Crypto News: The keep calm economy

As The Readout went to press, the Treasury announced that Chancellor of the Exchequer Kwasi Kwarteng will publish a medium-term fiscal plan on November 23. Minutes later, the Bank of England released its own update — it "will not hesitate to change interest rates," and will act in early November.

It's a bid by both to reassure panicking markets and, in their very different ways, convey calm and control, but being at least some six weeks out, it's the bare minimum many were calling for. As Bloomberg Opinion's columnist Mohamed El-Erian tweeted: "Given where the markets are, it may not prove sufficient to sustainably stabilise sentiment." He predicts sterling will weaken again (that's already happening).

At their party conference in Liverpool, the opposition Labour party has certainly been keen to capitalise on the tumult Kwarteng's tax-cutting fiscal event unleashed.

Party leader Keir Starmer and his shadow chancellor Rachel Reeves appear to be enjoying their new hymn sheet ('sound finance'). Labour would reverse the cut to the additional rate of income tax of 45%, they said, and plough the revenue of reinstating it into hiring more nurses — just about its most perfect political position. They also would keep the cut in the basic rate.

Manchester Mayor Andy Burnham (King of the North for some in the party) said he would scrap the 1p income tax cut, too. But I would have thought Starmer would quite like this — as it makes him appear somewhere in the middle, by comparison.

Keir Starmer Photographer: Ian Forsyth/Getty Images Europe

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The stories you need to know about this evening

The pound is already worth less than a dollar for some tourists.
Here are the BOE's risky options if it decides to act.
A UK interest-rate shock will quickly slam millions of homeowners.

The question on Monday was whether there was a hangover cure strong enough to end the market rout that began on Friday and got much worse when Asian markets opened late on Sunday (worrying traders more than a far-right win in Italy).

Traders, analysts and politicians looking for a soothing balm had been surprised on Sunday to hear Kwarteng's commitment "more is to come." Sterling dropped further and then, while the UK was sleeping, its currency tumbled in Asian markets — to £1.03 to the dollar, something former Treasury officials I know didn't think they'd ever see.

And so, even though the pound pared its losses slightly, the Bank of England came under huge pressure to do something. Anything.

A likely whopping 100 basis-point hike in November was already priced in. By Monday this climbed to 200 basis-points — four times the size of its last hike — and a call for an extraordinary extra session hastily arranged for this week. By lunchtime, there was a rumour of a BOE statement within hours, possibly including a extra bonus rate hike.

In the end this didn't materialise and all we got was the emollient tweet featured at the top of this email. Most agree the Bank will raise rates again — hammering household mortgage repayments in a period already billed as the worst winter in living memory (something former minister Jim O'Neill weighed in on today, calling the Budget "naive.")

So, if higher rates are one near cert response, what else did people prescribe? In an interview with Bloomberg Radio, one of the godfathers of Trussonomics, Gerald Lyons, believes it is a matter of explaining better the full policy context to Friday's package.

"[Kwarteng] needs to reaffirm that tax cuts are only part of the story, not the full story. What they're following is a supply-side agenda. Markets were still not convinced that his fiscal easing was necessary, non-inflationary and affordable... It's quite clear from the market reaction that those concerns were not fully addressed."

But our political editor and team have found plenty of Tory backbenchers horrified at the pound heading to parity with the dollar. One told them that "Kwarteng and Truss are in the midst of an ideological low-tax obsession, which won't deliver growth quickly enough to stabilize the public finances."

Over in the US, Tyler Cowen gives us a much needed contrarian take arguing there is no evidence the UK can't or won't repay its debts; nor are the yields on British government securities "astronomical numbers." He reserves more criticism for the BOE. "Politics aside, this is hardly the stuff from which economic disasters are made. What this debate could use is fewer adjectives and more numbers."

But Bloomberg Opinion's editorial board is less relaxed, calling for the prime minister to address a perceived reputation for recklessness:

"Following this worst possible start to her premiership, Truss needs to understand what went wrong and take prompt corrective action … Truss had already built a reputation for recklessness. The new fiscal policy seemed to affirm it. She must put this right in short order, or things will go from bad to worse."

Russia's seaborne crude exports to Europe are being compressed, with the bloc's sanctions only about two months away.

Shipments in recent weeks have been little more than half pre-invasion levels and will come under increasing pressure as the import ban nears.

Customers in northern Europe in particular have slashed their imports, which are now running below 300,000 barrels a day. That's about a quarter of the volume that was traded into the region before Moscow sent its forces to Ukraine in late February, crimping the Kremlin's revenues.

Get ahead of the curve

'Cryptic bailout.' The £40 billion plan announced by the new UK government to bolster energy traders remains a black box, writes Bloomberg Opinion columnist Javier Blas.

Winners and losers. Here's what the UK's radical budget means for taxes, property and stocks.

New era. Giorgia Meloni will become Italy's first female prime minister at the head of the most right-wing government since World War II.

A Japanese base. Binance, the world's biggest crypto exchange, is seeking a permit to return to Japan as the country opens up to crypto.

Copper woes. Saudi Arabia faces challenges to unlock its copper reserves that could ease a looming global shortage.

Mind the £150,000 gap. The UK's criminal trial lawyers are leaving their underpaid vocation for something more lucrative.

Sit down. The latest design trend is chairs that don't look like chairs.

One key story, every weekday

In the heart of midtown Manhattan lies a multibillion-dollar problem for building owners, the city and thousands of workers.

Blocks of decades-old office towers sit partially empty, in an awkward position: too outdated to attract tenants seeking the latest amenities, too new to be demolished or converted for another purpose.

It's a situation playing out around the globe as employers adapt to flexible work after the Covid-19 pandemic and rethink how much space they need. Even as people are increasingly called back to offices for at least some of the week, vacancy rates have soared in cities from Hong Kong to London and Toronto.

Read The Big Take.

Your early warning system

7 a.m. Ferguson, Close Brothers, United Utilities, SSP, and Saga report earnings.

9:30 a.m. Weekly petrol and diesel prices, via the Department for Business, Energy & Industrial Strategy.

2 p.m. Keir Starmer speaks at the Labour Party conference in Liverpool.

Follow all tomorrow's corporate news in The London Rush, live on Bloomberg UK from 8 a.m.

Please send thoughts, tips and feedback to readout@bloomberg.net. You can follow Allegra on Twitter.