“Factory activity was ravaged across the world in April, business surveys showed, and the outlook looked bleak as government lockdowns to contain the new coronavirus pandemic froze global production and slashed demand…
“With the public told to stay home in numerous countries, the global economy is expected to suffer its steepest contraction on record this year as supply chains have been massively disrupted.
“In a bid to combat the impact of the lockdowns, central banks and governments have unleashed unprecedented levels of fiscal and monetary policy, suggesting that without this conditions could have been even worse.”
“The US Treasury Department announced on Monday that it expects to borrow $3 trillion during the second quarter this year.
“The amount is five times greater than the amount the federal government borrowed at the height of the 2008-2009 financial crisis.”
“1. Shadow banking
2. Securitization and Derivatives
3. Deregulation
4. Subprime Lending
“Today, all four elements are still at work in the housing market. In some ways, their current manifestation has led to even more perverse lending practices than before 2008.
“As a result, stresses in the US housing market could lead to another financial crisis.”
https://www.ccn.com/housing-market-checks-4-boxes-caused-2008-crisis/
“Store-closing sales are crucial to the nation’s retail economy: They help liquidate slow-to-sell inventory, and in many cases, they fund a company’s operations through bankruptcy. Without liquidation sales, retailers would find it much tougher, if not impossible, to stay in business during a reorganization.
“The coronavirus pandemic is making retail bankruptcies more likely. But, ironically, it could also make bankruptcies more difficult, and lead to delayed filings. With much of the United States still limiting nonessential businesses, and with shoppers nervous about visiting open stores, closing sales are much more difficult to hold.”
“Debt commitments are much wider than just retail, though…
“Bloomberg displayed this headline on Jan. 2, well before the pandemic arrived in North America: “S&P Takes Most Bearish Stance on U.S. Corporate Debt Since 2009.” At that time, players in the oil and gas industry were taking the biggest hits. In other words, there was a debt problem before the coronavirus and its arrival magnified the problem.”
https://finance.yahoo.com/news/worrisome-state-corporate-debt-214054795.html
“Canada’s oil and gas industry is still reeling from the double whammy of demand destruction from the coronavirus and the overwhelming supply from warring producers such as Saudi Arabia and Russia.
“With storage likely to brim by mid-May, the outlook for global crude prices is still grim… The strong correlation between the performance of the Canadian economy and the oil price has ominous implications for the Canadian economy.”
https://invezz.com/news/2020/05/05/canadas-oil-and-gas-industry-stares-at-worst-ever-recession/
“The UK new car market declined by just over 44% in March this year, according to figures published last month by the Society of Motor Manufacturers and Traders (SMMT).
“Some 203,370 fewer cars were registered than in March 2019, as showrooms closed in line with government advice to contain the spread of the coronavirus.”
“France is facing its worst financial crisis since World War II and the small businesses that give Paris its vibrant culture are bearing the brunt of it. NBC News’ Helena Humphrey explains how the COVID-19 pandemic is threatening business owners’ way of life.”
Video:
https://news.yahoo.com/france-faces-worst-financial-crisis-233302369.html
“Millions of people across Europe were returning to some semblance of their former lives Monday as more countries across the continent began to reopen after weeks or months of coronavirus-related lockdowns. But not everyone is happy with how the “new normal” looks.
“Italian businesses are wondering how they’ll survive as restrictions are eased but not fully lifted.”
https://edition.cnn.com/2020/05/04/europe/europe-coronavirus-reopening-lockdown-intl/index.html
“The Turkish central bank’s international reserves are drying up and the lira has hit a 20-month low amid the coronavirus crisis, yet the overwhelming majority of Turkish citizens don’t want Ankara to take a loan from the International Monetary Fund.”
https://www.middleeasteye.net/news/turkey-public-oppose-imf-loan-austerity
“Algerian President Abdelmadjid Tebboune has declared that his country will not approach the International Monetary Fund (IMF) for loans, despite a financial crisis triggered by a collapse in global oil prices and coronavirus lockdowns.
“”Accumulating debt harms national sovereignty,” said Tebboune, in a meeting with Algerian media broadcast late Friday.”
“The coronavirus epidemic has pushed Iraq’s economy to the brink of catastrophe, experts say, with the outbreak aggravating the risk of public desperation and renewed social unrest if the needs of millions of Iraqis are not met by sweeping reforms.”
“Four zeroes will disappear from the value of the Iranian currency and the name of the currency itself change, thanks to a new law by the Iranian parliament amid hyperinflation caused by US sanctions and the coronavirus pandemic.
“The rial, Iran’s currency since 1925, has recently lost more than 50 per cent of its worth..”
“…for borrowing, he noted that Nigeria was on a downward spiral, on its way to experience the Zimbabwean situation of a dollar being equivalent to N1,000, a Venezuelan crisis of hyperinflation, escalating starvation, crime and mortality rates and a return to 1984 where Nigerians had to be on long queues to purchase essential commodities.”
“South Africa’s finance deputy minister was quoted in a leading newspaper on Sunday as urging the central bank to temporarily create money to fund the government response to the COVID-19 pandemic and its economic fallout…
“[However] …the government would be keen to avoid a situation like neighbour Zimbabwe, whose runaway money-printing to pay its bills triggered massive hyperinflation…”
“Argentina’s government and its biggest bondholders are at loggerheads over plans to restructure $65 billion in foreign debt, with little sign of either side budging in last-ditch talks to strike a deal…
“The standoff is raising the risk Argentina will fall into a sovereign debt default on May 22, when the grace period on a $500 million missed interest payment runs out.”
[Hong Kong was already in recession pre-Coronavirus btw]
“Hong Kong’s coronavirus-ravaged economy has suffered its worst decline on record, shrinking 8.9 per cent year on year in the first quarter and sparking an appeal from the city’s finance chief for unity to face the grim months ahead.”
“Thailand’s consumer price index (CPI) fell more than expected, by 3% year-on-year in April, much weaker than our -2% forecast and the -1.2% consensus median.
“This is the steepest CPI fall since the global financial crisis more than a decade ago. The negative inflation streak started in March with a 0.5% YoY fall. We believe it has further to run through the end of this year.”
“The economic climate just got a whole lot darker with the number of job ads falling by a shocking 53.1 per cent in April as coronavirus layoffs swept the [Australian] economy.
““What we are seeing looks unbelievable,” said Stephen Koukoulas, managing director of Market Economics and a former adviser to the Gillard government.”
https://thenewdaily.com.au/finance/finance-news/2020/05/04/coronavirus-job-ads-2/
“Coronavirus lockdowns have hit the market for thermal coal, where demand is expected to fall by the most this year since the second world war after factories power down…
“A a result, the price of thermal coal shipped to north-west Europe fell to its lowest level since 2003 last week…”
https://www.ft.com/content/c7b67992-b8e5-4ced-8efd-3b6b444d62d9
“While tankers are one of the few “silver linings” in the shipping market in the current context, things could very well turn south if the negative impact from the pandemic of COVID-19 is larger than originally thought.
“Shipping, not just tankers, needs a growing global economy and trade growth, in order to preserve a sustainable market.”
https://www.hellenicshippingnews.com/global-economys-rebound-will-determine-shippings-fate/
“‘There is one clear implication: The era of tax cuts is over. People who have been fortunate enough to be able to make significant incomes are going to have to make a greater contribution.’“
“Janeth and her husband, Roberto, are part of the greatest surge in unemployment in the U.S. since the Depression, setting off a wave of hunger that is swamping food programs nationwide. The couple and every adult member of their extended family in the U.S. have lost their jobs in the economic lockdown prompted by the pandemic.
“They are among the tens of millions in America — more than 1 out of every 6 workers — abruptly cut off from paychecks.”
https://www.voanews.com/covid-19-pandemic/we-dont-know-how-it-will-end-hunger-stalks-amid-virus
“Unsurprisingly, trying to plug the holes of a leaking $23 trillion economy with government money resembles a rudderless adventure right now. The economic repercussions of COVID-19 are almost too vast to fully appreciate…
“Further out, the question for the short to medium-term is, how exactly could prices go up? Aside from essentials (see personal protective equipment and, of course, toilet paper), demand has collapsed…”
“…It took 10 years to catch up on the output lost in 2008. The newly formed wedge in the chart implies we are starting all over again, and this time from an even more extreme scenario.”
http://ftalphaville.ft.com/2020/05/01/1588344147000/An-absolutely-enormous-output-gap-is-forming/
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