Good morning! It’s Wednesday, December 7th.
Hungary continues to displease the European Union, this time by blocking an €18 billion financial aid package for Ukraine, urgently needed for the war-torn country’s economy. This veto might be leverage for Hungary, which is facing the risk of losing €7.5 billion of its share of the EU budget after failing to meet the bloc's demands to address corruption.
- Here is a song with a list of others that can leave you grimacing. Listen at your own risk, and scroll down for your daily news.
—Özlem, with Tanem and Can
• Incoming orders to German factories rose 0.8% in October from the previous month, beating a 0.1% forecast by analysts, data from Destatis revealed on Tuesday. The Federal Statistics Office also revised up September's figures to show a drop of only 2.9%, rather than the 4.0% originally reported. As a result, orders were down 3.2% from a year earlier.
- Zoom in: The figures still leave orders on course for a decline in quarter-on-quarter terms, albeit a less steep one than feared. Destatis said that large orders —which tend to be highly volatile from one month to the next— were responsible for the rise in October. Without them, overall orders would have declined again, by 1.2%.
• The US trade deficit edged slightly higher in October than the month before, to $78.2 billion. The latest reading was up just 5.4%, less than half the pace of increase from the revised September reading when the trade deficit jumped by 12.7% to $74.1 billion. A strong dollar and weaker global demand weighed on exports in both months.
- By the numbers: The value of goods and services imports rose 0.6% to $334.8 billion, while exports declined 0.7% to $256.6 billion.
• The Czech Republic, which holds the rotating presidency of the EU, proposed a second compromise for a broader gas price cap —lowering the intervention threshold to €220 from the €275 suggested by the European Commission last month— just a week away from a meeting when ministers are due to meet to try ironing out a deal.
- A step back: Some states, including Germany, have opposed the idea of any cap, saying it could make it harder to secure supplies, while Belgium, Italy and Poland see it as a way to protect consumers. Gas prices at the Dutch TTF —Europe’s benchmark— were around €134 on Tuesday, down from a peak of €340 in August.
• Oil tankers hauling millions of barrels of Kazakh crude are being prevented from leaving the Black Sea to reach global markets following a move by Ankara to insist on proof of their insurer guaranteeing cover while in Turkish waters — something that’s yet to happen. At least 20 carriers holding 18 million barrels of crude oil are waiting to pass through the straits.
• The US reassured Rome that Italian lenders will not face sanctions if they provide financing to a Russian-owned refinery in Sicily, the Financial Times reported, as the Italian government rushes to keep the country’s largest fuel producer afloat. The refinery, owned by Lukoil’s Swiss-based subsidiary Litasco, urgently needs almost €1 billion to continue operating.
• The European Commission sent Deutsche Bank and Rabobank a statement explaining concerns that they "distort competition" in trading certain bonds issued by governments or agencies backed by them. The two banks are suspected to have unlawfully "exchanged commercially sensitive information and coordinated their pricing and trading strategies when trading these bonds in the secondary market" between 2005 and 2016.
• Global airlines are forecasting their first industry-wide profit since 2019 next year as demand for air travel remains strong despite a weakening economy and rebounds from Covid-19 restrictions, following tens of billions of dollars in losses in 2020 and 2021.
- Looking ahead: The International Air Transport Association now expects a net profit of $4.7 billion for the industry in 2023, with more than 4 billion passengers set to fly. For 2022, IATA narrowed its forecast for industry-wide losses to $6.9 billion from $9.7 billion.
• Prices for lithium-ion batteries, which power smartphones as well as electric vehicles, increased for the first time in 12 years. For over a decade of research from BloombergNEF, battery prices got cheaper each year as their production grew. But this year’s rising costs of metals used in batteries such as lithium and nickel led to a 7% increase to $151 (€144.2) per kilowatt-hour.
- On a related note: Mercedes-Benz opened its first dealership in the world that is dedicated to the all-electric Mercedes-EQ in Yokohama, Japan. Mercedes-Benz rolled five electric vehicle models since 2019, and "sees further growth in the electric vehicle market in Japan."
• Ukrainian President Volodymyr Zelenskiy visited troops close to the frontlines in the eastern Donbas region on Tuesday to mark the country's Armed Forces Day. "I believe that next time we will meet in our Ukrainian Donetsk and Luhansk," he said. "Thank you for this resilience and strength. You are an outpost of our independence."
Ukrainian Presidential Service
- On a related note: Drones struck another Russian airfield on its border with Ukraine, a day after Ukraine was accused of attacking two military bases deep in Russian territory. Moscow said the strikes were conducted using Soviet-era drones, while Kyiv has not directly claimed responsibility for the drone attacks.
- In other news: The European Commission is considering imposing sanctions on Russia's mining sector, which would be a part of a ninth EU sanctions package to eradicate Moscow from funding its war against Ukraine, the Financial Times reported.
• Hungary blocked the approval of an €18 billion EU package for financial aid to Ukraine, a veto that caused a delay on three other key votes, including an internationally-backed deal to reform corporate taxation. Ukraine is in urgent need of aid to cover its booming state deficit and keep the economy running against Russia's invasion.
- Good to know: Hungary is on the verge of having its €7.5 billion EU budget frozen after failing to complete a series of reforms to address corruption-related issues.
• Germany's constitutional court dismissed a legal challenge to the EU's €750 billion recovery fund to overcome the Covid-19 crisis, by rejecting two complaints against the bill passed by the parliament to ratify the funding program. The funds are to be repaid from the EU budget over the coming decades, with Germany shouldering by far the biggest share of any member state.
- Why it matters? This ruling adds to the debate on whether the EU can take on joint debt for other crises in the future — just as the Ukraine war causes an energy crisis.
• Leaders from the EU and Western Balkans gathered at a summit in Albania to work on strengthening their partnership, giving more concrete signs that Albania, Bosnia, Kosovo, Montenegro, North Macedonia, and Serbia might have a place in the bloc as Russia's war in Ukraine threatens security. European Council President Charles Michel underlined the bloc's energy support to the region as proof of their commitment.
- About Bosnia: EU leaders may give candidacy status to Bosnia-Herzegovina as early as Dec. 15, at a summit in Brussels, Bloomberg reported.
• Mandatory Covid-19 testing was dropped in China's capital Beijing, and residents were allowed into parks, supermarkets, offices and public transportation spots without having to show a negative Covid-19 test, the latest easing of restrictions by the government after nationwide protests broke out against a tough zero-Covid policy.
• Indonesia's parliament unanimously passed a revised version of the country's penal code that criminalizes sex outside of marriage for citizens and foreigners, promotion of contraception, and defamation of the president or state institutions.
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• Apple will expand its Self-Service Repair to eight European countries including France, Germany, and the UK. Customers will be able to buy parts online for certain iPhones and laptops as well as rent a toolkit for €60 to repair their own devices. The offering started in the US earlier this year as a result of pressures from right-to-repair advocacy groups.
• Meta’s oversight board published a report urging the tech giant to make “significant” changes to its content moderation systems. The report stated that some elite users of Facebook were not held responsible for their posts including harassment or incitement of violence, which would have resulted in penalties for ordinary users. The board said Meta’s cross-check system also caused delays in taking down content that violated the rules.
- On a related note: EU privacy regulators ruled that Meta’s social media platforms such as Facebook and Instagram should not require users to agree to personalized ads based on their digital activity. Meta's social media platforms allow users to opt-out of targeted ads based on choices across other apps, but the EU ruling may limit tracking inside Meta’s own apps too.
• Elon Musk’s Neuralink is facing a US investigation for potential animal rights violations as well as employee complaints. Neuralink has been testing its developing medical brain implant technology on animals, and causing needless deaths due to a rushed process, employees say. The company killed 1,500 animals in total, according to records reviewed by Reuters.
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