Bloomberg - Evening Briefing - Forced liquidation

Bloomberg Evening Briefing

Spiraling losses on Wall Street are now snowballing into forced asset liquidation, according to Bank of America strategists. The NYSE Composite Index, which includes US stocks, depositary receipts and real estate investment trusts, has broken multiple technical support levels including its 200-week moving average, the 14,000 mark. Now, accumulated losses could force funds to sell more assets to raise cash, accelerating the selloff. Similarly grim milestones keep piling up for Chinese stocks listed in Hong Kong. As September draws to an end, the Hang Seng China Enterprises Index has lost 14% to rank as the worst performer among major equity benchmarks globally in September. Hovering around the lowest since the global financial crisis, it is now trading at 0.6 times book value—the cheapest ever

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Then there’s the UK. Its rapid descent from stability to crisis, helped along by Prime Minister Liz Truss and her version of “Reaganomics,” is threatening to expose the fragility of global efforts to crush inflation, raising the specter of chaos spreading across financial markets. Events like Russia’s default in 1998 and, more recently, Greece’s debt crisis show how single countries can trigger wider financial turmoil

British Prime Minister Margaret Thatcher and President Ronald Reagan in 1987. Current Prime Minister Liz Truss, a Thatcher fan, has imposed a highly controversial tax-cut plan that’s been likened to Reaganomics. Photographer: AFP

For most of modern investing history, cash has carried a connotation of indecision: Any allocation to money-market funds or Treasury bills—considered cash equivalents—was merely a way station en route to more definitive investment decisions. But with the US Federal Reserve cranking interest rates ever higher, cash has become a bona fide asset class.

Struggling to hold the line against Ukrainian advances in the north and south, Vladimir Putin proclaimed more regions of Ukraine to be Russian territory, a move condemned as being without legal force by Europe, the US and others, and ignored by Ukrainian troops on the ground. The US responded by imposing new sanctions on Russia’s central bank chief. The Kremlin leader, though not specifically restating his earlier nuclear threats, says Kyiv should now negotiate. But Ukraine has said it will only consider talks once Russian troops are driven back at least to their positions on the eve of the Feb. 24 invasion. In recent days, Putin’s forces have fired barrages of missiles at Ukrainian cities, Kyiv said, including a strike on a humanitarian convoy, killing dozens of civilians.

Hurricane Ian slammed into the coast of South Carolina with violent wind and a deadly storm surge, making its second US landfall after tearing a 160-mile path of ruin across Florida. Ian, a Category 1 hurricane, came ashore just after 2 p.m. local time near Georgetown, South Carolina, with 85 mile-per-hour winds. It drove a wall of water onto land and is expected to inundate a 200-mile stretch of coastline. Florida, meanwhile, continues to reel under the storm’s impact. 

The money flowing out of crypto-related funds in the third quarter has slowed down, a possible sign that many bears have already piled out of the risky asset class. Investors pulled out $17.6 million from crypto exchange-traded funds in the three months ending Sept. 30, according to data compiled by Bloomberg Intelligence. That figure, as of Friday morning, is far below the record $683.4 million withdrawn from such funds in the second quarter. 

Satellite analysis has revealed the first images of the massive methane plumes triggered by the recent, as yet unexplained explosions on the Nord Stream pipelines in the Baltic Sea. Several European countries, along with the US, have labeled it sabotage that could only have been accomplished by a nation state.

Satellite images of the massive methane plumes. Source: Environmental Defense Fund

In North Carolina, where a neck-and-neck Senate race could help determine which US political party controls that chamber of Congress, inflation and abortion rights are colliding in voters’ minds and on the campaign trail. The state has seen a boom in finance and high-tech jobs in recent years as companies like Apple and Toyota have moved in, changing the demographics and moving North Carolina from a reliably Republican state to a critical swing state.

Covid-19: Bloomberg is tracking the continuing coronavirus pandemic and the progress of global vaccination efforts with daily updates.

 What you’ll need to know tomorrow

Americans Plan Fall Travel Despite Higher Costs

Financial worries may have bumped the pandemic as a top concern for travelers, but revenge vacations seem to have no seasonal bounds, as close to two-thirds of Americans are planning trips this fall.

A tourist favorite: dining at restaurants in the Montmartre district of Paris. Photographer: Anita Pouchard Serra/Bloomberg

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