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The Morning Risk Report: Energy Prices in Europe Surge After Russia Slashes Gas Flows
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Good morning. Russia followed through on promises to slash natural-gas flows to Europe, triggering a surge in prices for fuel and electricity that, if sustained, will hobble the region’s economy.
Moscow is using gas flows as an economic weapon to sow division and unrest among Ukraine’s Western allies. Europe, in particular Germany, has for years relied on gas produced in western Siberia to generate electricity, fire factories and heat homes.
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Content from our Sponsor: DELOITTE
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SOX at 20. Time for Tune-Up?
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As the Sarbanes-Oxley Act turns 20 years old this month, CFOs and CAOs may consider whether it’s time to upgrade their compliance programs with a focus on three key areas: operating model improvements, program enhancements, and automation opportunities. Read More ›
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In one of Moscow’s most drastic moves to date, state-owned supplier Gazprom PJSC on Wednesday halved the flow of gas through the Nord Stream pipeline. The pipe had already been running at a reduced rate. Shortly before midday in Berlin, just a fifth of the gas that could theoretically flow from Russia to Germany via the pipe was doing so.
Wednesday’s cut sent European gas prices up as much as 14% to more than 230 euros, or $234, a megawatt-hour in the region’s main wholesale market before settling 2.5% higher on the day. Gas prices are up by a quarter so far this week. Power prices, which tend to move in line with gas because the fuel is burned to generate electricity, added to recent gains in France, Germany and elsewhere.
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WSJ Risk & Compliance Forum
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Sign up for the next WSJ Risk & Compliance Forum on Nov. 16 for discussions on the critical issues facing corporate risk & compliance professionals, including keeping up with sanctions, screening for forced labor, and proposed U.S. rules on climate change and cybersecurity. Register here for a discounted ticket.
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The Justice Department is calling this its second-largest settlement related to redlining. PHOTO: ALEXANDER DRAGO/REUTERS
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The Justice Department said Wednesday that a mortgage company owned by Berkshire Hathaway Inc. would pay $24.4 million to resolve allegations of lending discrimination against minority residents of neighborhoods in the Philadelphia metropolitan area.
The department is calling this its second-largest settlement related to “redlining,” alleging that Trident Mortgage Co. avoided providing home loans and mortgage services to residents of neighborhoods in Philadelphia, Camden, N.J., and Wilmington, Del., that are populated mostly by minorities.
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Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd. after more than a year of extraordinary pressure from Chinese regulators.
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The Federal Trade Commission is seeking to block Meta Platforms Inc. from acquiring Within Unlimited Inc. and its virtual reality dedicated fitness app, Supernatural, saying the deal would violate antitrust laws.
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Two U.S. senators are preparing legislation that would give merchants power to process many Visa Inc. and Mastercard Inc. credit cards over different networks. The bill aims to create more competition among U.S. credit-card networks.
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The Federal Aviation Administration mishandled some of its oversight responsibilities at Southwest Airlines Co. in recent years, a new report from an agency auditor found. The report said Southwest and the union that represents its pilots have hindered investigations into flight incidents.
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Workers in Wuhan last year. China reported 553 new Covid-19 infections for Tuesday in a country of 1.4 billion people. PHOTO: THOMAS PETER/REUTERS
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Wuhan, the central Chinese city that was the epicenter of the early Covid-19 outbreak, locked down a district of about 1 million people due to four asymptomatic cases, as the nation’s leaders maintain their zero tolerance toward the virus, a policy that has cast a shadow over both the national and global economies.
Local authorities announced that the district of Jiangxia would enforce a three-day “temporary restriction” from Wednesday, and most businesses would be closed. The district will also ban large gatherings and dining in restaurants, close entertainment venues and suspend most public transportation services. The four cases detected in Hubei’s capital were the only new infections in the province.
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The Federal Reserve continued a sprint to reverse its easy-money policies by approving another unusually large interest-rate increase and signaling more rises were likely coming to combat inflation that is running at a 40-year high.
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Thousands of demonstrators chanting anti-Iran slogans stormed the Iraqi capital’s government center and occupied the parliament building Wednesday, protesting corruption and denouncing the leading candidate to be the country’s next prime minister.
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Speaking in New Delhi on Wednesday, USAID chief Samantha Power contrasted India’s and China’s approach to Sri Lanka’s economic crisis, and called on Beijing to transparently join other nations in debt restructuring talks for troubled economies.
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The Food and Drug Administration signed off on a Bavarian Nordic A/S monkeypox vaccine plant, a move that allows use in the U.S. of 786,000 doses made at the facility in Denmark.
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Moldova’s Parliament in Chisinau. PHOTO: DUMITRU DORU/SHUTTERSTOCK
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Moldova is working to step up cyber defenses to protect its critical infrastructure from rising threats amid the war in neighboring Ukraine.
Officials in the country of roughly three million people are planning overhauls to create basic cybersecurity rules and institutions, including drafting new legislation in tune with European Union guidelines, improving security in government offices and launching a new national computer emergency response team. The main challenge for Moldova, one of Europe’s poorest countries, is finding qualified cybersecurity experts to fill new jobs, and money to pay them.
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An Autodesk office in Portland, Ore. In a September letter, the company suggested the FASB clarify and refine its rules on segment reporting. PHOTO: AUTODESK
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U.S. public companies would have to start breaking out big-ticket expenses incurred by their business divisions under a new proposal from the U.S. accounting standards-setter aimed at helping investors get a clearer view of financial performance.
Companies usually split their operations into segments by business line or geography. They are required to disclose a measure of their profits or losses by operating segment in financial statements, but don’t have to go into much more detail. Under a proposal from the Financial Accounting Standards Board, companies would have to disclose significant expenses in those divisions.
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Securities and Exchange Commission Chair Gary Gensler said the U.S. audit regulator, the Public Company Accounting Oversight Board, has been slow to update its rules.
“The expectation was that the board would produce a more appropriate set of standards going forward,” Mr. Gensler said on Wednesday. “Historically, though, the PCAOB has been too slow to update auditing standards.”
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Spirit shareholders had been resistant to a Frontier deal amid a bidding war with JetBlue. PHOTO: EVA MARIE UZCATEGUI/BLOOMBERG NEWS
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JetBlue Airways Corp. agreed to buy Spirit Airlines Inc. for $3.8 billion, a combination that would create the fifth-largest U.S. carrier. The deal announced Thursday comes after The Wall Street Journal reported that the two sides were close to sealing an agreement after a monthslong bidding war between JetBlue and Frontier Group Holdings Inc.
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Credit Suisse Group AG named Ulrich Körner as its next chief executive and charged him to lead a fresh effort to stabilize the bank after financial losses and scandals.
The troubled Swiss bank has been trying to repair its business managing rich people’s wealth and operating a Wall Street investment bank. On Wednesday, it launched a new strategic review to pare back the investment bank further and slash its overall costs.
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Lufthansa ground staff demonstrated at Frankfurt Airport on Wednesday. PHOTO: FRANK SIMON/REUTERS
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Deutsche Lufthansa AG canceled almost all of its flights from two of its hub airports as ground staff staged a walkout, exacerbating the disruption that has plagued the aviation industry as it tries to increase flying to meet surging travel demand.
The German carrier said 678 flights had been scrapped from Frankfurt Airport and a further 345 at its Munich hub on Wednesday ahead of the start of the vacation season in parts of the country this weekend. About 134,000 passengers are affected, it said.
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Airbus SE cut its aircraft delivery guidance for this year and slowed production plans, citing delays in its supply chain that are holding back the European planemaker’s aggressive ramp-up targets.
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Spotify Technology SA reported accelerated user growth and a lift in advertising revenue in the most recent quarter as the streaming giant thwarts fears that inflation and subscription fatigue are hitting consumers’ wallets.
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Facebook parent Meta Platforms Inc. posted its first decline in revenue and issued a muted outlook as the company struggles to adjust to macroeconomic forces and growing competition from rival TikTok.
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