Crypto markets tumble.

• Cryptocurrencies Plunge as Doubts About FTX-Binance Deal Grow

• Feds Score $3 Billion Crypto Seizure From Silk Road Scammer

• Trump teases a “big announcement”

• Crypto markets tumble.

• US urges Big Wall Street banks to keep doing business with Russia

• China’s `iPhone City’ will probably stay locked down

• Europe’s energy crunch will trigger years of shortages and blackouts

• Europe's ravenous energy demand has global ramifications.

• A deeply divided America votes in the midterms.

• Overseas investors pull billions from China.

• Arizona hit by voting machine issues as Americans head to ballots.

• The deeply divided US electorate is set to deliver its verdict on whether Democrats or Republicans have the right prescription to guide the nation.

• The UK and EU are closer to resolving one of their biggest Brexit fights.

• The Bank of England may have made a mistake.

• An ECB governing council member warns of higher rates.

• Rishi Sunak is reportedly discussing expanding the top income tax rate.

• Musk sold Tesla’s shares again

• China PPI declines; CPI gain slows.

• US election looks closer than expected.

It could be tomorrow or the weekend before we know the outcome of the midterm elections. The result is important not just to the U.S as Republicans have different ideas on the economy and Biden will struggle to pass many of his intended bills, especially on the environment. It seems it will be close, and the outcome will impact markets – stocks, Treasuries, USD, and oil.

U.S inflation data today. However, with the midterm election outcome still unknown and the next Fed meeting in mid-December investors will possibly become more cautious.

Crypto tumbled on the Binance/FTX takeover. I expect this more because so far it is only a letter of intent which does not carry much commitment and it could easily end up not happening!

Global News

China's producer prices slid into deflation for the first time in nearly two years as Covid disruptions damped demand and some commodity prices slipped. The PPI fell 1.3% in October from a year earlier, a slightly smaller drop than economists predicted. The CPI gain slowed to 2.1%, weaker than consensus. BB

President Joe Biden acknowledged Democrats face a “tougher” challenge holding the House than the US Senate on the eve of Tuesday’s midterm elections. “I think it’s going to be tough but I think we can. I think we’ll win the Senate. I think the House is tougher,” Biden told reporters BB

As voting winds down in the US midterms, the world is watching to see whether the Democratic Party retains control of some or all of Congress. Republicans have sought to blame President Joe Biden for inflation many economists say has more to do with supply chain issues and Russia’s war. Matt Winkler writes in Bloomberg Opinion that Biden’s economic record is actually an enviable one. “The history of more than a dozen measures of relative prosperity shows Biden outperformed the last six of his seven predecessors and the 46th president has no peers reducing the nation's budget deficit,” Winkler says. BB

Republicans made gains in their drive to take control of Congress in a US election that was shaped by voters’ concerns on inflation and that laid bare the nation’s divisions on cultural and social issues. As polls closed in the eastern half of the US, Florida continued making the turn from swing state to Republican stronghold as GOP Governor Ron DeSantis and Senator Marco Rubio handily won re-election. GOP candidates expanded their representation in the House by winning three seats that had been held by Democrats. It is still too early to call the nation’s tight bellwether races, but the outcome of the midterms will hinge on Americans’ frustration over the rising cost of living and worries about the slowing economy. BB

The Bloomberg Dollar Spot Index hit its lowest level in seven weeks on Tuesday and could be heading for its fourth consecutive weekly loss, which will be the first such streak since July 2020. It now stands around 3% below its September highs despite the latest Federal Reserve meeting being more hawkish than expected as Chair Jerome Powell pointed out that the ultimate level of the terminal rate may be higher than traders estimate. While the factors that supported the greenback throughout the year, namely interest rate differentials and geopolitical risks, haven’t changed, disinflation bets and a rebound in the equities space, driven initially by China headlines and then US midterm elections, resulted in investors trimming their long-dollar exposure. According to CFTC data, hedge funds are net short the euro by the least since early June, net short the yen by the least since late August and remain net long the pound, albeit with a modest exposure. Technically, the dollar’s close below the 55-daily moving average for the first time in three months keeps bulls on their toes as it makes a case for the latest correction south to continue. According to the Elliott Wave theory, BBDXY could fall by a further 5% and still remain on a long-term bullish trajectory. But for the short-term, and as the correlation between equities and the greenback picks up yet again, it all boils down to price action following Thursday’s inflation report out of the US. BB

Europe's energy crisis sparked by the war in Ukraine will trigger years of shortages and blackouts in developing nations.

· Bills will be high, but Europe has bought enough oil and gas to get through the heating season. However much deeper costs will be borne by the world's poorest countries, which have been shut out of the natural gas market. BB

The stress on Germany's public finances is evident. It plans to more than double net federal borrowing to €45 billion next year to help ease the impact of energy costs.BB

Russia's trade with Europe is also feeling the pressure. It's drying up as a result of sanctions against Moscow and trading routes being redrawn. St. Petersburg experienced an 85% drop in container throughput. And China has overtaken the EU as Russia's most important trading partner. BB

Ongoing jitters about Beijing's Covid Zero policy led overseas investors to pull $8.8 billion from Chinese markets last month, a jump from September's $2.1 billion, the IIF estimates. Virus worries are weighing on the market; US-listed Chinese shares fell overnight. Meantime, BofA said clients posted the largest weekly outflow from US stocks since April 2021. BB

China can't afford to stick with Covid Zero forever, as its high cost is causing big fiscal deficits and surging debt levels, Shuli Ren writes. While Beijing would have to allow some deaths, a gradual reopening that starts with well-prepared coastal areas would be viable. Rising vaccination rates among the elderly are a sign that a change is in the works. BB

Japan probably sold some of its Treasury holdings to fund its yen interventions in a bid to show speculators it has more immediate firepower than they expected, analysts said. Tokyo's foreign-securities stash fell by $43.9 billion in October, similar to the amount it spent supporting the yen. The disposals may annoy foreign nations and further weaken the currency. Meanwhile, Japan's cabinet approved a fresh stimulus package. BB

Huw Pill suggested that the BOE erred in continuing stimulus through the pandemic, saying money-printing contributed to rocketing inflation. The central bank's chief economist told Parliament that "with the benefit of hindsight," different decisions would have been made. BB

The ECB may need to raise interest rates more than investors expect if the euro zone faces only a mild downturn, Governing Council member Pierre Wunsch said. "If the slowdown is shallow and accompanied by a further rise in inflation—and inflation expectations—real interest rates will have to move above market consensus" of 3%, the Belgian central-bank chief said. BB

Rishi Sunak may expand the top income tax rate, the Telegraph reported. Options being discussed include hiking the 45% top rate or lowering the £150,000 annual threshold. The Treasury is also mulling increasing the employers' National Insurance rate by 1.25 percentage points. Separately, Sunak suffered his first cabinet resignation when Gavin Williamson quit over bullying allegations. BB

The EU and UK are inching toward a trade deal for Northern Ireland. The two made a major breakthrough after the EU began testing the UK’s live database tracking goods between mainland Britain and Northern Ireland, we’re told. If the EU is happy, there could be an agreement over custom checks in the Irish Sea, one of the many sticking points over post-Brexit trading rules that at times risked becoming a full-blown trade war. Despite the progress, a full deal is not likely anytime soon. The UK and EU still disagree over a number of issues including the governance of Northern Ireland. But resolving checks on goods is seen as prerequisite to move onto other thorny topics. BB

The rise of outspoken Kremlin hardliners is alarming people close to Vladimir Putin. They're concerned he may seek more confrontation abroad and repression at home, people familiar said. Confidant Yevgeny Prigozhin's calls for "urgent Stalinist repressions" against businessmen who aren't enthusiastic enough about the war have led some wealthy Russians to fear for their safety. BB

The EU is even more divided on how to contain an energy crisis. While countries like Germany and the Netherlands continue to oppose a price cap, a larger group of countries, including Italy, Poland, Belgium and Greece accused the commission of being too slow to develop a proposal to limit the costs of the fuel. BB

Renewable Rules | The EU could cut back lengthy planning rules for building renewables projects — in particular for solar farms — with a new plan meant to lower electricity prices and reduce gas use in energy, based on a draft we’ve seen: “The proposed regulation reflects the need to take urgent action in response to the energy crisis.”  BB

Iran Sanctions | The EU is preparing to impose further sanctions against Iran over a deadly crackdown on protests triggered by the death of a young Iranian woman, we’ve heard. Envoys to the EU meeting in Brussels are set to back proposals as soon as today targeting several Iranian individuals and entities. BB

Microsoft is in for a rough week in the EU. The company’s $69 billion takeover of games developer Activision Blizzard faces an in-depth probe over concerns the tech giant could thwart access to blockbuster franchises like “Call of Duty.” European cloud group Cispe also filed a complaint against Microsoft for allegedly abusing its dominance in software to increase its share of the cloud market. BB

French President Emmanuel Macron said the US Inflation Reduction Act likely does not comply with WTO rules and is “not friendly.”  “The US produces cheap gas and in addition rolls out massive state aid schemes,” Macron said yesterday at a meeting with about 50 business leaders, referring to provisions that offer subsidies for electric cars made in North America. BB

Fiat won its challenge at the EU’s top court to topple a €30 million tax bill. The carmaker contested a 2015 commission order to pay back tax breaks granted by Luxembourg — part of EU Competition Chief Margrethe Vestager’s attempted crackdown on allegedly unfair tax deals. The EU Court of Justice wrote that the commission’s analysis was “erroneous.”  BB

Tesla Chief Executive Officer Elon Musk sold at least $3.95 billion of the electric-vehicle maker’s shares just days after closing his buyout of Twitter. He unloaded 19.5 million shares, according to regulatory filings on Tuesday in New York, his first disposals since August. Musk, the world’s richest person, said in August he was done offloading Tesla stock. He told a Twitter follower it was important to avoid an “emergency sale” of Tesla shares in case he was forced to close the acquisition of the social-media network and struggle to bring in additional equity partners. Still, some had speculated that the billionaire would sell more stock to shore up the deal. BB

Commodities

Europe is racing to fill the gap left by Russian gas, but emerging nations like Pakistan, Bangladesh and Thailand are the ones who will suffer as they are forced to compete on energy prices with economies several times their size. It’s all leaving the world’s poorest countries facing shutdowns, blackouts and social unrest. And while this winter isn’t looking great in Europe, at least gas reserves are full and the forecast is mild. It’s what happens next winter, and thereafter, that should have every country on the continent shivering with fear. BB

Fire breaks out at Chevron's El Segundo, California refinery - Chevron said fire crews responded to an isolated fire inside its 269,000-barrel-per-day El Segundo refinery in California on Tuesday, with no injuries due to the incident. The time of dispatch was 6:13 p.m. (0213 GMT) with a response at the two-alarm level from El Segundo, Manhattan Beach, Redondo Beach and Los Angeles County fire departments, El Segundo fire chief Deena Lee said. 

U.S. allows transactions to free sanctioned oil tanker stranded in Indonesia - The U.S. government has allowed some transactions to take place with a sanctioned oil supertanker in efforts to free the vessel stranded in Indonesian waters, a U.S. embassy spokesperson in Singapore said. The Indonesian navy has been trying to free the Djibouti-registered ship, Young Yong, which ran aground off Indonesia's Riau Islands on Oct. 26 near a gas pipeline. 

Argentina's farmers notch sales of more than 70% of soybean crop - Argentine farmers sold as of last week about 72% of the current soybean harvest, government data showed on Tuesday, a key crop especially important since it helps generate much-needed hard currency for the country's cash-strapped government. During the same time last season, farmers sold a little over 73% of the soybean harvest.

Both 2022 and 2023 U.S. corn, soy crops come under scrutiny this week -While analysts await the U.S. Department of Agriculture’s updated view on the 2022 corn and soybean crops, the 2023 discussion can already begin as the agency this week also offered its first glimpse into next season. USDA will publish its monthly supply and demand reports on Wednesday at noon EST (1700 GMT). Tables from its annual long-term baseline projections, including the first unofficial crack at 2023-24, were released on Monday.

India seeks to include steel in export incentive scheme – India's trade ministry has sought to extend an export promotion scheme to reimburse some local levies for domestic steel producers, a senior government official said, as the industry reels from steep fall in shipments. The Remission of Duties and Taxes on Export Products (RoDTEP) scheme offers refunds against various embedded taxes to exporters across sectors such as automobiles and agricultural produce, with steel exports presently outside its remit.

Australian mining magnate Forrest calls for ban on seabed mining - Fortescue Metals executive chairman Andrew Forrest on Tuesday said his charitable foundation is in favour of a pause on seabed mining, the first time a prominent mining executive has spoken out against the nascent industry. Forrest said the Minderoo Foundation, which he and his wife Nicola fund with the dividends they get from Fortescue, will back a pause until there's sufficient evidence that damage to ocean environments can be prevented.

EU Commission said gas price cap impossible as requested - The European Union's executive body told its 27 member countries at a seminar on Monday that it was not possible to create a gas price cap that would not affect long-term contracts or supply security, two diplomatic sources told Reuters. After much wrangling at an all-night summit, EU leaders agreed last month to task the European Commission with proposing a temporary gas price cap in power generation and a temporary price corridor to bring down costs for consumers.

Cheniere seeks 18 months to upgrade LNG turbines that failed pollution tests-document - Top U.S. liquefied natural gas (LNG) exporter Cheniere Energy Inc is asking Louisiana regulators for 18 months to upgrade nearly half of its turbines in the state because they exceeded new air pollution limits, according to a document viewed by Reuters. The request reveals a potential snag at a critical LNG production facility as U.S. producers try to ramp up exports to meet booming global demand. 

Ukraine wants grain deal expanded, eyes decision next week - Ukraine wants the Black Sea grain export deal expanded to include more ports and goods, and hopes a decision to extend the agreement for at least a year will be taken next week, Ukraine's deputy infrastructure minister said on Tuesday. The deal, which eased a global food crisis by unblocking three major Ukrainian ports during Russia's invasion, expires on Nov. 19 and briefly appeared imperilled last month when Moscow suspended its participation in the deal before rejoining again. 

Algeria buys about 400,000 tonnes wheat in tender – traders - Algeria's state grains agency OAIC has bought about 400,000 tonnes of milling wheat in an international tender which closed on Tuesday, European traders said in initial assessments. Initial purchases reported were around $367 to $368 a tonne, cost and freight (c&f) included, they said

Crypto/Digital

It's been a day of dramatic developments in the crypto space, with the news that crypto exchange Binance is to acquire its rival FTX, sparking wild price fluctuations in FTX's FTT and Binance's BNB tokens. It followed days of speculation as to the fate of FTX, after Binance offloaded large amounts of the FTT token–prompting a wave of withdrawals from FTX.

if the deal goes ahead. In a world now colored by the high-profile collapses of lenders like Celsius and Voyager and the entire Terra ecosystem, there’s reason to be cautious. 

That’s something that Zhao “CZ” Changpeng, Binance’s CEO, was keen to stress in his confirmation of the deal: He immediately signaled that the non-binding agreement is subject to due diligence, given a “significant liquidity crunch” at FTX. Legally, these types of letters of intent can evaporate as quickly as they appear, meaning that there’s no one to sue if Binance were to pull out. And just a few days ago, Zhao and Sam Bankman-Fried, FTX’s CEO, appeared to be more like frenemies than family.

Market levels (all analysis is based on CME futures contracts)

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The content of this daily newsletter should only be considered a guide and views, opinions or content contained in this email is provided solely for information purposes and does not constitute investment advice or a solicitation to trade or invest.

Chris Tubby

Senior Director Trading and Education

Symax Fintech