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The World
Hedge funds add fuel to oil price rally with bets on rise above $100: Hedge funds are piling into the oil market betting that prices will soon pass $100 a barrel, adding impetus to a rally sparked by production and export cuts from Saudi Arabia and Russia. Riyadh’s extension until December of a 1mn barrel a day oil cut, in addition to further cuts under its Opec+ target, has compounded Moscow’s move to limit exports and pushed prices for Brent crude, the international oil benchmark, to $95 a barrel this week, a fresh high for the year. (Financial Times)
Ukrainian President Volodymyr Zelenskyy called on the United Nations to suspend Russia’s Security Council veto, slamming the UN for not acting to halt Russia’s war in Ukraine. “Ukrainian soldiers now are doing at the expense of their blood what the UN Security Council should do by its voting,” Zelenskyy told the body. “They’re stopping aggression and upholding the principles of the UN Charter.” (Politico)
Zelenskyy is expected to visit the Pentagon on Thursday. (Politico)
President Biden invited Israeli Prime Minister Benjamin Netanyahu to the White House as the two met in New York on the sidelines of the UN General Assembly. It was the first meeting between Biden and Netanyahu, who have known each other for four decades, since Netanyahu returned to office last December. (CNN)
U.S. Ambassador to Japan Rahm Emanuel has been warned by the White House to “stop posting messages on social media taunting Chinese President Xi Jinping.” Over the past two weeks, Emanuel “has criticized Xi directly and sarcastically speculated about the Chinese leader’s treatment of his top aides, using the hashtag ‘#MysteryInBeijingBuilding.’” Administration officials said China “has been furious about Emanuel’s posts.” (NBC News)
Azerbaijan has halted its military actions in Nagorno-Karabakh “after winning its main demand to dismantle a regional military, which is aligned with Armenia.” A cease-fire “appeared initially to be largely holding, with Armenian Prime Minister Nikol Pashinyan reporting a ‘sharp decrease’ in hostilities.” Nagorno-Karabakh’s government said it “accepted the cease-fire deal proposed by the command of Russia’s peacekeeping mission in the region because the international community failed ‘to stop the war and resolve the situation.’” (Washington Post)
Prime Minister Rishi Sunak is delaying the UK’s net-zero policies, outlining “a series of measures to water down the government’s climate change commitments as he claimed that politicians had not been ‘honest with the public’ about the cost of net zero.” Sunak said current policies “would ‘impose unacceptable costs on hard-pressed British families’ and risked a public backlash against net zero.” (Times of London)
German President Frank-Walter Steinmeier is calling on other EU nations to take on a greater share of migrants, pointing out in an interview with an Italian newspaper “that Germany had received a third of all EU asylum requests in the first half of 2023.” Steinmeier “acknowledged that both Italy and Germany had ‘heavy loads to bear’ and called for a ‘fair distribution’ of migratory burdens within Europe.” (DW)
Economy
The Fed left interest rates unchanged, “but signaled one more hike was possible this year, as central bankers shift their focus toward how long they’ll keep rates high and when they’ll decide there has been enough progress on their inflation fight.” Rates still remain at a 22-year high. The Fed also said it now expects the economy to grow 2.1% this year, “up significantly from the 1 percent forecast just a few months ago,” and expects the unemployment rate to end 2023 at 3.8%, down from a previous forecast of 4.1%. (Washington Post)
Fed Chair Jerome Powell “delivered a warning that new risks including surging oil prices — which he called ‘a significant thing’ — and the autoworkers’ strike could upend the forecasts.” (Politico)
Higher Interest Rates Not Just for Longer, but Maybe Forever: The neutral rate isn’t literally forever, but that captures the general idea. In the long run neutral is a function of very slow moving forces: demographics, the global demand for capital, the level of government debt and investors’ assessments of inflation and growth risks.The neutral rate can’t be observed, only inferred by how the economy responds to particular levels of interest rates. If current rates aren’t slowing demand or inflation, then neutral must be higher and monetary policy isn’t tight. (Wall Street Journal)
White House aides “have been trying to quell tensions with the United Auto Workers since remarks by President Biden last week inadvertently upset union leadership.” Biden’s statement that he was dispatching Acting Labor Secretary Julie Su and senior White House adviser Gene Sperling to Detroit was intended “as an inoffensive gesture aimed at providing support in the talks. … But Biden’s comments instead antagonized UAW officials, who feared the presence of Su and Sperling would be interpreted by some workers as a sign that the administration was swooping in to control the negotiations.” (Washington Post)
The UAW announced that 190 workers at an Alabama plant that makes parts for Mercedes-Benz vehicles have gone on strike “as the union continued to weigh expanding the number of walk-out targets at Detroit’s automakers.” (Bloomberg)
The UAW has shut down “just three of Detroit carmakers’ roughly 70 factories or parts distribution centres across the US — a seemingly minimalist tactic the union believes will maximise its leverage at the bargaining table.” (Financial Times)
Ford’s tiered labor system “creates vast differences in the compensation between new and legacy autoworkers” that “are at the heart” of the UAW strike. (Washington Post)
Ford has reached a tentative labor deal with Canadian labor union Unifor, “avoiding what could have been a second strike at the automaker’s operations in less than a week.” (Wall Street Journal)
General Motors has laid off about 2,000 workers “because of consequences related to” the strike. GM said that “because of the strike, the 2,000 workers laid off from Fairfax will not be eligible for the supplemental unemployment benefits that its laid-off employees would normally receive.” (CNBC)
Small business owners are feeling more confident. The MetLife/U.S. Chamber of Commerce Small Business Index of small business confidence “jumped six points in the third quarter, nearly reaching its pre-pandemic high.” (Axios)
The Securities and Exchange Commission has adopted a new role that will require three-quarters of U.S. public investment funds “to prove that the vast majority of their holdings match their names.” The “crackdown on deceptive marketing” will require mutual and exchange traded funds “that use terms such as ‘growth,’ ‘value’ and ‘artificial intelligence’ or tout their use of “environmental, social and governance” factors to have 80 per cent of their assets in line with their names.” (Financial Times)
Bank of America will increase its minimum hourly wage to $23 next month “as it heads toward a goal of raising hourly pay to $25 by 2025, the company said.BofA has increased pay several times in recent years, starting with a move to $15 an hour in 2017.” (Reuters)
Technology
China continues to focus “on pouring money into its chip industry in a tech race against the U.S. instead of funding powerful stimulus measures, further slowing its economic recovery from a real-estate-induced slump. The policy seems to reflect Chinese President Xi Jinping's aim of protecting economic security amid rising tensions with Washington rather than achieving immediate growth.” (Nikkei Asia)
Amazon has announced “an all-new Alexa voice assistant powered by its new Alexa large language model.” The company said at its annual fall hardware event that “this new Alexa can understand conversational phrases and respond appropriately, interpret context more effectively, and complete multiple requests from one command.” The new Alexa will be rolled out slowly, and at first only in the U.S. (The Verge)
Seventeen high-profile authors including Jonathan Franzen, John Grisham, and George RR Martin are “suing OpenAI for ‘systematic theft on a mass scale,’” the latest in a wave of legal action by writers concerned that artificial intelligence programs are using their copyrighted works without permission. The authors allege “flagrant and harmful infringements of plaintiffs’ registered copyrights.” (Guardian)
Airbnb has removed 59,000 fake listings so far this year. The company said fake listings, high cleaning fees, and high prices were among the top concern users highlighted in a survey. (Associated Press)
Smart Links
Foreign investors still shunning China despite signs of upturn. (Financial Times)
Ex-Goldman Bankers Make a Fortune With Controversial Bet on Coal. (Bloomberg)
FedEx posted profits topping analyst estimates and raised its earnings forecast. (Bloomberg)
South Africa will host a U.S.-Africa trade summit in November despite some American lawmakers’ concerns over its ties to Russia. (Reuters)
Film companies abroad are anticipating production slowdowns as an effect of the Hollywood writers’ strike. (Semafor)
The White House is launching an “American Climate Corps” to bring young workers into low-carbon energy and climate resilience jobs. (Axios)
As Instacart nears its IPO, it has moved away from grocery delivery and is increasingly focused on advertising and software products. (New York Times)