🏆 Second in a row

• The US Federal Reserve raised its key interest rate by 50 basis points on Wednesday, slowing the pace from the previous four meetings when rates increased in three-quarter-point increments, as signs emerge that inflation is beginning to cool. The Fed’s decision —which was widely expected by economists— set their policy rate at a range of 4.25% to 4.5%, the highest it has been since 2007.

^{via NYT}

• Projections: The central bank forecast at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth.

• Eurozone industrial production fell by 2% from the previous month in October, exceeding an expected slump of 1.5%, following a downwardly revised 0.8% growth in September and adding to signs the bloc is heading for a recession this winter. In annual terms, industrial production growth in the single-currency region slowed to 3.4% in October from an upwardly revised 5.1% in September.

^Eurostat

• Why it matters: The decline in factory output —which follows a drop in eurozone retail sales in October— increases the likelihood that the ECB will opt for a smaller rise in interest rates on Thursday.

• Inflation in the UK fell to 10.7% in November, the biggest drop in 16 months and down from an annual 11.1% in October, amid growing fears of a long recession. However, the cost of living still remains close to a 40-year high, which will add to the pressure on the government to raise wages across the public sector to close the gap between earnings and surging prices.

^{via The Guardian}

• Spain’s annual inflation rate stood at 6.8% in November, final data released by the National Statistics Institute showed on Wednesday, confirming preliminary figures and reflecting a drop from the previous month’s 7.3%. The Harmonised Index of Consumer Prices stood at 6.7%, up 0.1% compared to the INE's previous estimate.

• Germany's recession will be milder than expected, with the economy expected to contract by 0.1% in 2023 compared to a previous forecast of a 0.3% contraction, the Ifo institute said on Wednesday. The economy is expected to grow by 1.8% in 2022 compared to an earlier forecast of 1.6%. Inflation is seen at 7.8% this year, 6.4% next year, and 2.8% in 2024, Ifo said in a statement.

• The German Bundestag approved the purchase of F-35 fighter jets from US defense giant Lockheed Martin as part of military procurement projects worth €13 billion, Defense Minister Christine Lambrecht said on Wednesday. The projects are among the first to tap money from a €100 billion special fund that Chancellor Olaf Scholz announced in a major policy shift days after Russia's invasion of Ukraine.

^{via Reuters}

• What it means: The US jet will replace the aging Tornado, which will be phased out by Berlin between 2025 and 2030. The deal upset France over fears it could undercut the development of a joint Franco-German fighter jet that is supposed to be ready by the 2040s.

• Zara owner Inditex reported a 24% increase in net profit to €3.1 billion for the first nine months of its fiscal year, as price rises helped offset weakening global demand for clothing. Sales for the world’s biggest fashion retailer rose 19% from a year ago, exceeding expectations. Shares in Inditex were up 3.07% at the market close.

^{via Reuters}

• Zoom out: The company has outperformed some rivals since Marta Ortega, the daughter of founder-owner Amancio Ortega, took the helm as non-executive chair in April. H&M, which has struggled to compete with its bigger rival Zara, will report results on Thursday.

• HSBC announced on Wednesday that it will stop funding new oil and gas fields and expect more information from energy clients over their plans to cut carbon emissions, as part of a wider update of its sector policy, which covers everything from biomass projects to hydrogen, nuclear and thermal coal.

• Zoom out: HSBC is among the biggest banks to confirm it would not support oil and gas projects that received final approval after the end of 2021, along with Britain's biggest domestic bank Lloyds.

• Furthermore: Also on Wednesday, Barclays said it had increased its sustainable and transition finance target to $1 trillion by 2030 and would pump more of its own money into energy startups.

• The US Securities and Exchange Commission on Wednesday will vote on whether to propose some of the biggest changes to the structure of the American equity markets in nearly two decades, aimed at boosting competition, transparency and fairness.

• Zoom in: The potential changes include new rules that would require marketable retail stock orders to be sent to auctions before they are executed, a new standard for brokers to show they get the best possible executions for client orders, and lower trading increments and access fees on exchanges, the SEC said.

• Ukrainian forces shot down 13 drones, according to officials, with Russia launching its first major drone attack on the capital Kyiv in weeks. President Volodymyr Zelenskiy called on Russia to withdraw by Christmas, but the Kremlin replied saying a "Christmas ceasefire" was not on their agenda.

^{via Bloomberg}

• In other news: As the US was considering sending advanced Patriot air defense systems to help Ukraine, Kremlin spokesperson Dmitry Peskov said any Patriot air-defense missile batteries on Ukrainian soil would be priority targets for Russia's military.

• The Hague District Court upheld the Netherlands' prohibition on assisted suicide, rejecting arguments that the ban infringes on their right to determine when their lives end and that it violates the European Convention on Human Rights. The court argued that the convention protects the right to decide when one wants to end their life, but that this right does not go so far as to obtain assisted suicide.

• Denmark's Social Democratic PM Mette Frederiksen agreed to form a coalition government with the main opposition Liberal Party and the Moderates led by former PM Lars Lokke Rasmussen. Frederiksen is to start her second term as PM after the new government is formally announced on Thursday.

• Kosovo formally applied to join the EU, which caused Serbia —Kosovo's long-lasting contentious neighbor— to react with anger and call on the bloc to cancel the process. Serbia said they will ask five EU states that do not recognize Kosovo to block the initiative.

• On a related note: Chancellor Olaf Scholz said it is in Germany's interest for the remaining Balkan countries to join the EU. Scholz welcomed the decisions to grant Bosnia candidate status and to accept Croatia to the Schengen zone, adding that Bulgaria and Romania should "follow soon."

• A court in Turkey sentenced the mayor of Istanbul —a member of the main opposition Republican People's Party— to two years and seven months in prison for "insulting" members of Turkey's Supreme Electoral Council, ahead of the country's upcoming general elections. The court also imposed a political ban that prevents Ekrem Imamoglu from running in elections over the same period.

⚡ Lightning Round

• US President Joe Biden signed gay marriage legislation into law, with thousands gathered to watch the ceremony where he called the law "a blow against hate in all its forms."
• The UN Economic and Social Council ousted Iran from the Commission on the Status of Women for the remainder of its 2022-2026, their leading global body fighting for gender equality, due to Tehran's systematic violation of the rights of women and girls.
• China said it will not report asymptomatic Covid-19 cases anymore, as they have become impossible to track without the mass testing mandate, the latest step in Beijing's departure from its zero-Covid policy.

• Apple is preparing to allow alternative app stores on its iPhones and iPads to comply with strict EU requirements coming in 2024. The changes will enable users to download third-party software to their iPhones and iPads without using the company’s App Store, sidestepping Apple’s restrictions and the up-to-30% commission it imposes on payments.

^{via Bloomberg}

• Why it matters: The EU laws are aimed at leveling the playing field for third-party developers against Apple and Google, which run the two biggest mobile app stores and wield too much power as gatekeepers according to regulators.

• Binance CEO Changpeng Zhao said on Wednesday that deposits were returning, a day after it saw heavy outflows of cryptocurrencies and halted some stablecoin withdrawals. On Tuesday, blockchain data firm Nansen said Binance saw withdrawals of $1.9 billion in 24 hours, the largest such outflow since June, after the bankruptcy of former rival FTX raised concern among investors.

• TikTok is trying out a new feature that offers a horizontal full-screen mode for videos on phones, experimenting with select users worldwide. This new feature not only changes TikTok’s famous short vertical videos but also stands in direct competition with YouTube.

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