🇬🇧 Off the rails

• European natural gas prices continued their decline as unseasonably mild winter temperatures —which are forecast to remain across continental Europe next week— reduced demand for heating and eased the stress of the region’s energy systems. Dutch front-month gas futures —Europe’s benchmark— closed more than 8% lower at €70.8 per MWh.

^{via Bloomberg}

• Zoom out: European gas futures had a record monthly decline in December, bringing relief to consumers and governments after a brutal summer. Still, energy prices are much higher than the typical levels for the time of year, and any disruption in supplies could tighten the market again.
• On a related note: The first regular shipment of LNG from the US arrived in Germany on Tuesday, part of a wide-reaching effort to help the country replace energy supplies it previously received from Russia. The shipment will be converted back into gas at a special floating terminal that was inaugurated last month by Chancellor Olaf Scholz.

• German inflation eased for a second consecutive month in December, according to preliminary figures released by the Federal Statistics Office on Tuesday, due to falling energy prices and the government's one-off payment of household energy bills. German consumer prices, harmonized to compare with the rest of the EU, rose by 9.6% year-on-year, significantly lower than analyst estimates of a 10.7% annual rise.

• Furthermore: German unemployment fell in December, data from Destatis showed on Tuesday. The number of people out of work decreased by 13,000 in seasonally adjusted terms to 2.52 million, contrary to analyst predictions of a slight increase. The seasonally adjusted jobless rate remained stable at 5.5%.

• The US manufacturing sector contracted at its fastest pace since May 2020, according to the latest PMI data from S&P Global on Tuesday, due to weak domestic and foreign customer demand that drove faster contractions in output and new orders. The final Manufacturing PMI posted 46.2 in December, down from 47.7 in the prior month, matching an earlier released flash estimate.

• The downturn in the UK manufacturing sector accelerated at the end of 2022 as production contracted for a sixth successive month while output, new orders, and employment all fell at faster rates in December. The final Manufacturing PMI fell to a 31-month low of 45.3, down from 46.5 in November and below the neutral 50.0 mark but above the earlier flash estimate of 44.7.

^{S&P Global}

• In other news: Millions of low-income households in Britain will receive cost-of-living support from the government of up to £900 (€1,024), the country's Department of Work and Pensions said on Tuesday, which will directly go to claimants' bank accounts in three payments over the financial year.

• Inflation in Turkey dropped sharply to 64.27% year-on-year in December, down from 84.39% reported in the prior month, the Turkish Statistical Institute announced on Tuesday. It’s the second month in a row that inflation has eased after hitting a 24-year high of 85.5% in October.

• What happened? The fall —which occurred mainly due to a base effect, with a high index from a year ago statistically bringing the inflation rate down— could help President Recep Tayyip Erdogan’s standing before a general election in June, but is unlikely to bring relief to households suffering from a cost of living crisis.

• British rail workers staged a fresh round of strikes on Tuesday that will disrupt services all week, the latest development in a long-running dispute over pay and working conditions. During the walkout by tens of thousands of workers, around half of the UK’s railway lines will be closed, while only one-fifth of services will be running.

^{via BBC}

• Looking ahead… RMT union boss Mick Lynch apologized for the action "dragging on" but accused the government of "doing nothing" about the dispute. He warned if there was no deal, he had the mandate to take action up until May, and could "go further."

• Spain-based infrastructure company Ferrovial has been commissioned by US tech giant Microsoft to build a data center near Madrid, the Cinco Dias newspaper reported on Tuesday. The news outlet cited unidentified sources as saying the contract could be worth several hundred million euros, as Microsoft plans a number of investments worth more than €12 billion across 17 regions in Europe.

• Tesla's China chief Tom Zhu has been promoted to take direct oversight of the electric carmaker’s US assembly plants as well as sales operations in North America and Europe, according to an internal post reviewed by Reuters. The move makes Zhu the highest-profile executive at Tesla after CEO Elon Musk, with direct oversight for deliveries in all of its major markets and operations of its key production hubs.

• Foxconn’s iPhone plant in China's city of Zhengzhou is almost back to full production, with its December shipments reaching about 90% of initial plans, two Reuters sources said on Tuesday. Production at the facility was heavily affected late last year after a Covid-19 outbreak and curbs taken to control the virus prompted thousands of workers to leave, which was followed by worker unrest over payment issues.

• A top Russian military blogger, who recently received an award from the country's President Vladimir Putin, expressed doubts about the death toll from a Ukrainian attack on Russian barracks in the occupied Donetsk region, saying that casualties could be bigger than the official statement from Kremlin — 63. Semyon Pegov, who blogs under the nickname "WarGonzo", posted a five-minute video on Telegram, referring to the attack as the "Makiivka tragedy".

^{Planet Labs}

• In response: Ukraine's President Volodymyr Zelenskiy said he received intelligence reports suggesting that Russia is planning to "exhaust" Ukraine with a prolonged wave of drone attacks, in a bid to demoralize the war-torn country.

• Germany is open to using Russia's billions-of-euros-worth of frozen assets to help Ukraine rebuild, as long as issues can be resolved and allies follow suit, Bloomberg reported. However, even though Chancellor Olaf Scholz's government supports Ukraine's demand for war preparations, they are yet to take an official position on seizing Russian assets — as there are some internal disagreements in the ruling coalition.

• China sharply criticized the growing list of countries that imposed Covid-19 testing requirements on travelers from China and threatened to impose countermeasures against the countries involved. Foreign Ministry spokesperson Mao Ning said that they are "firmly opposed to attempts to manipulate the Covid measures for political purposes," as the country battles a nationwide outbreak after abruptly easing harsh restrictions for the first time.

• A far-right Israeli minister visited a contested holy site in Jerusalem, which drew condemnation from across the Muslim world, as the Palestinians called it an "unprecedented provocation."

• Sweden is expected to address environmental concerns relating to its forest management, as it has just taken up the EU Council presidency for the first half of 2023, and has been criticized for cutting down trees.

• Sam Bankman-Fried pleaded not guilty to criminal charges, as he is accused of cheating investors in his FTX crypto-exchange company that is now gone bankrupt. Bankman-Fried is accused of looting billions of dollars in FTX customer deposits.

^{via Reuters}

• Good to know: It is common for criminal defendants to plead not guilty initially, but they may change their pleas later.

• Elon Musk's SpaceX is raising $750 million in a new round of funding that values the company at $137 billion, according to CNBC. Andreessen Horowitz —the venture capital firm which also was involved in Musk's buyout of Twitter—  has been reported to be likely to lead the new funding round.

• TikTok's parent company ByteDance has laid off hundreds of employees across various departments at the end of 2022 as part of a cost-cutting measure, according to a South China Morning Post report. The report added that the job cuts represent a small percentage of ByteDance's workforce.

• Google said India's antitrust watchdog copied parts of the EU ruling against the tech company for exploiting its market dominance such as online search and the Android operating system, arguing that the Competition Commission of India should quash the decision. In its filing to an Indian tribunal, Google argued that CCI's probe unit "copy-pasted extensively from a European Commission decision, deploying evidence from Europe that was not examined in India."

^{via Reuters}

• South Korea's antitrust watchdog said to impose a $2.2 million fine on Tesla for not telling customers about the EVs' shorter driving range in low temperatures. The Korea Fair Trade Commission said Tesla had exaggerated the "driving ranges of its cars on a single charge, their fuel cost-effectiveness compares to gasoline vehicles, and the performance of its Superchargers."

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