The European economy grew in the third quarter

In the third quarter, the eurozone economy showed unexpectedly strong growth, reaching 0.4%. France and Spain became the key drivers of this growth, and Germany, which was previously under threat of recession, increased GDP by 0.2%. In Italy, the production level remained at the level of the previous quarter.

Inflation in Spain accelerated slightly to 1.8%, remaining within the ECB's target range of 2%. Consumer prices in Germany rose by 2.4% y/y in October.

Germany still faces challenges such as loss of competitiveness due to high energy costs and a shortage of qualified personnel. Nevertheless, growth in the third quarter was supported by consumer and government spending.

The growth of the French economy is associated with the Olympic Games, as well as with increased government spending, despite the difficult financial situation. Although the increase in French GDP has brought some relief to the government, weak investment figures and a slowdown in consumer spending continue to negatively affect the budget.

Austria also showed growth of 0.3%, while Portugal and Lithuania have seen an acceleration in GDP growth.
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German industry is looking for salvation abroad

A study conducted in September 2024 among the top managers of 115 industrial companies in Germany revealed alarming trends.

Almost half of the respondents (45%) plan to expand abroad. And only a few companies (13%) are interested in new branches within the country. Moreover, 29% of enterprises reported readiness to transfer jobs from Germany, and only a tiny part (4%) is considering the reverse process of returning immigrated employees.

The results of the study confirm the fears of managers that more than two thirds of the survey participants are confident that the number of jobs in Germany will decrease in the coming years. Only about half expect the situation to improve in five years, while the rest are skeptical about the prospects for the development of the German economy.

Experts point to a number of reasons underlying the current trend. The majority of respondents consider excessive bureaucracy to be the main obstacle to economic recovery. «Wrong policy decisions,» according to almost half of the respondents, also play a significant role in slowing growth. «Insufficient management efficiency» is considered a problem by every fourth participant in the survey.
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Bitcoin has updated the historical record amid Trump's victory

On the night of November 6, the bitcoin exchange rate reached a new historical high, exceeding the $75,000 mark.

According to Coinmarketcap, the cost of one bitcoin was $74,909, after which the exchange rate decreased slightly and began to grow again, stopping at $74,500.

On the Binance exchange bitcoin was briefly trading at exactly $75,011.

The growth of bitcoin occurred against the background of the US presidential election held yesterday, as a result of which Donald Trump, known for his support of cryptocurrencies, won. This has caused optimism among investors who expect positive changes for the digital asset market.

Bitcoin set the previous record in March 2024, when its exchange rate reached $73,777.
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Bitcoin has broken the historical maximum of $81000

The bitcoin exchange rate exceeded $81,000 for the first time after Donald Trump's victory in the US presidential election. Traders expect a relaxation of cryptocurrency regulation by Trump, who has previously expressed his support for them.

On Monday, bitcoin rose 2.8% to $81,241. Over the past week, the growth was 14%, over 25% in a month, and over 100% in a year.

Republicans, in addition to Trump's victory, are approaching full control of Congress. This will allow the new administration to implement policies that will support cryptocurrencies.

Experts suggest that the new administration will bring positive changes, in particular, in the work of the Securities and Exchange Commission. These changes will lead to a softer regulatory stance on digital assets.

They also note that the increased demand for bitcoin is due to a combination of favorable factors: reduced regulatory risks, improved financial conditions and optimistic macroeconomic prospects for the United States.
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Economic expectations in Germany are falling amid the US elections

November brought negative news for investor and analyst sentiment in both Germany and the eurozone. The data from the economic expectations index clearly show a decline in optimism.

The German index fell to a modest 7.4 points from 13.1 points in October. This sharp decline, significantly exceeding the projected 13 points, is primarily due to unstable political events both inside and outside Germany.

Donald Trump's victory in the US presidential election has caused a noticeable negative impact on economic expectations. While the economic recovery is growing in the United States, the situation in the eurozone and China, on the contrary, is deteriorating.

In parallel with the drop in the expectations index, the assessment of the current economic situation also decreased to -91.4 points, reaching the lowest level since May 2020.

The situation in the eurozone is not much better: the index of economic expectations fell to 12.5 points from 20.1 points, not meeting forecasts for growth to 20.5 points. The assessment of the current economic situation in the eurozone also decreased by 3 points, reaching -43.8.
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Why the US Dollar Will Continue to Strengthen

Yesterday, the euro and pound quickly lost ground against the US dollar after Federal Reserve Chair Jerome Powell confirmed traders' concerns by stating that recent data provides the central bank with room to lower interest rates cautiously.

"The economy is not signaling any need for us to rush into rate cuts," Powell said on Thursday in Dallas. "The current state of the economy allows us to approach our decisions cautiously."

The Fed began lowering borrowing costs in September with an aggressive half-point cut, followed by a quarter-point reduction last week. The Fed indicated readiness to continue lowering rates if inflation remains subdued. However, Powell's remarks align with several colleagues who advocate for a more gradual approach to future rate cuts.

Powell's comments have tempered market expectations for a December rate cut. Policy-sensitive two-year Treasury yields rose by eight basis points to 4.36%, while swap traders reduced the odds of a December rate cut to less than 55%, down from about 88% the day before.

Powell also addressed recent data, noting that inflation remains on a bumpy path: "The economy shows no urgency for rate cuts, as inflation demonstrates some signs of picking up," Powell stated on Thursday. He added that uncertainty about the neutral rate—where policy neither stimulates nor restrains growth—warrants caution. This week, several Fed officials highlighted the importance of defining the new neutral rate as a key factor in shaping future policy.

"We should be cautious in this environment," Powell said. "As the central bank approaches the plausible range of neutral levels, it may be the case that we slow the pace of what we're doing."

As I noted above, recent data showed that headline inflation in October remained unchanged, while the core Consumer Price Index (CPI), excluding food and energy costs, rose 0.3% for the third consecutive month. "Inflation is approaching our long-term 2% target, but it hasn't reached it yet," Powell said. "We are committed to finishing the job. With labor-market conditions in rough balance and inflation expectations well anchored. I expect inflation to continue its descent toward 2%, albeit on a bumpy trajectory."

Powell refrained from commenting on the likelihood of a December cut.

Monetary policy could face new headwinds following President-elect Donald Trump's potential tax cuts, immigration restrictions, and tariffs. Political uncertainty may further reinforce the Fed's cautious stance on rate cuts.

The US dollar has gained significant strength over the past two weeks and now dominates the forex market.

As for the current technical picture of EUR/USD, buyers need to reclaim the 1.0580 level to target a test of 1.0615. A move beyond this level could lead to 1.0655, although such progress will require support from major market players. The most distant target is 1.0690. If the trading instrument declines in 1.0540, I expect major buyers to take action; failing that, it would be good to wait for the 1.0495 low to be updated or to open long positions from 1.0460.

As for the current technical picture of GBP/USD, pound buyers need to break through the nearest resistance at 1.2680 to aim for 1.2725, above which breaking through will be quite problematic. The furthest target will be 1.2760, followed by a potential sharp rally to 1.2796. Bears will aim to regain control of the 1.2630 area if the pair declines. A breakdown here would deal a significant blow to bullish positions, pushing GBP/USD toward 1.2585, with a further target at 1.2550.
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ECB: AI bubble threatens financial stability

The European Central Bank (ECB) has expressed alarm about a possible bubble in the stock market related to artificial intelligence (AI).

In its semi-annual financial stability review, the ECB noted that the stock market, especially in the United States, is increasingly dependent on several companies considered leaders in the field of AI. This concentration raises concerns about the possibility of an AI asset bubble. Investors demand a low premium for owning stocks and bonds, and funds have reduced their cash reserves, which can cause a shortage of cash and forced asset sales.

The central bank warned that if investors' expectations for the revenues of these companies are not met, then a sudden drop in asset prices may occur, which threatens adverse global consequences.

The ECB expressed concern about the low liquidity of assets and the reduction of funds' cash reserves, which could lead to forced asset sales and a decrease in their value. Among other risks, the ECB noted the vulnerability of the eurozone to trade fragmentation and possible negative consequences from the introduction of tariffs, as well as an increase in borrowing by eurozone countries at higher interest rates.
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Kuwait will spend more than $30 billion to increase oil production

Kuwait Petroleum Corp. (KPC) intends to invest about 10 billion Kuwaiti dinars ($33 billion) over five years to increase oil production. According to CEO Sheikh Nawaf Al-Sabah, the company plans not only to maintain the current capacity, but also to significantly increase it in accordance with strategic goals.

According to Nawaf, Kuwait's forecast for stable oil demand until the middle of the century coincides with the expectations of such major market players as TotalEnergies SE and Vitol Group. However, the International Energy Agency (IEA) suggests that global oil use will peak by 2030 due to the shift to electric vehicles and renewable energy sources.

KPC's investments are part of a large-scale program worth 20 billion dinars, launched in April and covering the entire spectrum of the oil industry – from production to petrochemicals. In 2024, the company intends to reach a production capacity of 3.2 million barrels per day, and by 2035 to increase this figure to 4 million barrels.

Today, Kuwait is one of the ten largest oil producers, producing about 2.5 million barrels daily, and continues to strengthen its position in the global energy sector.
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Oil fluctuates amid a truce in the Middle East and a reduction in reserves in the United States

On Wednesday morning, oil prices showed slight fluctuations, reflecting the impact of both signals of a reduction in fuel reserves in the United States and news of a truce between Israel and Lebanon.

Brent futures rose slightly, trading at $72.86 per barrel, slightly above the closing level of the previous session ($72.81). A similar trend is observed in the WTI oil market, which is trading at $68.79 per barrel.

The truce between Israel and Lebanon, announced by US President Joe Biden, has become a positive factor for the market, reducing geopolitical risks. At the same time, Israeli Prime Minister Benjamin Netanyahu stressed that the duration of the truce will depend on the situation in Lebanon.

Market expectations regarding oil reserves in the United States also have an impact on prices. Data from the American Petroleum Institute (API) showed an unexpected decrease in inventories by 5.94 million barrels, which supported oil prices. Official data from the U.S. Department of Energy will be released tonight.
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Dollar at the bottom: the biggest drop in three months

The US dollar is experiencing a significant drop, which may be the largest in the last three months. Investors are reconsidering their position in relation to the so-called «trump trade», which led to the growth of the currency after his election victory.

The US currency index fell by 0.2% on Friday, increasing the decline this week to 1.1%, and remains at 105.

Trump's recent threats to impose tariffs and the appointment of Scott Bessent to the post of US Treasury Secretary, which is associated with government spending cuts, have caused unrest in financial markets. This led to a decrease in US Treasury bond yields and an increase in the long-term positioning index.

Experts believe that the fall in the dollar is also caused by exhaustion after a long period of growth that began after Trump's victory. The dollar is expected to fluctuate in the coming months before Trump's inauguration, when his economic policy will become clearer.
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Elon Musk files a fourth lawsuit against OpenAI

Elon Musk continues his legal battle with OpenAI, filing another lawsuit that calls into question the legitimacy of its commercial activities. According to Musk, OpenAI's actions create obstacles for other companies in the field of artificial intelligence in attracting investments and contribute to the emergence of unequal conditions of competition in the market.

The lawsuit alleges that OpenAI uses confidential information and interacts with Microsoft in ways that may violate the principles of fair competition.

The lawsuit, which involves not only Musk but also other high-profile industry participants, highlights the growing tensions around ethics and commerce issues in the field of AI. This is Musk's fourth lawsuit against OpenAI, and he expresses concern that the company has deviated from its original course as a non-profit organization created for the benefit of humanity.

This situation raises important questions about the future of artificial intelligence regulation, as well as how AI companies should balance commercial interests and ethical obligations to society.
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The Bank of England may reduce the rate four times in 2025

The Bank of England is considering a fourfold interest rate cut in 2025 as inflation slows faster than expected. In the November forecast, the regulator has already laid out such a scenario in order to return inflation to the target of 2%.

After the statement by the head of the Bank of England, Andrew Bailey, the market reacted with an increase in expectations of monetary policy easing. At the moment, investors estimate the probability of a rate cut of 83 basis points by the end of 2025, which implies three or four downgrades.

Risks of a trade war and inflation

The Bank of England also takes into account external risks, including a possible escalation of the trade war if the United States imposes new tariffs after Donald Trump's election victory. This may complicate UK inflation forecasts, as the impact of trade barriers on prices will depend on the response of other countries.

Market impact and warning of deregulation

An additional factor influencing inflation will be the UK's October budget. Bailey stressed that excessive financial deregulation can lead to risks, but should not hinder economic growth.
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