Leader in Name

The astonishing reversal of UK Prime Minister Liz Truss’s economic program — designed to bring stability to the financial markets after weeks of turmoil — leaves the premier in office but toothless and unable to proceed with the tax-cutting platform that won her the Conservative Party leadership contest. Truss watched on in the House of Commons as Chancellor of the Exchequer Jeremy Hunt, the former leadership rival she installed to rescue her premiership, dismantled much of what was left of her Sept. 23 “Growth Plan.” Business groups welcomed the attempt to calm markets but warned that the UK is now economically rudderless, with no long-term plan and a tax burden stuck at the highest in 70 years.

Oil Reserves

The Biden administration is moving toward a release of another 10 million to 15 million barrels of oil from the nation’s emergency stockpile in a bid to balance markets and keep gasoline prices from climbing further, according to people familiar with the matter. The Strategic Petroleum Reserve release would be the latest tranche of a 180-million-barrel program that began in the spring. Heading into winter, the US has the lowest seasonal inventories of diesel, according to data back to 1982. The White House has been seeking to ease rising costs at the pump, one of the most visible signs of inflation. President Joe Biden in recent weeks has repeatedly warned oil companies against raising costs.

Nuclear for Longer

German Chancellor Olaf Scholz ordered an extension in the life of the country’s three remaining nuclear plants until mid-April 2023 — a dramatic reversal of an earlier decision by Economy Minister Robert Habeck — as the country contends with an unprecedented energy crisis. Scholz’s decision, which came late Monday after a day of speculation, is designed to end a standoff between his two coalition partners, the Greens and the Liberals. While Habeck’s Greens are ideologically opposed to nuclear power, the business-friendly Free Democrats under the leadership of Finance Minister Christian Lindner argue that Germany should use all the generation capacity available to tackle the crisis.

China´s Economy

China´s economy is improving, Premier Li Keqiang said Monday, as he called on officials to better implement policies intended to keep the recovery going. Li echoed pledges from President Xi Jinping’s two-hour speech Sunday as the premier spoke with delegates during a group discussion at the Communist Party’s congress, according to a report by the official Xinhua News Agency. Li also urged to keep the economy running within a “reasonable” range and highlighted the importance of its quality. His remarks came as the nation’s statistics authority unexpectedly delayed the publication of third-quarter gross domestic product data, which was originally scheduled for release Tuesday. 

To Sell or Not to Sell

Credit Suisse is considering a sale of its US asset-management business and the firm’s investment-bank chief is set to depart as the company looks to reshape the business and its top ranks. The Swiss bank has recently begun a sales process for the US operations of Credit Suisse Asset Management, or CSAM, according to people familiar with the matter. The unit, which includes a platform for investing in collateralized loan obligations, is expected to draw interest from private equity firms. No final decision has been made and Credit Suisse could opt to hold onto the unit.

Coming Up…

European shares are headed for a higher start following Monday’s rally, while stocks in Asia extended a rebound from Wall Street. The EU will disburse 2 billion euros to Ukraine as early as Tuesday, a person familiar said, as part of a bigger package announced in May. Minneapolis Fed President Neel Kashkari speaks. Expected data include a survey of German investor confidence and US industrial production. There’s a host of earnings to sift through, with Goldman Sachs, Netflix and J&J among the companies slated to report. It’s also a big day for sports fans — the NBA season and the MLB League Championship both kick off today.

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(Source: Bloomberg, Oct. 18-2022)