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The World
Deep oil production cuts approved by Opec+ sent shockwaves across energy markets, put the cartel on a collision course with Washington and pointed to a strengthening bond between Saudi Arabia and Russia. The implications are far-reaching, from the future price of oil to the future relationship between the US and Saudi Arabia. The move is an aggressive attempt to raise oil prices. At $90 a barrel, crude is well below levels reached soon after Russia’s invasion of Ukraine but higher than at any point between 2015 and early 2022. The pain of higher oil prices is compounded by the stronger dollar for many countries, which must buy their oil in the US currency. “We need to pre-empt a crash in the oil market because of the slowdown,” Suhail Al Mazrouei, energy minister of the United Arab Emirates, told the FT, arguing long-term investment in the industry would suffer without action. (Financial Times)
In response, the president directed the release of 10 million barrels of oil from the U.S.’s Strategic Petroleum Reserve, a move analysts said would have little impact on prices. Administration officials also said they would consult with Congress on ways to rein in OPEC+’s power over energy prices, which analysts interpreted as a potential sign of support for legislation allowing antitrust action against foreign state-owned oil companies. (Wall Street Journal)
OPEC Move Shows the Limits of Biden’s Fist-Bump Diplomacy With the Saudis: OPEC’s decision to curb oil production was a signal that President Biden’s influence over his Gulf allies was far less than he had hoped. (New York Times)
The Biden administration is preparing to scale down sanctions on Venezuela’s authoritarian regime to allow Chevron Corp.to resume pumping oil there, paving the way for a potential reopening of U.S. and European markets to oil exports from Venezuela. In exchange for the significant sanctions relief, the government of Venezuelan President Nicolás Maduro would resume long-suspended talks with the country’s opposition to discuss conditions needed to hold free and fair presidential elections in 2024. (Wall Street Journal)
North Korea fired two short-range ballistic missiles into the sea in the direction of Japan, after the return of a U.S. aircraft carrier to the region and a U.N. Security Council meeting in response to the North's recent launches. The missile launch was the sixth in 12 days. (Reuters)
The U.S. aircraft carrier USS Ronald Reagan is redeploying near the Korean Peninsula in a show of might aimed at deterring any further North Korean activity one day after Pyongyang fired a ballistic missile over Japan. (Nikkei Asia Review)
Xi Jinping cracks down on disloyalty ahead of Communist party congress: Xi has delivered a blunt message to the top ranks of the ruling Chinese Communist party: no one is beyond reach. Death sentences — which can be commuted to life in prison after two years — were last week handed down to Fu Zhenghua, Xi’s former justice minister, Sun Lijun, the former deputy minister of public security, and Wang Like, a former top official in Jiangsu. Jail terms of more than 10 years were also issued to at least three other former police and security chiefs. While the sentences were mostly for corruption, authorities noted that the cases were all related to a “political gang” disloyal to the Chinese president. (Financial Times)
Taiwan sees more Chinese coercion, intimidation in Xi's next term. (Reuters)
Poland suggests hosting US nuclear weapons amid growing fears of Putin’s threats: Request is widely seen as symbolic, as moving nuclear warheads closer to Russia would make them less militarily useful. (The Guardian)
L.A. landlords can resume evictions starting Feb. 1: After nearly three years of COVID-19 emergency restrictions, landlords will again be allowed to evict tenants who fall behind on their rent, the L.A. City Council voted. The decision enables the eviction protections, some of the longest-lasting in the country, to end as of Feb. 1, 2023. (Los Angeles Times)
The climate crisis made the record drought across the northern hemisphere this summer at least 20 times more likely, scientists have calculated. Without human-caused global heating, the event would have been expected only once every four centuries. (The Guardian)
‘The worst we’ve seen’: Ranchers threatened by historic heat and drought. The record-breaking dry spell, covering more than 40 percent of the continental U.S. for nearly two years, has put pressure on livestock herds across the Great Plains. (Washington Post)
Sydney set to smash rainfall records as Australia braces for more floods. (Reuters)
Economy
World trade in goods is projected to slow sharply next year under the weight of high energy prices, rising interest rates and war-related disruptions, raising the risk of a global recession, according to a new forecast. Total exports and imports of goods are likely to grow by just 1% in 2023, the World Trade Organization said on Wednesday. That would be down from its previous forecast of 3.4% and its forecast of 3.5% for this year. The WTO also lowered its forecast for global economic growth in 2023 to 2.3% from earlier expectations of 3.3%, and warned of an even sharper slowdown should central banks raise interest rates too sharply in their efforts to tame high inflation. (Wall Street Journal)
US employers cut more than 1mn job vacancies in August, in a sign that the Federal Reserve’s aggressive efforts to cool the economy are starting to hit the labour market. The monthly decline was the second sharpest in two decades of data, eclipsed only by April 2020, when widespread lockdowns froze hiring at the onset of the coronavirus pandemic. The figures come before the release of official jobs data on Friday. (Financial Times)
Goldman Sachs pursues asset purchases in UK pensions fire sale. US bank’s asset management arm targets retirement schemes’ illiquid holdings. (Financial Times)
The Bank of England was warned by one of its most senior advisers two years ago that the £1 trillion investment approach adopted widely by the pensions industry could one day contribute to capsizing the government bonds market. Anil Kashyap, an eminent academic and member of the Bank’s financial policy committee, warned of the risk of “contagion” and “multiplier effects” posed by investment approaches including so-called liability driven investment (LDI) in November 2020. (The Times)
Lettuce at $8? Inflation in Australia is hurting everyone from restaurant owners to diners. Food prices are rising at one of the fastest rates among consumer goods in Australia. Costs of fruit and vegetables rose 18.6% in August compared to a year ago. Annual inflation in August has risen to 6.8% from just under 2% before the pandemic. The east coast floods this year exacerbated price increases pushing up the price of a head of lettuce to nearly A$12 a head. (CNBC)
Major commercial banks in Thailand have rushed to raise interest rates in response to the Bank of Thailand's two consecutive rate hikes, sparking concern over rising financial costs that will eventually be passed on to businesses and consumers at a time when the Thai economy is still in the recovery stage from the COVID-19 pandemic. (Nikkei Asia Review)
Technology
Huawei, the Chinese technology group, is planning to relaunch 5G phones as soon as next year to overcome the stranglehold of US sanctions and win back market share. The company is blacklisted by Washington from acquiring US technology for 5G smartphones but has been developing strategies to bypass the sanctions. One approach is to redesign its smartphone without using restricted advanced chips, said two people familiar with the company’s plans. (Financial Times)
US defense department adds drone maker DJI and BGI Genomics to blacklist it links to Chinese military. (South China Morning Post)
Elon Musk’s ‘everything app’ plan for Twitter rekindles dotcom dream: Musk’s stop-start plan to buy Twitter for $44bn has often seemed like an impulsive move by the world’s richest person. But the Tesla and SpaceX chief now insists the deal is part of a master plan to launch an “everything app” incorporating messaging, payments and commerce that has been more than two decades in the making. “Buying Twitter is an accelerant to creating X, the everything app,” Musk tweeted on Tuesday after his lawyers told the social media company he planned to proceed with the purchase at the original price of $54.20 per share. The deal is contingent on debt financing and an end to the bitter months-long legal battle to back out. (Financial Times)
Three reasons Washington is freaking out about Elon Musk right now. (Politico)
Ford is raising the price of electric F-150 Lightning pickup to $51,974. Ford is increasing the entry-level price of its electric F-150 Lightning pickup by $5,000 for the 2023 model year due to rising costs and supply chain issues. The starting price of the 2023 Lightning Pro model will be $51,974 – up nearly 11% and a 30% increase from the truck’s $39,974 price in May 2021. (CNBC)
DeepMind uses its AlphaTensor AI to solve a matrix multiplication problem by building a 3D TensorGame board game, beating a record that has stood for 50+ years. (MIT Technology Review)
What to expect from Google's Pixel 7 event on October 6th: The meat of the presentation will probably focus on Google’s latest phones, the Pixel 7 and Pixel 7 Pro. An official preview at this spring’s I/O conference revealed that they’ll largely iterate on the Pixel 6 line. You can expect an updated but familiar-looking design with a seamless aluminum frame that extends to the camera bar. There will also be a new Tensor G2 chip that promises improved performance for media, speech recognition and other tasks. They’ll run Android 13. The base model will have two rear cameras like the regular Pixel 6, while the Pro adds a third. (Engadget)
Watch here, 10 am ET today.
Smart Links
‘Universities are going to continue to suffer.’ Some colleges struggle with enrollment declines, underfunding. (CNBC)
Tyson Foods will move about 500 corporate employees in Chicago, Downers Grove to Arkansas headquarters. (Chicago Tribune)
401(k) Providers Make It Easier to Avoid Cashing Out Retirement Savings. (Wall Street Journal)
Dollar's blistering rally to extend into next year: FX analysts in Reuters poll. (Reuters)
Rich Chinese are flocking to buy luxury Singapore condos. (South China Morning Post)
Trader Joes has brought back its beloved free samples after a years-long hiatus due to the pandemic. (Los Angeles Times)