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The Data Show a Bleak Outlook for Global Economic Growth:

“…In 2020 almost all economies on the planet will shrink, according to a World Bank forecast. By contrast, in 2019 almost 4 out of 5 grew. It’s not an exaggeration to say this year has surpassed every recession in modern history.”

https://www.bloombergquint.com/onweb/global-economic-data-paint-a-bleak-picture-for-the-future


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The US debt is now projected to be larger than the US economy

“…when the country eventually pulls out of its current health and economic crises, Americans will be left with a debt hangover.”

https://edition.cnn.com/2020/10/08/economy/deficit-debt-pandemic-cbo/index.html


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The largest US banks haven’t been this cautious with their holdings in at least 35 years.

“Cash, Treasuries and other securities effectively guaranteed by the federal government now make up more than 35% of the combined balance sheets of the 25 biggest U.S. banks, according to data compiled by the Federal Reserve. That’s the biggest share in records going back to 1985…”

https://www.bloomberg.com/news/articles/2020-10-09/biggest-u-s-banks-keep-their-assets-at-safest-level-in-35-years


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“With unemployment sky rocketing as a result of Covid-19, there has been a corresponding rise in evictions and mortgage defaults. A new study from Washington University in St. Louis’ Olin Business School of the loan-to-value ratios in the wake of the 2008 financial crash issues a cautionary warning about the troubles ahead.

“The study finds that the higher the outstanding mortgage is relative to the value of the home, the worse the future income growth and job mobility of the individual will be.”

https://www.forbes.com/sites/adigaskell/2020/10/09/new-study-predicts-gloomy-economic-times-ahead-for-americans/#64eee7cd1588


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Mounting evidence suggests the May/June bounce was just that—a bounce, and not a return to prior trends… .even the small businesses that are hanging on are in major distress. A Lending Tree survey shows 43% have seen revenue drop by half or more, and 6% have already dissolved.

“We have never seen anything like this in history, with a possible exception (percentage-wise) during the Great Depression. This is not the material from which V-shaped recoveries are created.”

https://www.forbes.com/sites/johnmauldin/2020/10/09/from-recession-to-an-ever-deeper-one/#61e504322f41


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“”We are in a depression—not a recession, but a depression. And I think the dynamics of a depression are different than they are in a recession because depressions invoke a secular change in behavior.

“Classic business cycle recessions are forgotten about within a year after they end—the scars from this one will take years to heal.””

https://www.forbes.com/sites/johnmauldin/2020/10/09/rosenberg-we-are-in-a-depression/#6405598715bf


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“The crisis is worsening, and the airline industry’s very survival is at stake,” said Paul P. Skoutelas, president of the American Public Transportation Association…

Amtrak this month slashed operations and its workforce, furloughing 2,050 workers.

“The 11 percent reduction in its workforce came as a direct result of the coronavirus crisis, which has substantially cut into its revenue.”

https://www.washingtonpost.com/transportation/2020/10/09/incredible-whiplash-airline-workers-talk-crisis-transit-uncertainty-over-stimulus-persists/


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As the first chills of winter arrive, it’s increasingly clear that the global airline industry is as deep in the hole as it ever was

“Airlines burned through $51 billion in the June quarter and will eat a further $77 billion in cash in the six months through December.”

https://www.business-standard.com/article/international/the-worst-for-aviation-industry-is-probably-ahead-of-it-rather-than-behind-120101000101_1.html


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Tourism is one of the biggest industries in the world, but as millions are finding, it doesn’t offer much by way of job security.

“It’s not only guides and hotel workers who are suffering, but an army of support workers that would normally keep the sector running smoothly.”

https://www.scmp.com/magazines/post-magazine/article/3104474/bali-nepal-human-impact-tourisms-collapse-and-what-being


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Passenger journeys on Britain’s railways fell during lockdown to the lowest level since the mid-19th century, according to official figures.

“The rail industry regulator said 35m journeys took place from April to June, which was just 8% of the total for the same period in 2019.”

https://www.theguardian.com/business/2020/oct/08/uk-rail-usage-fell-during-lockdown-to-lowest-level-since-mid-19th-century-coronavirus


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The UK economy is expected to stall in the coming months — and may even go into reverse — as it faces a triple threat of the COVID-19 second wave, the end of furlough, and Brexit.

““Going forward, the UK almost has this perfect storm,” Alejandra Grindal, senior international economist at Ned Davies Research, told Yahoo Finance UK.”

https://uk.finance.yahoo.com/news/uk-economy-q4-outlook-brexit-covid-19-furlough-scheme-060050175.html


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The Bank of England’s Governor has warned the economy is at risk of stalling as he vowed to ramp up stimulus to limit any damage caused by another Covid wave.

Andrew Bailey warned the risks to the recovery were “very much on the downside”…”

https://www.telegraph.co.uk/business/2020/10/08/economy-risk-stalling-bank-england-warns/


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‘Our worst nightmare’: will militias heed Trump’s call to watch the polls?

“With the US dangerously divided, experts fear the president’s remarks will inspire armed factions to show up at polling places…. FBI background checks – a direct indicator of gun sales – almost doubled year-on-year this summer, a reflection of the jitters that abound. As America arms itself, deadly weaponry is increasingly finding its way on to the streets, borne by self-styled private militias and culminating in violent clashes that have caused bloodshed in several US cities.”

https://www.theguardian.com/world/2020/oct/09/us-militias-trump-election-day-covid-guns


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Latin America and the Caribbean will suffer the worst economic and health impact from the coronavirus, the World Bank said Friday, forecasting a nearly 8.0 percent drop in regional GDP.

““Our region is suffering the worst economic and health impacts of Covid-19 of anywhere in the world,” according to Carlos Felipe Jaramillo, the Bank’s regional vice president.”

https://www.macaubusiness.com/latin-america-to-bear-worst-impact-from-coronavirus-world-bank/


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South Africa is heading Argentina’s way on the fiscal front if “serious measures” are not taken to rein in spending, bring down its debt and “to close the mouth of the hippopotamus,” Finance Minister Tito Mboweni has warned.

“…Mboweni stressed that tough decisions lay ahead for South Africa…”

https://www.thesouthafrican.com/news/sa-faces-argentina-like-debt-crisis-warns-mboweni/


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Turkey has once again raised the cost of borrowing by the back door as the lira sinks towards the threshold of 8 to the dollar. The lira has dropped 25 per cent this year and is already at record lows

““[Authorities] are very worried about the lira,” said Paul McNamara, an emerging markets portfolio manager at GAM. “It’s finally beginning to register that they need to [further] tighten liquidity.””

https://www.ft.com/content/5dab847f-4bc8-4127-b5ba-7025f7d1be60


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Why Turkey hired Syrians to fight for Azerbaijan…

“…the ones fighting on Turkey’s behalf in Libya most likely are hardened militias who see Turkish President Recep Erdogan’s self-styled Sunni-power leader image as palatable, and do so in support of Ankara’s regional geopolitical manoeuvres

“…the ones in Azerbaijan, reportedly hired by private contractors, are those who suffer from economic destitution back home, and see this as merely a job that pays.”

https://www.orfonline.org/expert-speak/why-turkey-hired-syrians-to-fight-for-azerbaijan/


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While politicians and looters in Kyrgyzstan are exploiting this moment of uncertainty to scheme and sack or seize buildings and businesses, what is left of the government is working how it can to pull the country back from economic and healthcare catastrophes.

Serious trouble is looming on both fronts.”

https://eurasianet.org/kyrgyzstan-economy-and-healthcare-shattering-under-weight-of-crisis


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The United States on Thursday slapped fresh sanctions on Iran’s financial sector, targeting 18 banks in an effort to further choke off Iranian revenues as Washington ramps up pressure on Tehran weeks ahead of the U.S. election.

“The move freezes any U.S. assets of those blacklisted and generally bars Americans from dealing with them, while extending secondary sanctions to those who do business with them. This means foreign banks risk losing access to the U.S. market and financial system.”

https://uk.reuters.com/article/us-iran-nuclear-usa-sanctions/u-s-imposes-new-iran-sanctions-that-may-spook-european-banks-idUSKBN26T35H


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Iran wants a “strategic partnership” with China – For China, Iran is just one piece on a large chessboard.

Leaked drafts call for big Chinese investment in everything from roads and ports to telecoms and nuclear energy.

“The agreement would probably give China a stake in Iran’s oil industry, guaranteeing a market for its crude and refined products…. China’s new friendship has caused a measure of alarm in Washington.”

https://www.economist.com/middle-east-and-africa/2020/10/10/iran-wants-a-strategic-partnership-with-china


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U.S. Shale Faces Another Year Of Contraction In 2021

“With Joe Biden leading in the polls, the odds of access to federal lands for U.S oil and gas producers getting curtailed now looks reasonably high.”

https://oilprice.com/Energy/Energy-General/US-Shale-Faces-Another-Year-Of-Contraction-In-2021.html


Banks and other secured lenders hold greater portions of the debt that’s currently dragging oil and gas drillers into bankruptcy, which points to more contentious restructurings and asset sales as many of those lenders face significant losses, experts say.”

https://www.law360.com/articles/1318528/oil-gas-bankruptcies-may-drag-as-secured-debt-swells


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The pace of defaults in the pandemic is faster than during the global financial crisis of 2008 to 2009, S&P analyst Sudeep Kesh said Friday in a phone interview

““The credit environment was very, very vulnerable to some kind of economic shock” before Covid-19 led to lockdowns globally, Kesh said.

“That’s because companies were aggressively increasing their debt levels for years as interest rates remained low for so long, he explained.”

https://www.institutionalinvestor.com/article/b1nqzhy696j9zc/Where-Defaults-Are-Surging


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The resurgence of Covid-19 across Europe and elsewhere is sparking fears of a reversal in the global recovery over the winter.

“While fiscal policy will continue to do much of the heavy lifting, economic uncertainty is putting renewed pressure on central banks to act. Here’s what we expect from them over the coming months.”

https://think.ing.com/articles/central-banks-whats-left-in-the-toolbox/


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Covid-19 has pushed the global economy into the worst downturn since the Great Depression, says The Economist. During the 2008 crisis, real house prices fell by 10%, and similar pain was expected this time. Yet house prices in developed countries rose by 5% in the second quarter. In Germany, they were up by an annual 11% in August.

There are two main causes. Firstly, massive monetary stimulus from central banks has kept borrowing costs low… Secondly, governments have stepped in with massive fiscal support.”

https://moneyweek.com/investments/property/602115/a-global-property-boom


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As the days grow colder and darker in the northern hemisphere, so too, does the economic outlook, as the global economy switches from relief-and-surge mode to slowing activity, with renewed fears of a double-dip recession amid rising infections and new restrictions.

The surge in 3Q was the easy part, but a sustainable recovery will be much harder.”

https://think.ing.com/reports/october-economic-update-winter-is-coming/


You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back with a ‘Climate’ round-up on Monday.

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