Wild Gyrations

Shares in the Swiss banking giant Credit Suisse plummeted 12% to an all-time low on Monday after a weekend of fevered Twitter speculation about its financial health, before they regained almost all of the losses later in the day. The wild gyrations show the difficulty for Credit Suisse in managing the febrile confidence of investors as it rushes to devise a repair plan for its investment bank, which has been on the ropes since suffering massive losses last year from backing Archegos Capital Management. The price investors have to pay to insure the bank’s debt hit record levels, leading some to harken back to the fear-driven days of 2008.

Truss Issue

Liz Truss will struggle to drive through key parts of the economic revolution she’s planning for the UK because her standing in the ruling party is already so damaged, members of her Cabinet said. Less than a month into her premiership, the ministers said Truss has failed to take basic steps to line up support for her plans, such as putting them to Cabinet debate, and expressed doubts about the way she manages the ruling Conservative Party. They asked not to be identified criticizing the government. One former Cabinet minister predicted Truss will be gone within a year to allow the party time to regenerate before the general election, which must be held by January 2025 at the latest.

Game of Chicken

As Vladimir Putin’s game of chicken with the US and its allies over Ukraine escalates into a new round of nuclear threats, the smaller weapons that his officials have called on him to use may provide vital hours or even days of warning. While Russia’s long-range missiles and bombers are kept on constant alert, ready to fire in just minutes to ensure they aren’t destroyed by a pre-emptive strike, lower-yielding tactical weapons are locked up in about a dozen warehouses across Russia and it would take time to transport them to launchers. US and European officials have said there’s no sign of any such preparations, but the Kremlin has sought to sow fear with hints that further escalation may involve arms that haven’t been used in war since 1945.

North Korea’s Missile

North Korea fired a missile over Japan for the first time in five years, further ratcheting up tensions over Kim Jong Un’s nuclear program and prompting a rare public safety warning to be issued by Tokyo. The missile launched Tuesday splashed down in the Western Pacific about 3,200 kilometers east of Japan, officials in Tokyo said, adding there were no reports of damage. The test represented the longest-range weapon fired by North Korea since May and hearkens back to the autumn of 2017 when Kim’s regime unleashed its largest barrage of long-range rockets and detonated a nuclear bomb.

Coming Up…

European shares are on track to climb after a US stock rally boosted sentiment, with weak manufacturing data quelling fears of more aggressive Fed policy. ECB Governing Council member Mario Centeno speaks at a conference in Luxembourg. John Williams, Loretta Mester and other regional Fed presidents speak at separate events. The Warsaw Security Forum starts in Poland, while the World Aviation Festival, billed as the most important aviation technology conference, will get underway in Amsterdam. Expected data include Spanish unemployment. Acuity Brands reports results.

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(Source: Bloomberg, Oct. 4-2022)