“Oil prices slumped to 2018 lows on Friday in thin but volatile trading, pulled down by concerns of an emerging global supply overhang amid a bleak economic outlook…
“Amid the plunge, Brent and WTI price volatility has surged in November to approach levels not seen since the the market slump of 2014-2016 and, before that, the financial crisis of 2008-2009…
“High production comes as the demand outlook weakens on the back of a global economic slowdown.”
“Despite policymakers’ best efforts, it looks as if China‘s economy is currently experiencing one of the worst slowdowns in recent memory. China has already adopted a series of economic stimulus measures, to try and offset some of the impact of US tariffs, including accelerated spending on infrastructure and multiple cuts to bank reserve requirements. However, these measures may be too little too late.”
“Zhuang told CNBC he expected a “photo op” and a probable “mock deal” from the meeting between the leaders of the world’s two largest economies, “which means there will be temporary market-positive feedback from that.”
“But trade tensions will continue to escalate, he added.”
“Euro zone business growth was much weaker than expected this month as exports fell sharply, hurt by a slowing global economy and an ongoing United States-led trade war, a survey showed on Friday. The disappointing readings will likely be of concern to policymakers at the European Central Bank who are expected to draw a line under their 2.6 billion euro asset purchase program at the end of the year.”
“Germany’s first economic contraction since 2015 was led by a drop in exports and private consumption, a trend that needs to be reversed if the Europe’s largest economy is to rebound before the end of the year.
“The 0.2 per cent decline in the third quarter, matching the initial reading, has been blamed on a slump in the auto industry…”
“The messiness of British party politics has made the Brexit process look like a domestic dispute that is sometimes inscrutable to the rest of the world. But Brexit holds important lessons for and about the global economy.
“Gone are the days when accelerating economic and financial globalization and correlated growth patterns went almost unquestioned.”
“Italian banks are sitting on [Europe’s] biggest pile of bad debt: €224.2B ($255.9B), with NPLs and advances making up nearly a quarter of all loans. As if that is not bad enough, the banks now have to contend with potentially heavy penalties coming from Brussels after Italy’s recalcitrant leadership refused to revise the country’s fiscal 2019 budget to lower debt and borrowing. The sharks can already smell the blood in the water, and investors have been shorting Italian banking stocks to death. Italian banks hold nearly a fifth of the country’s government bonds.”
“Greece is scrambling to figure out how to save its banks — again. Burdened by bad loans that make up almost half of total lending, crippled banks remain one of the biggest hurdles to Greece’s economic recovery.
“There are even worries that the country may face yet another financial crisis if it can’t dislodge its lenders from their downward spiral.”
Recent prices for bitumen oil from the tar sands have been under $20, which is actually a loss-making proposition for producers, once the light oil has been purchased to dilute it so it can flow through a pipeline.
“Albertans dealing with steep discount prices for oil expressed frustration Thursday with Ottawa’s fiscal update that they say offered little acknowledgment of pain in the oilpatch. But Prime Minister Justin Trudeau said in Calgary he hears the “concerns and the fears” Albertans are expressing.”
“Preliminary figures compiled by Venezuela’s central bank indicate that the crisis-wracked nation’s economy contracted 16.6 percent in 2017, according to two people with direct knowledge of the estimates.
“For the first time since 2016, the bank is preparing a raft of macroeconomic indicators for the International Monetary Fund to avoid sanctions including a possible expulsion from the lender.”
“Nigeria’s central bank held its key interest rate at a record high level as it sees inflationary pressures persisting even as prices are becoming more stable, it said.
“The Monetary Policy Committee maintained the benchmark rate at 14 percent, Governor Godwin Emefiele told reporters Thursday in the capital, Abuja.”
“The stock market is no longer not just not great — it’s downright awful. In fact, after the 550-point plunge in the Dow Jones Industrial Average on Tuesday (November 20), 2018’s market meltdown
“…at least in terms of valuations, now ranks among the worst of the past few decades.”
“Investors pulled almost $6bn out of corporate bond funds in the past week, in the latest sign of nervousness about companies’ global debt pile in an environment of rising US interest rates… Withdrawals from investment grade and high-yield bond funds totalled $5.7bn in the week to November 21.”
“Bitcoin mining operations in the US and China are facing closures after the plummeting price of bitcoin means they may no longer be profitable.
“The world’s most valuable cryptocurrency is currently trading at around $4,500, having lost almost a third of its value in the space of a week.”
“…low interest rates meant that the debt that caused the GFC was simply transferred from consumers, who took the opportunity to pay back their loans and deleverage their finances, to companies and countries that were lured by the temptation of ‘cheap’ money,” says Citadel Chief Economist and Advisory Partner Maarten Ackerman.
“Over the past two years, the US has begun the process of normalising monetary policy by hiking interest rates, causing the dollar to strengthen and making this debt more expensive. This in turn has gradually exposed those countries with too much dollar-denominated debt and poor macroeconomic fundamentals.
““Argentina and Turkey have been among the first to show the cracks, and the emerging market turmoil experienced over the past few months clearly demonstrates that the legacy of debt left by the GFC will become problematic again as interest rates rise,” he cautions.
““We’ve been in a ten-year recovery thus far, but this recovery won’t continue forever. And while we haven’t yet seen the full impact of the debt burden left by the GFC, recent events such as the emerging market sell-off do point to tough times ahead.””