Short overview of 5 things on November 14

Empty Case File

The collapse of Sam Bankman-Fried’s crypto empire has been chaotic, fast and full of unknowns. In nearly every other multi-billion dollar Chapter 11 case in recent years, lawyers quickly file a smattering of routine requests designed to stabilize operations. However, more than 130 related companies sought court protection at Delaware federal court at the end of last week without filing any of the usual court motions or explanatory documents seen in a big insolvency case. Two days later, the companies’ main court docket contains only a 23-page fill-in-the-blank petition. Meanwhile, a swift plunge in value of FTX’s key crypto assets, along with unauthorized withdrawals of funds after it filed for bankruptcy, suggests that customers face a slim chance of recovering much of their deposits. 


President Joe Biden seeks to prevent US-China ties from deteriorating further in a meeting with Chinese leader Xi Jinping, American officials said. Biden and Xi will speak Monday evening in Bali, Indonesia, on the sidelines of the Group of 20 summit, in the first in-person meeting between leaders of the world’s biggest economies since the pandemic emerged. Both countries have tempered expectations with tensions high over Russia’s invasion of Ukraine, US curbs on chip exports to China and the status of Taiwan. The US officials framed the meeting as the first serious, in-person US-China diplomacy in years — and said it was the product of weeks of serious and diligent efforts from each side, meaning its very occasion has already somewhat warmed ties.

“Ways to Go’’

Federal Reserve Governor Christopher Waller said “we’ve still got a ways to go” before the US central bank stops raising interest rates, despite good news last week on consumer prices. While officials could moderate the size of their rate hikes to 50 basis points at their next meeting or the one after that — after a string of 75 basis-point moves — Waller cautioned that officials were not close to a pause. The comments echoed remarks this month from Fed Chair Jerome Powell and other colleagues who said rate increases were far from over but the speed could possibly slow soon. The dollar advanced as the Fed governor outlined the case for further hikes.

Guide for Next Year

It’s been a miserable year for the global economy, but things can always get worse. History says the Fed’s high-speed interest-rate hikes may well tip the US into recession in 2023. Few will be surprised if spiraling natural-gas prices do the same for Europe. The double whammy of Covid Zero and a property slump threatens to bring China’s economy to a near standstill. In an extreme downside scenario, all those things happen at once, potentially wiping out some $5 trillion in global output.

Coming Up…

European shares are on track to climb after China’s policy moves on virus restrictions and property-sector support added to investor sentiment. The Xi-Biden meeting is set to happen in Bali, Indonesia. ECB’s Luis de Guindos and Fabio Panetta speak at the start of a busy week for the central bank, while the Fed’s John Williams moderates a panel. Expected data include UK house prices and Finnish retail sales. Sonova, Tyson and Aecom unveil earnings results.


(Source: Bloomberg, Nov. 14-2022)

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