Out of Gas

Germany is still struggling to get enough fuel to get through the coming winter. Even if natural gas inventories can meet the country’s target of being 95% full by November, that would only cover about two and a half months of demand if Russia cuts off supplies completely, according to the country’s energy regulator. Stockpiles are currently 77% full, which is two weeks ahead of schedule. And Sweden is relying on an old oil-fired power plant to keep the lights on as a dearth of wind generation and nuclear outages send prices to a record.

Cold, Dark Winter

Rishi Sunak has ruled out freezing the UK’s energy price cap if he becomes prime minister, while his rival Liz Truss warned against “throwing money” at a short-term fix for the looming winter crisis. At a hustings in Scotland, the Conservative leadership contenders gave their first public response to Labour leader Keir Starmer’s announcement this week that he would freeze the cap on energy bills at £1,971 ($2,380) a year, instead of allowing it to rise again in October. Figures today are expected to show the biggest jump in the cost of living in more than four decades. Prices in pubs, restaurants and supermarkets are skyrocketing.

Nuclear Deal

The Biden administration is weighing Iran’s response to a European Union proposal aimed at reviving the 2015 international nuclear agreement. While the US so far has refused to comment in detail on the proposal, a last-ditch effort to save the Joint Comprehensive Plan of Action, a State Department spokesman said the big issues have been “largely settled” and that it was close to what the US was looking for. It raised fresh hopes that Iran, the US and other signatories to the nuclear deal are close to reaching an agreement after talks dragged on for almost 18 months.

Flashing Warning

Mounting concern over semiconductor demand is sending shudders through Asia’s high-tech exporters, which historically serve as a bellwether for the international economy. South Korean behemoths Samsung and SK Hynix have signaled plans to dial back investment outlays, while the world’s biggest contract chipmaker TSMC indicated a similar expectation. Fading tech demand is darkening the economic picture as Russia’s war on Ukraine and rising interest rates damp activity.

Coming Up…

European stock futures edged up, following gains in Asia as traders await Fed minutes that may shed light on the outlook for rates. Expected data include UK inflation and euro-zone GDP. Norway’s sovereign wealth fund presents a half-year report. Persimmon, Cisco and Target are slated to report earnings.

(Bloomberg, August 17-2022)