Finance

The sign of a Shell petrol station is seen in front of a burning pilot flame atop a flare stack at the refinery of the Shell Energy and Chemicals Park Rheinland in Godorf near Cologne, Germany, August 3, 2022. 
Wolfgang Rattay | Reuters

Check out the companies making headlines in midday trading Thursday.
Constellation Brands — The spirits producer slipped 1.5% despite posting earnings and revenue for the previous quarter that beat expectations. Constellation Brands did, however, report losses in its cannabis business and said it would divest some of its wine offerings to The Wine Group.

Compass — Shares surged 16.1% after Insider reported Vista Equity Partners is considering a deal that would take the real estate technology company private.
General Electric — General Electric’s stock shed 1.8% amid news that the company is firing 20% of its onshore wind workforce in the U.S.
Conagra — Conagra’s stock traded 3.7% lower despite a top and bottom line beat in its recent fiscal quarter. The food producer also reaffirmed its outlook for the year.
Shell — Shares of the energy producer fell 4.4% after the company warned that it expects lower refining margins and weaker earnings from natural gas trading. Shell also cited higher costs for delivering fuel.
Silvergate Capital — Shares fell 6.5% after Wells Fargo double downgraded the crypto bank stock to underweight from overweight, citing deposit outflows because of sharply falling cryptocurrency prices.

Pinterest — Shares of the vision board company jumped nearly 5% after Goldman Sachs upgraded the stock to buy from neutral. The analyst said he came away from a recent meeting with senior Pinterest management with increased confidence in user growth and monetization on the platform.
Take-Two Interactive — The gaming company added 3.5% after Goldman Sachs upgraded Take-Two to a buy rating, saying the recent pullback in the stock create a good entry point for investors.
AbbVie — The biotech stock fell more than 2% after AbbVie said in a securities filing that research & development and milestone expenses will shave 2 cents off of earnings per share for the third quarter. AbbVie is scheduled to announce its full results for the quarter on Oct. 28.
Peloton — Peloton shares bounced back 4% after the at-home fitness company announced a plan to slash 500 more jobs, or 12% of its workforce, to help steer it back to growth. It was up about 3% midday after falling in the premarket.
Lamb Weston — Shares of Lamb Weston rose 0.7% to a new fresh 52-week high, after the frozen potato processing company announced quarterly earnings that beat Wall Street’s expectations on Wednesday. The company also delivered a revised outlook for 2023 profit.
Splunk — Splunk’s stock dropped more than 4.5% after UBS downgraded it to neutral from buy. The firm said it sees “growth challenges” for the data-platform provider, including increased competition and pricing. 
Provention — The biopharmaceutical company surged 25.7% on news of a partnership with French company Sanofi created to launch a drug candidate for type 1 diabetes.
— CNBC’s Tanaya Macheel, Alex Harring, Yun Li, Sarah Min, Jesse Pound, Carmen Reinicke and Michelle Fox contributed reporting.

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Check out the companies making headlines before the bell:
Conagra (CAG) – The food producer’s stock added 2% in the premarket after it reported better-than-expected quarterly profit and sales. Conagra also reaffirmed its full-year guidance.

Peloton (PTON) – Peloton slid 4.1% in premarket trading after announcing it would cut another 500 jobs, or about 12% of its remaining workforce following several previous rounds of job cuts. CEO Barry McCarthy told the Wall Street Journal he’s giving the fitness equipment maker another six months or so to turn itself around and if it can’t, Peloton is likely not viable as a standalone company.
McCormick (MKC) – The spice maker reported adjusted quarterly earnings of 69 cents per share, 7 cents below estimates, with revenue essentially in line with forecasts. McCormick said it is now recovering costs through pricing actions after a period which saw its expenses outpace product price increases. McCormick fell 1.1% in the premarket.
Compass (COMP) – Compass shares surged 11.4% in premarket trading, following an Insider report saying Vista Equity Partners is exploring a deal to take the real estate firm private.
Eli Lilly (LLY) – Lilly shares added 1% in the premarket after its diabetes drug tirzepatide received a “Fast Track” designation from the FDA for possible use to treat adults with obesity or overweight with weight-related comorbidities.
Twitter (TWTR) – Twitter remains on watch today amid multiple reports on the effort by Elon Musk and the social media company to finalize an agreement on his $44 billion takeover deal. The Wall Street Journal reported the two sides held unsuccessful talks about a possible price cut for the deal, and Reuters reports that private equity firms Apollo Global and Sixth Street Partners are no longer in talks with Musk to provide financing. Twitter fell 1.8% in premarket action.

Take-Two Interactive (TTWO) – Take-Two Interactive was upgraded to “buy” from “neutral” at Goldman Sachs, which cited improving videogame industry fundamentals. Goldman increased its price target for the videogame producer’s stock to $165 per share from the prior $131. Take-Two gained 3% in premarket trading.
Splunk (SPLK) – Splunk was downgraded to “neutral” from “buy” at UBS, which said the data platform provider faces a number of additional headwinds aside from the overall macroeconomic outlook. Splunk slid 3.1% in the premarket.
Shell (SHEL) – Shell slumped 5.4% in premarket trading after saying third quarter earnings will take a hit from significantly lower profits from trading gas. The energy producer also cites higher costs for delivering fuel.
Pinterest (PINS) – Pinterest rallied 5.2% in the premarket after the image-sharing site’s stock was upgraded to “buy” from “neutral” at Goldman Sachs. Goldman expressed confidence in Pinterest’s ability to further monetize its operations and capture more ad dollars.

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In 1988 paul krugman, a Nobel-prizewinning economist, wrote that it was “fairly likely” the world would soon shift away from freely floating exchange rates. Governments would instead adopt a system of “broad target zones”, promising to stop their currencies wandering too far above or below a fixed exchange rate.He was wrong—but a version of this future can be seen in China. Each morning its central bank sets an exchange rate for the yuan known as the “fix”. China’s currency can float 2% above or below this rate each day. The zone is narrower than Mr Krugman expected and its mid-point moves each morning in discrete steps. Yet it is similar enough that economists at Hamburg University have called it a staircase-shaped “moving Krugman band system”.The stairs have been steep of late. Since mid-April, the yuan has declined by about 10% against the dollar; a decline slowed (but not stopped) by the morning fix. On its way down, the currency has passed psychologically important thresholds. In August it crossed 6.8 to the dollar, close to the level at which the yuan was pegged after the global financial crisis of 2008-09. On September 26th the central bank set the fix at more than seven yuan to the dollar for the first time since the early stages of the covid-19 pandemic.The reason for this descent is clear. America’s Federal Reserve has raised interest rates aggressively to curb inflation. To stabilise the yuan, China’s central bank could raise interest rates in tandem. But tighter monetary policy would be at odds with the needs of its weak economy, which is hampered by a property slump and draconian covid controls.What is less clear is where the bottom of the staircase lies, and how sure-footed the descent will be. Some analysts fear a repeat of 2015, when a poorly executed devaluation of the yuan provoked capital outflows that further undermined the currency. But a rerun is unlikely. The yuan is no longer overvalued. Its target zone is better managed and its capital controls are better enforced. In the past China kept its currency anchored to the dollar, because it feared that a conspicuous drop would trigger a run on its currency. The yuan’s decline against the dollar is now less likely to become disorderly. For that reason, China will try less hard to prevent it. In assessing China’s currency choices, economists sometimes invoke the “impossible trinity”. A country might want exchange-rate stability, monetary independence and free capital flows, but it can have only two of these. Rich countries typically make clear-cut choices. As Joshua Aizenman of the University of Southern California has pointed out, emerging economies are more ambivalent. Many have adopted mixed positions, embracing none of the objectives in full, nor rejecting any entirely. By imposing limited controls on capital, say, they can provide some stability to their exchange rate, without entirely forgoing monetary independence. China has clung to exchange-rate stability more than most. The yuan has been less volatile than India’s rupee, let alone South Africa’s rand or Brazil’s real. But China has also adopted tighter capital controls, especially since 2015. This can be inefficient and inconvenient. It is, however, not outlawed by the impossible trinity.China can also take comfort from the economic fundamentals. Despite its insulation from market forces, its exchange rate is reasonably well priced. Adjusted for inflation, it is about 10% below its fair value, according to the Institute of International Finance. It has remained stable this year against a broader basket of currencies. If only the fundamentals applied, it ought not to plummet.Unfortunately, financial markets are not respectful of such calculations. “Few will heed fundamentals…in times of turbulence and turmoil,” as Zhou Xiaochuan, then China’s central-bank governor, put it in 2016. Expectations of yuan declines can become self-fulfilling, regardless of the underlying state of the economy.Mr Krugman showed that target zones, if credible, could ameliorate this problem, by converting speculators into stabilisers. As the exchange rate reaches the bottom of the zone, its room for further declines is limited. Knowing that, speculators would push it back to the middle. The mere prospect of intervention by the authorities could make actual intervention unnecessary.That did not work in China in 2015 partly because of the way its stairs were built. Each morning’s fix was supposed to reflect the currency’s value at the end of the previous trading session. Thus any speculative declines during trading could be embedded in the following morning’s fix. Within any single day, the zone might constrain the speculators. But from one day to the next, the speculators could move the zone.In need of a fixTo restore stability and credibility, China sold more than $700bn of foreign-exchange reserves in 2015-16 and enforced its capital controls more zealously. It introduced a mysterious “counter-cyclical factor” in its calculation of the morning fix, intended to offset any speculative momentum. It also imposed a reserve requirement on banks that made it costlier to bet against the yuan. That requirement was removed in 2020, only to be restored last month.Having taken these measures, China now seems more confident that the yuan can fall against the dollar without the fall becoming self-reinforcing. For this reason, the yuan now seems less anchored to America’s currency. Economists have looked at how faithfully the yuan mimics movements in the dollar against other currencies. In the dark days of 2015, it moved one to one. In recent years, the dollar’s influence has steadily declined, according to Chen Zhang of the National University of Singapore and colleagues, falling from one to about 0.3. China might cling more tightly to the dollar in a period of great financial stress. But it is otherwise unlikely to intervene heavily to defend any particular value of the yuan to the dollar. The country’s policymakers do not mind if the yuan walks steadily down the stairs. Just as long as it does not tumble. ■Read more from Free Exchange, our column on economics:Economists now accept exchange-rate intervention can work (Sep 29th)China’s rulers seem resigned to a slowing economy (Sep 22nd)Richer societies mean fewer babies. Right? (Sep 15th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Everyone wants to trade Treasuries. Big banks hold them for liquidity management, pension funds own them for long-term yields, hedge funds use them to bet on the economy, individuals’ savings are stored in them and central banks use them to manage foreign-exchange reserves. The market for Treasuries, most of the time, is deep and liquid. Some $640bn of government bonds change hands each day, at prices that become the benchmark risk-free rate by which all financial instruments are valued and lending rates set. So why do they sometimes not change hands? Several times in the recent past the market has broken down. In 2014 a “flash rally” led to wild swings in prices, for no clear reason. In 2019 rates spiked in the “repo” market, in which Treasuries can be swapped for cash overnight. In March 2020 extreme illiquidity led yields to spike, even though in times of panic they usually fall as investors rush to safe assets. Now issues are cropping up again: measures of volatility have jumped to levels last seen in 2020 and bid-ask spreads are widening. The problem stems from the fact that the Treasury market has doubled in size over the past decade, even as its infrastructure has shrunk. Trading is carried out by primary dealers, designated institutions which are mostly big banks—and regulatory requirements now constrain them. The leverage ratio, which limits the value of assets banks can hold relative to their capital, does not care whether the asset is super-safe Treasuries or subprime mortgage debt. Thus when a client calls asking to sell a bond, banks must find a client who wants to buy it, rather than holding it as inventory for when another client calls. In times of stress, this system gets overwhelmed. The fixes fall into three buckets: let the banks trade more bonds with investors, let investors trade more bonds with each other, or let investors trade or swap more bonds with the Federal Reserve. Start with letting the banks do more. The solution would be to exempt Treasuries and other safe assets, like bank reserves, from inclusion in leverage ratios. The Fed and other bank regulators did this for a year from March 2020 to help ease market chaos. The logic behind the move was sound enough. Treasuries are not risky assets, likely to default, and so they do not require much capital to be held against them. Still, the leverage ratio is appealing because it is simple to administer and cannot be gamed. And with Democratic bank regulators in charge, who do not want to appear to be undoing financial regulation, the idea is a non-starter. How about letting investors deal more with one another? Portfolio managers at pimco, a large bond investment firm, have proposed that investors should trade on a platform where asset managers, dealers and non-bank liquidity providers can trade on a “level playing field, with equal access to information”, akin to how stocks are traded. This could be good, if it is actually possible. Matching buyers and sellers of Treasuries is harder than matching buyers and sellers of stocks. All shares in Microsoft are the same; there are dozens of Treasuries that have roughly five years to maturity.A final fix would be to let investors do more with the Fed. Last year the central bank created a standing repo facility, which allows a Treasury to be swapped overnight for cash. But the facility is only for primary dealers, which do not always pass on the liquidity. Opening it to more participants would address this problem. It would also expose the Fed to a range of riskier counterparties—but that could be mitigated by requiring firms to swap a greater value in Treasuries than the central bank gives out in cash.The problem is not a shortage of plausible reforms. It is that none of them have been implemented. The heady bull market has collided with the reality of high inflation and much higher interest rates. Financial markets have already entered a new phase in which volatility, stress and fear have returned. Any grand plans to overhaul the Treasury market cannot be implemented on the fly, in the midst of a burgeoning crisis.If the Treasury market seizes up again—as the market for British government bonds did after ministers announced a package of unfunded tax cuts on September 23rd—the task of fixing it will fall on the Fed and its bond-buying schemes. Relaunching asset purchases at the same time as raising rates to combat inflation would be very uncomfortable. Since regulators failed to fix the Treasury market when they had the chance, they may end up with little choice.■Read more from Buttonwood, our columnist on financial markets:Investment banks are sharpening the axe (Sep 29th)How to rebrand stockmarket indices (Sep 22nd)Why investors should forget about delayed gratification (Sep 15th)For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

The Bank of England was forced to intervene in the long-dated bond market after a steep sell-off of U.K. government bonds — known as “gilts” — threatened the country’s financial stability.
While the central bank’s intervention offered some fragile stability to the British pound and bond markets, analysts have flagged lingering stability risks in the country’s shadow banking sector – financial institutions acting as lenders or intermediaries outside the traditional banking sector.

Analysts are concerned about a knock-on effect to the U.K.’s shadow banking sector in the event of a sudden rise in interest rates.
Photo by Richard Baker | In Pictures | Getty Images

LONDON — After last week’s chaos in British bond markets following the government’s Sep. 23 “mini-budget,” analysts are sounding the alarm on the country’s shadow banking sector.
The Bank of England was forced to intervene in the long-dated bond market after a steep sell-off of U.K. government bonds — known as “gilts” — threatened the country’s financial stability.

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The panic was focused in particular on pension funds, which hold substantial amounts of gilts, while a sudden rise in interest rate expectations also caused chaos in the mortgage market.
While the central bank’s intervention offered some fragile stability to the British pound and bond markets, analysts have flagged lingering stability risks in the country’s shadow banking sector — financial institutions acting as lenders or intermediaries outside the traditional banking sector.

Former British Prime Minister Gordon Brown, whose administration introduced a rescue package for Britain’s banks during the 2008 financial crisis, told BBC Radio Wednesday that U.K. regulators would need to tighten their supervision of the shadow banks.
“I do fear that as inflation hits and interest rates rise, there will be a number of companies, a number of organizations that will be in grave difficulty, so I don’t think this crisis is over because the pension funds have been rescued last week,” Brown said.
“I do think there’s got to be eternal vigilance about what has happened to what is called the shadow banking sector, and I do fear that there could be further crises to come.”

Global markets took heart in recent sessions from weakening economic data, which is seen as reducing the likelihood that central banks will be forced to tighten monetary policy more aggressively in order to rein in sky-high inflation.

Edmund Harriss, chief investment officer at Guinness Global Investors, told CNBC Wednesday that while inflation will be tempered by the decline in demand and impact of higher interest rates on household incomes and spending power, the danger is a “grinding and extension of weakening demand.”
The U.S. Federal Reserve has reiterated that it will continue raising interest rates until inflation is under control, and Harriss suggested that month-on-month inflation prints of more than 0.2% will be viewed negatively by the central bank, driving more aggressive monetary policy tightening.
Harriss suggested that sudden, unexpected changes to rates where leverage has built up in “darker corners of the market” during the previous period of ultra-low rates could expose areas of “fundamental instability.”
“When going back to the pension funds issue in the U.K., it was the requirement of pension funds to meet long-term liabilities through their holdings of gilts, to get the cash flows coming through, but ultra-low rates meant they weren’t getting the returns, and so they applied swaps over the top — that’s the leverage to get those returns,” he said.
“Non-bank financial institutions, the issue there is likely to be access to funding. If your business is built upon short-term funding and one step back, the lending institutions are having to tighten their belts, tighten credit conditions and so forth, and start to move towards a preservation of capital, then the people that are going to be starved are those that require the most from short-term funding.”

Harriss suggested that the U.K. is not there yet, however, for there is still ample liquidity in the system for now.
“Money will become more expensive, but it is the availability of money that is when you find sort of a crunch point,” he added.
The greater the debt held by non-banking institutions, such as hedge funds, insurers and pension funds, the higher the risk of a ripple effect through the financial system. The capital requirements of shadow banks is often set by counterparties they deal with, rather than regulators, as is the case with traditional banks.
This means that when rates are low and there is an abundance of liquidity in the system, these collateral requirements are often set quite low, meaning non-banks need to post substantial collateral very suddenly when markets head south.
Pension funds triggered the Bank of England’s action last week, with some beginning to receive margin calls due to the plunge in gilt values. A margin call is a demand from brokers to increase equity in an account when its value falls below the broker’s required amount.
Sean Corrigan, director of Cantillon Consulting, told CNBC Friday that pension funds themselves were in fairly strong capital positions due to higher interest rates.
“They’re actually now ahead of funding on the actuarial basis for the first time in I think five or six years. They clearly had a margin problem, but who is the one who’s thinly margined?” he said.
“It’s the counterparties who’ve passed it on and shuffled it around themselves. If there is an issue, maybe we’re not looking at the right part of the building that’s in danger of falling down.”

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A Tesla service and sales center is shown in Vista, California, June 3, 2022.
Mike Blake | Reuters

Check out the companies making headlines in midday trading Wednesday.
Tesla, Twitter — Shares of Tesla fell 3.5% after a Tuesday filing confirmed that CEO Elon Musk agreed to buy Twitter for $54.20 per share, the original price he’d agreed upon for the acquisition. Shares of Twitter slumped 1.4%, taking a breather after surging more than 22% on Tuesday.

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Airbnb is a buy as it could soon become the biggest Western travel company, Bernstein says

14 hours ago

Morgan Stanley, Goldman Sachs — Shares of Morgan Stanley and Goldman Sachs dropped 1% and 1.9%, respectively, following downgrades from Atlantic Equities. The firm said the two investment banks have few positive catalysts ahead as they continue to deal with macro challenges. Morgan Stanley was downgraded to neutral from overweight, and Goldman Sachs was lowered to underweight from neutral.
Airbnb — Shares of the travel rental company gained 0.9% after Bernstein initiated the stock as outperform with a price target of $143, indicating an upside of about 30%. The Wall Street firm said Airbnb is on track to become the biggest travel western travel platform over the next five years.
Carnival — Cruise line stocks declined as a group. Shares of Carnival fell 4.3%, Royal Caribbean Group declined 0.9%, and Norwegian Cruise Line Holdings fell 0.8%. The group got a boost a day earlier, after Norwegian said it would end all Covid-19 testing and vaccination requirements.
Enphase Energy, Sunrun — Solar stocks declined Wednesday after their rally earlier this week. Shares of Enphase Energy declined 9.3%, and Sunrun tumbled 7.9%.
Schlumberger — Energy stocks spiked as a group after OPEC+ decided to cut oil output by 2 million barrels a day. Schlumberger advanced 6.3%, Exxon Mobil gained 4%, and Phillips 66 rose 2.5%.

Lamb Weston Holdings — Shares of the food products company climbed 4.2% after Lamb Weston reported large increases in net sales and net income for its fiscal first quarter. Lamb Weston’s adjusted earnings of 75 cents per share beat analyst estimates of 50 cents per share, according to StreetAccount. The Idaho-based company also maintained its full-year outlook despite seeing a volume decline in the quarter.
Lumen Technologies — The tech company’s shares plummeted 9.5% after Wells Fargo cut its price target on Lumen 56% and downgraded the stock from overweight to equal weight. Wells Fargo said its mass market segment was seeing downsides that put the dividends at risk.
— CNBC’s Alexander Harring, Yun Li, Jesse Pound and Carmen Reinicke contributed reporting.

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The organisation of the Petroleum Exporting Countries (OPEC) is sometimes called the oil market’s central bank. Every month the cartel and its allies, some 23 countries that produce 40% of the world’s oil, meet to decide on production targets. The aim is to keep prices high and stable. But just as central-bank governors argue about the speed of rate rises, members of opec+, as the wider group is known, disagree on how fast to turn the spigots.The latest summit on October 5th was a short one—but the decision that emerged was controversial. Ending a series of online meetings and timid tweaks to output, opec+—which includes Russia—met in person for the first time since the covid-19 pandemic. Emerging from a Viennese boardroom, ministers confirmed that they would cut production by 2m barrels a day (b/d), an amount equivalent to 2% of the world’s total output. After months of market volatility and missed targets, the cartel is determined to restore its credibility and regain control of the oil price. Members are worried about falling demand. Brent crude, the global benchmark, has dropped to $93 a barrel, down from $125 in June. Pricey petrol has led to lower consumption. Europe’s gas crunch, China’s covid policies and property troubles, and rising interest rates augur a global recession. The strong dollar, in which oil prices are denominated, makes the fuel still less affordable outside America. opec+ does not explicitly say so, but its members want a floor under the price at a time when increased spending at home implies a higher breakeven price. Experts place that floor at between $80 and $100, compared with $70 to $80 before covid. The cartel has rarely had such an opportunity to set prices. No country outside of its biggest members has the capacity to ramp up output fast, and global stocks are low. Crude inventories in the oecd, a club of mostly rich countries, remain well below their five-year average; China is running down its stockpiles in a bid to satiate its thirsty refiners. The volume of oil on water may be rising, but that is only thanks to the longer tanker journeys that are required as the market adjusts to sanctions, rather than growth in floating storage, notes Giovanni Serio of Vitol, a trader. The problem opec+ faces is that its credibility is in tatters. Even the cut announced on October 5th is not what it seems. Its members have failed to invest in production, leading to a gap between target and actual output (see chart). In reality the cut will only apply to members that are hitting or are near to their targets. Ehsan Khoman of MUFG, a bank, expects the revision to deliver a real cut of up to 1.1m b/d. The tactic is nevertheless working—at least for now. The oil price has risen by 11% since September 26th, when rumours of the cartel’s plans first emerged. That makes the reduction worthwhile even for Saudi Arabia, which will trim its output by 5%, but ought to benefit from an increase in price twice the size. Jorge León, a former opec analyst now at Rystad Energy, a consultancy, reckons that Brent could surpass $100 by the end of the year. After the meeting, the Saudi energy minister said that, unless the market changes, the supply curbs will remain until the end of 2023.But the decision is not without risk. opec+’s market share is yet to recover from huge cuts it made in 2020 to shore up prices amid a collapse in demand. Trimming production again may further erode the cartel’s market share. The cut is also a snub to President Joe Biden, who recently visited Saudi Arabia in an attempt to cajole it into pumping more, before tough midterm elections next month. He responded to the decision by sniffing that the cuts were “unnecessary”, and announcing that America would release another 10m barrels from its strategic reserve next month. The decision also provides fuel to nopec, a congressional bill that would allow the cartel to be sued under antitrust law, although it will have to overcome opposition from lawmakers and oil firms who fear retribution. opec+’s loss in market share should be partly reversed when it eventually cranks up output again. Thus it is the decision’s impact on demand, with higher prices likely to further reduce consumer appetite, that will probably do more damage to opec+’s position. Cutting output in a tight market also creates more volatility, not less—the extra uncertainty will discourage investors and lenders, reducing liquidity in the paper oil markets. The decision may also reignite diplomatic tensions within the cartel. Since quotas no longer reflect actual output, the latest cuts are being shouldered by just a handful of members—Iraq, Kuwait, Saudi Arabia and the uae—that were already prevented from producing quite as much as they ideally would. The uae, which secured a small increase in July but plans to expand its production capacity from 4m b/d today to 5m b/d in 2025, will almost certainly agitate for a rejig in future negotiations. This will be resisted by underperformers such as Angola and Nigeria, says Robin Mills of Qamar Energy, another consultancy, in the hope that they can one day rebuild their capacity.Ironically, Russia could offer the cartel a solution. The country has long been a staunch advocate for higher production. But its output is now likely to fall, both soon, as a result of a European embargo set to start in December, and in the long run, as sanctions prevent it from getting access to vital partners, people and parts. Saudi Arabia and the uae are in bed with “a weakening business partner”, says Karen Young of Columbia University. Russia will be reluctant to give away some of its quota. The question is whether, in a world where it has ever fewer friends, doing so is a price worth paying to remain inside the tent. ■ More

Forty-three percent of U.S. adults are planning to take trips between Thanksgiving and New Year’s; 79% of them are changing their holiday travel plans due to high inflation, according to Bankrate.
Some are shortening their trips, choosing cheaper accommodations or destinations, taking fewer trips, traveling shorter distances or driving instead of flying, for example.

D3sign | Moment | Getty Images

Travelers are shifting their holiday getaway plans to avoid busting their budgets amid high inflation, according to a new Bankrate survey.
Forty-three percent of U.S. adults are planning to take overnight leisure trips between Thanksgiving and New Year’s; of them, 79% are adapting to rising prices for travel in various ways, according to the survey.

For example, 26% are shortening their trips, 25% are selecting cheaper accommodations or destinations, 24% are taking fewer trips, 23% are traveling shorter distances and 23% are driving instead of flying, according to the survey.
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The dynamic disproportionately impacts travelers with lower household incomes: 86% of those with less than $50,000 of annual income are adjusting their travel plans versus 70% of those earning more than $100,000, according to Bankrate.
“Travel costs have surged, so it’s important to plan ahead and factor these expenses into your overall holiday budget,” Ted Rossman, senior industry analyst at Bankrate, said. 
“I suggest making airplane and hotel reservations earlier than in previous years, since demand will probably outpace supply,” he added. “This summer, air travel was particularly messy as consumers unleashed pent-up demand and the industry couldn’t keep pace.”

Costs for airfare, hotels and rental cars had been rising quickly through 2021 along with consumer prices in the broader U.S. economy, though retreated a bit in recent months.
Airline fares in August were up 33% versus a year earlier and by 9.3% relative to 2019, according to the consumer price index, an inflation gauge.
Meanwhile, rental car prices were down 6.2% versus August 2021, while hotel lodging was up 4.5% and gasoline prices increased 25.6% over the same period. Dining out at restaurants is also 8% more expensive.

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