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Premarket stocks: The energy crunch is roiling markets

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What’s happening: Global markets are stumbling Tuesday as energy prices soar. One big problem has been shortages of natural gas, triggered by low stocks and a jump in demand as activity recovers from its Covid-19 lull.

Wholesale natural gas prices in Europe hit fresh records on Monday and continue to rally Tuesday, according to Tom Marzec-Manser at market intelligence firm ICIS. In the United States, natural gas futures have also jumped, surpassing levels last hit in 2014, when temperatures plunged across much of the country.
China is contending with a worsening energy situation, too, as it tries to reduce its reliance on coal just as demand for domestic-made goods is swelling. Companies in the country’s industrial heartlands have been told to limit their energy consumption, according to state media, while supply has also been cut to some homes — reportedly trapping people in elevators.

Asia is now “scrambling” to secure natural gas for immediate delivery “in the same way Europe is,” Marzec-Manser told me. And while the prices “are nowhere near comparable” in the United States, they’re clearly on a steep upward trajectory, he added.

The circumstances put growing pressure on national governments, which are trying to limit instability by shielding residents from the effects of higher costs and shortages. For investors, the fallout presents another key risk.

Watch this space: There were already concerns that the economic recovery was losing momentum in both the United States and China. Turmoil in energy markets only stands to make matters worse.

Analysts at Nomura trimmed their forecast for Chinese growth in 2021 by half a percentage point to 7.7% on Friday, citing the “rising number of factories” that have had to “cease operations,” either because of local energy consumption mandates or power outages due to rising coal prices and shortages.

Goldman Sachs followed on Tuesday, cutting its 2021 GDP growth forecast to 7.8% from 8.2%, pointing to “recent sharp cuts to production in a range of high-energy intensity industries.”

“Short-term economic activity will likely experience a greater drag from this shock than from Evergrande,” Craig Botham, chief China economist at Pantheon Macroeconomics, told clients Tuesday, referring to the debt-laden Chinese real estate developer whose potential collapse is being monitored closely.

Markets drop: Anxiety about rising energy prices is tied to broader fears about inflation, which have been pushing up bond yields. Higher yields, which move opposite prices, are encouraging investors to ditch high-growth tech stocks, which tend to perform better when bonds are more expensive.

Shares of Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) are all down roughly 1.5% in premarket trading.

Oil prices, meanwhile, are shooting up, with Brent crude futures, the global benchmark, hitting their highest level in almost three years. US oil futures are also at their highest since October 2018. If the winter is colder than expected, and securing natural gas remains difficult, there could be a scramble for crude, keeping prices elevated.

“Fuel oil may need to brace itself for the high gas and coal price situation bleeding into its own market,” BloombergNEF analysts said in a report published Tuesday.

Fed officials step down after criticism over personal trades

The heads of the Boston and Dallas Federal Reserve banks have announced their early retirement amid a controversy over their personal investing decisions that raised conflict-of-interest concerns.

The latest: Eric Rosengren, the Boston Fed chief, cited his health Monday in announcing he would step down about a year earlier than planned, my CNN Business colleague Anneken Tappe reports. He was set to retire in June next year but moved that date up to Thursday. In a message to staff, he shared that he has a kidney condition and qualified for transplant, which will require making lifestyle changes.

Regional Fed chiefs step down after criticism over personal trades

Later Monday, Dallas Fed chief Robert Kaplan said in a statement that his retirement would take effect in early October. He attributed the move to recent scrutiny of his trading activity.

“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy,” Kaplan said in a statement. “Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve’s execution of that vital work.”

Step back: The Fed officials have faced backlash over trades made during the pandemic while the central bank was buying hundreds of billions of dollars in assets to shore up the economy. Stimulus from central banks has been a huge boon for financial markets.

The Boston Fed recently disclosed that Rosengren had investments in the real estate sector. At the same time, the central bank was buying $40 billion worth of mortgage-backed securities each month.

My thought bubble: It’s important that the Fed is now reviewing its ethics rules, given how essential it is that the central bank, whose decisions steer the US economy, maintains public trust.

The shakeup could also have policy ramifications at a delicate moment. Rosengren and Kaplan were hawks, or officials who supported a faster rollback of pandemic-era support. The new Boston Fed president will be a voting member on the Fed’s decision-making body next year, while the Dallas Fed president will hold a spot in 2023.

This hamster’s crypto portfolio is beating the market

Market professionals don’t like to be reminded that it’s tough to consistently predict the whims of the market. Unfortunately for them, there’s a hamster determined to drive home the message.

Since June, a German hamster named Mr. Goxx has been running an independent portfolio that trades cryptocurrency from a high-tech cage called the Goxx Box. His portfolio includes a wide range of cryptocurrencies, including ether and bitcoin, my CNN Business colleague Ramishah Maruf reports.

How it works: Mr. Goxx’s trading sessions are livestreamed on Twitch. First, the hamster runs on an “intention wheel,” which spins around and chooses a cryptocurrency. Then, it scampers through either a “buy” tunnel or a “sell” tunnel, triggering purchases or sales of roughly €20 ($23.35) worth of the cryptocurrency (presumably executed by the hamster’s anonymous human partner).

Industry website Protos reports that Mr. Goxx is up nearly 30% since he started trading digital assets, outperforming returns from bitcoin, the S&P 500 and Warren Buffett’s Berkshire Hathaway.
The takeaway: Perhaps Mr. Goxx is a market savant, and we should all be tapping hamsters to set us up for retirement. Alternately, his wins back up a well-worn theory: If markets are effective at incorporating all publicly available information, prices are mostly driven by random events. That means a monkey who makes stock picks throwing darts at a board should be able to do just as well as esteemed portfolio managers.

There’s plenty of room for debate on whether markets really do function efficiently. But financial advisers can point to Mr. Goxx as evidence that average investors would be wisest to invest in a broad range of assets over the long-term, instead of trying to beat the system.

Up next

Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen testify before the Senate on the coronavirus recovery starting at 10 a.m. ET.

Also today:

  • US consumer confidence data for September arrives at 10 a.m. ET.
  • Micron (MICR) reports results after US markets close.

Coming tomorrow: Shares of eyeglass brand Warby Parker are expected to start trading on the New York Stock Exchange. The startup is going public via a direct listing, as opposed to a traditional initial public offering, or IPO.



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FreshKorn Cryptocurrency

Stocks rebound after Omicron plunge

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Reports of the new Omicron variant of the coronavirus brought back memories of last summer when the fast-spreading Delta variant put a dent in the recovery and consumer confidence. This spooked investors on a traditionally quiet day in the market following Thanksgiving, leading to one of the worst days for stocks this year.
The Dow (INDU) logged its worst day since October 2020, while the S&P 500 (SPX) had its worst performance since February. The Nasdaq Composite (COMP) recorded its steepest fall since September.

But just as the market quickly bounced back from its Delta fears, history appears to be repeating itself: Investors are taking a breath and sensing a buying opportunity.

The market opened in the green, with all three indexes sharply higher. The Dow opened up 375 points, or 1.1%, while the S&P rose 1.2%. The Nasdaq was 1.5% higher.

Other asset classes that were battered Friday — notably oil and cryptocurrencies — also recovered.

US oil prices were up 6.7%, or almost $5, at $72.69 per barrel around the time of the stock market open. That doesn’t totally make up for Friday’s drop, but it takes back a chunk of it.

The global oil benchmark Brent was up 5.7% at $76.84 per barrel.

Bitcoin was up more than 5%.

“Investors are trying to make sense of the latest Omicron Covid strain, but at this point more seems to be unknown than known,” said analysts at Bespoke Investments. “Clouding things even more, we’re unlikely to have definitive answers in the immediate future.”



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Stocks tumble as fears over new Covid-19 variant grip global markets

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US equities took a dive at the open and continued their downward path in the first half hour of trading, with the Dow more some 900 points lower. Oil prices were also badly hit.

Over the summer, the Delta variant spooked consumers and weighed on sectors like leisure and hospitality. Now investors and economists worry this new variant could do the same.

Wall Street was deep in the red early Friday, with the Dow (INDU) falling 2.5%, or about 900 points, in what is shaping up to be a volatile session. The broader S&P 500 (SPX) tumbled 1.8% and the Nasdaq Composite (COMP) opened down 1.3%.

It’s a shortened trading session as the New York Stock Exchange will close at 1 pm ET after being closed Thursday for Thanksgiving. Reduced trading volume during this half-day session is also likely to exacerbate the swings in the market.

Nevertheless, it could shape up to be one of the worst days of the year for stocks.

But it’s not just stocks that are getting a beating.

Oil prices are tumbling as well. US oil futures fell 7.4%, or nearly $6, to $72.51 per barrel around the time of the stock market open. The global benchmark Brent dropped 6.8% to $76.63 per barrel.

The US dollar, measured by the ICE US Dollar Index, which pegs it against its main rivals, was down 0.6% Friday morning.

Cryptocurrencies also felt the heat, dropping across the board. Bitcoin was down nearly 7% around the time of the stock market open, according to CoinDesk data.

Meanwhile, investors are pushing into safe haven investments. The 10-year US Treasury bond got more expensive and yields fell more than 0.1 percentage points to 1.52% Friday morning. Gold prices also jumped.



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‘NFT’ is Collins Dictionary’s Word of the Year for 2021, beating out ‘crypto’ and ‘cheugy’

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Written by Jack Guy, CNNLondon

“NFT,” the abbreviation of “non-fungible token,” has been named Word of the Year by dictionary publisher Collins, beating “crypto” and “cheugy” to the top spot.

An NFT is “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible,” according to a blog post from Collins, published Wednesday.

Acting like virtual signatures, NFTs prove the authenticity of an artwork as the blockchain serves as incorruptible proof of ownership, meaning that “original” artworks and their owners can always be identified via the blockchain, even if an image or video is widely replicated.

They also provide scarcity, and as a result the digital art market has been booming.
In March, a digital artwork named “Everydays: The First 5000 days” sold for $69.3 million via Christie’s, making its creator, graphic designer Mike Winkelmann, better known as Beeple, one of the art market’s most valuable living artists.

The idea of a digital revolution is also captured in another of the dictionary’s candidates for Word of the Year: “crypto,” short for “cryptocurrency,” digital money that is challenging traditional forms of money, according to Collins.

It also named “metaverse” in its blog post, following Facebook’s announcement that it would change its corporate name to Meta.

Other selected words reflect the ongoing coronavirus pandemic, with “double-vaxxed” and “hybrid working” making the shortlist.

“Climate anxiety” reflects growing concern about the damage humans are doing to the planet, while “neopronoun” is a way of referring to a person without using their name or traditional markers of gender, such as “he” and “she.” Collins gives “xe,” “ze” and “ve” as examples of neopronouns.

Rounding out the shortlist are “Regencycore,” which is defined as a fashion aesthetic inspired by the Georgian-era clothing seen in the Netflix show “Bridgerton,” and “cheugy,” which is used to say that something is out of date or uncool.

In 2020, Collins named “lockdown” its Word of the Year, for obvious reasons, and, earlier this month, Oxford Languages made “vax” its pick for 2021.

Defined as “a colloquialism meaning either vaccine or vaccination as a noun and vaccinate as a verb,” vax was relatively rare until this year, the company, which publishes the Oxford English Dictionary, said.

In September, vax appeared more than 72 times more frequently than the year before, said Oxford Languages, which analyzes news content to track changes in the English language.



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