Europe takes a one-two hit on inflation and GDP.

• Grain markets get jolted. 

• Europe takes a one-two hit on inflation and GDP.

• Rishi Sunak gets dose of reality as woes mount.

• As the energy crisis continues to ravage businesses and households, economic growth is widely expected to shift into reverse during the winter.

• Biden spooks energy stocks with "windfall" profit warning.

• Canadians say their personal finances haven't been this bad in more than a decade.

• OPEC said global oil demand will climb by 13% to reach 109.5 million b/d and hold around that level for another decade.

• Japan spent a record ¥6.3 trillion ($42.4 billion) in October to prop up the yen against the dollar.

• Retail traders returned in force on Monday, creating a volatile session for meme stock favorites including none other than GameStop.

• Stocks trimmed their monthly surge and bond yields jumped, with investors awaiting Wednesday’s Fed rate decision

• More tax for Britons.

• Fed rate hike.

• Credit Suisse is not for sale.

• Gold purchases from central banks hit a record.

• Russia says “unacceptable’’ to move grain ships via corridor.

• The RBA continues on a path of smaller hikes.

• The Bank of England begins selling its QE-era assets

• US restrictions on its citizens assisting China's chip industry will be more narrowly enforced than feared.

Putin seems to have changed their tactics in the war against Ukraine by trying to knock out essential services such as power and water supplies. Will the war continue over winter as temperatures drop or will forces just hold their ground!

Sunak`s claim that all Britons will have to pay more tax is laughable. The rich (he is one of them) are provided with so many loopholes to avoid paying their fair share of tax it is still left to the 99% to bear the cost.

Tomorrows Fed rate decision and statement will set the scene for the stock market until the end of the year. If the Fed become more dovish, I would expect stocks to rally and the USD to drop, however, their battle against inflation is far from over and therefore I expect them to say it will depend on the data to give themselves some breathing space before December’s meeting. Data is showing demand may be softening but we all know inflation is still being driven more by supply issues.

Thursdays BoE 75 bp hike is not a done deal. With the chaos caused by the Tory party recently and their plan for austerity, which will speed up the UK recession, the BoE may elect to only raise by 50 bps. Inflation is still high and may go higher yet over winter, especially as the public’s energy cap was cut from 2 years to 6 months!

Global News

·  Joe Biden vowed to impose higher taxes on oil firms that don't boost their US production and refining capability after posting record profits.

·  With gasoline prices still high ahead of the midterms, he called profits "a windfall of war." Earlier reports had spooked oil stocks.

·  But Democrats have proposed such taxes for a decade, and no such plan is likely to pass the Senate even if Dems do better than expected next week.BB

The RBA hiked rates by 25 basis points and signaled more tightening to come. That puts the cash rate at 2.85%, the highest since April 2013. The move, which was in line with consensus, contrasts with expectations for the Fed and Bank of England, which are seen unleashing 75-basis point hikes this week.BB

The Bank of England will become a test case for how quickly markets can shift away from easy-money policies today when it starts selling off assets accumulated during its 13-year stimulus program. It plans an auction of its first £750 million in short-maturity securities. Results are due about 3 p.m. in London. BB

Moscow warned that the security of ships sailing in Ukraine's grain-export corridor can't be assured without reciprocal guarantees from Kyiv, increasing the risks for Black Sea trade. And Vladimir Putin said said that Russia's recent strikes on Ukraine weren't "all that we could have done." BB

Euro-area inflation sped up, growth slowed and the outlook only gets worse from here.

·  Inflation surged at its fastest-ever pace, with price-growth accelerating to 10.7% in October, way more than forecast.

·  Economic growth slowed to 0.2% in the third quarter from the prior three months. That's better than the consensus estimate of 0.1% but much slower than the second quarter's 0.8% pace. BB

Rishi Sunak may scrap an energy revenue cap plan for the UK and instead expand a windfall tax on producers, the FT reported. The Times said he's cooling on plans for a similar levy on banks. The Sun said some lawmakers want a tax on non-UK citizens who live overseas and own property in Britain. BB

Rishi Sunak is drawing up plans for years of tax rises for everyone in the country, as a Treasury source warned: "It's going to be rough." On Monday, the Prime Minister and the Chancellor decided to bring in "stealth" increases in income tax and National Insurance over the coming years by freezing the thresholds at which people start to pay different rates. - Telegraph

The SNB ran up a loss of 142.4 billion francs ($143 billion) in the first nine months as FX turmoil took a toll on its currency portfolio. It also saw a valuation loss on its gold holdings and its franc positions.BB

UK property prices will fall as much as 5% in 2023 on higher mortgage costs, according to Zoopla. That would erase the past eight months of price gains for the average home. London properties are set to face the biggest loss with 13 months of capital gains wiped out.BB

Ukraine said Russia launched a massive wave of missile attacks across the country, targeting the capital. Kyiv's mayor said about 350,000 apartments in the city are without power supply and more than 80% of residents remain without running water.BB

Brazilian assets rebounded, buoyed by stocks expected to benefit from Luiz Inacio Lula da Silva's election win, but there's still a lingering concern: Jair Bolsonaro has yet to concede or comment in any way about the results, and a contested election could roil markets. BB

China's Covid Zero policy is killing its advantage in the iPhone market, Tim Culpan writes. Workers streaming out of factories is the visual embodiment of the risky bet Xi is making. China will remain Foxconn's industrial base—and by default that of Apple's—at least for a while. But as more capacity is added overseas, Beijing's leverage over suppliers and their clients will start to diminish. BB

Rishi Sunak’s government said it’s inevitable that all Britons, especially the richest, will have to pay more tax to restore stability to the public finances. Sunak met with Chancellor of the Exchequer Jeremy Hunt on Monday to discuss tax and spending plans ahead of an economic statement planned for Nov. 17. They discussed the “eye-watering” gap in Britain’s public finances and agreed “tough decisions” are needed on tax rises and on spending, according to a Treasury readout. The measures are necessary to bring calm to financial markets that dumped UK government bond BB

The Federal Reserve’s fifth-straight outsized rate hike may spur fresh warnings that a recession is inevitable, based on a bond-market signal preferred by Chair Jerome Powell himself. Powell’s favored yield curve -- where three-month rates are now versus where they are expected to be in 18 months’ time -- is on the cusp of inverting, with the spread between the two tumbling to a mere 0.2% Tuesday from 2.7% in April. An inverted yield curve is a key warning sign for many investors that a recession is coming, and many closely watched spreads in the Treasury market have already flipped below zero. Meanwhile, JPMorgan estimates that a dovish Fed could spark 10% rally in the S&P. BB

Commodities

Biden calls on oil, gas companies to stop 'war profiteering,' threatens windfall tax - U.S. President Joe Biden on Monday called on oil and gas companies to use their record profits to lower costs for Americans and increase production, or pay a higher tax rate, as he battles high pump prices with elections coming in a week. In remarks at the White House, Biden criticized major oil companies who are bringing in big profits while Americans, weary of inflation, pay a tidy sum to fill up their cars. 

OPEC raises long-term oil demand view, calls for investment - OPEC raised its forecasts for world oil demand in the medium and longer-term in an annual outlook released on Monday and said $12.1 trillion of investment is needed to meet this demand despite the energy transition. The view from the Organization of the Petroleum Exporting Countries, in its 2022 World Oil Outlook, contrasts with that of other forecasters which see oil demand reaching a plateau before 2030 due to the rise of renewable energy and electric cars. 

U.N. Black Sea grain pact under threat as Russia quits - Grain was flowing out of Ukraine at a record pace on Monday under an initiative led by the United Nations aimed at easing global food shortages despite Russia warning it was risky to continue after it pulled out of the pact. Russia said on Monday that the deal was hardly feasible as it was impossible to guarantee the safety of shipping after its withdrawal over the weekend following what it said was a major Ukrainian drone attack on its fleet in Crimea.

Ukraine says it will press on with Black Sea grain deal - Ukrainian President Volodymyr Zelenskiy said on Monday that his country would continue exporting grain from its Black Sea ports under a U.N. programme despite Russia's pull out because the shipments offered stability to world food markets. He made his comments following talks with Czech Prime Minister Petr Fiala. Russia announced on Saturday that it was suspending its role in the U.N.-backed initiative that escorts cargo ships through the Black Sea.

Record central bank buying lifts global gold demand, WGC says - Central banks bought a record 399 tonnes of gold worth around $20 billion in the third quarter of 2022, helping to lift global demand for the metal, the World Gold Council (WGC) said on Tuesday. Demand for gold was also strong from jewellers and buyers of gold bars and coins, the WGC said in its latest quarterly report, but exchange traded funds (ETFs) storing bullion for investors shrank. 

India's gold demand dips as inflation hits rural buyers - India's gold consumption in the months of October to December could fall by around a quarter from a year ago as inflation depresses rural demand, the World Gold Council (WGC) said on Tuesday. The lower purchases in the world's second-biggest gold consumer could weigh on prices, which are trading near their lowest level in more than two-years.

Germany finalises details of planned gas price cap - Germany's expert gas commission on Monday presented proposals to the government for a gas price cap in Europe's biggest economy to help citizens cope with soaring energy prices and encourage companies to remain in the country and preserve jobs. Households in the country are paying more than 2-1/2 times as much for an average annual gas contract from their supplier than a year ago - before Russia's invasion of Ukraine disrupted gas supplies and pushed prices sharply higher - data from energy price portal Check24 shows.

Japan gov't decides to retain stake in new Sakhalin-1 operator - Japan has decided to retain its stake in the new Russian operator of the Sakhalin-1 oil and gas project and has asked Japanese consortium members to stay to ensure the country's energy security, the industry minister said on Tuesday. "The Sakhalin-1 is extremely important for Japan's energy security as it is a valuable source outside of the Middle East," industry minister Yasutoshi Nishimura told a news conference, citing that Japan was highly dependent on Middle East crude oil.

Pakistan government approves plan to buy 300,000 tonnes of Russian wheat  - Pakistan's government on Monday approved a plan to buy 300,000 metric tonnes of wheat from Russia, the finance ministry said in a statement. The country's Economic Coordination Committee, which is headed by Finance Minister Ishaq Dar, approved the plan proposed by the ministry of commerce to procure wheat from the Russian government. 

India allows rice exports backed by already issued letters of credit - India said it will allow cargoes of white and brown rice backed by letters of credit issued before Sept. 9 to be shipped overseas, a measure that provides some relief to exporters grappling with fresh government curbs. The world's biggest exporter of rice on Sept. 8 banned exports of broken rice and imposed a 20% duty on exports of various grades as it sought to boost domestic supply and calm local prices after below-average monsoon rainfall curtailed planting. 

Crypto/Digital

BRICS Nations Plan to Create a “New Global Reserve Currency”

Russia and members of the BRICS countries the end of June met at the 14th BRICS Summit to discuss world affairs. During this meeting, it was revealed the leaders of these five major emerging economies are in the midst of “creating a new global reserve currency.”

Russian President Vladimir Putin announced that the five-member economies — Brazil, Russia, India, China, and South Africa plan to issue a “new global reserve currency.”

For international payments to work (which will replace the 50-year-old SWIFT cross-border payment system), standardized protocols need to be established. These protocols are known as ISO 20022.

ISO 20022 is a single standardization approach to be used worldwide by all financial standards initiatives. The new standardization is set to officially begin in November 2022 and be fully implemented by November 2025.

There are already ISO 20022 compliant cryptocurrencies that have been established to be part of this system. Whether the BRICS nations adopt an already compliant IS0 20022 cryptocurrency or create their own is still unknown.

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

 DISCLAIMER.

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