“Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.” — Larry Hite

1. Fed Minutes Show Most Officials Favored Slowing Rate Rises Soon — their discussion at the meeting, described in minutes of the gathering released Wednesday, suggests they could downshift to a rate rise of 0.5 percentage point, or 50 basis points at their meeting next month. “A substantial majority of participants judged that a slowing in the pace of increase would soon be appropriate,” the minutes said. Officials approved the fourth consecutive supersize rate increase at their Nov. 1-2 meeting, bringing their benchmark rate to a range between 3.75% and 4%. They are boosting rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high.
All 19 officials at the meeting supported the decision to raise rates this month and broadly agreed they needed to keep lifting them, the minutes showed. Still, the discussion revealed some were more anxious about the possibility of overdoing the increases, while others worried they might not be making enough progress to warrant a downshift.
2. Violent Protests Erupt at Apple’s Main iPhone Plant in China — hundreds of workers at Apple Inc.’s main iPhone-making plant in China clashed with security personnel, as tensions boiled over after almost a month under tough restrictions intended to quash a Covid outbreak. The protest started overnight over unpaid wages and fears of spreading infection, according to the witness, asking to remain anonymous for fear of repercussions. Several workers were injured and anti-riot police arrived on the scene Wednesday to restore order, the person added.
3. China’s Daily Covid Tally Tops 30,000 for First Time as Curbs Spread — China’s daily Covid infections broke through 30,000 for the first time ever as officials struggle to contain outbreaks that have triggered a growing number of restrictions across the country’s most important cities. Rising infections across the country are challenging Chinese authorities who want to shift away from city-wide lockdowns to more targeted measures that are less disruptive to residents and businesses. But after initially easing off on testing and movement restrictions — in line with a new 20-point virus playbook issued by Beijing — officials in some places are again imposing mass testing orders and lockdowns as they strive to meet the overriding objective of suppressing Covid.
That’s meant instead of issuing explicit orders, major cities are locking down apartment block by apartment block and imposing other under-the-radar curbs. In Beijing supermarket delivery apps are being overwhelmed after residents across Chaoyang, its biggest district, were told not to leave their homes unless necessary. Grocery outlets in the district are also no longer taking orders.
4. EU Unveils Proposal to Cap Natural-Gas Prices — the European Union set out the details of a long-debated proposal to cap natural-gas prices on the bloc’s main trading hub, part of an effort to shield consumers from the effects of higher energy costs linked to Russia’s invasion of Ukraine.
The European Commission, the bloc’s executive arm, said that its proposal was designed to deal with exceptional circumstances where the benchmark price for natural gas in Europe exceeds 275 euros, equivalent to about $282, per megawatt hour for two weeks. Prices would also need to be above reference levels by a set margin for 10 consecutive days within those two weeks. The proposal for a price cap, which the commission refers to as a market-correction mechanism, would apply to month-ahead prices on the Title Transfer Facility, a virtual trading hub based in the Netherlands. The commission said over-the-counter trading wouldn’t be affected because it is difficult to monitor and those trades can help in balancing markets.

The week ahead — Economic data from Econoday.com:

“Every battle is won or lost before it’s ever fought” — unknown

1. FTX Says Number of Creditors in Bankruptcy Could Top 1 Million — FTX’s bankruptcy could involve “more than one million creditors,” its lawyers said in court filings late Monday, showing the vast reach the second-largest cryptocurrency exchange had before its downfall. Its sudden collapse this month has jolted the financial world. Digital currencies including bitcoin have fallen significantly in the past week, while lawmakers have stepped up their pushback against crypto-friendly legislative proposals.
2. U.S. Retail Sales Rose 1.3% in October Ahead of Holiday Season — U.S. retail sales rose sharply in October as consumers spent more on everyday staples and big-ticket items such as autos and furniture.
Retail sales—which includes spending on clothing, wine and ottomans but also meals at restaurants—increased a seasonally adjusted 1.3% in October compared with September, when spending was unchanged from the prior month, the Commerce Department reported. Consumers spent more at auto dealers, furniture stores, grocery stores and gasoline stations. Retail sales—which includes spending on clothing, wine and ottomans but also meals at restaurants—have generally risen in recent months amid higher prices and rising interest rates that can make purchases, particularly big ones, more expensive.
3. Crypto Lender BlockFi Plans Bankruptcy Filing Within Days in FTX Fallout — cryptocurrency lender BlockFi Inc. is preparing to file for bankruptcy within days, according to people with knowledge of the matter who asked not to be named because discussions are private. The crypto lender paused client withdrawals, citing uncertainties with FTX, while saying it had adequate liquidity and was exploring options with outside advisers. FTX US and BlockFi are closely tied. In July, FTX US provided the lender with a $400 million revolving credit line, which came with an option to purchase the company. And BlockFi has given loans to now-bankrupt Alameda Research, Bloomberg reported.
The sudden unraveling and subsequent bankruptcy of FTX — once seen as a savior to struggling crypto firms — is reverberating across the digital asset landscape. Bankrupt Voyager Digital Ltd., which Sam Bankman-Fried was going to rescue in a $1.4 billion deal, is now scrambling to find a replacement buyer for its assets. And Genesis is exploring options after suspending redemptions and new loan originations amid a liquidity shortfall.

The week ahead — Economic data from Econoday.com:

‘Only when the tide goes out that do you discover who’s been swimming naked. ‘ – Warren Buffett.

1. Consumer Prices Rose 7.7% in October From Year Earlier — the Labor Department on Thursday said that its consumer-price index increased 7.7% in October from the same month a year ago, the smallest 12-month increase since January 2022. The reading was down from 8.2% in September. June’s 9.1% inflation rate was the highest in four decades.
On a monthly basis, the CPI rose 0.4% in October from September, the same pace as the previous month. The CPI measures what consumers pay for goods and services.
The so-called core CPI—which excludes volatile energy and food prices—climbed 6.3% in October from a year earlier, down from 6.6% in September, which was the biggest increase since August 1982. The October inflation report could keep Federal Reserve officials on track to approve a half-percentage-point interest-rate increase next month and to pencil in slightly higher rates next year than they had anticipated previously.
2. FTX Hurtles Toward Bankruptcy With $8 Billion Hole, US Probe — the crisis engulfing Sam Bankman-Fried’s FTX.com is rapidly worsening, with the onetime crypto wunderkind warning of bankruptcy if his firm can’t secure funds to cover a shortfall of as much as $8 billion. The acknowledgment of his firm’s deepening troubles and limited options is a stunning turn for Bankman-Fried, who was once worth $26 billion and likened to John Pierpont Morgan. It also underscores the uncertainty hanging over FTX, its clients and cryptocurrency markets.
3. FTX Files for Bankruptcy — beleaguered cryptocurrency platform FTX filed for bankruptcy protection Friday—a swift demise for a company hailed as a trusted platform just a week ago. In a statement, the company said Chief Executive Sam Bankman-Fried resigned from his position but would remain at the company to assist with an orderly transition. FTX said that it would begin a process to review and monetize assets for stakeholders. FTX is the latest in a string of crypto companies seeking bankruptcy protection this year. Months ago, Mr. Bankman-Fried served as a lender of last resort to his industry, following the failure of other crypto companies. Its fortunes reversed in the past 10 days, after a CoinDesk report showed the depth of the relationship between FTX and Alameda, triggering a loss of faith in the platform by amateur and professional investors.
4. The midterm-election effect on the S&P500 Index — historically, midterm elections set up nice rallies with phenomenal consistency. Since 1942, after midterm elections the S&P 500 went up 7.6%, 14.1%, and 14.9% over the next three, six and 12 months, notes Ed Yardeni of Yardeni Research. That’s irrespective of the election outcome. The two charts below show the history. The green- and red-shaded areas represent the 12 months following an election. The percentage market move during the three-, six- and 12-month time frames are written below the election year.

The week ahead — Economic data from Econoday.com:

“Markets are never wrong – opinions often are.” — Jesse Livermore

1. Fed Approves Fourth 0.75-Point Rate Rise, Hints at Smaller Hikes — the Federal Reserve lifted interest rates by 0.75 percentage point to combat inflation and signaled plans to keep raising them, though possibly in smaller increments. Fed officials in the latest policy statement acknowledged it could take time for rapid increases this year to be reflected in the economy. “The committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” they said at the conclusion of a two-day meeting. Officials are boosting interest rates at the fastest pace since the early 1980s to reduce inflation that is running near a 40-year high. They have raised rates by 0.75 point at four consecutive meetings, with the latest one taking the central bank’s benchmark federal-funds rate to a range between 3.75% and 4%.
2. Bank of England Raises Key Interest Rate by 0.75 Point — the Bank of England raised its key interest rate by 0.75 percentage point on Thursday, the largest increase since 1989, in an effort to tame surging inflation but which, by the bank’s own estimates, will help drive the U.K. economy into a recession lasting over a year.
The central bank lifted its benchmark lending rate for the eighth consecutive meeting to 3% from 2.25%, taking it to the highest level since November 2008. Higher borrowing costs will hurt an already weak economy as consumers brace for a difficult winter of falling real incomes and rising prices.
3. Surge in Pediatric Respiratory Viruses, Including RSV, Strains Children’s Hospitals — physicians are reporting unseasonably high numbers of respiratory illnesses in children, straining many children’s hospitals before the typically busier winter months. RSV is an easily transmissible virus that infects the respiratory tract. The virus spreads through droplets from coughing and sneezing and on surfaces. Positive tests for RSV have been on the rise across the U.S., according to the Centers for Disease Control and Prevention. The increase in cases has come ahead of the typical winter peak for such illnesses, hospital officials said. For most people, RSV amounts to a cold, and nearly all children come in contact with the virus by the age of two, health authorities said. But it can be severe for some infants and older adults, especially for those who have pre-existing health conditions.
4. Jobs Report Shows Payrolls Grew 261,000 in October — Employers added a seasonally adjusted 261,000 jobs in October, a robust number but the fewest since December 2020, and the unemployment rate rose to 3.7%, the Labor Department said Friday. Wage gains in October ticked up from the previous month. On an annual basis, however, wage increases have eased, a possible sign of loosening in the labor market. The report points to an economy that is gradually losing momentum following a torrid stretch of growth last year and earlier this year. Over the past three months, employers added an average 289,000 jobs a month, down from 539,000 during the same period a year ago. But that is still far more than before the pandemic. In 2019, job gains averaged 164,000 a month.

The week ahead — Economic data from Econoday.com:

THERE WILL NOT BE ANY POSTING FOR THE WEEK OF OCT 28 2022 — WE ARE AWAY FOR THE LONG WEEKEND.

The week ahead — Economic data from Econoday.com: