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It is curious, and perhaps telling of how accepting markets are of the economic impacts of the coronavirus, that the slew of absolutely dismal global economic data published last Friday caused barely a tremor in markets

“With the virus still spreading in the US – senior US health officials are warning it has entered a new and more extensive phase – and Congress and the White House still wrangling over the terms of a new relief package to replace the one that expired on Friday, the optimism priced into equity markets doesn’t appear well-founded.”

https://www.smh.com.au/business/the-economy/shocking-economic-data-creates-dark-cloud-over-global-outlook-20200803-p55hzm.html


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“Riots. Radicalism. Corruption.

Trump and Biden supporters turn to apocalyptic themes in campaign ad wars… the middle of summer has seen a barrage of aggressive ads…”

https://eu.usatoday.com/story/news/politics/elections/2020/08/01/trump-biden-ad-wars-candidates-apocalyptic-messages/5443313002/


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Gun sales are booming as the Covid-19 pandemic wrecks the US economy and volatile protests dominate the news. Handguns are flying off the shelves.

“And ammo is so hot, it’s hard to keep in stock.”

https://www.forbes.com/sites/aaronsmith/2020/08/01/covid-19-and-civil-unrest-fuel-comeback-for-gun-industry/#51b3ee752684


How the election could go wrong… there is a lot of mischief that can be done within the legal boundaries by a determined president, especially with the compliance of the attorney general and enough political allies in the state capitals.”

https://www.theatlantic.com/ideas/archive/2020/07/how-2020-election-could-go-wrong/614842/


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US lawmakers are facing increasingly shrill warnings over the dangers to the economy as Congress and the White House struggle to reach a deal on a new fiscal stimulus package, leaving millions of Americans without vital safety net payments and risking not just the US but also the global recovery.”

https://www.ft.com/content/636a74fa-b95a-42af-b49a-91c147cfab28


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Fitch Ratings revised its outlook on the US’s credit score to negative from stable, citing a “deterioration in the U.S. public finances and the absence of a credible fiscal consolidation plan.”

““High fiscal deficits and debt were already on a rising medium-term path even before the onset of the huge economic shock precipitated by the coronavirus,” Fitch said. “They have started to erode the traditional credit strengths of the U.S.””

https://www.bloomberg.com/news/articles/2020-07-31/united-states-outlook-revised-to-negative-from-stable-by-fitch


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“…the US currency has suffered its poorest monthly performance in 10 years… The 5 per cent drop in the value of the dollar in July might sound modest, but in the relatively stable foreign exchange market that counts as dramatic…

“…Some are openly asking, once again, whether US institutions are now too weak for the world to rely on the dollar.”

https://www.ft.com/content/7c963379-10df-4314-9bd0-351ddcdc699e


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Young Chinese struggle to find jobs despite recovery:

The world’s second-largest economy may have rebounded sharply from a historic virus-induced contraction, but its young graduate jobless rate in June was more than three times that for urban unemployment.”

https://asiatimes.com/2020/08/young-chinese-struggle-to-find-jobs-despite-recovery/


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Young people across Britain believe their future has been “stolen” as a result of the coronavirus outbreak, with more than half fearing it has damaged their prospects.”

https://www.theguardian.com/society/2020/aug/02/coronavirus-has-stolen-our-future-young-peoples-despair-as-jobs-evaporate


A police officer was injured during clashes with youths after Eid celebrations in east London, as police leaders warned they had been given little time to prepare to enforce new social distancing restrictions.”

https://www.telegraph.co.uk/news/2020/08/01/police-clash-youths-eid-celebrations-frustration-mounts-new/


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Shares in Britain’s “big four” — HSBC Holdings Plc, Barclays Plc, Lloyds Banking Group Plc and the recently rebranded NatWest Group Plc — have all performed worse than their European peers this years.

“Lloyds and NatWest, the most exposed to the U.K. economy, have seen more than half of their market values wiped out, leaving them not far off the lows of the financial crisis. Banco Santander SA, which runs Britain’s fifth-largest bank, last week wrote $7.2 billion off the value of its U.K. offshoot.”

https://www.washingtonpost.com/business/britains-struggling-banks-show-the-uks-economic-weakness/2020/08/03/2891cc04-d559-11ea-a788-2ce86ce81129_story.html


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HSBC Holdings reported a 82% slump in second-quarter profit on Monday as it ratcheted up provisions for loan losses due to the coronavirus pandemic and warned of the fallout from mounting U.S.-China tensions…

“The London headquartered bank expects provision for loan losses for the year to surge to between $8 billion and $13 billion. That would be the highest sum in a decade…”

https://asia.nikkei.com/Business/Finance/HSBC-profits-slump-82-as-bank-preps-for-loan-losses


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“The whole regulatory thing is a giant banking sham. As far as the ECB is concerned, the role of the commercial banks is to act as agents in its funding of member states’ budget deficits. But that problem has escalated suddenly in recent months putting additional strains on the whole Eurosystem.

“Yet the ECB continues to drive the commercial banks into the ground by forcing them towards yet higher ratios on the slimmest of margins in its quest to fund member government deficits.”

https://seekingalpha.com/article/4363585-eurozones-financial-disintegration


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Berlin police said dozens of officers were injured — and three were hospitalized — while dispersing some 20,000 people protesting anti-pandemic measures.

“Many participants dismissed the coronavirus as a “false alarm.””

https://www.dw.com/en/germany-45-officers-injured-at-berlin-rally-against-coronavirus-curbs/a-54402885


Anti-racism protests have continued in Portugal a day after hundreds of demonstrators gathered in the capital, Lisbon, to demand justice for a Black Portuguese man who was murdered a week ago.”

https://www.aljazeera.com/news/2020/08/hundreds-join-protests-portugal-murder-black-man-200801195825314.html


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August 1 was the 24th consecutive day of the protests in Bulgaria, demanding the resignation of Boiko Borissov’s government and Prosecutor-General Ivan Geshev, and the calling of early elections.”

https://sofiaglobe.com/2020/08/01/bulgarias-anti-government-protesters-block-stara-zagora-haskovo-road/


Thousands of people have marched in the Russian far eastern city of Khabarovsk for a fourth consecutive weekend in protest at Vladimir Putin’s handling of a local political crisis.”

https://www.independent.co.uk/news/world/europe/russia-anti-putin-protest-sergei-furgal-a9649466.html


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Chile’s $4.5bn stimulus boost follows months of mass protests.

The demonstrations of discontent from Chile’s lower-income areas are becoming increasingly violent.”

https://www.aljazeera.com/news/2020/08/chiles-4-5bn-stimulus-boost-months-mass-protests-200801131648036.html


Thousands of demonstrators have gathered outside the official residence of prime minister Benjamin Netanyahu and thronged the streets of central Jerusalem, as weeks of protests against the Israeli leader appeared to be gaining steam.”

https://www.theguardian.com/world/2020/aug/02/thousands-demonstrate-against-netanyahu-as-israel-protests-gain-strength


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With Iraq, Lebanon, Syria in economic collapse, virus adds to despair of young:

For millions in the Middle East, the pursuit of jobs, plans for higher education, and marriage preparations have been upended by the pandemic, plunging them into deep uncertainty.”

https://www.timesofisrael.com/with-iraq-lebanon-syria-in-economic-collapse-virus-adds-to-despair-of-young/


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Middle-class, educated Tunisians are part of the exodus to Italy – including one group that brought their pet poodle… a new wave of migrants from Tunisia that has the Italian government deeply worried.

The exodus is being fuelled by a social, political and economic crisis in the country that was the birthplace of the Arab Spring…”

https://www.telegraph.co.uk/news/2020/08/01/economic-crisis-fuels-exodus-tunisian-migrants-pets/


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The collapse in tourism as a result of the coronavirus pandemic has left a gaping hole in Turkey’s finances. Foreign investors have fled, pulling out almost $13bn from the country’s local-currency bonds and stocks over the past 12 months.

“In the face of those outflows, the country has burnt through tens of billions of dollars of reserves this year in a bid to maintain an unofficial currency peg.”

https://www.ft.com/content/cb70275f-8b7d-453c-9184-6d65815a8b10


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“…the coronavirus-related collapse in world tourism, which represents more than 10 per cent of global economic output, according to the World Travel and Tourism Council, may well trigger the next stage of this crisis, in which we move from a public health emergency and mass unemployment to widespread insolvencies in myriad industries.”

https://www.ft.com/content/2ddda9de-cd76-4969-a9dd-ce314fb6d38e


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How long can the central bank continue to cancel gravity?

“It’s impossible to say, although we do know that the felicitous effects of helicopter money cannot last indefinitely.

“We also know that every penny of it will have to be paid by someone at some point.

“Hyperinflation or deflation are the only conceivable avenues to achieve this, but it would be overly optimistic to assume we will have a choice.”

https://www.fxstreet.com/analysis/how-long-can-fed-cancel-gravity-202008030342


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Gold has rallied over 30% this year, with Spot Gold last trading at US$1,976 per ounce, according to Bloomberg Data.

“While the precious metal dipped alongside equity markets in March, investors have poured into gold – both spot and futures – over the last few weeks, as hopes of an easy economic recovery evaporates, uncertainty increases and the coronavirus pandemic intensifies.”

https://www.ig.com/uk/news-and-trade-ideas/gold-price-continues-to-rise–goldman-eyes–2-300-oz-price-targe-200803


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The world economy is in a dangerous place. Attempts to restart activity, premature or not, have led to a rise in coronavirus cases, particularly in Europe where the pandemic previously looked under control. Relief from a potential vaccine, if any works, seems months away.

Meanwhile, central banks have little capacity to respond to a further downturn.

“Governments are already fretting about the debt they incurred by keeping economies in deep freeze through the outbreak’s first stage.”

https://www.ft.com/content/e15a3156-e39f-4008-887f-354daab5a5f8


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