Aposto

Çarşamba, 7 Aralık 2022
Çarşamba, Aralık 7, 2022
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WEEK AHEAD | MARKETS
BUSINESS
POLITICS | WORLD
TECHNOLOGY
APOSTO PICKS

🇺🇦 “Won’t leave anyone”

Eurozone heading into recession by year-end, Brussels says, Kyiv vows to keep pushing out Russian forces, US Dems secure control of Senate.

Reuters

Good morning. It is Monday, November 14th.

We would like to start today's issue by offering our condolences to the loved ones of those who lost their lives in yesterday's explosion in Istanbul. Moving on, we would like to show you how the collapse of the third largest cryptocurrency exchange in the world was foreseeable, but a VC decided to keep that information to themselves. The replies to the original tweet are also a good read.

—Atilla, with Özlem and Can

WEEK AHEAD | MARKETS

Markets recap

Year-to-date price changes. Prices at markets close.

• This week will be —kind of— quiet, with a flash GDP reading and the Harmonised Index of Consumer Prices (HICP) for the Eurozone. However, cryptocurrency indices will surely be a sight to behold, following the collapse of FTX — while the UK inflation data and GDP growth for China and Russia being other topics of interest.

  • Monday
    ECB’s Fabio Panetta to speak in Florence, and Guindos to speak in Frankfurt; Eurozone industrial production.
  • Tuesday
    Eurozone GDP, trade balance, unemployment; US Empire State manufacturing index, PPI; Germany ZEW economic sentiment index; UK unemployment; China GDP, industrial production, unemployment.
  • Wednesday
    G-20 summit in Bali; ECB President Lagarde to speak; UK, Italy, Canada CPI; Russia, Israel GDP; EIA crude oil inventory report
  • Thursday
    Eurozone CPI
  • Friday
    US Conference Board leading index; Norway GDP; Japan CPI.

The eurozone economy and most EU member states are expected to tip into recession in the last quarter of the year, according to the European Commission's autumn economic forecast, amid elevated political uncertainty, high energy price pressures, erosion of households' purchasing power, a weaker external environment, and tighter financing conditions.

Forecasts for EU

The European Commission

  • Looking ahead… The EU's executive arm revised up its inflation forecast from July, predicting that prices would peak at year-end and remain high in 2023. While prices are expected to come down in 2023, inflation is still predicted to be at 6.1% in the eurozone, before decreasing to 2.6% in 2024.

Germany’s inflation rate has reached an all-time high since reunification, according to data released by the Federal Statistical Office on Friday. EU-harmonized consumer prices rose 11.6% year-on-year in October, confirming preliminary figures. Final non-harmonized CPI was also confirmed at 10.4%

UK finance minister Jeremy Hunt said he will set out tax hikes and spending cuts in a budget plan on Thursday, to show Britain can lower a budget deficit and restore its economic credibility after financial market chaos sparked by former PM Liz Truss. Hunt added that he seeks to make any recession “as short and shallow as possible.”

G7 output

via Bloomberg

  • On a related note: Hunt is considering a big increase in a windfall tax on oil and gas companies and extending it to power generation firms as he tries to find ways to lower a budget deficit of an estimated £50 billion, according to Reuters sources.
  • In other news: The UK economy contracted by 0.2% in Q3, the Office for National Statistics said on Friday, lowering the country’s GDP to 0.4% below its pre-Covid level (Q4 2019). Meanwhile, Britain’s total trade deficit narrowed by £8.1 billion to £8.7 billion in the quarter.

Japan’s producer prices eased slightly in October. The rise in PPI slowed to 9.1% year-on-year, down from 10.2% in the prior month but still above the consensus of 8.8%.

BUSINESS

Schneider Electric raised its offer for UK software developer Aveva to £9.86 billion as it seeks to win over investors that had rejected its first offer as opportunistic. The French industrial group said it would increase the price from £31 per share to £32.22, or 4%, and said the bid would be its last unless a rival offer emerged. A vote by Aveva shareholders will be held on the deal on Nov. 25.

  • Zoom in: Schneider already owns nearly 60% of Aveva and has valued the company at a 47% premium over its closing share price in August, before Schneider’s original offer.

Lufthansa is in talks to sell the remaining part of its airline catering unit to German private equity firm Aurelius, according to Bloomberg sources, and could announce a deal for the LSG Sky Chefs business in the coming weeks. Germany’s flagship airline has been trying to sell off its catering operations for years as short-haul flying outpaces longer routes.

Italy’s billionaire Benetton family and US investment firm Blackstone are set to complete their buyout bid for infrastructure giant Atlantia, even after their takeover offer fell just short of the required 90% shareholder threshold. 

  • In detail: Schema Alfa —the bidders’ vehicle owned by the Benetton family and Blackstone— is ready to waive the 90% threshold validity condition. In addition, terms for accepting the offer will be reopened for five days starting from Nov. 21. Bidders would therefore be given a new chance to achieve the targeted 90% ownership of Atlantia's capital.

Disney plans to institute a hiring freeze as well as some job cuts as the company tries to stop the losses at its streaming operations, which have racked up billions in losses over the past three years. The company is also establishing “a cost structure taskforce” to trim costs in operations, which will be made up of CEO Bob Chapek, CFO Christine McCarthy, and General Counsel Horacio Gutierrez.

Disney+

via CNBC

  • A step back: The move comes days after Disney reported disappointing quarterly results. Streaming services lost $1.47 billion last quarter, more than double the unit’s loss from a year prior. McCarthy said losses will improve in 2023, and Chapek has promised streaming will become profitable by the end of 2024.
POLITICS | WORLD

Ukraine’s President Volodymyr Zelenskiy vowed to keep pushing Russian forces out of the country after the historic retaking of Kherson. Kherson residents hugged and kissed the arriving Ukrainian troops. Zelenskiy said “There will be many such greetings,” and pledged to the people in Ukrainian cities and villages that are still under occupation: “We don’t forget anyone; we won’t leave anyone.”

Kherson celebrates pushing Russian forces out

via Reuters

  • Zoom in: Ukrainian officials described the current state of Kherson as a “humanitarian catastrophe.” The remaining residents lack water, medicine, food, and electricity. “The occupiers and collaborators did everything possible so that those people who remained in the city suffered as much as possible,” an adviser to Kherson's mayor said.

France suspended an agreement to take in 3,500 migrants relocated from Italy and urged other EU members to do the same after tensions between the two countries were heightened over a migrant boat. Italian PM Georgia Meloni warned it would not be "intelligent" for the EU to isolate Italy, and added that Italy took in almost 90,000 migrants this year, while Ocean Viking, with 234 on board, was the first NGO rescue boat that France had ever accepted.

Ocean Viking

via BBC

  • A step back: France on Thursday offered a safe harbor to Ocean Viking, an NGO vessel rescuing migrants on the Mediterranean, whose passengers were previously refused entry by Italy. French Interior Minister Gerald Darmanin said Italy's right-wing government's ban on the boat was "incomprehensible" and "selfish."

The UK and France are set to agree on a deal possibly on Monday to join efforts to stop migrants from crossing the English Channel, Telegraph reported. The agreement will significantly increase the 200 French officers and volunteers who operate on Channel beaches and may include more British drones to detect migrants hiding in dunes before they attempt the perilous crossings often in flimsy boats.

US Democrats kept control of the Senate after a victory in Nevada gave them the 50 seats they needed to prevent Republicans from retaking the chamber. Georgia is now the only state where both parties will still compete for a Senate seat in a Dec. 6 runoff. Democratic control of the Senate ensures a smoother process for Biden’s cabinet appointments and judicial picks, including those for potential Supreme Court openings.

US Capitol

via CNN

A bomb in Istanbul’s popular touristic district killed at least 6 people and wounded 81 on Sunday, with Turkish officials saying they suspect a terror attack. Turkey’s official media watchdog swiftly imposed a ban on broadcasting images of the attack. The government also moved to limit online discussion and slowed the Internet down due to "security reasons", two senior officials confirmed.

Lightning Round

  • Polish police were criticized by the opposition on Saturday for detaining anti-fascist protestors at a nationalist rally while not reacting to the illegal use of Nazi symbols by other demonstrators. Some participants were seen carrying the neo-Nazi “Black Sun” symbol.
  • Slovenia voted for the presidential election on Sunday morning. Liberal candidate Natasa Pirc Musar appears poised to win, which would make her the country’s first female head of state.
  • Former Israeli PM Benjamin Netanyahu received an official mandate on Sunday to form a new government after an election in which Jewish far-rightists surged. Netanyahu pledged for Israeli unity, raising concerns for Israel’s 21% Arab minority as well as secularists.
TECHNOLOGY

FTX, the once-third-largest crypto exchange, filed for bankruptcy in the US. FTX CEO and founder Sam Bankman-Fried has resigned from his role, and Enron turnaround veteran John J. Ray III has been appointed as the new CEO. This news comes after a week-long collapse and an attempt by the company to raise rescue funds.

Sam Bankman-Fried

via TechCrunch

  • In other news: Cryptocurrency exchange Binance has stopped accepting deposits of FTX's FTT token on its platform, its chief executive Changpeng Zhao said on Sunday, urging other rival exchanges to do the same.

Twitter owner Elon Musk said Twitter Blue is “probably” coming back “end of next week.” Twitter on Friday paused its recently announced $8 blue check subscription service on Friday after a surge in fake accounts. The blue check mark was previously reserved for verified accounts of politicians, famous personalities, journalists, and other public figures, but the subscription option opened it to anyone prepared to pay.

The FBI might have considered using NSO Group’s spyware Pegasus in criminal investigations as recently as last year, reported the New York Times. According to internal bureau documents and court records, agency officials were in the “advanced” stages of developing plans to brief FBI leadership on the software between late 2020 and early 2021.

US DOJ

via Engadget

  • What happened: In 2021, the US placed Pegasus creator NSO Group on the Commerce Department’s entity list, a designation that prevents US companies from conducting business with the firm.  FBI Director Chris Wray said in December that they had tested the software “to figure out how bad guys could use it.”

The UN announced a Methane Alert Response System (MARS) that will use satellite map data to identify "major" methane emission releases and warn countries and companies. The technology will sport the sources, notify the relevant bodies and help track progress on lowering this output. The data will also be made public between 45 to 75 days after it’s detected.

APOSTO PICKS

🪖 Ukraine war: Why is control of Kherson so important?

🌳 Watch: Deforestation in the Brazilian Amazon reaches a record high

🌍 Opinion: Beware the creeping normalization of the hard right

Related Keywords

Index of Consumer Prices

Eurozone

Fabio Panetta

Florence

Frankfurt

Empire State

index

Bali

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