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Global food prices reached a six-year high in December and are likely to keep rising into 2021, adding to pressure on household budgets while hunger surges around the world.

A United Nations gauge of food prices has jumped 18% since May, as adverse weather, government measures to safeguard supplies and robust demand helped fuel rallies across agricultural commodities from grains to palm oil. Prices will likely climb further, the UN’s Food & Agriculture Organization said.

The spike threatens to push up broader inflation, making it harder for central banks to provide more stimulus to shore up economies, while stirring up memories of a food-price crisis a decade ago…”

https://www.bloomberg.com/news/articles/2021-01-07/global-food-prices-at-six-year-high-are-set-to-keep-on-climbing?srnd=markets-vp


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Victory for the Democratic party in this week’s Senate run-offs will add to the long-term pressure on the US dollar, which was already expected to continue its slide this year, analysts say.

“The dollar has kicked off 2021 on a subdued note after notching up losses of 7 per cent last year against a basket of its peers. This week, it touched its weakest levels since April 2018, helping to push the euro and the Chinese renminbi to multiyear highs.”

https://www.ft.com/content/9e58d2fb-37c5-432e-b4c6-dcf862d43b7d


The euro and yen are flirting with valuations unseen for years as dollar weakness creates headaches for policy makers the world over.”

https://www.bloomberg.com/news/articles/2021-01-06/euro-yen-eyeing-new-heights-against-dollar-poses-policy-dilemma


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China’s home appliance manufacturers left cursing export orders as costs rise, profits vanish amid yuan rally:

Lockdowns and work from home arrangements in the West have increased the demand for home appliances manufactured in China. But a strong yuan is causing profits to decline, with firms also under pressure from soaring metal prices.”

https://www.scmp.com/economy/china-economy/article/3116667/chinas-home-appliance-manufacturers-left-cursing-export


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A week on from Brexit, the main road to Dover has been so quiet that officials were able to close half of it Thursday for a litter-picking operation without causing delays for drivers.

“But behind such placid scenes, many truckers are still warning of chaos as they struggle to adjust to the new paperwork required by Britain’s departure from the European Union. Drivers are being held up for hours because they lack the right documents, they say.”

https://www.aljazeera.com/economy/2021/1/8/in-post-brexit-uk-quiet-ports-hide-mounting-transport-chaos


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About 4,000 City firms are at a heightened risk of failure due to the Covid crisis, and nearly a third of those businesses could potentially harm consumers if they collapsed, the financial watchdog has warned.

“The regulator said insurance intermediaries and brokers, payments and electronic money firms, and investment management companies experienced the largest drop in cash and assets, which can act as a buffer during a downturn.”

https://www.theguardian.com/business/2021/jan/07/consumer-finances-at-risk-as-4000-city-firms-face-collapse-in-covid-crisis


Financial markets are likely to be hit more frequently by the kind of upheaval unleashed by the COVID-19 pandemic and central banks need new tools to deal with powerful investment firms which were at the heart of it, a Bank of England official said.”

https://uk.reuters.com/article/us-britain-boe-hauser-newsmaker-idUKKBN29C1TU


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Bank of France Says High Debt Puts Financial System at Risk:

Low interest rates, rising credit risk weigh on banks’ profits… Extended lockdown would make it harder to pay off loans.”

https://www.bloomberg.com/news/articles/2021-01-07/bank-of-france-says-corporate-debt-puts-financial-system-at-risk


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Danes Get 20-Year 0% Mortgages: The country with the longest history of negative central bank rates is offering homeowners 20-year loans at a fixed interest rate of zero…

The once unthinkable notion of borrowing for two decades without paying interest comes as central bankers across the globe shy away from rate hikes.”

https://www.bloomberg.com/news/articles/2021-01-05/danes-get-20-year-0-mortgages-as-interest-rates-keep-sinking


Eurozone retails sales contracted more than expected in November and inflation was negative for the fifth consecutive month in December, adding to the pressure on policymakers to support the economy…”

https://www.ft.com/content/cfefe909-f365-4b80-8cd9-099d377aa500


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Europe’s top auto markets posted their biggest annual sales declines in decades, with ongoing coronavirus restrictions expected to crimp a recovery early this year.

“Registrations fell by about 25% last year across Germany, the U.K., France, Italy and Spain, Europe’s five largest car-buying countries…” [Worth noting that car sales were falling in Europe, and indeed globally, in 2019.]

https://www.bloomberg.com/news/articles/2021-01-07/europe-s-car-sales-outlook-is-bleak-after-worst-year-in-decades


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Japan is considering extending a state of emergency from the Tokyo metropolitan area to other regions as novel coronavirus cases increase but that could raise the risk of a double-dip recession for the world’s third-largest economy

““There’s no doubt it will affect January-March growth,” Finance Minister Taro Aso told reporters, when asked about the economic impact.”

https://www.reuters.com/article/health-coronavirus-japan/update-2-in-japan-wider-covid-19-curbs-heighten-double-dip-recession-risk-idUSL1N2JJ07Z


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India’s economy is set for its biggest annual contraction in records going back to 1952 as the rapid spread of coronavirus cases and measures to contain them hurt businesses and households.

“Gross domestic product will shrink 7.7% in the financial year ending March 2021, the statistics ministry said in its first advance estimate published on Thursday.”

https://www.aljazeera.com/economy/2021/1/7/bbindias-economy-braces-for-biggest-contraction-since-1952


A weak banking system has come back to haunt India’s economy during the pandemic.”

https://qz.com/india/1946266/why-indias-economy-will-struggle-to-recover-from-covid-19/


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Cubans have suffered food shortages for years. Then the country’s economic situation deteriorated even further due to the Covid-19 crisis.

Suddenly, after years of gradual economic decline, the crisis seems to have accelerated.

“The main symptom is a severe shortage of food.”

https://havanatimes.org/features/cuba-the-decline-of-a-country-running-out-of-food/


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Venezuelans risk lives to buy flour:

“Residents and traders from the Venezuelan port town of Guiria travel to Trinidad and Tobago by boat, risking their lives, to stock up on flour, rice, oil and other essentials that have become scarce and prohibitively expensive at home.”

https://www.france24.com/en/live-news/20210107-venezuelans-risk-lives-to-buy-flour-rice-from-trinidad-and-tobago


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Already suffering under stringent U.S. and U.N. sanctions, North Korea’s economy faced a double whammy of severe floods and the coronavirus pandemic this year, which prompted Pyongyang to shut its border with China and ditch outside aid…

The U.N.’s World Food Programme said in July, just before the monsoon season, that more than 10 million people, or 40% of the population, were already facing food shortages.”

https://uk.reuters.com/article/northkorea-politics-economy/factbox-north-koreas-economy-struggles-as-sanctions-covid-19-weigh-idINKBN29C0QS


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Zimbabwe is in the throes of a deepening economic crisis characterised by hyperinflation that has pushed food prices beyond the reach of many, in addition to stagnant salaries, foreign currency shortages, a rapidly weakening currency, low production, water shortages, power blackouts and rising poverty.”

https://www.newsday.co.zw/2021/01/worst-nightmare-zimbos-suffer-amid-rising-covid-19-cases/


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Six years of war have culminated in dire economic conditions across Yemen. Millions of people suffer from food insecurity and famine is looming….

“Since September 2016, Yemen’s public employees have not received their salaries regularly, which has left millions of families exposed to harsh living conditions.”

https://www.al-monitor.com/pulse/originals/2021/01/yemen-government-aden-economy-crisis-challenges.html


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It is, to put it mildly, counterintuitive. In the midst of a global pandemic and one of the steepest recessions ever, mainstream investment markets are very fully valued by historic standards

“…part of the reason for the rich valuations in today’s markets, according to Longview Economics, a research boutique, is that ever more newly-created [central bank] money is chasing an ever-shrinking pool of investable assets as the central banks take assets on to their own balance sheets… [How do you make a good return in an era of ever diminishing returns?]

“William White, former economic adviser and head of the economic and monetary department at the Bank for International Settlements, suggests that by keeping interest rates too low in the attempt to generate economic growth central banks have induced corporations and households to take on more debt.

“This, says Mr White in an interview, creates a debt trap and rising instability. When a financial crisis strikes central banks have to save the system, but in doing so they create even more instabilities.”

https://www.ft.com/content/91efe8fa-857c-438a-a0f3-96dfb8e7daaa


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Bitcoin has surged above the $40,000 (£29,500) mark for the first time in its history after doubling its value in less than a month.

“The record comes just days after the cryptocurrency hit an all-time high of more than $34,800 on Sunday, which was also the 12th anniversary of the bitcoin network being created. Bitcoin first breached the $20,000 mark in mid-December.”

https://www.theguardian.com/technology/2021/jan/07/bitcoin-tops-40000-dollars-investors-seek-hedge-against-inflation


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘Climate’ thread.

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