“The world economy’s fragile recovery is in danger of stalling. A resurgence of coronavirus infections across the Asia-Pacific region, which was considered to have broadly curbed the virus more effectively than elsewhere, is being viewed as an early warning for the rest of the world…
“…Yelp Inc. estimates that more than half of the U.S. business closures that were temporary when the virus outbreak began are now considered permanent.”
“”I’m certainly not qualified to make any predictions around if we’re going to be in a recession or not, but I’d certainly say there are a lot of warning signs out there that suggest that the consumer sentiment and the concern about the economy is negative and going in the wrong direction,” McDonald’s CEO, Chris Kempczinski said.
“Schools are shuttered and child-care options restricted, working parents across the country are shouldering unexpected child-care burdens. Many will not be able to return to work until they can find safe, affordable child care.
“At the same time, the [US] child-care industry is collapsing under pandemic-inflicted financial pressure.”
“Privately held companies, particularly smaller operations, are starting to feel more pain from the coronavirus pandemic as loan default rates rise while their lenders and private-equity backers seek ways to steer them safely to the end of the year…
“Advisers and turnaround experts say they expect defaults to continue rising as more loan payments come due over the next few quarters…”
“Japanese Style Price Fixing by the Fed is On the Way…
“The world needs a market price for the 10-year Treasury yield, and Mr. Powell is threatening to take that away…
“”We don’t know what price the global economy would pay for such a policy in economic distortions or financial instability. The Fed doesn’t know either. No one should be eager to find out.””
https://www.thestreet.com/mishtalk/economics/japanese-style-price-fixing-by-the-fed-is-on-the-way
“UK Banks may set aside a figure approaching £100 billion for bad debts for the first half of this year, analysts believe…
“…yet the true picture of how bad the Covid-19 pandemic has been for financial institutions in Europe and the United States will not become clear until the autumn or even the end of year, when recession starts to bite.”
“UK food banks experienced their “busiest month ever” during the coronavirus crisis as families faced a loss of income due to job losses or furlough schemes, the Trussell Trust has said.
“The food bank network saw an 89% increase in demand for emergency food parcels in April compared to the same period in 2019.”
“Banks in the euro area could soon face difficulties if the current crisis deepens and erodes their capital positions, Andrea Enria, chair of the European Central Bank’s supervisory board, told CNBC in an exclusive interview on Tuesday…
“…if the economic crisis persists the depletion of bank capital could be “material.””
https://www.cnbc.com/2020/07/28/ecb-stress-tests-banks-amid-coronavirus-crisis.html
“Australia’s biggest fall in consumer prices since the depths of the Great Depression in 1931 has prompted concerns the economy will struggle to escape the grips of the coronavirus pandemic and force the Reserve Bank to leave official interest rates at record lows for even longer.
“The consumer price index fell by 1.9 per cent in the June quarter, the Australian Bureau of Statistics reported on Wednesday…”
“As Papua New Guinea stands on the edge of the precipice of an unchecked Covid-19 outbreak, and other Pacific island nations face economic devastation trying to keep the virus from their shores, health professionals have warned the broader health impacts of the fight against the novel coronavirus could be as devastating as the virus itself.”
“Put a frog in boiling water and it will jump out. Put a frog in cold water and slowly raise the temperature, and it won’t notice—or so the story goes. It may not actually be true for frogs, but investors in the equity of China’s major banks may discover that recognizing major threats quickly is better than allowing the reality to sink in over time…
“…nonperforming-loan ratios are already far higher than Chinese banks actually report.”
https://www.wsj.com/articles/chinese-banks-and-slow-boiling-frogs-11595928665
“A shiver went through the UAE’s financial community last week when Emirates NDB, the champion of the Dubai banking business and one of the biggest banks in the region, declared figures for the first half of 2020…
“Many financial institutions [in The Gulf] are becoming increasingly dependent on access to foreign funds…
“…there are loudly expressed concerns about international financial conditions in the second half of the year.”
https://www.arabnews.com/node/1711476
“Close to a million people in Beirut can no longer afford basic necessities and children are likely to starve to death this year, the charity Save The Children said Wednesday.
“The group said 910,000 people, more than half of them children, in the Greater Beirut area no longer have sufficient amounts of food because of the economic crisis.”
https://www.macaubusiness.com/hunger-will-kill-children-in-lebanon-by-years-end-charity/
“Pakistan’s Covid-19 outbreak is morphing into a food security crisis as massive wheat shortages emerge due to failing supply chains, poor government planning, unseasonal rains and, not least, pestilence…
“Pakistan’s economy has been devastated by the Covid-19 pandemic.”
https://asiatimes.com/2020/07/pakistans-covid-crisis-could-result-in-famine/
“Rising demand, floods, insect infestations, and rumors of spoiled inventories are all contributing to China’s developing food related woes…
“China, which holds just over half of the world’s wheat inventories and is the globe’s second largest producer of wheat…. has already imported more wheat in the first half of 2020 than it has in the first half of any year in the past decade.”
“In a world riven by disease and credit risk, traders are betting central bankers will pin down global borrowing costs for years to come — regardless of the consequences.
“With banks awash with cash, money markets are signaling that unsecured lending rates will stay near historic lows across Europe and the U.S., even as rising corporate bankruptcies add pressure to bank balance sheets.”
“…“Moral hazard is absolutely rampant,” said James Athey, investment director at Aberdeen Standard Investments in London. “There are some very disturbing outcomes possible: default, depression. And the more liquidity is pumped into the system without production to back it up, the more outright currency debasement there is.”“
“The extreme measures taken by central banks have provided relief but risk inflicting huge pain later on. These actions could potentially usher in a new regime akin to either the stagflation of the 1970s (most likely in my view) or depression of the 1930s…
“Investors need to perform a high-wire act. They dare not disregard the firepower of central banks. Nor can they ignore the likelihood that its unprecedented use could well herald a new era of upheavals; especially since markets had already lost any sense of connectivity with the real economy prior to the crisis.”
https://www.ft.com/content/8b741a21-8a00-41a1-900e-4e23a71b332f
You can read the previous ‘Economic’ thread here and visit my Patreon page here.
