North American Morning Briefing: Jobs Report Eyed -2-

10/07/2022 | 06:13am

High inflation is proving to be more persistent than anticipated and has created a strong case for the Federal Reserve to lift and then hold interest rates at levels that will slow economic activity, a central bank official said Thursday.

The Fed will need to keep rates at restrictive levels "until we are confident that inflation is firmly on the path toward our 2% goal," said Fed governor Lisa Cook in remarks at the Peterson Institute for International Economics, where she made her first speech since joining the central bank's board this May.

U.S. Takes Aim at OPEC for Oil Production Cuts

WASHINGTON-OPEC's decision to slash oil production has the U.S. considering responses that could include measures aimed at breaking the cartel's hold on markets or limiting U.S. oil exports should shortages emerge.

The cutback by the Organization of the Petroleum Exporting Countries and its Russia-led allies is the latest dilemma for President Biden, who has sought to transition the U.S. away from fossil fuels while at the same time keeping consumer prices in check.

Elon Musk's Revived Twitter Deal Could Saddle Banks With Big Losses

Banks that agreed to fund Elon Musk's takeover of Twitter Inc. are facing the possibility of big losses now that the billionaire has shifted course and indicated a willingness to follow through with the deal, in the latest sign of trouble for debt markets that are crucial for funding takeovers.

The $44 billion deal, which Mr. Musk had been trying to walk away from, would be paid for in part with some $13 billion of debt seven banks including Morgan Stanley, Bank of America Corp. and Barclays PLC agreed to provide when the takeover was sealed in April.

EU Leaders Set to Clash Over Energy Prices at Prague Gathering

PRAGUE-European leaders who have been compromising on their response to Russia's war in Ukraine all year now face a growing rift over how to offset the rising damage of high energy prices to their domestic economies.

Italy and several other countries will square off against Germany at a summit in Prague on Friday, in a spat that mirrors clashes from past crises. Heavily indebted countries fear that their wealthier neighbors will gain an unfair edge by supporting their businesses and consumers.

Higher Australian Interest Rates Pushing Some Borrowers Closer to Default, RBA Says

SYDNEY-The Reserve Bank of Australia said Friday that higher official interest rates are already hitting the ability of some borrowers to repay loans, identifying a small group of borrowers who run the risk of defaulting.

In its latest report card of financial stability, the RBA said "there is a small group of borrowers who could fail to meet debt payments due to low savings and high levels of debt."

Glynn's Take: RBA Has Stuck Its Neck Out by Slowing Rate Increases

SYDNEY-The Reserve Bank of Australia stuck its neck out a long way this week by slowing the pace of interest-rate increases despite global central banks continuing to tighten policy aggressively and warning of more to come.

For RBA Gov. Philip Lowe, raising the official cash rate by 25 basis points rather than the expected 50 basis points was a clear declaration that the RBA will set policy according to Australian conditions.

Higher Australian Interest Rates Pushing Some Borrowers Closer to Default, RBA Says

SYDNEY-The Reserve Bank of Australia said Friday that higher official interest rates are already hitting the ability of some borrowers to repay loans, identifying a small group of borrowers who run the risk of defaulting.

In its latest report card of financial stability, the RBA said "there is a small group of borrowers who could fail to meet debt payments due to low savings and high levels of debt."

German Industry Contracted in August, Energy Intensive Branches Particularly Hurt

Germany's industrial production fell in August as demand for goods moderated and factories grappled with high energy prices and supply bottlenecks.

Total industrial output--comprising production in manufacturing, energy and construction--decreased 0.8% on month in August, data from the German statistics office Destatis showed Friday. Economists polled by The Wall Street Journal had expected a 0.5% decline.

U.N. Nuclear Agency Warns of Increased Risk at Ukraine's Largest Nuclear Plant

KYIV, Ukraine-The head of the United Nations' nuclear agency warned on Thursday that staff at Europe's largest nuclear-power plant are under increasing pressure after Russian authorities attempted this week to deepen their control over the plant, posing a heightened safety risk.

Russia's capture of the Zaporizhzhia nuclear-power plant in southeastern Ukraine in March and a resulting struggle with Ukraine, along with shelling near the occupied facility, have raised global concern about the risk of an atomic catastrophe. The Ukrainian engineers staffing the plant have continued to operate it since Russia's military took control of it.

Donald Trump PAC Jumps Into Ohio, Pennsylvania Senate Races

Donald Trump is jumping into the midterm-election ad wars with a pair of spots in the hotly contested Pennsylvania and Ohio Senate races, the first wave in what is expected to be millions of dollars in spending from the former president's new political-action committee.

Mr. Trump, who has faced pressure to use his fundraising resources to help Republican candidates, had before this week spent modestly-and not on TV ads for candidates. He preferred instead to stage boisterous rallies in battleground states.

Appeals Court Allows Florida to Prohibit Businesses From Requiring Proof of Covid-19 Vaccination

A federal appeals court ruled Thursday that Florida can bar businesses from requiring proof of Covid-19 vaccination of their customers.

The 2-1 ruling from the 11th U.S. Circuit Court of Appeals tossed out a lower-court ruling that had found the state's prohibition on proof of vaccination violated the speech rights of Norwegian Cruise Line Holdings Ltd., which challenged it in court.

Prosecutors Hold Off Final Hunter Biden Case Decision Amid Talks With Defense Lawyers

Prosecutors are holding off on a final decision on whether to bring a case against President Biden's son, Hunter, while they review defense evidence in the long-running investigation, people familiar with the matter said.

Investigators for months have believed there is enough evidence to charge the younger Mr. Biden with tax crimes and a false statement related to a gun he purchased, and had expected a case to be brought by the end of the summer, the people said.

Trump Hasn't Returned All Documents, DOJ Officials Believe

A senior Justice Department official recently told Donald Trump's legal team that law-enforcement officials don't believe the former president returned all of the government documents he took with him when he left the White House, people familiar with the matter said.

The communication from Jay Bratt, chief of the Department of Justice's counterintelligence and export-control section, was the latest indication that the government is still seeking some records it believes Mr. Trump should have relinquished at the end of his administration. The National Archives and Records Administration told Congress late last month that it hadn't recovered all of the presidential records that were supposed to be turned over, adding that there was "no easy way to establish absolute accountability."



MTY Food 3Q

Tilray Brands 1Q

Economic Indicators (ET):

1230 Sep Labour Force Survey

Market Talk:

Bank of Canada Rate Peak Depends on Economy's Evolution

Bank of Canada Gov. Tiff Macklem said interest rates will continue to rise and remain elevated until the central bank is satisfied that consumer demand has sufficiently cooled and inflation expectations are in check. His comments came in a Thursday night interview broadcast on Canada's Global Television Network.

"How high rates go and for how long will depend on the evolution of the economy and the evolution of inflation," Macklem said.

Earlier Thursday, he said in a speech that further rate rises are warranted as there's little evidence underlying, or core, inflation has decelerated. He added in the broadcast interview that rate policy would also be contingent on how quickly or slowly there is a resolution to supply-chain constraints at the global and domestic level.

Expected Major Events for Friday

00:01/UK: Sep KPMG and REC UK Report on Jobs

05:00/JPN: Aug Indexes of Business Conditions - Preliminary Release

06:00/GER: Aug Foreign trade price indices

06:00/GER: Aug Retail Trade

06:00/GER: Aug Industrial Production Index

06:00/UK: Sep Halifax House Price Index

06:00/UK: 3Q Halifax House Price Index: UK Regional Breakdown quarterly release

06:45/FRA: Aug Foreign trade

06:45/FRA: Aug Balance of Payments

08:00/ITA: Aug Retail Sales

08:59/JPN: Aug Provisional Labour Survey - Earnings, Employment & Hours Worked

12:30/US: Sep U.S. Employment Report

12:30/CAN: Sep Labour Force Survey

14:00/US: Aug Monthly Wholesale Trade

19:00/US: Aug Consumer Credit

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Friday

Enochian Biosciences Inc (ENOB) is expected to report for 4Q.

MTY Food Group Inc (MTY.T) is expected to report $0.96 for 3Q.

Matrix Service (MTRX) is expected to report $-0.14 for 4Q.

Nautilus (NLS) is expected to report $-0.50 for 2Q.

Tilray Inc (TLRY) is expected to report $-0.07 for 1Q.

bebe stores (BEBE) is expected to report for 4Q.

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Adeia Cut to Buy From Top Pick by BWS Financial

Ally Financial Inc Cut to Market Perform From Outperform by Raymond James

AutoNation Cut to Neutral From Overweight by JP Morgan

BTRS Holdings Cut to Sector Weight From Overweight by Keybanc

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10-07-22 0612ET

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