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The coronavirus could cost the global economy more than $1tn in lost output if it turns into a pandemic, according to a leading economic forecaster. Oxford Economics warned that the spread of the virus to regions outside Asia would knock 1.3% off global growth this year, the equivalent of $1.1tn in lost income.

“The consultancy said its model of the global economy showed the virus was already having a “chilling effect” as factory closures in China spilled over to neighbouring countries and major companies struggled to source components and finished goods from the far east.”

https://www.theguardian.com/world/2020/feb/19/coronavirus-could-cost-global-economy-1tn-in-lost-output


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The International Monetary Fund (IMF) said on Wednesday that Argentina’s debts were “unsustainable” and that private creditors would need to make a meaningful contribution to get the South American nation back on its feet.

“The statement came as the Fund wrapped up a week-long visit to the country, which is battling to avoid defaulting on around $100 billion in loans and bonds after a biting recession, high inflation and a sharp market crash pummeled Argentina last year.”

https://www.nasdaq.com/articles/imf-says-argentine-debt-unsustainable-amid-default-fears-2020-02-19


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Camila and Darianyelis, aged nine and seven, are among nearly one million “left-behind” Venezuelan children whose parents have been forced to migrate, leaving their offspring in the care of grandparents, aunts, siblings, neighbours or sometimes even completely alone.”

https://www.theguardian.com/global-development/2020/feb/20/one-million-children-left-behind-those-who-stay-venezuela-amid-exodus


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“It is boom time for junk-rated slices of subprime auto-bond deals [USA].

Auto-loan delinquencies may have approached crisis-era levels recently, but that hasn’t put the brakes on demand for riskier slices of subprime auto-loan bond deals.”

https://www.marketwatch.com/story/cracks-in-the-13-trillion-auto-finance-market-arent-curbing-investor-demand-for-risky-debt-2020-02-19


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““Major disruption to the global supply chain because of the Covid-19 continues, affecting industries from automotive to toys – and the issue continues to escalate,” said Richard Wilding, Professor of Supply Chain Strategy at Cranfield University.

““In China, smaller companies may find it easier to get back up and running. But larger factories may have to go through a cleaning and disinfectant process before staff can fully return and implement appropriate procedures to identify potential infections in the workforce, similar to what we have seen at airports. For larger sites implementing such procedures could take weeks.””

https://www.themanufacturer.com/articles/jcb-coronavirus-can-bring-uk-supply-chain-knees/


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Choked off from suppliers, workers, and logistics networks, China’s manufacturing base is facing a multitude of unprecedented challenges, as coronavirus containment efforts hamper factories’ efforts to reopen.

“Many of those that have been granted permission to resume operations face critical shortages of staff, with huge swathes of China still under lockdown and some local workers afraid to leave their homes. Others cannot access the materials needed to make their products, and even if they could, the shutdown of shops and marketplaces around China means demand has been sapped.”

https://www.scmp.com/economy/china-economy/article/3051534/coronavirus-chinas-manufacturing-supply-chain-pummelled-all


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“China said on Thursday it lowered its benchmark lending rates — a move that was widely expected by analysts as the world’s second-largest economy faced threats from an outbreak of a deadly coronavirus

“Bo Zhuang, chief China economist at research firm TS Lombard, said the Chinese economy would need more “aggressive” easing.”

https://www.cnbc.com/2020/02/20/coronavirus-chinas-pboc-cuts-benchmark-lending-rate-loan-prime-rate.html


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Just 34 per cent of nearly 1000 small and medium-sized firms [in China] said they could survive for a month on current cashflow, a recent survey by Tsinghua University and Peking University showed.

“A third said they could last for two months, while 18 per cent said they could stick it out for three months.

“”There could be big layoffs,” said Wang Jun, Beijing-based chief economist at Zhongyuan Bank.”

https://www.brisbanetimes.com.au/world/asia/china-races-to-contain-job-losses-as-coronavirus-crisis-batters-economy-20200219-p542h4.html


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Hong Kong is heading for its first back-to-back annual recessions on record, as the coronavirus outbreak cripples an economy already battered by months of political unrest.

“Economists’ forecasts since the start of this month point to a contraction of more than 1 per cent this year, following a 1.2 per cent decline last year.”

https://www.straitstimes.com/business/economy/hong-kong-heads-for-1st-back-to-back-recessions-on-record


Russia’s exports to China dropped by almost a third in the first six weeks of the year as the spread of coronavirus sapped demand in the world’s second-biggest economy. Exports dropped 21% to 620,000 tons year-on-year…”

https://www.themoscowtimes.com/2020/02/19/coronavirus-hits-russian-exports-to-china-a69355


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What is wrong with this picture? Aussie dollar hits its lowest level in eleven years while…

“Australian shares scaled a record high on Thursday, tracking Wall Street, as expectations of more stimulus from China amid the coronavirus outbreak and a big drop in confirmed new cases boosted risk sentiment.”

https://www.reuters.com/article/australia-stocks-midday/australia-nz-shares-hit-record-high-on-china-stimulus-hopes-idUSL4N2AJ4W4


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U.S. stock markets continue to blaze in ‘risk-on’ mode despite a number of global headwinds. The Dow Jones Industrial Average (DJIA) pushed nearly 100 points higher on Wednesday, hovering just shy of all-time highs.

“But are traders ignoring the bigger picture? Japan and Germany – two of the world’s four largest economies – are on the brink of recession. Meanwhile, China is expected to record its slowest growth in almost 30 years (and that’s before the coronavirus hit).”

https://www.ccn.com/dow-climb-but-global-economy-teeters-toward-recession/


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Yale’s Stephen Roach said the markets continued move to the upside despite coronavirus uncertainty does not make sense because “irrational exuberance never makes sense.”

““As long as central banks are opening up the liquidity spigot as wide as they are, the markets pay absolutely no attention to any potential threats to economic activity,” Roach said. “It’s the here and now, and it works until it doesn’t.””

https://www.cnbc.com/2020/02/19/markets-may-face-serious-reckoning-amid-coronavirus-stephen-roach.html


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“Equally eye-popping is the US$600 trillion worth of derivatives – over six times global GDP – that appear in financial statement footnotes but not on balance sheets due to “netting” that assumes counterclaim matching and liquidity that won’t exist during the next financial crisis, as for the last.

“Derivatives of such magnitude mean that even small mismatches will cause instant insolvency for many firms, among them some big banks…

While triggers for dips are difficult to predict, one thing is certain: central bankers face a dilemma.

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“They need to raise near-zero interest rates to equip themselves for the next downturn and mitigate distorting effects of low interest rates on real asset values, investments, savings and income equality. Yet, by doing so, they risk causing a downturn, as they have done before.

“So my prediction is that, unless one of the candidates above triggers a market collapse before they do, central bankers will.

As I said in 2007, consider selling soon.”

https://www.scmp.com/comment/opinion/article/3051201/if-slowing-growth-unsound-financial-systems-and-coronavirus-dont


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