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Brace, brace, brace: commodity prices surge

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It was all meant to fall into place: The world gets vaccinated, and the recovery from the pandemic-doom begins. But soaring energy prices are about to put the crunch on China, and then the rest of the world.

The latest bout of commodity-price surge has taken markets by surprise just as major central banks were planning to find a path out of their stimulus measures.

But the price of commodities may put an end to that sort of wishful thinking on the part of federal treasurers and the Fed.

INNER MONGOLIA, CHINA

OIL, GAS RISE

Oil’s climbed to more than $80 a barrel for the first time in three years, natural gas for October delivery traded at the costliest in seven years and the Bloomberg Commodity Spot Index rose to the highest level in a decade. 

The rising cost of power, as well as intermittent power cuts to Chinese factories as Beijing tries to force reduced emissions, could now lead to surging prices for Chinese goods.

Sharp cuts in production across a range of energy-intensive industries in China are now expected to drag growth lower this year, with economists from Goldman Sachs Group Inc. to Morgan Stanley cutting forecasts.

Trader on the New York Stock Exchange
Trader on the New York Stock Exchange

WALL STREET BRACES FOR IMPACT

Investors have been caught by surprise, having spend much of the year planning for a sudden recovery. Wall Street stocks ended sharply lower on Tuesday in a broad sell-off driven by rising U.S. Treasury yields.

It was the S&P 500 index’s biggest one-day percentage drop since May, and the Nasdaq’s largest since March.

The S&P 500 and the Nasdaq Composite index were on track for their largest monthly declines since September 2020.

“The big picture is the sudden surge in the past week of yields, which has led to a ‘sell first, ask questions later’ mentality.”

Ryan Detrick, senior market strategist at LPL Financial

In the US, rising costs for households and companies are hitting confidence while pushing inflation faster than economists had expected only a few months ago. 

In the U.K., consumer confidence fell in September at its sharpest pace since almost a year ago as Britons brace for a looming income squeeze. 

All three major U.S. stock indexes slid nearly 2%, with tech and tech-adjacent stocks weighing heaviest as investors lost their risk appetite.

“(But) there are multiple factors weighing on sentiment today,” Detrick added. “The back-and-forth in Washington with the debt ceiling and the spending bill and potential higher taxes have weighed on overall investor psyche and has led to a pretty good sized sell-off.”

THE SILVER LINING

Thankfully for advanced economies, they have been able to recover from the “COVID recession” better than anticipated a year ago. 

Many officials around the world are still hopeful the current spike in prices will fade without the need for action. 

European Central Bank President Christine Lagarde believes the key challenge for policy makers is that “we do not overreact to transitory supply shocks that have no bearing on the medium term.”

Ahron Young is an award winning journalist who has covered major news events around the world. Ahron is the Managing Editor and Founder of TICKER NEWS.

Business

Four-day office week for Snapchat employees

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Snapchat is asking workers to return to the office 80% of the time, or the equivalent of four days a week.

They want workers back from the start of next year.

It’s the latest sign of tech employees receiving less flexibility nearly three years after the pandemic took hold.

It also comes amid a wave of cost-cutting in the tech sector.

The company says in a statement: “We believe that being together in person, while retaining flexibility for our team members, will enhance our ability to deliver on our strategic priorities of growing our community, driving revenue growth, and leading in [augmented reality].”

The new policy will take effect at the end of February.

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Twitter quietly cancels COVID misinformation policy

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More big changes at Twitter under the new Elon Musk ownership.

This time, its Twitter’s controversial COVID misinformation policy, which the social platform has quietly canceled.

Twitter said in December 2020 that it would begin to label and remove misinformation about Covid-19 vaccines.

But Twitter CEO Elon Musk has been a vocal critic of how health officials reacted to the coronavirus pandemic.

Musk has committed to free speech on Twitter, which might explain why the change has now been enacted.

But online safety experts have contended his approach has led to an increase in hate speech, harassment and misinformation on the platform.

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Twitter users are flocking to smaller platforms

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Twitter users

Twitter users flock to smaller platforms, as Musk takes control

Twitter’s instability under Musk’s leadership has resulted in users joining smaller platforms.

The uncertain future of Twitter with mass firings and staff walk outs have caused a sea of doubt. Many are now weighing up their options in case Twitter crumbles over the next few weeks.

Smaller and lesser-known platforms such as Social Hive and Mastodon have become a life raft for Twitter users.

Mastodon is fast becoming known as a Twitter alternative and has 2.4 million active monthly users. It’s a dramatic increase from the 381,000 users the platform had the day Musk closed the Twitter deal.

Mastodon is an open-source, decentralised online software. It allows users to set up their own servers to communicate with each other.

It’s becoming a firm favourite with journalists and academics. With many of the same functions as Twitter, Mastodon has been described as a combination of Twitter and alternate microblogging site, Tumblr.

Hive Social is another social networking site attracting scores of Twitter users since Musk’s reign.

Hive now has 2 million users and recently hit the top of the App Store. Its founder is 24 years old and the platform has only two employees.

With a simple and user-friendly design, Hive has attracted Twitter users searching for a new home in preparation for Twitter’s possible demise under Musk’s impulsive leadership.

If Twitter turns the corner, it will also be very interesting to see if original users abandon Mastodon and Hive Social to return to their Twitter homes.

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