(Opening price as of 12/08/2022 compared to last close)
Weekly Highlights
#1
Yield curve inverts to depths not seen since 1980s
#2
Musk's bankers mull new Tesla margin loans to slash Twitter debt
#3
Gasoline price falls below $3, lower than a year ago
#4
Brittney Griner released in Russia prisoner swap
Share your thoughts
WTI oil settles below $75, recession call or back to normal?
WTI oil price holds firmly in the red for the fifth consecutive day and hits its one-year low on Wednesday. Global oil prices continue to fall and slide below price levels before the Russo-Ukrainian war, extending a downward trend as growing concerns about global demand offset any bullish effects from a price cap on Russian oil sales.
The market sees this sharp drop in global oil prices as a sign of weakening demand and recession forecast. Top Wall Street executives spoke about their worries over inflation, Fed rate hikes, and their effects on consumers and the economy. The chart below displays what some of these executives said this week and compares them to comments they made around June of this year.
Warnings from top executives in both Wall Street and big tech companies reflect how the US economy is reacting to Fed’s aggressive rate hikes. Those warnings also serve as a reminder to Fed officials to consider dialing back their current rate hike process.
Even though high inflation has now spread well beyond physical goods to the nation’s vast service sector, the main issues that caused this 40-year high inflation since last year have been gradually resolved, including surging demand, labor shortage, supply chain crisis, and rising fuel costs. The graph below shows US oil production (white) and consumption (blue) over the past 3 years.
As interest rate remain at a restrictive high, it will take years for Americans to pay off their debts.
Do you think the plunge in oil prices is a recession call or an indication that things are going back to normal?
A. Recession call
B. Back to normal
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Inside Scoop
#1. Yield curve inverts to depths not seen since 1980s
• The 10-year minus 2-year US Treasury yield now stands at levels not seen since the 1980s. This is a concern because this is a well-regarded indicator of a forthcoming US recession.
• While economic and labor data remain strong, the markets prep for a smaller Fed hike next week.
#2. Musk's bankers mull new Tesla margin loans to slash Twitter debt
• The margin loans are one of several options the Morgan Stanley-led bank group and Musk’s advisers have discussed to soften the burden of the $13 billion of debt for Twitter’s $44 billion deal.
• So far, the discussions have focused on replacing $3 billion of unsecured debt with an interest rate of 11.75%. Twitter faces about $1.2 billion in annual interest costs in the current debt structure.
#3. Gasoline price falls below $3, lower than a year ago
• According to AAA, the price per unleaded gallon was $3.329 Thursday, below the $3.343-per-gallon price a year ago.
• GasBuddy says there’s a good chance the price could fall below $3 nationally by as early as Christmas.
#4. Brittney Griner released in Russia prisoner swap
• US basketball star Brittney Griner was released by Russia from a penal colony in a negotiated prisoner-release deal, a US official said. She is now in US custody.
• The Russian Foreign Ministry said that Ms. Griner was exchanged for Russian citizen Viktor Bout at Abu Dhabi Airport on Thursday.
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Warnings from top executives in both Wall Street and big tech companies reflect how the US economy is reacting to Fed’s aggressive rate hikes. Those warnings also serve as a reminder to Fed officials to consider dialing back their current rate hike process.
