US Crypto Broker Genesis Says It is Working to Avoid Bankruptcy Filing

1. NATO pledges more aid to Ukraine.

2. Bank of Canada posts first loss in its 87-year history.

3. European Central Bank warns of losses.

4. It's confusing whether OPEC+ will cut output or not.

5. U.S. consumer confidence index falls to a four-month low.

6. Brent crude will soar again to $110 a barrel next year.

7. Bank of England sells £346.4 million of government bonds.

NATO allies on Tuesday pledged to provide Kyiv with more weapons and equipment to help Ukraine restore electricity and heating disrupted by Russian missile and drone strikes. Meanwhile, air-raid sirens were sounded across Ukraine for the first time this week. Despite the subsequent lifting of air-raid sirens, Ukrainian people had been fleeing from the streets to bomb shelters.

The Bank of Canada (BoC) on Nov. 29 local time reported a loss of C$522 million in the third quarter for the first time in the Bank's 87-year history. It is reported that the BoC has been unable to make a profit in recent months as it rushed to raise interest rates to fight inflation, resulting in a mismatch between assets and liabilities on its expanded balance sheet. The BoC expects to lose C$5 billion to C$6 billion in the future and profit again in 2024 or 2025.

The European Central Bank (ECB) warned Tuesday that it might make a loss as high inflation forces it to raise interest rates and foot the bill of a decade of aggressive money printing. The ECB, which has created about 5 trillion euros in deposits through massive bond purchases and cheap loans over the past 10 years, must pay huge amounts of interest to commercial banks after raising interest rates to curb runaway prices. These stimulus tools were used in years when inflation was too low and are now likely to push the ECB and other central banks, such as the central banks of Germany, the Netherlands, and Belgium, into the red.

OPEC+ is considering holding its regular Dec. 4 meeting online. Several participants have already indicated that OPEC+ may consider further production cuts at its Dec. 4 meeting. The Saudi Arabian energy minister already sent a very clear signal to the market last week that it was ready to further reduce supply if necessary. But several other OPEC+ sources and the Iraqi side said that OPEC+ would extend the production cut deal reached in October. Of the 17 traders and analysts surveyed, 10 expect new OPEC+ production cuts of 250,000 to 2 million bpd. Advisory firm FGE forecasts the cut could be at the top of that range.

U.S. consumer confidence index fell to a four-month low in November, with households less enthusiastic about buying big-ticket items over the next six months amid high inflation and rising borrowing costs, heightening the risk of a recession next year.

However, consumers remain optimistic about the labor market, which could limit the downturn. Despite the Fed's aggressive rate hikes, the labor market is still showing resilience, helping keep consumer spending and the overall economy stable.

The trend of waning confidence portends a recession, which is likely to occur in the coming year. However, any potential recession could be short and shallow given the tight labor market and the hint that layoffs may not be as bad as feared.

UBS said the pandemic prevention and control measures appeared to remain negative for crude oil in the near term, adding to market concerns about lower demand due to a global economic slowdown. But the downward pressure on oil from a weaker global economy should be offset by reduced global supply. We remain optimistic about the outlook and expect Brent crude prices to remain around $110 per barrel over the next year. OPEC+ will meet on Dec. 4 and will consider measures to counter the recent drop in oil prices. The EU's import ban on Russian crude will take effect on Dec. 5, which should support oil prices. Meanwhile, the U.S. and other OPEC governments will also stop selling strategic oil reserves.

The Bank of England (BoE) sold 346.4 million pounds of long-dated and index-linked gilts. This is the first time the BoE sold bonds held as a result of emergency purchases. BoE Governor Andrew Bailey said that the UK government bond market had not returned to normal and there was no reason to believe that the BoE would not achieve its goal of reducing its holdings of 80 billion pounds of government bonds in one year. J.P. Morgan forecasts that UK GDP will fall 0.6% in fiscal 2023, while GDP will rise 4.3% in fiscal 2022. It expects the BoE to raise interest rates to 4.25% in the first quarter of 2023.

UTC+8 16:30 Peel, chief economist of the Bank of England, delivers a speech

UTC+8 17:00 European Central Bank Governing Council member Makhlouf delivers a speech

UTC+8 18:00 Eurozone HICP (Nov)

UTC+8 21:15 U.S. ADP Employment (Nov)

UTC+8 21:30 U.S. Annual Real GDP Revised QoQ (SA) (Q3)

UTC+8 21:30 U.S. Wholesale Inventory MoM (SA) (Oct)

UTC+8 23:00 U.S. JOLTS Job Openings (SA) (Oct)

UTC+8 23:30 U.S. EIA Weekly Gasoline Stock Changes

UTC+8 01:35 Federal Reserve Governor Lisa Cook speaks

UTC+8 02:30 Federal Reserve Chairman Powell delivers a speech

UTC+8 03:00 The Federal Reserve releases its Beige Book on the state of the economy

Annual growth in the Indian economy likely slowed in the July-September quarter as COVID distortions faded, economists said ahead of GDP data due on Wednesday that will provide clues about its resilience in the face of global economic turmoil.

Asia's third-largest economy is expected to post annual growth of 6.2% in the three months to Sept. 31, according to a Reuters poll, down from explosive growth of 13.5% in the previous quarter, which was inflated by comparison with weak activity during COVID-19 lockdowns.

The gross domestic product data will cast light on the health of the economy as pandemic related disruptions ease and the government steps up spending in the hope that private spending and investments will follow, economists said.

"Several indicators suggest that the Indian economy is making resilient progress in Q2 FY23 in spite of the drag from global spill overs," State bank of India's economist Soumya Kanti Ghosh said, using the designation used by the government for the July-September quarter.

Ghosh, however, said annual GDP growth in the period could be slightly slower than the consensus expectation of over 6% as companies have seen a decline in margins and industrial production increased at an annual pace of only 1.5% on average last quarter, its weakest in two years.

India's Ministry of Statistics and Programme Implementation will release the GDP data at 1200 GMT on Wednesday.

During the September quarter, the Indian government stepped up capital expenditure, spending 1.67 trillion rupees ($20.45 billion) over the three months, more than 40% higher than a year ago.

Consumption has also improved, which suggests that momentum on a non-seasonally adjusted basis is likely to be stronger in the July-September quarter than in the previous three months, economists said.

"On a sequential (non seasonally adjusted) basis, July-September GDP is likely to increase, reversing the contraction seen in the prior three months," said Rahul Bajoria, chief India economist at Barclays.

The services sector, driven by pent-up post-COVID demand for hotels, restaurants and transport, will support growth, Bajoria said.

Dwindling exports due to a slowdown in global activity and higher interest rates may hurt economic activity in subsequent quarters, with the Indian central bank now pegging GDP growth for the 12 months to March 31, 2023, at 7.2%.

Chinese stocks made strong gains yesterday as a scheduled announcement on the recent Zero-Covid measures promised a less draconian approach in the future. Among the various measures noted, one was more pressure on the elderly to get vaccinated, which could be one route out of Zero-Covid, though there is a long way to go yet before this happens. The Hang Seng Index gained 5.24%, and the CSI 300 rose 3.09%. Daily symptomatic case numbers are currently hovering at a little under 4,000, where they have been since recording 4,010 on 23 November. US stocks were less upbeat. Both the NASDAQ and S&P500 made small losses on the day, perhaps taking defensive positions ahead of today's speech by Fed chair, Jerome Powell, which we expect will be one of the more hawkish speeches to date. US equity futures also look slightly jittery. US Treasury yields are edging higher too. The 2Y Treasury yield is up 3.5bp over the last 24 hours and there was a bigger 6.3bp rise from the 10Y bond which now yields 3.744%. European bond yields fell yesterday by about 6bp on average, probably helped by some lower inflation numbers. The EURUSD exchange rate pulled back a little further to 1.0323 on the combination of slightly higher risk aversion and yield differential swings. The AUD is actually slightly stronger than this time yesterday at 0.6674, but recent direction has been weaker after a big upswing. Cable performed much the same bi-directional move and is little changed in net terms at 1.1944 from a day ago, and the same goes for USDJPY which is currently trading at 138.75. Asian currencies had a mixed performance in the last 24 hours. The CNH and CNY have both strengthened following the reassurances given on Zero-Covid policies, and that probably helped drag along the THB and TWD for smaller gains. The MYR held up the bottom of the table, variously blamed by newswires on profit taking and lower crude oil prices.

Germany's inflation rate for November, fell to 10.0% from 10.4% in October (11.3% from 11.6% on a harmonised basis). Though as the linked note here suggests, inflation may not yet have peaked in Germany, so the drop in yields may prove short-lived. Eurozone November inflation data is released later today and the harmonised inflation rate is due to decline to 11.3% YoY from 11.8%. In the US, the ADP survey provides the first and least unreliable indicator for Friday's payrolls release. JOLTS job openings and layoffs data adds some nuance to last month's employment numbers, but don't actually tell us much new, and are unlikely to be market moving. The same goes for the second release of US 3Q22 GDP data.

Industrial Production in October from South Korea and Japan were weaker than expected, reflecting signs of a global demand slowdown.

Industrial production (IP) plunged -3.5% MoM sa in October, lower than the market expectation of -1.0% (vs a revised -1.9% in September). All industry IP dropped -1.5% MoM sa in October, falling for the fourth consecutive month, and the contraction even intensified in October. Meanwhile, retail sales (-0.2%) and facility investment (0.0%) outcomes were also sluggish as interest rate hikes and the gloomy outlook for the overall economy weighed on activity. Today's weak outcomes support our view that GDP in the current quarter will contract, and that the ongoing trucker strike will put more strain on economic activity, at least in the current quarter. In addition, as the effect of the rate hikes to date have begun to have a more full-fledged impact on economic activity along with weak external demand conditions, the Bank of Korea probably only has limited room for further rate hikes.

Industrial production fell -2.6% MoM sa in October (vs -1.7% in September, market consensus: -1.8%), recording a second monthly drop. After the economy contracted in the third quarter, this weak start to the current quarter signals a cloudy outlook.

Monthly October CPI data for Australia surprised with a much lower rate of inflation than the market had been expecting (Consensus 7.6%, ING f 7.8%). Headline inflation in October dropped back from 7.3% in September to only 6.9%YoY. The core trimmed mean inflation rate also edged slightly lower to 5.3% YoY from 5.4%, and against expectations for further increases. Lower-than-expected food prices were responsible for about 0.1pp of the decline. But the bigger share was attributable to a drop in the prices for holiday travel and accommodation. We don't believe these lower inflation figures have any substantial ramifications for Reserve Bank (RBA) policy, which we believe will continue to increase at a 25bp per meeting pace into next year. But it does make us more comfortable with our 3.6% cash rate peak call.

3Q22 GDP data for India is out later today. We don't disagree with the consensus 6.2%YoY figure, which is a sharp drop back from the 13.5%YoY base-effect driven 2Q number, with the latest number being a much better reflection of underlying economic growth. We still look for India to grow by about 6.3%YoY for the full calendar year 2022, but may have to adjust this view in the light of any surprises from today's data.

The travel and tourism sector's greenhouse gas emissions are declining even as the industry continues to grow but it must pursue decarbonisation plans "aggressively", the World Travel and Tourism Council chief said.

Between 2010 and 2019, the sector's gross domestic product grew on average 4.3 per cent annually while its environmental footprint increased by 2.4 per cent, according to the latest data on the industry's climate impact by WTTC and Saudi Arabia-based Sustainable Global Tourism Centre.

The sector was responsible for 8.1 per cent of global greenhouse gas emissions in 2019, down from previous estimates of 11 per cent, according to the data.

"Until now, it's not been possible to quantify the actual impact that we're having on the climate, we simply as a whole sector did not have the data," Julia Simpson, president and chief executive of WTTC, said on Monday, as the tourism body launched its environment and social impact report for travel and tourism.

"It is a ground-breaking piece of research that allows us to measure and track our sector's climate footprint … So now we know what we are working with," she said.

The new report will give travel and tourism businesses the latest data on the areas they need to focus on for a climate action plan and provide governments with facts on how to meet SDG targets, Ms Simpson said at the WTTC Global Summit in Riyadh.

"We have started on the journey of growing our businesses but reducing our carbon intensity and this is critical. While our total emissions are at the lower range of previous estimates, we will need to decarbonise absolutely aggressively but we cannot do this alone," she said.

The WTTC chief highlighted the top priorities for the sector including a shift to renewable energy and increasing both the production and use of sustainable aviation fuels (SAFs) in aircraft.

"In 2019, around one-fifth of emissions came from electricity, so while we look to our own energy efficiency, we need governments to help us switch to renewables for the energy we use from the grid every time we turn a light on in our hotel room," she said.

The transport sector contributed 38 per cent of carbon emissions in 2019.

While electric and hydrogen aircraft will become a possibility in the future, the use of SAF now will help the aviation industry reach the Paris Agreement targets.

"It is critical that we have wide-scale availability of SAF. We need a commitment by fuel producers … to produce SAF and policies by governments to incentivise the production of SAF," Ms Simpson said. "The technology for SAF already exists, we need governments to make it a priority."

While climate change is a planet-wide problem, it is also an opportunity to preserve natural resources for future generations.

"We will not only protect the world and its abundance of resources but ensure they are the inheritance of every future traveller, so that beyond the horizon lies yet again a new wonder," Ms Simpson said.

The aviation industry is taking steps towards its target of net-zero emissions by 2050, amid growing pressure from climate change activists over the impact of billions of additional passengers that are expected to take to the skies in the coming years.

A very small breather for German inflation. Headline inflation came in at 10% year-on-year in November, from 10.4% in October. The monthly drop in consumer prices (by 0.5%) was the largest since early 2020. The HICP measure also fell, to 11.3% YoY, from 11.6% YoY in October.

Available regional data suggest that the drop in headline inflation was mainly driven by energy base effects and a drop in prices for leisure and entertainment after the Fall vacation period. Food price inflation still increased.

Looking ahead, the November inflation number might not yet be the peak of German inflation. We rather expect headline inflation to rebound in December, before finally reaching a more structural peak in the first quarter. Most importantly, the pass-through of higher wholesale gas prices is still in full swing. Many households will see the first price increase only as of 1 January. Also, even though corporate selling price expectations have started to come down somewhat in the last two months, there is still a lot of inflationary pressure in the pipeline. Don’t forget that during previous episodes of supply-side driven inflation shocks, headline inflation started to come down as the pure result of base effects, while core inflation continued to go up for a while. Needless to say that any forecast for headline inflation is still hugely affected by developments in energy and commodity markets.

According to the German Bundesbank, the recently-announced gas price cap could bring down headline inflation by one percentage point next year. However, the price cap will only become effective in March next year and it is questionable whether the suggested retrospective implementation for January and February will show in the official inflation statistics. In any case, the agreed compensation of one month energy downpayment for December will not have any impact on headline inflation. In general, this is an important distinction to be made: government support schemes that come as compensation for households and companies to offset higher energy costs do not bring down headline inflation but cushion the negative price impact in the short run, while also prolonging inflationary pressure. Direct price caps can immediately bring down headline inflation but open the door for limitless government support measures.

All in all, we remain cautious and don't call today's numbers the peak in German inflation, yet. The pass-through of wholesale gas prices as well as still high selling price expectations suggest that there could first be a rebound before the final peak will really be reached. For the ECB, however, today’s German inflation number as well as the sharp drop in Spanish inflation could be reason enough to go for a 50bp rate hike and not another jumbo rate hike by 75bp at the December meeting. Even though, ECB Executive Board member Isabel Schnabel last week said that there was only limited room to slow down the pace of rate hikes. The fact that the rate hikes up to now still need to fully reach the real economy, the uncertainty surrounding the looming recession and the upcoming further shrinking of the ECB's balance sheet all argue in favour of slowing down the rate hike cycle and to eventually shift from policy rates to the size of the balance sheet as the ECB's main instrument to fight inflation.

The International Monetary Fund has lowered its growth outlook for 2023, projecting that the world economy will grow 2.7 percent in 2023, down from 3.2 percent this year. The IMF said in a report last month that the global economy was facing “steep challenges” as pandemic-related supply-chain disruptions, the war in Ukraine, China’ s economic slowdown, and rising interest rates weigh on growth.

“In short, the worst is yet to come, and for many people 2023 will feel like a recession,” the organization said in the report.

In the United States, recession fears have grown and inflation remains stubbornly high. Some economists and investors have voiced concerns about the Federal Reserve’s aggressive interest rate hikes and how much they could weaken the world’ s biggest economy. By making borrowing money more expensive, the central bank is trying to slow consumer demand, which should lead to slower price growth. But that could also trigger an economic downturn if businesses significantly slow hiring or lay off workers in response.

Still, some economists say the United States is actually in a better position than many other nations. European countries, for instance, are experiencing a dramatic slump because their energy supplies have been hurt more by the war in Ukraine. Many American households still have excess pandemic savings, and unemployment in the United States remains low.

“We’ re raising interest rates fairly aggressively and financial market conditions have tightened in the US,” said Ryan Sweet, the chief US economist at Oxford Economics. “But so far, the economy’ s weathered it reasonably well. Inflation is high in the US, but it’s high almost everywhere”.

Central banks around the world have lifted interest rates to combat surging prices. The European Central Bank started raising rates earlier this year, and officials recently signaled that they aren’ t yet done. The Bank of England has also raised rates multiple times this year.

There are several factors contributing to economic instability globally, ranging from the war in Ukraine to China’ s strict Covid policies and weakening property industry.

The war in Ukraine has sparked an energy crisis in Europe, leading to a surge in prices. Countries that were more dependent on energy imports from Russia — such as Germany and Italy — have been hit especially hard by the restricted supply of natural gas.

Inflation in the Eurozone picked up 10.6 percent in October from a year earlier, up from 9.9 percent the month before. Inflation in the United Kingdom has also surged because of skyrocketing energy bills. In October, consumer prices in Britain climbed 11.1 percent from a year before.

The war has also disrupted exports of food such as wheat, sunflower oil, and other produce, straining the global food supply and pushing up inflation further.

These price increases could lead to a painful economic slowdown because things like food and gas tend to be necessary purchases for households. If European consumers are spending more of their budgets on those items, they have less money to spend on other goods and services, said Raghuram Rajan, a professor at the University of Chicago Booth School and a former chief economist at the IMF.

“Energy and food are an essential part of your household budget” Rajan said. “The more you spend on essentials, the less you have on discretionary items, so you have to cut back on that spending”.

Pierre Lafourcade, a global economist at UBS, said European households also haven’ t acculumated as much excess savings as Americans. Earlier in the pandemic, American lawmakers passed more stimulus measures and sent direct checks to consumers, leading to more robust savings that have helped cushion household budgets.

“You didn’ t have the equivalent in the Eurozone,” Lafourcade said. “In the Eurozone and in the UK, they never had excess savings to begin with”.

UBS economists have predicted that the world economy will grow 2.1 percent next year, the lowest rate since 1993. Out of 32 economies, UBS expects 13 of them to contract for at least two quarters, which their economists say is akin to a global recession.

Although the war in Ukraine exacerbated global inflation, consumer prices were already on the rise around the world before Russia’ s invasion. Workers testing positive for Covid led to factory shutdowns and increased demand for goods among American consumers pushed up prices for many goods. The IMF projected that global inflation will rise to 8.8 percent in 2022 from 4.7 percent in 2021, although the agency expects overall price increases to fall to 6.5 percent in 2023.

The main factors driving up inflation in the United States, however, have differed from countries in Europe.

Karen Dynan, an economics professor at Harvard University and a nonresident senior fellow at the Peterson Institute for International Economics, said inflation in the United States has affected a broader array of goods and services compared to other countries, in part because of strong consumer demand. Earlier in the pandemic, people stuck at home ramped up spending on items like exercise bikes and work-from-home equipment. Supply chain disruptions also made it harder to produce and transport goods around the world, leading to a spike in prices.

Inflation in Europe has mainly been driven by rising energy and food costs as a result of the war in Ukraine, Dynan said. If energy and food costs subsided, that would significantly help ease rising prices in European countries, but that would have less of an impact on bringing down overall inflation in America, she said.

“In the United States, that’s not enough to take care of our inflation problem because our inflation is broader,” Dynan said.

China is under “extreme duress” because of its stringent Covid policies and weakening property industry, said Kenneth Rogoff, an economics professor at Harvard University and a former chief economist at the IMF.

China’ s economy — the world’ s second-largest — has taken a toll because of its attempts to eradicate Covid outbreaks through extensive lockdowns and mass testing efforts. Although economists expect China’ s economy to rebound in growth next year as restrictions potentially ease, the “zero-Covid” approach has already disrupted the production of goods, weakened consumer spending, and led to growing protests against the policies.

The nation’ s property sector, which makes up about one-fifth of economic activity in China, has also significantly weakened. For years, China’ s housing industry saw rising sales and real estate prices. But excessive borrowing from developers has led to construction delays and falling home prices in the past year, sparking anger among Chinese homeowners. The Chinese government issued several directives earlier this month to boost its property industry, but economists say the sector is unlikely to see a quick rebound.

Although Rogoff said the United States economy is in “distinctly better shape right now” compared to European countries and China, he said a weaker global economy has many negative implications for American consumers. If consumers in other countries can’ t afford to buy as many American goods, that can hurt American businesses and their exports. If businesses with large operations abroad are earning fewer profits in those countries, that could translate into lower salaries for their workers in America, Rogoff said.

And even though the US economy is holding up now, the country could still see a painful downturn in the coming months as the Fed continues to raise interest rates.

“If we over-tighten, we’ll probably be doing worse than Asia,” Rogoff said. “Whether we’ ll be doing worse than Europe, that’s a low bar”.