Inflation higher than expected, rising to 8.6%

Rev 6:6 NAS “And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Inflation rose 8.6% in May, highest since 1981
  • The consumer price index rose 8.6% in May from a year ago, the highest increase since December 1981. Core inflation excluding food and energy rose 6%. Both were higher than expected.
  • Surging food, gas and energy prices all contributed to the gain, with fuel oil up 106.7% over the past year.
  • The rise in inflation meant workers lost more ground in May, with real wages declining 0.6% from April and 3% on a 12-month basis.

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Another Warning about Cyberattack from White House Official

Revelations 6:3-4 “ when he opened the second seal, I heard the second living creature say, “Come!” 4 And out came another horse, bright red. Its rider was permitted to take peace from the earth, so that people should slay one another, and he was given a great sword.

Important Takeaways:

  • White House warns Russia prepping possible cyberattacks against US
  • The White House on Monday urged private companies to bolster their cyber defenses, citing evolving intelligence suggesting the Russian government is exploring “options for potential cyberattacks” targeting U.S. critical infrastructure.
  • The administration has warned in recent weeks that Russia could look to target infrastructure in the U.S. or elsewhere with cyberattacks, but officials previously said there were no specific or credible threats against the U.S.
  • Neuberger would not say Monday which specific critical infrastructure sectors could be targeted. Critical infrastructure encompasses a range of sectors, including water, energy, health care, and financial services.

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Beijing concerned about civilian casualties but vowed to continue normal trade with Russia

Revelations 6:3-4 “ when he opened the second seal, I heard the second living creature say, “Come!” 4 And out came another horse, bright red. Its rider was permitted to take peace from the earth, so that people should slay one another, and he was given a great sword.

Important Takeaways:

  • China considers buying stakes in Russian energy, commodity firms
  • China is considering buying or increasing stakes in Russian energy and commodities companies, such as gas giant Gazprom PJSC and aluminum producer United Co. Rusal International PJSC, according to people familiar with the matter.
  • Any deal would be to bolster China’s imports as it intensifies its focus on energy and food security — not as a show of support for Russia’s invasion in Ukraine — the people said.
  • Worried about the impact surging prices will have on the economy, China’s top government officials issued orders to prioritize commodities supply security, Bloomberg reported last week.

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Europe for sale and China is cashing in

Matthew 24:6 You will hear of wars and rumors of wars, but see to it that you are not alarmed. Such things must happen, but the end is still to come.

Important Takeaways:

  • China: Buying Up Europe
  • For more than a decade, China has been stealthily buying up European companies in strategic sectors, particularly in technology and energy.
  • China has been covering up its European purchases by passing them off as ostensibly commercial investments. It has been hiding the state-owned companies involved in the investments behind “layers of ownership, complex shareholding structures and deals executed via European subsidiaries,” according to Datenna, a Dutch company that monitors Chinese investments in Europe
  • A staggering 40% out of 650 Chinese investments in Europe in the years 2010-2020, had “high or moderate involvement by state-owned or state-controlled companies, including some in advanced technologies”.
  • What appears to be urgently needed in Europe now is a deeper understanding of the threat that China poses, as well as the political will to act on it. Action is urgently needed to block investments that serve up Europe’s strategic assets on a silver platter to China’s state-owned companies, which the Chinese Communist Party then use to advance its expansionist ends.

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Soaring gasoline, food prices boost U.S. inflation; labor market tightening

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. consumer prices accelerated in October as Americans paid more for gasoline and food, leading to the biggest annual gain in 31 years, suggesting inflation could stay uncomfortably high well into 2022 amid snarled global supply chains.

Inflation pressures are also brewing in the labor market, where an acute shortage of workers is driving wages higher. The number of Americans filing claims for unemployment benefits fell to a 20-month low last week, other data showed on Wednesday.

High inflation is eroding the wage gains, adding to political risk for President Joe Biden, whose approval rating has been falling as Americans grow more anxious about the economy. The White House and the Federal Reserve, which views high inflation as transitory, have maintained that prices will fall once supply bottlenecks start easing.

“There is increasing evidence that inflationary pressures are broadening out, underlining that inflation will remain elevated for much longer than Fed officials expect,” said Andrew Hunter, a senior economist at Capital Economics.

The consumer price index jumped 0.9% last month after climbing 0.4% in September, the Labor Department said on Wednesday. The largest gain in four months boosted the annual increase in the CPI to 6.2%. That was the biggest year-on-year rise since November 1990 and followed a 5.4% increase in September.

The broad-based increase in prices last month was led by gasoline prices, which surged 6.1% after rising 1.2% in September. Food prices advanced 0.9%, with meat, eggs, fish, vegetables, cereals and bakery products becoming more expensive. But prices for alcoholic beverages declined. Rents increased a solid 0.4% and prices for both new and used motor vehicles rose.

Excluding the volatile food and energy components, the CPI gained 0.6% after climbing 0.2% in September. The so-called core CPI jumped 4.6% on a year-on-year basis, the largest increase since August 1991, after being steady at 4.0% for two straight months. Economists polled by Reuters had forecast the overall CPI shooting up 0.6% and the core CPI rising 0.4%.

U.S. stocks opened lower. The dollar rose against a basket of currencies. U.S. Treasury yields rose.

WORKER SHORTAGES

Inflation is heating up again as the economic drag from the summer wave of COVID-19 infections, driven by the Delta variant, fades and supply bottlenecks persist. Trillions of dollars in pandemic relief from governments across the globe fueled demand for goods, leaving supply chains overstretched.

The nearly two-year long pandemic has upended labor markets, causing a global shortage of workers needed to produce raw materials and move goods from factories to consumers. The government reported on Tuesday that producer prices increased strongly in October, reversing a slowing trend in the monthly PPI that had become entrenched since spring.

Though the Fed last week restated its belief that current high inflation is “expected to be transitory,” most economists are skeptical, also noting that wages are rising strongly as companies scramble for workers.

The U.S. central bank this month started reducing the amount of money it is injecting into the economy through monthly bond purchases. The Fed’s preferred inflation measure for its flexible 2% target increased 3.6% year-on-year in September.

With labor scarce, companies are holding on to their workers. In another report on Wednesday, the Labor Department said initial claims for state unemployment benefits fell 4,000 to a seasonally adjusted 267,000 for the week ended Nov. 6.

That was the lowest level since the middle of March in 2020, when the economy almost ground to a halt under the onslaught of mandatory business closures aimed at slowing the first wave of COVID-19 infections. Claims, which have now declined for six straight weeks, are within striking distance of their pre-pandemic level.

The report was published a day early because the federal government is closed on Thursday for the Veterans Day holiday.

The government reported last Friday that the economy added 531,000 jobs in October, with annual wage growth the largest in eight months. The labor force is down 3 million from its pre-pandemic level, making it harder to fill the 10.4 million job openings as of the of August.

“Businesses facing labor shortages are likely retaining rather than laying off workers,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics in White Plains, New York. “Even so, for the labor market, supply remains a constraint that is a headwind for the recovery for now.”

(Reporting by Lucia Mutikani; Editing by Dan Burns and Andrea Ricci)

Argentina urges people to ‘save water’ with Parana river at 77-year low

By Maximilian Heath

BUENOS AIRES (Reuters) – Argentina’s government has urged citizens to limit water use in a bid to alleviate pressure on the Parana River, a key grains thoroughfare that is at a 77-year low, a situation which is hampering shipments of cereals including soy and wheat.

A government advisory group called on people to “save water,” store rainwater for irrigation and avoid burning waste to prevent wildfires on the wetlands around the river delta.

“Water levels in the Parana are at the lowest level since 1944, which requires a commitment from everyone to attend and act preventively and responsibly against this situation,” the group said in a statement late on Monday.

The Parana, which has its source in southern Brazil, flows through Argentina to the coast near Buenos Aires. It is the transportation route for 80% of country’s farm exports and a source of drinking water, irrigation and energy.

However, due to a prolonged shortage of rainfall in Brazil, the Parana’s water levels have dropped dramatically, hitting the amount of cargo that can be carried by ships at the peak of the Argentine corn and soy export season.

On Saturday, the government announced a $10.4 million relief fund to mitigate the impact of low water levels.

On the banks of the Parana are important cities such as Rosario, Parana and Santa Fe. Rosario is the main agro-industrial hub and river port of Argentina, a leading global supplier of soy, corn and wheat to global markets.

(Reporting by Maximilian Heath; Editing by Adam Jourdan and David Evans)

Britain issues first Amber Extreme Heat warning

LONDON (Reuters) – Britain’s Met Office issued its first ever amber extreme heat warning on Monday, saying unusually high temperatures expected western areas and continuing high night-time temperatures created potential risks to health.

The alert is the first issued by the Met Office since the national meteorological service launched its extreme heat national severe weather warning system at the start of June to help better inform people of the risks hot weather can bring.

Much of Britain has seen heatwave conditions in recent days but temperatures are expected to rise further, possibly reaching 33 degrees Celsius in some western parts of the country, the Met Office said.

“The impacts of extreme heat can be many and varied. It can have health consequences, especially for those who are particularly vulnerable, and it can impact infrastructure, including transport and energy, as well as the wider business community,” the Met Office said in a statement.

A record-breaking heatwave this month killed hundreds of people in Canada and the United States. Europe also has been unusually hot and flooding has devastated parts of Germany, Belgium and other countries.

(Reporting By Susanna Twidale; editing by Philippa Fletcher)

U.S. oil mergers surge as energy, share prices recover from pandemic

HOUSTON (Reuters) – U.S. oil and gas mergers surged last quarter with the most $1 billion plus combinations since 2014, according to data released on Monday, as rising energy and share prices led to larger oil patch deals.

Producers are consolidating in U.S. shale as oil and natural gas prices recover from last year’s pandemic swoon and this month traded at multi-year highs. Smaller producers also are snapping up unwanted properties in a bet on continued demand for oil and gas while some big oil companies shift their acquisition emphasis to renewables.

Total value of the 40 reported deals last quarter was $33 billion, estimated energy data provider Enverus Inc, up from $44.5 billion for all of last year.

The quarter’s seven $1 billion plus deals were mostly in Texas and Colorado oilfields but a fifth of the total value was spend on natural gas properties in the U.S. east, said Andrew Dittmar, Enverus’ senior M&A analyst.

BIG GAS MERGERS

Natural gas shot into the spotlight with U.S. prices rising 40% this year, helping spark Southwestern Energy’s $2.7 billion acquisition of Indigo Natural Resources and EQT Corp’s $2.9 billion deal for northeast gas producer Alta Resources.

“There is still a lot of activity out there,” said Dittmar, citing recovering share prices and the number of private-equity backed firms looking to sell. “Public companies are not done consolidating” smaller, closely-held producers, he said.

“If commodity prices stay strong, we’ll see a fairly active rest of the year,” Dittmar said.

A number of top oil companies including Royal Dutch Shell, Chevron, Exxon Mobil, and Occidental Petroleum are considering or have put U.S. oil properties on the market due to rising buyer interest.

CABOT-CIMAREX TOPS LIST

Top deals by price last quarter were Cabot Oil and Gas’s $7.4 billion combination with Cimarex Energy and Pioneer Natural Resources’ $6.4 billion acquisition of closely held DoublePoint Energy, both for assets in the Permian Basin of West Texas and New Mexico.

KKR & Co’s Independence Energy merged with Contango Oil & Gas, a deal that valued the pair at $5.7 billion, including debt, and will become a platform to acquire other producers.

(Reporting by Gary McWilliams; Editing by David Gregorio)

U.S. imposes fresh Iran-related sanctions, targets Khamenei-linked foundation

By Daphne Psaledakis and Humeyra Pamuk

WASHINGTON (Reuters) – The United States on Wednesday imposed sweeping new sanctions targeting Iran, blacklisting a foundation controlled by Supreme Leader Ayatollah Ali Khamenei and taking aim at what Washington called Iran’s human rights abuses a year after a deadly crackdown on anti-government demonstrators.

The sanctions announced by the U.S. Treasury Department, which also targeted Iran’s intelligence minister, marked the latest action to reinforce the “maximum pressure” campaign on Iran pursued by President Donald Trump’s administration. They came just over two months before Trump is due to leave office after his Nov. 3 election loss.

The department imposed sanctions on what it described as a key patronage network for Khamenei. It said it blacklisted the Bonyad Mostazafan, or the Foundation of the Oppressed, which is controlled by Khamenei, in the move also targeting 10 individuals and 50 entities associated with the foundation in sectors including energy, mining and financial services.

The sanctions freeze any U.S. assets of the targeted individuals and entities and generally bar Americans from doing business with them.

The charitable foundation – an economic, cultural, and social welfare institution – has amassed vast amounts of wealth to the detriment of the rest of the Iranian economy and controls hundreds of companies and properties confiscated since the 1979 Islamic Revolution.

“Iran’s Supreme Leader uses Bonyad Mostazafan to reward his allies under the pretense of charity,” U.S. Treasury Secretary Steven Mnuchin said in the statement.

“The United States will continue to target key officials and revenue-generating sources that enable the regime’s ongoing repression of its own people,” Mnuchin added.

Trump, who has taken a hard line toward Tehran during his presidency and abandoned an international nuclear agreement with Iran reached by his predecessor Barack Obama, last week asked for options on attacking Iran’s main nuclear site, but ultimately decided against taking the step, a U.S. official said on Monday.

The Treasury Department also slapped sanctions on Iranian Intelligence Minister Mahmoud Alavi, accusing his ministry of playing a role in serious human rights abuses against Iranians, including during last year’s protests.

VIOLENT CRACKDOWN

The crackdown a year ago may have been the bloodiest repression of protesters in Iran since the 1979 revolution.

Reuters reported last year that about 1,500 people were killed during less than two weeks of unrest that started on Nov. 15, 2019. The toll, provided to Reuters by three Iranian interior ministry officials, included at least 17 teenagers and about 400 women as well as some members of the security forces and police.

Iran’s Interior Ministry has said around 225 people were killed during the protests, which erupted after state media announced that gas prices would rise by as much as 200% and the revenue would be used to help needy families.

The U.S. State Department on Wednesday also blacklisted two Iranian Revolutionary Guard Corps (IRGC) officials, accusing them of involvement in the killing of nearly 150 people in the city of Mahshahr during last year’s crackdown. The action bars them and their immediate families from traveling to the United States.

Rights groups said they believe Mahshahr had one of the highest protest death tolls, based on information they received from local residents. The State Department said as many as 148 civilians were killed there.

“Nations who believe in supporting the freedoms of expression and association should condemn Iran’s egregious human rights violations, and reaffirm respect for the dignity and human rights and fundamental freedoms of every person by imposing consequences on the regime as we have, today,” U.S. Secretary of State Mike Pompeo said in a separate statement.

Reuters was the first to report that sanctions on Iranians involved in the crackdown against anti-government demonstrations were expected as early as this week.

Tensions between Washington and Tehran have risen since Trump unilaterally withdrew in 2018 from the 2015 deal under which Tehran agreed to restrict its nuclear program in return for relief from American and other sanctions. Trump restored harsh U.S. economic sanctions designed to force Tehran into a wider negotiation on curbing its nuclear program, development of ballistic missiles and support for regional proxy forces.

U.S. President-elect Joe Biden, set to take office on Jan. 20, has previously said he would return the United States to the nuclear deal, if Iran resumes compliance.

Some analysts have said that the piling-on of additional U.S. sanctions by Trump’s administration appeared to be aimed at making it harder for Biden to re-engage with Iran after taking office.

(Reporting by Daphne Psaledakis and Humeyra Pamuk; editing by Will Dunham)

Oil markets flat as restarts begin at storm-hit energy operations

By Erwin Seba

HOUSTON (Reuters) – Energy companies on Friday continued efforts to restore operations at U.S. Gulf Coast offshore platforms and refineries shut by Hurricane Laura as oil markets largely shrugged off the storm’s impact.

Some 300 offshore production facilities and half-dozen refineries halted ahead of a Category 4 storm that hit the coast of Louisiana early Thursday with winds of 150 mile per hour (240 kph). The destructive winds cut a narrow path through the area, sparing facilities not directly in its path.

However, Citgo Petroleum’s 418,000-barrel per day Lake Charles, Louisiana, plant was on the storm’s path, and repairs could take four to six weeks, according to Mizuho Securities. The company did not reply to requests for comment.

Motiva Enterprises, operator of the largest U.S. refinery, and Valero Energy Corp on Friday began restarting their Port Arthur, Texas, refineries.

U.S. crude futures traded at $43.08 per barrel at midday, up four cents, up slightly from $42.34 a week ago. U.S. gasoline futures were up 2 cents, less than 2% higher than they were a week ago.

About 84%, or 1.56 million barrels per day, of U.S. Gulf of Mexico crude output and 60% of natural gas offshore production were shut on Thursday, the U.S. Department of Interior reported.

Exxon Mobil Corp said its 369,024 bpd Beaumont, Texas, refinery, about 50 miles (80 km) west of the storm’s landfall, required “minor repairs,” a spokesman said. The company was taking steps to restart once power and port operations were restored.

Cheniere Energy Inc’s and Cameron LNG’s Cameron liquefied natural gas plants in Louisiana took almost no pipeline gas early on Friday, according to preliminary data from Refinitiv.

“Refiners may be reluctant to quickly return to production when the product they make is a money losing proposition,” Robert Yawger, director of energy futures at Mizuho Securities, wrote on Friday.

The ports of Beaumont, Orange and Sabine, Texas, and Cameron and Lake Charles, Louisiana, remained closed on Friday, according to the U.S. Coast Guard.

Houston, the United States’ largest energy export port, restarted operations on Thursday and had nearly halved the list of 53 vessels waiting on Thursday to reenter the port.

One-way movement and other restrictions were in place on Friday at points along the Houston Ship Channel, according to the U.S. Coast Guard.

(Reporting by Erwin Seba; writing by Gary McWilliams; Editing by Marguerita Choy and David Gregorio)