Weekly Digest: Eurozone in Recession, Binance Outflows


5 minutes read

Jun 9, 2023

People walking on the street with the EU flag in the background

10/06/2023: The Eurozone falls into recession as energy prices soar, investors pull $790 million from crypto exchange Binance after SEC charges, China’s producer prices plunge the most in 7 years. And more.

💡Quote of the Week

“In the short term, expect to keep hearing the whooshing sound of money being yanked from the crypto ecosystem as regulation combines with the pain of rising interest rates and fading FOMO.” - Bloomberg Opinion

Investment news

A Euro banknote with economic indicators in red

🇪🇺 📉 Eurozone sinks into recession. Figures released on Thursday revealed that the Eurozone unexpectedly contracted for two consecutive quarters, defying earlier predictions. The decline in growth can be attributed to a combination of factors including energy shocks, Russia's conflict in Ukraine, inflation, and monetary tightening, all of which hampered the region's growth momentum during the winter months. (Politico)

According to the revised data from Eurostat, the EU's statistics office, the GDP of the eurozone contracted by 0.1 percent during the first three months of 2023. This news was further exacerbated by the revision of the previous quarter's data for 2022, which revealed a contraction of 0.1 percent instead of the previously forecasted 0 percent.

🇺🇸 🏦 Don’t call it a “pause.” As the Federal Reserve meets next week, it is widely anticipated that they will keep the current interest rates, following a streak of 10 consecutive meetings where they increased the key rate to fight runaway inflation. However, what could be perceived as a simple "pause" in rate adjustments is likely to be described as a deliberate "skip." (AP News)

“That’s probably the only way to keep the committee cohesive in an environment where they have seem to have somewhat broadening disagreements,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank Securities.

Gold bound for weekly gain. The gold price saw a slight decline on Friday due to a stronger dollar, yet it is on track to achieve a weekly gain, thanks to speculations that the Federal Reserve might soon halt its interest rate hikes.

Spot gold slipped by 0.3% to $1,962.34 per ounce, but it is set to achieve a 0.8% weekly increase after a notable surge of around 1.5% triggered by a rise in U.S. weekly jobless claims. Meanwhile, U.S. gold futures remained stable at $1,978.20.

🇨🇳 A disappointing recovery. China's producer prices have experienced the sharpest decline in seven years, indicating the looming presence of deflation in the economy. (CNBC)

In May, the producer price index recorded a significant decline of 4.6%, representing the largest year-on-year drop in seven years. This drop is comparable to the 7.2% decline witnessed in May 2016, which was the last time producer prices experienced such a substantial year-on-year decrease.

🇨🇭🏦 Credit Suisse takeover. On Friday, UBS and the Swiss government jointly announced the signing of a loss protection agreement. This agreement will be implemented upon the completion of the takeover of Credit Suisse. (CNBC)

“The priority for the federal government and UBS is to minimise potential losses and risks so that recourse to the federal guarantee is avoided to the greatest extent possible,” the Swiss government said in a statement.

💵 Investors pull $790 million from crypto exchange Binance after SEC charges. Federal regulators expressed concerns that the $2.2 billion worth of U.S. customer assets held by Binance is exposed to a "significant risk" of being stolen by founder Changpeng Zhao, following the charges filed against the crypto regulator by the Securities and Exchange Commission. (CNBC)

On Monday, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and Zhao, accusing them of participating in the unregistered offer and sale of securities, as well as commingling investor funds with their own.

Similarly, on Tuesday, the Securities and Exchange Commission (SEC) filed a lawsuit against Coinbase, claiming that the company was functioning as an unregistered exchange and broker. Additionally, the SEC stated that 13 assets listed on Coinbase's platform were classified as crypto asset securities.

📸 Image of the week

A meme mocking the future of humanity after the AI takeover


AI technology with microchip

🤔 What’s the best use for crypto? Let’s ask AI. “At first the crypto assets will be existing ones, such as Bitcoin and Ether. But over time the bots may invent their own coins, based on principles of convenience (for the bots, of course).” (Bloomberg Opinion)

“Presumably these bots will be good with numbers, so they might use multiple crypto assets for reasons of diversification. The bot-based crypto economy could evolve to be considerably more complex than the human-based crypto economy,” Tyler Cowen writes.

What else is happening

Severe flooding in one of the villages in southern Ukraine caused by a dam destruction
Source: AP News

🇺🇦Ukraine war. On Tuesday, a significant dam in southern Ukraine collapsed, resulting in the flooding of villages, posing a threat to crops and jeopardizing the availability of drinking water. Both Russia and Ukraine hastily initiated evacuation efforts while pointing fingers at each other for the devastation. (AP News)

Ukraine accused Russian forces, claiming they were responsible for the destruction of the Kakhovka dam and hydroelectric power station. This particular facility is located in an area controlled by Moscow for over a year. On the other hand, Russian officials attributed the damage to Ukrainian bombardment in the disputed region where the river serves as a dividing line between the two sides.

The conflicting claims could not be reconciled.

🧑‍⚖️ Trump indictment. Former President Donald Trump faces seven federal criminal charges for keeping classified government documents at his Florida home after leaving the White House. (CNBC)

On Thursday evening, President Trump revealed the indictment himself through a series of posts on his social media platform, Truth Social. He also stated that he has received a summons to appear in court in Miami on Tuesday.

And finally…

Spaceship interior with view on earth 3D rendering elements of this image furnished by NASA

👾 Space travel can seriously mess with your brain. Space presents various challenges to the human body, impacting our physiology from head to toe due to factors like microgravity conditions. A recent NASA-funded study has provided valuable insights into this matter. (Reuters)

On Thursday, researchers announced that astronauts who embarked on missions lasting at least six months aboard the International Space Station (ISS) or NASA space shuttles encountered notable expansion of the cerebral ventricles. These ventricles, located in the middle of the brain, house cerebrospinal fluid.


See you next week!


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