“Almost half of the entire global work force could lose their livelihoods because of the coronavirus pandemic, a UN agency has revealed.
“The International Labour Organisation reported on Wednesday that some 1.6 billion workers in the informal economy are in ‘immediate danger’ of losing their livelihoods.
“The informal economy refers to any labour that isn’t monitored by the government and where the workers don’t pay tax, such as restaurant staff, cleaners and street vendors. There are around 2 billion informal workers in the world, out of a total workforce 3.3 billion.”
“The US economy shrank by 4.8 per cent in the first quarter, with experts warning that worse is to come as the coronavirus pandemic brings the world’s largest economy to a halt.
“The contraction in GDP between January and March exceeded most analysts’ expectations… A much bigger decline is expected in the second quarter.”
“People in this country [the US] are hungry… as unemployment numbers increase and families struggle to meet their basic needs, food insecurity becomes more and more common…
“…food banks across the country also struggle to meet this huge new demand. Ironically, much of the food that could be feeding these newly in-need populations is rotting in fields or being plowed under by farmers who cannot sell or transport their crops in the midst of the COVID-19 crisis.”
https://nonprofitquarterly.org/hunger-grows-food-rots-and-the-usda-moves-at-a-sloths-speed/
“UK Manufacturing output has fallen below 60 per cent of capacity to the lowest level since records began 40 years ago reflecting the closure and cutbacks at UK factories in response to the coronavirus outbreak.
“The extent of the damage to the economy from lockdown was further underlined by data showing confidence in the services sector also slumped to a record low, raising the spectre of a spike in job losses.”
https://www.ft.com/content/e1b84a01-c030-4249-a2c5-f6ef026cdd8e
“France saw its sharpest economic contraction since World War II in the first quarter as a lockdown from mid-March left shops shuttered and consumers hunkered down at home, official data showed on Thursday.
“French gross domestic product shrank 5.8% in the quarter from the previous three months, the INSEE official statistics agency said.”
“The German economy will suffer the biggest slump in its history this year over the coronavirus crisis, the government warned today, pushing Europe’s top economy into a painful recession.
“German gross domestic product (GDP) is expected to shrink by a record 6.3 per cent as demand for exports plummets and lockdown restrictions weigh on domestic consumption, Economy Minister Peter Altmaier said in Berlin.”
“Investor confidence in European ETFs has taken a hit during the coronavirus sell-off with funds seeing higher redemptions than their “darkest days” during the global financial crisis.”
https://portfolio-adviser.com/european-etf-market-sees-darkest-days-during-coronavirus-sell-off/
“The signs are that nations such as Germany and the Netherlands will resist any grants to the worst-hit nations, instead insisting that relief is made up of loans that must be paid back.
“Goldman Sachs has already raised questions about debt sustainability in southern Europe. Chief European economist Jari Stehn predicts Italy’s debt load will climb above 160 per cent of GDP, with Spain and France also at risk if borrowing costs rise.”
“As the weather starts to sizzle in Hong Kong, tensions are also bubbling as protests are expected to make a comeback after months of calm following the coronavirus outbreak last December.
“In the past week or so, netizens, who have been largely lying low since the start of the pandemic, have started circulating messages on social media and online, urging people to join planned demonstrations in the coming months.”
https://www.straitstimes.com/asia/east-asia/protests-in-hk-returning-as-virus-outbreak-eases
“China’s factory activity unexpectedly shrank in April, a private-sector survey showed on Thursday, as the coronavirus pandemic shattered global demand, causing a substantial drop in export orders and more layoffs.”
“…[emerging market debt is] split between hundreds of creditors ranging from New York hedge funds to Middle Eastern sovereign wealth funds and Asian pension funds.
“A solution can’t come soon enough. Dollar-denominated notes from 18 developing nations already trade at spreads of at least 1,000 basis points over U.S. Treasuries, the benchmark for distressed debt, data compiled by Bloomberg show. While the top three outliers — Venezuela, Argentina and Lebanon — were grappling with their own problems before the pandemic, others are approaching those levels amid currency sell-offs and record-shattering outflows.”
https://finance.yahoo.com/news/plan-save-emerging-market-debt-143024688.html
“The global financial system very likely could absorb debt defaults in the frontier and smaller emerging market economies without too much difficulty. But it would be quite a different matter if any of Brazil, Mexico, South Africa or Turkey were to need debt relief.
“This would seem to be especially the case at a time when debt problems in the world’s high-yield market are already putting significant strain on the global financial system.”
https://thehill.com/opinion/international/495093-emerging-market-risks-to-the-economic-recovery
“Hertz says it is in talks with its lenders to avoid defaulting on debt related to its rental vehicle fleet, after skipping a payment that was due earlier this week.
“Hertz, which also operates the Dollar and Thrifty rental brands, said in a regulatory filing Wednesday that it had suffered a ‘sudden and dramatic negative impact’ on its business due to the coronavirus pandemic, which has crushed demand for rental cars as people cancel travel and stay at home.”
“Before the coronavirus, investors hungry for returns piled into risky corporate loans and bonds with precious little protection for creditors. Now they’re frantically scouring the terms to see just what firms can get away with to survive the fallout…
“With the coronavirus pandemic threatening to trigger a surge in corporate loan defaults, borrowers and investors in so-called covenant-lite loans and high-yield bonds with weak protection for creditors are taking stock fast.”
“The massive rally over the past few weeks has left the S&P 500 vulnerable and exposed. The market is highly concentrated, with a handful of winners – Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), Facebook (FB) – driving up overall market indices.
“A turn in sentiment due to the realization that this crisis – both medical and financial – will hit in waves could easily slash support for the current rally and destroy sentiment.”
https://seekingalpha.com/article/4341142-attack-waves-gfc-covidminus-19-and-financial-collapse
“Credit markets have rallied strongly this month, despite an economic slump which slashes earnings even as companies take on more debt. Central banks saying they’d buy corporate bonds helped crush credit spreads, but they can’t resolve fundamental underlying issues.
“The gap between markets and economic data has never been larger,” Matt King, global head of credit strategy at Citigroup Inc., wrote in a note Wednesday.”
“The demand-side impact… clearly dominates the economic outlook. Shutting large portions of the economy resulted in a collapse in spending and surging unemployment.
“Not only do we have a collapse in demand, but the eventual rebound in activity is likely to be anemic, too.”
“Economic history suggests that deflation, not inflation, is by far the more likely—and in some ways the more dangerous—destination of the Fed’s current trajectory without yet more unprecedented action.”
“A drop in global energy demand this year will likely “dwarf” the impact of the 2008 financial crisis and slash carbon emissions by 8%, the International Energy Agency said on Thursday.
“The coronavirus pandemic was causing the biggest shock to the world’s energy system in seven decades, the Paris-based agency said in its latest Global Energy Review.”
https://www.montelnews.com/en/story/demand-drop-to-dwarf-impact-of-2008-financial-crisis–iea/1110193
“While the world grapples with the coronavirus pandemic, the head of the United Nations food agency warned on Tuesday that a looming “hunger pandemic” will bring “the worst humanitarian crisis since World War II.“
“Famine in as many as three dozen countries is “a very real and dangerous possibility” due to ongoing wars and conflicts, economic crises and natural disasters, World Food Program Executive Director David Beasley told the U.N. Security Council during a virtual briefing.”
Read the previous ‘Economic’ thread here and visit my Patreon page here.
