Weekly Market Update - 7 November 2022

Oil Companies Reinvesting

US President Joe Biden said he’d seek to impose higher taxes on oil companies that record “windfall” profits without reinvesting in production. Companies that don’t show they’re reinvesting are “going to pay a higher tax on their excess profits and face other restrictions,” he said, blasting the industry’s profits as “a windfall of war.” However, his promise will be all but impossible to deliver as no such proposal is likely to pass the current Senate, evenly divided between Democrats and Republicans. Unless Biden’s party makes unexpected gains in next week’s elections, the GOP and centrist Democrats will be able to block it for the foreseeable future.

Source: Bloomberg

Reopening Rumours

Chinese stocks listed in the US surged on Tuesday, fueled by speculation that Beijing is preparing to phase out Covid Zero policies — even as the nation’s Foreign Ministry said it was unaware of such a plan. Investors have been desperate for less-restricted activity to spur growth in China’s economy. But looking at China’s cities right now, the signs aren’t good. While the country hasn’t been issuing sweeping lockdown orders like that seen in Shanghai earlier in the year, lockdowns by stealth — where officials communicate restrictions with businesses directly, or close small sections of a city incrementally to avoid panic — are increasingly becoming the norm.

Source: Bloomberg

Brazil Facing Transition

Brazilian President Jair Bolsonaro vowed to respect the constitution and, while stopping short of formally conceding defeat, authorized the government to start the political transition after his loss to Luiz Inacio Lula da Silva. The president also called for pro-government protests that have blocked major highways across the country to be suspended, describing them as “leftist methods.” During his four years in power, Bolsonaro repeatedly cast doubt on Brazil’s electronic voting system, claiming it could be rigged against him and fueling concerns at home and abroad of a contested result and unrest akin to the Jan. 6 riots in the US Capitol.

Source: Bloomberg