“Plunge, tumble and rout are overused by the financial media to describe a market in decline, but such superlatives would not be out of place to describe what’s happening to commodities. The Bloomberg Commodity Index of 25 raw materials ranging from oil to copper to cattle dropped as much as 2.80 percent on Wednesday, the most since 2014, before closing at its lowest level since December. That brought the gauge’s decline to 8.88 percent from this year’s peak in late May.
“If one thinks of raw materials as a sort of early warning system — copper is frequently called the metal with an economics Ph.D. because it often tracks the health of the world economy — then commodities are sending an incredibly distressing signal.”
https://www.bloomberg.com/view/articles/2018-07-11/rout-in-commodities-can-no-longer-be-ignored
“The copper price, which started sliding a month ago, slumped 3 per cent on the London Metals Exchange on Wednesday night to its lowest level for a year. It’s fallen about 15 per cent in a month. It wasn’t alone. Base metal prices generally fell sharply, with zinc down 6 per cent and nickel and lead both about 3 per cent. Aluminium prices have also fallen heavily over the past month, down more than 7 per cent.”
“Soyabean prices are getting crushed, dropping to their lowest since the financial crisis as the trade war between the US and China ratchets up.”
https://www.ft.com/content/d1e11c08-853b-11e8-a29d-73e3d454535d
“Oil prices plunged 5$ Wednesday afternoon, dropping on bearish news and posting their worst performance in over a year.”
“Global investors have been rattled after a threat by the Trump administration to impose 10% duties on $200bn (£151bn) of imports prompted protests from Beijing and brought an all-out trade war a step closer. Stock markets headed lower in the US, Asia and Europe on Wednesday as the US warned that it would press ahead with further tariffs and China promised to “fight back as usual” with “firm and forceful measures” if they were enacted.”
“While higher prices caused by the import taxes are the most immediate effect, accounting for roughly half the decline in GDP, the larger impact will come from derailing the existing global supply chain of goods hit by the tariffs and the impact on jobs and confidence.”
“A rout in China’s dollar-denominated junk bonds is getting worse as mounting defaults send traders running for cover. Rising trade tensions are also adding to longer-existing difficulties created by the nation’s push to cut excessive leverage.”
“Inner Mongolia Berun Group Co said on Wednesday that it was uncertain of its ability to make interest and principal payments on a medium-term note totaling 856 million yuan ($128.32 million). The manufacturer of coal and natural gas chemicals said it was actively considering methods to raise funds, but that tight finances meant there was a risk it would not be able to make the payments.”
“Turkish equities, bonds and the lira took a hammering on Wednesday as Recep Tayyip Erdogan predicted a fall in interest rates and investors fretted over the health of the country’s economy… Turkey must find around $200bn a year in foreign financing — most of it in the form of short-term “hot money” flows — to fund the current account deficit as well as maturing debt. But foreign investors are worried about the management of Turkey’s $880bn economy under a powerful new executive presidency that came into force after last month’s elections and centralises power in the hands of Mr Erdogan.”
https://www.ft.com/content/5e645f06-8527-11e8-a29d-73e3d454535d
“Many [of Morocco’s] state-owned strategic institutions are on the verge of bankruptcy due to financial and legal problems, which may lead the government to privatizing the establishments as a solution.”
“As it stands, Italy does not necessarily wish to leave the euro of its own volition. However, Italy’s debt crisis could be a major problem for the eurozone. Should Italy default on its debt, then this has the potential to trigger a significant decline in global growth.”
https://seekingalpha.com/article/4186771-italy-really-leave-euro
“Tory Rebel, Dominic Grieve told the audience: “If by the end of February or early March it is clear that there is no [Brexit] deal on anything, there will be a declaration of a state of emergency in this country… Ordinary life will grind to a halt.””
“Foreign direct investment in the United States dropped 32 percent, or $120 billion, in 2017 as compared to the year before, according to new figures. After a two-year spike in foreign investment, the Bureau of Economic Analysis found that the rate last year dropped to levels similar to 2014 and the years before the financial crisis.”
http://thehill.com/policy/finance/396584-foreign-investment-in-us-drops-32-in-2017
“The reach of America’s student loan problem — total debt is now about $1.4 trillion — is vast. Millions of people are in default, and many young people are graduating into adulthood facing payments that limit their ability to buy homes and to start families of their own. Some employers have even begun dangling student loan repayment benefits as a perk to potential workers.”
https://www.nytimes.com/2018/07/11/your-money/student-loan-debt-parents.html
“Masayoshi Son and Elon Musk leveraged their dreams to the hilt… They’re the headliners in a decade-long, $11 trillion corporate borrowing frenzy, fueled by central banks that flooded the global financial system with ultra-cheap money. Investors have been lending to virtually anyone willing to pay a decent yield. But now the easy money is coming to an end. Policy makers, after driving interest rates to unprecedented lows, are hiking those rates for the first time in 10 years. For many companies, it will bring new financial pressures. And for some of them, those pressures could trigger disaster.”
https://www.bloomberg.com/graphics/2018-corporate-debt/
“The current system now relies nearly entirely on the so-called “big four” accounting firms — KPMG, Ernst and Young, Deloitte and PwC… they have “lost sight of their core purpose”, with only a third of their revenue coming from auditing and the rest earned from “consultancy services”… the firms are now selling billions of dollars worth of business advice to the same companies they are supposed to independently audit.”
http://www.abc.net.au/news/2018-07-12/richard-brooks-accountants-who-broke-capitalism/9971084
