Economy

OTTAWA (Reuters) -Canada must strengthen its incentives meant to help industry scale up clean technologies after the United States passed massive investments in August to accelerate the green transition there, the finance minister said on Wednesday.The Inflation Reduction Act (IRA) was signed into law by U.S. President Joe Biden and contains incentives for consumers and businesses as the United States seeks to drastically cut its carbon emissions.”This is a far-reaching piece of legislation with a lot of different consequences for Canada,” Finance Minister Chrystia Freeland told reporters in Windsor, Ontario, where she spoke to automotive parts manufacturers earlier. There are “elements” of the IRA that Canada needs to “respond to,” she said. “We are working on it. You will see some of that in the fall economic statement, and you’ll see further action in the budget in the spring.” Freeland said she would soon announce a date for the annual fall economic statement (FES), which is when the government updates its economic projections and sometimes tweaks its spending plans. Canada should avoid new stimulus in the FES, analysts told Reuters last week.Canadian companies seeking to build carbon capture facilities and manufacturers hoping to attract new electric vehicle (EV) or battery plants have expressed concern that the IRA will give the United States an unfair advantage.Governments in Europe and Asia have raised complaints about parts of the act impacting their industries. On Wednesday, the Biden administration announced another big boost for its green transition, saying it was awarding $2.8 billion in grants to encourage U.S. production of EVs or the minerals that go in their batteries.Freeland has repeatedly welcomed the introduction of the IRA because it puts the United States on a path toward the green transition without penalizing Canada with new EV consumer tax credits only for American carmakers as had initially been announced. Instead the tax credits are allowed for “North American” carmakers. The sweeping IRA also boosts the requirements to source critical minerals used to make batteries with free-trade agreement allies like Canada, which has an abundance of the minerals but still needs to scale up production and processing. More

Vladimir Putin has declared martial law in four occupied regions and given security forces sweeping powers in a sign the Russian president is struggling to regain the military initiative nearly eight months into the invasion of Ukraine. The move, which includes broad restrictions on travel including vehicle checks and “economic mobilisation” in much of western and southern Russia, is Putin’s latest escalation as his army continues to cede ground to Ukraine. Demanding the “entire system of state administration” contribute to the war effort, Putin yesterday authorised Russia’s governors to maintain public order, ensure supplies for the armed forces and to protect critical infrastructure. The measures, which are one step below martial law, cover eight regions bordering Ukraine, including the Crimean peninsula annexed by Russia in 2014. Putin also set up a “co-ordination council” led by Russia’s cabinet to streamline support for the invasion forces. Prime minister Mikhail Mishustin said the council would focus on military equipment and supplies as well as construction and transport logistics.Related read: Ukrainian officials have expressed “shock” over Republican suggestions that future assistance for Kyiv could be limited if the party wins the House of Representatives in November’s US midterm elections.Thank you for reading FirstFT Asia. Have feedback on today’s newsletter? Let me know what you think at [email protected]. — EmilyFive more stories in the news1. Australian ex-pilots reportedly approached to train China’s military Australia’s defence force has launched an investigation into allegations that a number of its former air force pilots were offered lucrative packages to teach Chinese pilots how to fly western attack aircraft. Australian pilots were among those approached by a South African flight school to train Chinese pilots to operate warplanes.2. Truss’s home secretary quits UK home secretary Suella Braverman was forced to quit after she admitted a security breach. Braverman insisted she had committed only “a technical breach of the rules” and her resignation letter contained a broadside against prime minister Liz Truss and hinted at the bitterness behind her departure. Amid the chaos, Truss’s administration is living from hour to hour.More UK news: 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. For the latest UK political news, click here to sign up for Stephen Bush’s newsletter, Inside Politics.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, said 140,000 people had left in the past two years. 4. Kakao’s co-chief resigns over messenger app outage Namkoong Whon has resigned from Kakao after an hours-long outage of the company’s mobile services sparked a public backlash against South Korea’s primary messaging app provider. His resignation came after President Yoon Suk-yeol said that South Korea’s antitrust watchdog would examine Kakao’s market dominance.5. Biden orders officials to prepare for more emergency oil releases President Joe Biden has ordered officials to prepare for more releases from the US Strategic Petroleum Reserve as he approved the sale of 15mn barrels of oil in December and established a plan to replenish the dwindling emergency stockpile.The day aheadMalaysia’s Election Commission meets A special meeting will be convened today to discuss the upcoming general election. A press conference is expected following the meeting. (Channel News Asia) European Council meeting Economic troubles will be high on the agenda when EU heads of state meet today in Brussels. EU Court of Justice revisits blocked Telefónica-Three deal Advocate general at the EU Court of Justice Juliane Kokott will deliver her opinion on whether Brussels made the right decision in blocking the proposed merger of the UK businesses of Telefónica’s O2 and CK Hutchison’s Three in 2016. The decision could unleash a wave of activity across the sector.Earnings Companies reporting results today include American Airlines, AT&T, Nokia, Pernod Ricard, Philip Morris, Schroders, Union Pacific and Vivendi. See our full list here. What else we’re reading and listening to Did China miss its chance to fix its economy? As President Xi Jinping prepares to stay on for an unprecedented third term as leader, he faces a big problem: China’s slowing economy. On this episode of Behind the Money, the FT’s China correspondent Edward White explains whether it’s too late for Xi to put the country on a path to strong growth again. Go deeper: Xi’s expected reaffirmation 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. Retail investor vigilantes hunt for crypto’s most wanted man A group of nearly 4,400 crypto investors are working to track down Do Kwon, who is wanted in South Korea on charges of financial fraud following the collapse of his terraUSD and luna coins in May. The international manhunt for the 31-year-old Stanford-educated entrepreneur has intensified as retail investors try to recover from the devastating losses.Will the energy crisis crush European industry? Saint-Gobain, the French building materials group, has ordered extra-warm coats and gloves for warehouse staff as it prepares to turn down the heat this winter to save money on its energy bill. While European industrial companies are putting a brave face on it, there is already evidence that major companies are reducing production because of the energy shortage.

Containing China is Biden’s explicit goal Unless a company’s product is, say, luxury goods or agricultural commodities, Biden’s technological decoupling from China will hit their bottom line, writes Edward Luce. It is not clear that corporate America, or its foreign counterparts, have fully digested what is about to hit them. Pakistan needs billions to recover from floods Prime Minister Shehbaz Sharif told the FT that his country will ask international lenders for billions of dollars worth of new loans to rebuild the country after calamitous floods uprooted 33mn people and pushed its cash-strapped economy even closer to insolvency. The country needs “huge sums of money” for “mega undertakings”, he said.“There is a gap — and a very serious gap — which is widening by the day between our demands and what we have received,” Sharif said.FashionOn a search for the perfect suit, Annachiara Biondi discovers that finding a professional-looking ensemble that is both comfortable and within budget involves some trial and error. For more fashion and style news sign up for our FT Weekend newsletter. More

Federal Reserve and White House officials spent last week quizzing investors and economists about the risks of a British-style meltdown at home.WASHINGTON — Federal Reserve researchers and officials quizzed experts from Wall Street and around the world last week about a pressing question: Could a market meltdown like the one that happened in Britain late last month occur here?The answer they got back, according to four people at separate institutions who were in such conversations and who spoke on the condition of anonymity to describe private meetings, was that it probably could — though a crash does not appear to be imminent. As the Biden administration did its own research into the potential for a meltdown, other market participants relayed the same message: The risk of a financial crisis has grown as central banks have sharply raised interest rates.The Bank of England had to swoop in to buy bonds and soothe markets after the British government released a fiscal spending plan that would have stimulated an economy already struggling with punishing inflation, one that included little detail on how it would be paid for. Markets lurched, and pension funds using a common investment strategy found themselves scrambling to adjust, prompting the central bank’s intervention.While the shock was British-specific, the violent reaction has caused economists around the world to wonder if the situation was a canary in a coal mine as signs of financial stress surface around the globe.Officials at the Fed, Treasury and White House are among those trying to figure out whether the United States could experience its own market-shuddering meltdown, one that could prove costly for households while complicating America’s battle against rapid inflation.Administration officials remain confident that the U.S. financial system is unlikely to see such a shock and is strong enough to withstand one if it comes. But both they and the Fed are keeping close tabs on what is happening at a moment when conditions feel abnormally fragile.Markets have been choppy for months in the United States and globally as central banks — including the Fed — rapidly raise interest rates to bring inflation under control. That has caused abnormally large price moves in currencies and other assets because their values hinge partly on the level of interest rates and on international rate differences. Stocks have been swinging. It can be hard to quickly find a buyer for U.S. government bonds, although the market is not breaking down. And in corners of finance that involve more complicated investment structures, there’s concern that volatility could trigger a dangerous chain reaction.“In the market, there is a lot of worry, and everyone is saying it feels like something is about to break,” said Roberto Perli, an economist at Piper Sandler who used to work at the Fed and who was not part of the conversations last week. He added that it made sense that officials were checking up on the situation.President Biden at an event promoting the Inflation Reduction Act in California last week.T.J. Kirkpatrick for The New York TimesPresident Biden has repeatedly convened his top economic aides in recent weeks to discuss market flare-ups, like the one that roiled Britain.Fed officials and staff members have met with investors and economists both during normal outreach and on the sidelines of the World Bank and International Monetary Fund annual meetings last week in Washington.Fed researchers asked about three big possibilities during the meetings. They wanted to know whether there could be a trade or an investment class in the United States similar to British pension funds that could pose a significant and underappreciated threat.They also focused on whether problems overseas could spill back over to the United States financial system. For instance, Japan is one of the biggest buyers of U.S. debt. But Japan’s currency is rapidly falling in value as the country holds its interest rates low, unlike other central banks. If that turmoil caused Japan to reverse course and stop buying or even sell U.S. Treasurys — something that it has signaled little appetite for, but that some on Wall Street see as a risk — it could have ramifications for U.S. debt markets.The final threat they asked about focused on whether today’s lack of easy trading in the Treasury market could turn into a more serious problem that requires the Fed to swoop in to restore normal functioning..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.None of those areas appear to be at immediate risk of snapping, analysts told officials. The pension system in the United States is different from that in Britain, and the government debt market may be choppy, but it is still functioning.Yet they also voiced reasons for concern: It is impossible to know what might break until something does. Markets are large and intertwined, and comprehensive data is hard to come by. Given how much central bank policy has shifted around the world in recent months, something could easily go wrong.There is a good reason for officials to fret about that possibility: A market meltdown now would be especially problematic.A New York City market. The Fed is rapidly raising interest rates to bring inflation under control, but a financial crash could force it to shift that plan.Elias Williams for The New York TimesA financial disaster could force the Fed to deviate from its plan to control the fastest inflation in four decades, which includes raising rates rapidly and allowing its bond portfolio to shrink. Officials have in the past bought large sums of Treasury bonds in order to restore stability to flailing markets — essentially the opposite of their policy today.Central bankers would most likely try to draw a distinction between bond buying meant to keep the market functioning and monetary policy, but that could be hard to communicate.The White House, too, has reasons to worry. Mr. Biden was scarred by his experience as vice president throughout the Great Recession, during which a financial meltdown brought on the worst downturn since the 1930s, throwing millions out of work and consuming the Obama administration’s policy agenda for years of a painstakingly slow recovery.Mr. Biden has pressed his team to estimate the likelihood that the United States could experience another 2008-style shock on Wall Street. Treasury Secretary Janet L. Yellen and her deputies have been closely monitoring developments in the market for U.S. government debt and searching for any signs of British-style stress.While administration officials noted that trading has become more difficult in the market for Treasury bonds, they also pointed out that it was otherwise functioning well. Multiple officials said this week that they expected the Fed would step in to buy bonds — as the Bank of England did — in an emergency.Other administration officials came away from their meetings in Washington last week with increased worries about financial crises sprouting in so-called emerging markets, like parts of Africa, Asia and South America, where food and energy prices have soared and where the Fed’s steady march of interest rate increases has forced governments to raise their own borrowing costs. Such crises could spread worldwide and rebound on wealthier countries like the United States.Yet administration officials say the American economy remains strong enough to endure any such shocks, buoyed by still-rapid job growth and relatively low household debt.“This is a challenging global economic moment where stability is hard to find,” said Michael Pyle, Mr. Biden’s deputy national security adviser for international economic affairs, “but the U.S. has momentum and resilience behind its economic recovery, and a trajectory that puts the U.S. in a strong position to weather these global challenges.”And there is no guarantee that something will blow up. A senior Treasury official said this week that financial risks had risen with high inflation and rising interest rates, but that a variety of data the department tracked continued to show strength in American businesses, households and financial institutions.For now, markets for short-term borrowing, which are crucial to the functioning of finance overall, look healthy and fairly normal, said Joseph Abate, a managing director at Barclays. And officials are working on safeguards to stem the fallout if a disaster should come. The Financial Stability Oversight Council, which Ms. Yellen leads, discussed the issues at its most recent meeting this month, hearing staff presentations on U.S. financial vulnerabilities.The Treasury Borrowing Advisory Committee, an advisory group of market participants, has been asked in its latest questionnaire about a possible Treasury program to buy back government debt. Some investors have taken that as a signal that they are worried about a possible problem and may want to be able to improve market functioning, especially in light of their comments and outreach.“We are worried about a loss of adequate liquidity in the market,” Ms. Yellen said last week while answering questions after a speech in Washington.And the Fed already has outstanding tools that can help to stabilize markets. Those include swap lines that can funnel dollars to banks that need it overseas, and that have been used by Switzerland and the European Central Bank in recent weeks.Mr. Abate at Barclays said the Securities and Exchange Commission, Treasury and Fed seemed to be “on top of” the situation.“It’s clear in the marketplace that liquidity is a concern,” he said. “The regulators are moving to address that.” More

The two largest makers of consumer goods have been hit by shoppers around the world tightening their budgets and turning to supermarkets’ own-brand products, with Nestlé warning that prices would have to rise further.Sales volumes at Switzerland’s Nestlé and US-based Procter & Gamble fell in the third quarter as inflation continued to surge and consumers’ tolerance for steep price increases began to crack.Mark Schneider, chief executive of Nestlé, warned of further price increases ahead as energy and labour costs mount over the next few months. “Obviously some of the pricing will have to continue [rising] . . . our pricing is still catching up with the hit we have taken from inflation,” he said.P&G, which generates more than half of its revenue outside the US, is also suffering from a strong dollar. Andre Schulten, its chief financial officer, said on Wednesday: “We fully expect more volatility in costs, currencies and consumer dynamics as we move through the fiscal year.”Price rises led by food are straining consumer budgets globally: Europe especially has been affected by the war in Ukraine and the resulting energy crisis. Eurozone inflation topped 10 per cent in the year to September, while UK inflation is also in double digits.Schulten said: “We see high pressure on the European consumer, with high inflation and, certainly . . . energy costs will hit the consumer over the winter period.”

Makers of global brands have so far fared better than expected as inflation has soared, but the squeeze has begun pushing more consumers towards cheaper products and own-brands. Companies’ margins are also coming under pressure as they race to push through higher costs.P&G raised prices by 9 per cent year-on-year across its product lines in the quarter to September, while Nestlé pushed through a 7.5 per cent year-on-year rise in the first nine months of 2022, its biggest in decades.But P&G’s sales volumes still declined 3 per cent in the quarter, while Nestle’s real internal growth — a measure of sales volumes and consumers’ product choices — slid 0.2 per cent in the third quarter, according to analysis of its nine-month figures. That figure was lower than analysts expected. Supply chain problems also played a part, the company said.Nestlé’s like-for-like net sales growth reached 8.5 per cent in the first nine months, its highest rate in 14 years, propelled by the price increases. The maker of Maggi noodles, Kit Kats and Nespresso coffee capsules said it expected full-year sales growth of 8 per cent, the higher end of the range it had previously signalled.P&G, which makes Tide detergent and Tampax tampons, expects its sales volumes to fall 1 to 3 per cent in its fiscal year, down from its previous forecast for flat to 2 per cent growth. P&G also forecast a $1.3bn hit from the strong dollar this fiscal year, or a 6 per cent knock to its sales growth, $400mn more than originally anticipated.The US-based group declined to say whether it would raise prices further, but acknowledged limits to its pricing power, particularly in Europe.James Edwardes Jones, an analyst at RBC Capital Markets, said Nestlé was “coping admirably” but noted that sales of its bottled water, prepared foods and confectionery had slowed in the third quarter. “Even Nestlé, it could be argued, is starting to show early signs of tougher conditions,” he added.Schneider said pressure on consumer wallets was coinciding with a return to more normal shopping patterns following the acute phase of the pandemic. “You see a bit of trading down” but some of the shifts were down to “post-Covid normalisation”, he added.Shares in Nestlé fell 1.28 per cent on Wednesday to SFr106.40, while shares in P&G rose 1.8 per cent to $130.79 after its results surpassed analysts’ expectations. More

The housing market has become especially tough for multigenerational households for two reasons.
The first is that home prices, even as they are starting to cool, have jumped sharply in the past year.
Second, there were 59.7 million U.S. residents living with multiple generations under the same roof in March 2021, according to Pew Research. That’s up from 14.5 million in 1971.

Juan Espinoza, far left, with his family.

A combination of rising interest rates, high home values and limited inventory has been squeezing prospective homebuyers — and perhaps few know that as well as Juan Espinoza does.
The 23-year-old resident of Santa Ana, California, has been on a three-year search for a dwelling that’s within the family budget that includes the four in his own family — and his parents.

“We live in an apartment right now, just waiting for the market to come down a little bit,” Espinoza said. “We’ve been outbid so many times I’ve lost track of how many houses we saw.”

Lea en español aquí.

The family is facing two trends that have made the search especially difficult. The first is that home prices, even as they are beginning to cool, have jumped sharply in the past year. And the Espinozas have been searching in Orange County where the median home price was $987,950 during the third quarter, up 11% from the year-earlier period, according to ATTOM Data.

The second is that the Espinozas are among the millions of people with multiple generations residing under one roof. In March 2021, there were 59.7 million U.S. residents in that living arrangement, up from 14.5 million in 1971, according to Pew Research.
Mortgage rates have also surged as the Federal Reserve tightens monetary policy to curb inflationary pressures not seen in about 40 years. The rate on a 30-year fixed mortgage reached 6.66% on Oct. 6 according to Freddie Mac. It was 2.99% on Oct. 7, 2021.
“We’re going to make them homeowners, but the interest rates have gone up, and their purchasing power has gone down,” said Imelda Manzo, a Murrieta, California-based realtor who has been working on finding new housing for the Espinozas.

Multigenerational households

Families of color are more likely to share a home with multiple generations, Pew found. Roughly a quarter of Asian, Black and Hispanic Americans each lived in multigenerational households in 2021, compared to 13% of those who are white.
Residing with relatives can offer advantages: More family members residing under one roof means you can pool multiple streams of income, for instance. And in households with young children, grandparents can pitch in with child care.
“Latinos are more likely to live in multigenerational households,” said Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals.
“But being a larger multigenerational family comes with complications if you’re trying to be a homeowner,” he said.

For instance, it can be harder for them to qualify for a mortgage, even if they bring multiple streams of income to the table. “The perception is that those aren’t permanent scenarios, so the instinct of the underwriter is to look at everything else more aggressively,” Acosta said.
Larger families also have needs to meet as they search for their dwellings, which make it hard to find the ideal home when inventory is tight. “It’s not just square footage, but do you have a yard, more bedrooms,” Acosta said. “You want more utility.”
“Work-at-home growth pushed homebuyers to the suburbs and toward homes with more utility, such as extra bedrooms that can be used as a home office,” Acosta said. Institutional buyers have also rushed into affordable neighborhoods to snap up homes, he added. Indeed, a May report from the National Association of Realtors found that in 2021 the institutional buyer market share rose in 84% of states, as well as in the District of Columbia.
For the Espinoza family, the ideal home would have at least three bedrooms, a backyard and proximity to employment and schools in Santa Ana.
These issues are also compounded by the fact that first-time homebuyers like the Espinozas have been facing fierce competition from all-cash buyers.
“We would get counteroffers,” said Manzo. “[Sellers] would ask for highest and best within a deadline.”
Aggressive bidders are also willing to up the ante to buy a home, including waiving inspections and appraisal contingencies, she said. And others just bring more cash to the table.
In one situation, the family lost their bid on a home to another buyer who was willing to pay $125,000 over asking, Manzo added.

Seeking balance between higher rates and falling prices

As homeownership becomes increasingly unaffordable, different states are crafting legislation to address the problem.
Last year, Democratic California Gov. Gavin Newsom signed the California Housing Opportunity and More Efficiency Act into law. The measure streamlines the process for homeowners to split their residential lot or build a duplex onto their property.
The law also makes it easier for homeowners to build accessory dwelling units onto their property, said Acosta, which can also help accommodate multigenerational households.

Arrows pointing outwards

Freddie Mac

“These additional units are typically called granny flats and can be used as an extra bedroom or it can be a small apartment inside of another property, so it increases density,” he said.
Another piece of proposed legislation in New Jersey would permit buyers bidding on foreclosed homes to make a down payment of 3.5%, provided they make that property their primary residence for at least seven years. Normally, buyers of these foreclosed properties would have to put down a deposit of 20%.
For the Espinoza family, the next steps are to wait for the market to cool sufficiently — and to keep an eye on interest rates, even as the Fed continues its policy-tightening regime.
“We’ve started to see some sellers are doing price reductions on their listing; they’re not selling the way they were six months ago,” Manzo said. “We’re in a waiting period right now, but we’ll continue to look and see what happens toward the end of the year.”

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Today’s top storiesUK inflation hit a more-than-expected 40-year high of 10.1 per cent in September, driven by huge increases in food prices. The September figure has extra significance as it is used to calculate increases in pensions and benefits. Prime Minister Liz Truss said today the “triple lock” protecting pensions would stay but did not make commitments on benefits. The other unanswered question is where public spending cuts may fall. Either way, there isn’t much left to cut, says columnist Sarah O’Connor.Suella Braverman quit as UK home secretary in another blow to Liz Truss’s government. Braverman insisted she had committed “a technical breach” of security rules, but her resignation letter contained a broadside against Truss and the breaking of election pledges. She was replaced by Grant Shapps.President Joe Biden authorised the sale of more oil from the US’s strategic reserve and set out a plan to replenish the stockpile.Nestlé, the world’s largest foodmaker, increased prices by 7.5 per cent in the first nine months of the year — the biggest amount in decades — pushing its sales growth to the highest level in 14 years.For up-to-the-minute news updates, visit our live blogGood evening,As temperatures begin to drop and energy prices continue to rise, European households and industry face a bleak winter. Yesterday, ahead of an EU summit tomorrow, Brussels unveiled a fresh package of emergency measures. These include a cap on the traded price of gas and measures to limit volatility in derivatives markets. The moves form part of what European Commission chief Ursula von der Leyen called “further steps towards an energy union”.The need for a common EU energy policy is also the subject of today’s column by chief economics commentator Martin Wolf, who argues that it needs to accelerate the shift to renewables as well as help member states cushion households from the worst of the price shock.Meanwhile, a separate rebellion is growing among EU member states over an international energy treaty that allows multinationals to sue governments to protect their investments. Campaigners say the pact, designed in the 1990s, hinders governments’ efforts to curb greenhouse gases.Finding alternatives to Russian gas is still the most pressing demand.European countries have been holding talks with Qatar, the world’s largest exporter of liquefied natural gas. The country’s energy minister told the FT that next year could be “much worse” once reserves were depleted, especially if there was a harsh winter and gas did not start flowing again from Russia.Countries outside the bloc have problems too. In the UK, campaigners warned yesterday that 11mn homes could be pushed into fuel poverty after the government ditched its commitment to help all households with bills for two years, replacing it with six months of support followed by targeted help for the most vulnerable.Meanwhile, Europe’s industrial companies, which employ about 35mn people, or 15 per cent of the working population, are strapping themselves in for an exceptionally difficult winter, as today’s Big Read explains. Some sectors have already halted production and many worry that industry could start migrating to places with cheaper energy. “We are risking a massive deindustrialisation of the European continent,” said Alexander De Croo, Belgium’s prime minister.

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Gas is EU industry’s single most important source of energy (it consumes more than a quarter of the EU’s total supply) and is critical to the chemical and fertiliser sectors in particular, as well as the bloc’s wider industrial strategy.“If the German chemicals industry goes down, three weeks later every supply chain in Europe has a problem,” said the head of the industry’s trade body.Could we soon witness the end of electricity sharing as countries focus on their own energy needs? Read the first instalment of our new Climate Exchange dialogues.Need to know: UK and Europe economyBritish workers are on track to suffer two decades of lost wage growth, according to Frances O’Grady, the outgoing head of the country’s trade union movement, with each worker losing £24,000 in real terms since 2008 as pay growth lags inflation.The UK’s recent disastrous “mini” Budget can trace its origins back to the decision to leave the EU. Watch our new film on why there has not yet been a convincing case for a “Brexit dividend”. A new poll suggests the British people support a reset in relations with Brussels.

Video: The Brexit effect: how leaving the EU hit the UK

Giorgia Meloni, Italy’s likely new prime minister, is set to take power against a backdrop of looming recession and swingeing increases in energy prices for households and businesses. Public debt stands at 150 per cent of GDP — the highest of any major eurozone economy.Need to know: global economyThe delay of Chinese GDP data that might have reflected badly on Xi Jinping during the Communist party congress has fuelled concern over the country’s economy. It is also the topic of today’s Behind the Money podcast with China correspondent Edward White.Pakistan will ask international lenders for billions of dollars in new loans to rebuild the country after floods uprooted 33mn people and caused an estimated $30bn of damage. These funds would be in addition to its existing external debt of $130bn.Latin America’s central banks can teach big economies a thing or two about handling inflation, writes LatAm editor Michael Stott.

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Need to know: businessNetflix shares shot up on news that the streaming company had stemmed its subscriber losses, adding 2.4mn members in the third quarter — more than double its forecast.Goldman Sachs profits plunged 43 per cent in the third quarter to $3.1bn or $8.25 per share, although they were still better than analysts expected. The bank is pulling back from retail operations to focus on wealth management.Demand for air travel is still surging (United is the latest carrier to forecast an increase in demand), but so are fares. International business editor Peggy Hollinger says airlines could still come unstuck, as the darkening economic outlook hits consumer spending. One of the consequences of the UK’s ill-fated “mini” Budget has been pressure on property funds to sell offices and warehouses, leading real estate investors to pick up some bargains. Funds have faced a wave of withdrawals, meaning they have to sell assets to meet the redemption requests.Small business confidence in the UK has fallen to its lowest level since the depths of the pandemic, according to an industry survey. More than 40 per cent expect revenues to continue to fall over the next three months. A separate survey highlights a rise in corporate financial distress, especially in hospitality and retail.The World of WorkMiddle managers: blocks in the road of success and innovation, or deeply needed allies and vital links between senior management and an increasingly demanding workforce? Listen to the new Working It podcast. Elizabeth Uviebinene, author of The Reset: Ideas to Change How We Work and Live, reports from the UK Black Business Show, the biggest event of its kind in Europe that aims to develop, empower and inspire black professionals and entrepreneurs.Get the latest worldwide picture with our vaccine trackerSome good newsUğur Şahin and Özlem Türeci, the team behind the pioneering BioNTech Covid-19 jab, told the BBC that vaccines to treat cancer would be possible by 2030. (Full interview at 35m30s). You can read more on their cancer development work in global pharma correspondent Hannah Kuchler’s Big Read.Uğur Şahin, left, and Özlem Türeci, founders of the German-based vaccine developer BioNTech © Bernd von Jutrczenka/Getty Images More

The benchmark S&P 500 index is firmly in bear market, down about 22% year-to-date, as investors worried over rising interest rates, record inflation and the lingering impact of global-supply chain snags turned risk averse.”No asset class is over pricing the recession risk. But in relative terms, U.S. equities have the most recession risk priced in,” a Citigroup team led by Alex Saunders said in a note dated Tuesday, adding earnings estimates had more to adjust.Analysts now expect quarterly earnings growth for S&P 500 companies of just 2.8% from a year ago, much lower than an 11.1% increase expected at the start of July, according to Refinitiv data.Still, some gauges of the U.S. stock market that flashed warnings throughout the year ahead are more positive, while the S&P 500’s recent pattern of big upside moves echoes those seen in prior market bottoms.Citigroup said earlier this month that it was expecting global equities to rise about 18% from now through the end of 2023. U.S. bonds had priced the least risk of a recession, the Wall Street bank said.”Bonds may have to wait for longer this time around to price recession risk given that the Fed will remain hawkish for longer than typical,” the team wrote.Industrials and financials are not factoring in enough recession risk among sectors, Citigroup said, with consumer discretionary the least risk priced in. More

Amazon founder Jeff Bezos has become the latest corporate leader to warn about the state of the economy, cautioning that rougher times are likely ahead.
“Yep, the probabilities in this economy tell you batten down the hatches,” Bezos said in a comment related to Goldman Sachs CEO David Solomon’s CNBC interview.

Amazon CEO Jeff Bezos speaks during the UN Climate Change Conference (COP26) in Glasgow, Scotland, Britain, November 2, 2021.
Paul Ellis | Reuters

Amazon founder Jeff Bezos has become the latest corporate leader to warn about the state of the economy, cautioning that rougher times are likely ahead.
In a tweet posted Tuesday evening, the former president and CEO of the online retailing giant echoed comments that Goldman Sachs Chief Executive David Solomon made to CNBC earlier in the day.

“Yep, the probabilities in this economy tell you batten down the hatches,” Bezos said in a comment attached to a clip of Solomon’s “Squawk Box” interview.
Solomon, the head of the Wall Street financial giant, said it’s time for both corporate leaders and investors to understand the risks building up, and to prepare accordingly.
Solomon spoke after his firm had just posted quarterly earnings results that beat Wall Street estimates. Yet he said a recession could be looming as the economy deals with persistently high inflation and a Federal Reserve trying to lower prices through a series of aggressive interest rate increases.
“I think you have to expect that there’s more volatility on the horizon,” Solomon said. “Now, that doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”
Fed officials have also been warning that a recession is possible as a result of the monetary policy tightening, though they hope to avoid a downturn. Policymakers in September estimated that gross domestic product would grow just 0.2% in 2022 and rebound in 2023, but to only 1.2%. GDP contracted in both the first and second quarters this year, meeting a commonly held definition of a recession.

There have been mixed signals lately from corporate leaders.
JPMorgan Chase CEO Jamie Dimon has been warning of troubles ahead, saying recently that the situation is “very, very serious” and that the U.S. could slip into recession in the next six months.
However, Bank of America CEO Brian Moynihan told CNBC on Monday that credit card data and related information show that consumer spending has held up.
“In the current environment, the consumer is quite good and strong,” he said on “Closing Bell.”
Moynihan acknowledged that the Fed’s efforts could slow the economy, but noted that “the consumer’s hanging in there.”

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