International companies with ties to China are closely monitoring the sudden surge of protests in the country over the government's "zero COVID" stance — particularly if the unrest leads to any policy changes.
Why it matters: The restrictions have kept the pandemic in check in China for a long time — but they've also had sweeping implications for businesses, undermining domestic consumer demand and triggering production shortfalls in international supply chains.
Kraken, a U.S.-based cryptocurrency exchange, has agreed to pay $362,159 in a settlement over apparent violations of the U.S. Treasury Department's sanctions program.
Driving the news: "Kraken processed 826 transactions, totaling approximately $1,680,577.10, on behalf of individuals who appeared to have been located in Iran at the time," Treasury said in a statement.
Cyber Monday — expected to be the biggest online shopping day of the year — got off to an early start after Black Friday sales wrapped up.
Why it matters: Online holiday shopping is growing at a slower pace than in past years but it continues to break records, according to Adobe Analytics.
Crypto lender BlockFi was taken down by exposure to FTX and Alameda Research, the latter of which defaulted on $680 million of collateralized loan obligations, according to a bankruptcy filing.
Why it matters: Despite claims of transparency and decentralization in crypto, the intertwined balance sheets and opaque nature of crypto lending have led to contagion in the ecosystem.
Why it matters: The tweets are part of a broader narrative Musk is trying to paint that Apple is a monopoly and uses its power to censor voices and charge "a secret 30% tax" on transactions in its App Store.
As central banks around the globe rapidly raise interest rates, policymakers outside the U.S. may find they pack more punch in terms of curbing demand.
The reason boils down to the unique way Americans finance their homes.
Why it matters: Americans tend to take out mortgages with interest rates fixed over long periods, as much as 30 years. It means when the Fed tightens, most homeowners are unaffected.
That's not the case in other countries in much of Europe, Australia and Canada, where spiking mortgage rates can result in higher monthly payments.
From the central bank's point of view, rate rises can cool demand in a very direct way.
For example, the Reserve Bank of Australia did a sensitivity analysis showing that a 2.5 percentage point hike in rates caused an Australian family, with typical income and mortgage debt levels, to see monthly spare cash flow drop 13%.
Yes, but: That may be good for bringing down inflation, but it means economic pain for homeowners. The OECD warned recently that "low-income families in countries where households are highly indebted and variable-rate mortgages are widely used, such as some Nordic countries, could be particularly vulnerable" as rates rise.
Between the lines: In nations where mortgages are overwhelmingly of the variable type, "the required tightening and reduction in demand is spread broadly," says Krishna Guha, vice chair at Evercore ISI. "Rates might not have to go up as much because the increase hits incomes broadly."
How it works: Whenmortgage rates reset, homeowners tend to alter spending patterns in response, according to a paper released by the Dallas Fed earlier this year.
It focused on Canada's housing market — where the vast majority of mortgages are considered "fixed-rate," which reset every two to five years. The findings have implications for other countries, where shorter-horizon fixed mortgages are common.
When a reset resulted in a higher rate and steeper monthly payments, consumers didn't appear to pull back spending on big-ticket durable goods items. But there are signs they cut back elsewhere, including a corresponding decline in credit card balances.
"From the accounting point of view, [it] means that they must have either reduced their other spending or their savings," Katya Kartashova and Xiaoqing Zhou, the paper's co-authors, said in an email.
Where it stands: As of the end of last month, about half of all variable-rate mortgage holders in Canada — those with fixed payments, roughly 13% of all mortgages — have reset at the level that would result in higher payments, the nation's central bank said last week.
"These borrowers may need to adjust spending or use savings to meet their higher debt obligations," researchers write.
Those who bought last year, when variable rates were at an ultra-low 1.5%, are facing the worst shock as rates approached 5% last month. Those monthly payments would have increased by about 20%.
The big picture: On the one hand, officials in these countries may see the effect of tighter money ripple through the economy sooner, as existing borrowers curb spending (thus slowing demand) as a result of higher mortgage payments.
On the other hand, it means the burden of policy overwhelmingly falls on homeowners. The result could be political backlash: Philip Lowe, Australia's top central banker, today delivered an unusual apology to regretful mortgage holders who leaned on the central bank's early guidance that rates wouldn't rise until 2024.
Economists have started to warn about "mortgage dominance," the idea that central bankers let up on aggressive interest rate hikes for fear of the impact on homeowners. As the Financial Times points out, Norway's central bank has downshifted rate hikes after a bigger-than-expected knock to its housing market.
What to watch: The problem may be most acute in the U.K., where rates recently soared amid broader market fallout from the failed tax cuts proposed earlier this fall.
"A huge share of the tightening that the central bank executes will run through a massive income shock to 4 million or so households, on top of the cost-of-living crisis," says Guha. She estimates the total number of mortgage holders on a variable-rate or a two-year fixed mortgage is 4 million.
"It's a huge distributional issue the central bank can't solve because it doesn't have the tools to do so."
Cryptocurrency lender BlockFi has filed for Chapter 11, becoming the latest casualty of crypto contagion following the collapse of FTX.
Why it matters: The dominoes continue to fall in the crypto world, as a series of bad bets and a market plunge has sent companies like FTX into bankruptcy.
U.S. workers aren’t too worried about their job security.
Why it matters: Despite all the headlines (including ours!) chronicling the wave of layoffs hitting the tech industry, most Americans work in other sectors and still feel pretty good.
The financialization of crypto made it vulnerable to the kind of contagion we're now seeing.
Why it matters: The big change in crypto between 2018 and today is the introduction of large-scale lending to the sector. And with lending comes a new kind of risk — counterparty risk — that crypto still hasn't found a good way of dealing with.
"I think it's fair to say that in the thousands of female founders we've met, there's not a single one who has ever dressed like Sam Bankman-Fried," Nisha Dua, co-founder at BBG Ventures, an early-stage investment fund that backs women founders, told Axios recently. She was talking about Bankman-Fried's signature disheveled look — shorts, frumpled T-shirts, mussed hair.
Why it matters: Investors in tech startups have long gravitated to super-casually dressed young men. The FTX founder's fall from grace could be a moment to break the cycle.
Elon Musk is promising to reinstate more banned Twitter accounts even as a coalition of groups is out with a fresh warning that online hate is on the rise.
Why it matters: It's another risky bet by Twitter's "free speech"-espousing owner that he can dial back enforcement of content rules without releasing a torrent of racism, anti-semitism and anti-LGBTQ speech that could further erode the service's already shaky advertising base.
The residential real estate market has screeched to a halt, and some economists believe home prices are about to drop significantly.
The big picture: Existing home sales have fallen for nine straight months. The supply of single-family homes is growing. And with mortgage rates near 7%, experts say a large-scale housing slowdown is becoming increasingly likely.
Nestlé plans to introduce plant-based Toll House morsels, making it easier for vegans to enjoy homemade chocolate chip cookies.
Why it matters: Despite tough times for plant-based meat, major food companies are still bullish on the plant-based category, which has particular appeal among younger consumers.
As Amazon prepares to debut its long-delayed Prime Air drone delivery service, it's also showing off a smaller, quieter drone that will be ready in 2024 and could be making regular deliveries in major cities by the end of the decade.
Why it matters: Consumers want their stuff fast, and under Amazon founder Jeff Bezos' vision, they could get it delivered in as little as 30 minutes while helping the environment by taking CO2-emitting trucks off the street.
