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COVID-19 represents a new kind of mystery when it comes to something as complex and critical to the world’s economy as the global supply chain, for a number of reasons:

  • The global spread of the virus and duration of the pandemic. “We have no idea when it will be under control and whether it will resurface,” Singhal said…

  • Both the demand and supply side of the global supply chain are disrupted…

  • Longer lead times.

  • Supply chains have little slack, and little spare inventory.

https://phys.org/news/2020-05-restarting-global-economy-wont-easy.html


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Virtually all hospitals in the U.S. — large and small, urban, suburban and rural, nonprofit and investor owned — will face a financial crisis by fall unless there is a bailout on the order of what we did for our banks in 2008

“The financial crisis that is about to happen must be avoided if the moral covenant we have with those who are there for us is to be respected.”

https://www.marketwatch.com/story/our-hospitals-need-a-bailout-to-cure-a-coronavirus-induced-financial-crisis-2020-05-11


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Maj. Gen. Kenneth Hara, incident commander of the state’s [Hawaii] COVID-19 response, said he was frustrated when leaders failed this weekend to come up with a schedule for reopening the economy.

“Hara said if nothing changes, there could be violence.”

https://www.hawaiinewsnow.com/2020/05/12/states-coronavirus-incident-commander-warns-potential-unrest-riots-if-economic-strife-continues/


Bank of England hints at a 16% drop in home prices, matching the 2008 housing bubble crash. The median price of residential listings in the U.S. has already slumped since March.”

https://www.ccn.com/house-prices-could-tumble-as-much-as-2008-crisis-according-to-new-projection/


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Economic activity and optimism levels both plummeted to record lows last month due to the UK’s coronavirus lockdown.

“Business output across the UK fell by 35.87 points in April to 44.9, significantly below the 79.28 recorded after the global financial crisis, to the lowest level since records began in 2005.”

https://www.cityam.com/coronavirus-lockdown-economic-activity-and-optimism-plunge-to-record-lows/


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Germany’s constitutional court sent shockwaves through Europe last week by ruling that the country’s government and the EU’s top judges failed to properly scrutinise the European Central Bank’s bond-buying programme.

“The judgement threatens to turn the European Commission against Germany, the EU’s biggest member state.”

https://www.ft.com/content/2d4a6959-8bdc-4d74-b617-873bba839807


A collapse in oil prices — Russia’s key export — means a $165bn national reserve fund previously earmarked for Mr Putin’s stimulus programme was instead being rapidly used up to plug the resulting hole in the budget.”

https://www.ft.com/content/59504095-d9db-4a7d-b7aa-58745bcb6f16


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On Monday, Saudi authorities announced unprecedented measures to salvage its finances from an imminent meltdown, caused by mismanagement rather than simply the coronavirus pandemic or the collapse of oil prices.

“From July, an increase in VAT from five percent to 15 percent and the suspension of the cost of living allowance (a monthly 1000 rials/ $266) are both desperate attempts to rescue an economy that has been plundered for generations.”

https://www.middleeasteye.net/opinion/how-long-can-saudis-remain-silent-over-their-own-impoverishment


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The virus has shattered global tourism and devastated the Maldivian economy… The risk is that this brutal, abrupt recession could translate into the Maldives becoming the latest country to sink into sovereign bankruptcy.

Zambia, Ecuador and Rwanda have all announced in recent weeks that they are struggling to repay their debts. Lebanon has already kicked off its restructuring process…”

https://www.ft.com/content/f7157356-e773-47c4-b05d-8624a5ccfd03


Up to 13.7% of “speculative grade” bonds across emerging markets are at risk of defaulting over the next year – a higher level than that seen during the throes of the 2008 Global Financial Crisis, according to Moody’s latest forecast.”

https://www.investmentweek.co.uk/news/4015067/emd-suffer-defaults-2008-financial-crisis-moody-warns-reports


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[Mexico’s] National Council for the Evaluation of Social Development Policy (Coneval) said that between 6.1 million and 10.7 million people could be left in situations of poverty as a result of income loss

“…due to the sharp economic downturn caused by Covid-19 and the measures put in place to contain the disease.”

https://mexiconewsdaily.com/news/coronavirus/coronavirus-could-leave-up-to-10-million-more-in-poverty/


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The Argentine government has extended a deadline to restructure $65bn (£53bn) of debt to 22 May in an effort to avert further financial turmoil. Argentina had asked private bondholders to accept significantly lower interest payments and to defer those payments until 2023.

“Most bondholders rejected the offer.”

https://www.bbc.co.uk/news/world-latin-america-52618707


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Rio de Janeiro’s iconic Christ the Redeemer statue was lit up on Sunday with messages aimed at ending hunger amid the coronavirus pandemic.

“A food bank program and social services of the city launched the campaign… The program has had a growing demand as a result of the coronavirus pandemic.”

https://www.euronews.com/2020/05/11/brazil-s-most-iconic-landmark-lit-up-with-calls-to-end-hunger


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Allegations are flying thick and fast as some desperate eThekwini [South Africa] residents wait for the delivery of food parcels, one of the brutal consequences of government’s draconian and extended Covid-19 lockdown…

““We are aware that there is an increase in demand for social relief support and we will continue to respond within the available resources,” said Zikalala.”

https://www.dailymaverick.co.za/article/2020-05-12-hunger-and-starvation-in-durban/


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A man fell to the ground in front of Gandaria City shopping mall in South Jakarta on Monday as a result of starvation

“When local police officers asked him what was wrong, he said his gastric acid levels had risen because he had not eaten.”

https://www.thejakartapost.com/news/2020/05/11/man-collapses-from-starvation-in-south-jakarta.html


Collapsing shipments from South Korea, plunging commodity rates, wildly fluctuating cargo costs and a hollowing out of jobs markets for major trading partners are all ominous signs for China’s industrial base, which has struggled to return to full capacity since a coronavirus-led shutdown in the first quarter.”

https://www.scmp.com/economy/china-economy/article/3083858/coronavirus-evidence-demand-shock-wave-chinas-economy-piles


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China’s factory prices fell at the sharpest rate in four years in April, highlighting weakening industrial demand in the world’s second-largest economy as the coronavirus pandemic slams global growth.”

https://www.reuters.com/article/us-china-economy-inflation/chinas-factory-deflation-deepens-as-pandemic-hits-demand-idUSKBN22O073


The coronavirus pandemic has thrown tens of millions out of work in China, piling pressure on the country’s patchy social welfare network and creating a major policy challenge for Beijing.

“It remains unclear whether the Chinese government has the means at its disposal to handle the sharp rise in unemployment…”

https://www.scmp.com/economy/china-economy/article/3083823/coronavirus-china-prepared-handle-unemployment-crisis


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A key economic indicator in Japan fell at the fastest pace since 2011 in March and the government warned of a deep recession as the coronavirus crisis takes a heavy toll on business activity and consumer spending….

“…the government maintained its view that the economy was “worsening” in March, backing other data during that month and in April which paint a bleak outlook.”

https://uk.reuters.com/article/us-japan-economy-indicators/key-japan-indicator-drops-at-fastest-pace-in-nine-years-signals-steep-recession-idUKKBN22O0TO


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Prime Minister Scott Morrison has praised Australian businesses for their resilience during the coronavirus pandemic but says assistance programs will not be around “forever”.

“Speaking in Canberra this morning, Mr Morrison looked towards the “fourth phase” of the country reopening.”

https://www.9news.com.au/national/coronavirus-scott-morrison-urges-business-confidence-amid-covid19-economic-slump/bc52b73f-a99c-43d9-be14-410faa04055b


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JPMorgan Asset Management and Fiera Capital are among those touting the virtues of things like private equity, property and infrastructure in the wake of March’s broad market crash. BNY Mellon says it’s helping managers line up new funds targeting unlisted assets.

Yet these are exactly the type of investments now feeling the full force of the economic crisis brought on by the lockdown of swaths of the world’s population to contain the coronavirus. Some speculate they’re just starting the worst slump in years, spelling trouble for anyone late to the private-asset party.”

https://finance-commerce.com/2020/05/trillions-flowing-to-private-assets-on-recession-front-line/


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Using the longest dataset available for the S&P 500 and its predecessor indices, gains this sharp have not occurred over as short of a timespan since a brief period in 1938.

“Before those rapid gains, the only other market rebound this strong occurred during 1932-1933. The Depression-era volatility led to large market swings with historic gains and even larger drawdowns.”

https://seekingalpha.com/article/4345989-gains-this-quick-not-seen-since-great-depression


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Almost everything about the Coronavirus Recession of 2020 should worry us more than the GFC.”

https://seekingalpha.com/article/4345953-what-is-different-coronavirus-recession


Read the previous ‘Economic’ thread here and visit my Patreon page here.

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