“Knowledge born from actual experience is the answer to why one profits; lack of it is the reason one loses” — Gerald M. Loeb

1. Market Rout Shows Dangers of Margin Lending, Crypto Style — margin loans are one of the most common sources of the borrowed money, or leverage, that underlies the zigs and zags of financial markets. During the current winter for crypto firms and their investors, leverage is exposing crypto lenders’ risk-management failures and exposing many of their customers to significant losses and stressful uncertainty. In crypto, the legal and regulatory structures are far less developed. It isn’t always clear what a crypto lender can do with a counterparty’s collateral once it moves to liquidate. Lenders and the investment firms that borrow from them tend to have a much less-complete picture of each others’ finances than, say, a big bank like Goldman Sachs Group Inc. and its hedge-fund clients, said Richard Lee, a partner at Crowell & Moring LLP.
2. EU Seeks 15% Cut in Gas Use on Russian Supply Squeeze — the European Union proposed that the bloc cut its natural gas consumption by 15% over the next eight months in a plan that would affect all households, power producers and industry. The move reflects mounting concern that Russia will halt gas exports to the region in retaliation for sanctions following its invasion of Ukraine. A cutoff would threaten EU efforts to replenish stockpiles ahead of winter, potentially jeopardizing security of supply to key sectors and crippling the region’s economy well into next year.
3. Russia Resumes Nord Stream Natural-Gas Supply to Europe — Russian natural gas began flowing again at a reduced volume through a critical pipeline into Europe on Thursday, buying time for governments to decouple from the Kremlin’s exports amid what they expect will be an increasingly unreliable supply of energy from Moscow heading into the winter.
The Nord Stream pipeline connecting Russia with Germany under the Baltic Sea resumed operation after its annual maintenance, ending 10 days of tense speculation about whether President Vladimir Putin’s regime would cut off the gas flow to Europe in retaliation for Western sanctions after his invasion of Ukraine.
Gas-flow data showed the pipeline was operating at its premaintenance level of around 40% of total capacity.
4. ECB Raises Rates by Half-Percentage Point in First Hike Since 2011 — the European Central Bank raised interest rates by a larger-than-expected half-percentage point and unveiled a new plan to buy the debt of Europe’s most vulnerable economies, seeking to protect the currency union as it navigates the twin threats of skyrocketing inflation and slowing economic growth. The rate increase comes despite rapidly accumulating challenges facing Europe’s economy and the currency union’s cohesion—from a looming energy crisis to a protracted war next door, mounting political instability at home, and what many economists think has become an inevitable recession. Some of these could make it difficult for the ECB to focus on combating inflation.

The week ahead — Economic data from Econoday.com: