Good morning. Joe Biden is to announce the sale of more oil from the government’s strategic reserves in a speech later today addressing rising costs.
The US president will also outline a plan to replenish the dwindling emergency stockpile in an effort to tame petrol prices, which have been a political liability for Democrats ahead of next month’s midterm elections.
In March, Biden ordered the release of 180mn barrels of oil from the Strategic Petroleum Reserve following Russia’s invasion of Ukraine, which led to a surge in energy prices and a scramble for supplies. The latest release of 15mn barrels from the SPR completes the president’s target but leaves reserves at their lowest level since 1984.
The latest intervention in the energy market by the White House follows the decision by Opec and its allies last week to cut oil production, a move that angered Washington.
The US government’s decision to lean on the SPR to bring down domestic petrol prices has come under fire from Republicans, who argue reserves have fallen to dangerously low levels.
Yesterday the White House responded to some of these criticisms by announcing a new mechanism that will be used to replenish supplies.
Under the new arrangement the SPR would purchase oil if it fell to between $67 and $72 per barrel in spot transactions, but would also enter into contracts to purchase oil based on its forward price in the futures market. US oil prices rose to $83.50 ahead of Biden’s announcement.
Do you think Joe Biden is correct to sell oil reserves to help lower prices? Have your say in our latest poll. Here’s the rest of the day’s news — Gordon
Five more stories in the news
1. ‘We’re done with shrinking quarters’ Reed Hastings, chief executive of Netflix, announced the streaming giant added subscribers for the first time in two quarters alongside results. The success of Stranger Things and Dahmer — Monster: The Jeffrey Dahmer Story helped Netflix add 2.4mn subscribers in the third quarter, taking the total of paying customers to 223mn. The company’s shares surged as much as 15.5 per cent in after-hours trading.
2. UK inflation rate hits double figures UK inflation rose to 10.1 per cent, putting pressure on the government’s stretched finances and on the Bank of England to announce a large interest rate increase at its next meeting in November. The UK has the highest inflation in the G7, five times the central bank’s target of 2 per cent.
3. Hong Kong launches scheme to stem professional exodus Hong Kong announced a HK$30bn (US$3.8bn) plan to attract international investors and businesses back to the city, after strict pandemic policies and a security crackdown sparked an exodus of residents. John Lee, the city’s new chief executive, who oversaw a crackdown against political protesters, said 140,000 people had left in the past two years.
4. Goldman pulls back from consumer lending Goldman Sachs said it was pulling back from its highly touted foray into retail banking to focus on its traditional strengths of serving big corporations and wealthy investors. The decision is part of a reorganisation under chief executive David Solomon that will see the trading and investment banking business folded into one unit as the bank shrinks from four divisions to three.
Go deeper: This is the second significant restructuring at Goldman Sachs under David Solomon and is an attempt to narrow the valuation gap with Wall Street rivals.
5. Female climber met by cheering crowds on return to Iran Female Iranian climber Elnaz Rekabi was greeted by crowds of cheering supporters at a Tehran airport today on her return to the country. Rekabi’s decision to take part in an international competition in Seoul without wearing a headscarf was widely seen as a show of support for protests in Iran.
The day ahead
Company earnings After saying it delivered a record number of autos in the third quarter, Tesla is expected to report increased quarterly revenue. Investors expect to hear detail on consumer demand and the status of its production ramp-up at new factories in Texas and Germany. Procter & Gamble is expected to provide insight into consumers’ response to price rises as it reports earnings for its first fiscal quarter. Earlier today Nestlé, the world’s largest foodmaker, said it increased prices by 7.5 per cent in the first nine months of the year. Chipmaker IBM and US pipeline operator Kinder Morgan report after the closing bell.
Federal Reserve: The US central bank will release its penultimate Beige Book of the year, an anecdotal assessment of regional economic conditions gathered by each central bank branch. Meanwhile, Minneapolis Fed president Neel Kashkari will take questions on inflation, interest rates and the US economy before a Travelers Institute employee town hall in Minneapolis. Separately, Chicago Fed president Charles Evans will participate in a question-and-answer session on current economic conditions and monetary policy at the Jefferson Scholars Foundation in Virginia.
Economic data Economy watchers should gain further signs on the health of the US property market and the impact of rising mortgage rates on would-be home buyers. The annualised rate of new home construction is expected to have fallen to 1.48mn in September from 1.58mn in August. Separately, the number of new home building permits are expected to decrease to 1.53mn from 1.542mn.
Trump deposition Former US president Donald Trump is scheduled to be deposed by attorneys for E Jean Carroll, a writer who has alleged Trump raped her in the 1990s. Carroll brought a federal defamation lawsuit against Trump in New York. Trump had requested that the deposition be delayed while a federal appeals court in Washington, DC, considered dismissing the case, but a New York federal judge rejected the motion.
What else we’re reading
Murdoch pitches reuniting empire to dubious investors At 91, media mogul Rupert Murdoch appears to be putting the pieces in place for his succession and has asked the boards of News Corp and Fox to consider combining forces after nearly a decade apart. But investors are sceptical, with some deriding the move as “family drama”.
KKR to push further into Japan US private equity group KKR, which manages nearly $500bn in assets, plans to boost its exposure to Japan, taking advantage of low corporate valuations and weakness in the yen to increase its investment in the country. “Our commitment to Japan continues to go up, not only in private equity but in real estate, infrastructure and our credit business,” KKR’s chief investment officer Henry McVey told the FT.
Banks discover that holding cash can be lucrative again As recently as last year, many US and European banks were actively trying to get out of holding clients’ cash because they were awash with deposits, writes Brooke Masters. Now the worm has turned.
China’s GDP data delay fuels concern for economy Viewed in some quarters as an attempt to avoid distracting from China’s biggest political event in years, the delay in releasing the country’s third-quarter GDP data came at a time when growth has become an uncomfortable topic in Beijing.
Go deeper: The expected reaffirmation of Xi Jinping at this week’s National Congress of the Chinese Communist party is a watershed moment politically, militarily and economically for the world’s emerging superpower.
Eurozone economies must tackle the supply shock together With fragmentation always a risk, a common energy policy is essential if EU citizens are to be protected against the worst of the economic crisis, writes Martin Wolf.
Food & Drink
From Barcelona to Bali, HTSI has pulled together 24 plant-based menus in its global guide to great vegan food. Do you have a favourite vegan restaurant? Email firstft@ft.com or reply to this email and your recommendation may appear in a future edition of FirstFT.
Source: Economy - ft.com
