“Shocks to supply chains are engulfing a wider swath of the global economy as the pandemic rages on, threatening to stifle Asia’s trade-led recovery just as soaring freight rates make it harder for businesses to weather another year like 2020.
“Shortages of consumer goods like paper towels and work-from-home gear early in the Covid-19 crisis have given way to parts shortfalls in one of the most globally integrated of industries: auto manufacturing.”
“US initial jobless claims jumped to 965k last week – an awful outcome – 176k above expected while continuing claims came in 271k above expectations at 5.27mn.
“To put this in context the worst reading during the Global Financial Crisis was 665k, so the ongoing stress in the jobs market is clear for all to see.”
https://think.ing.com/snaps/us-job-fears-mount
“U.S. Supply Chains Disrupted by Millions Calling Out Sick:
“Some manufacturers are reporting absenteeism rates as high as 25%…
“More than 1.9 million people missed work in December because of illness, according to Labor Department data, almost matching the 2 million record set in April.”
“Joe Biden has unveiled a $1.9tn coronavirus relief proposal, aimed at urgently combating the pandemic and the economic crisis it has triggered.
“As the US faces its deadliest stage of the pandemic, Biden described the moment as “a crisis of deep human suffering”.”
https://www.theguardian.com/us-news/2021/jan/14/joe-biden-coronavirus-stimulus-package
“Negative interest rates could fuel unemployment [in the UK]… monetary policy now has little room to maneuverer. Beyond QE, the Bank of England is limited to using interest rates as a lever to stimulate the economy…
“Besides the fact they have never been implemented in the UK and strong misgivings about how the financial system would cope, negative rates are likely to have an adverse impact on household consumption.”
https://reaction.life/negative-interest-rates-could-fuel-unemployment/
“Border staff are turning back 10pc of lorries leaving Britain because drivers do not have the correct paperwork, fuelling fears of a trade crisis and shortages of goods.
“Complex and confusing Brexit rules have left lorries unable to cross to the Continent…”
“Germany’s economy suffered its biggest contraction last year since the 2009 financial crash, as it was hit hard by the coronavirus pandemic, official data showed Thursday.”
[Wasn’t doing so great in 2019, I recall.]
https://uk.finance.yahoo.com/news/german-economy-sees-biggest-blow-113745252.html
“Dutch government faces collapse over child benefits scandal:
“The Dutch government will decide on Friday whether to step down over an escalating scandal in which tax officials wrongly accused thousands of parents of fraud, plunging many families into debt by ordering them to repay childcare allowances.”
“Italians have responded with a mix of anger, perplexity and calls for the entire government to be sent packing after the country was plunged into political mayhem once again.
“The Giuseppe Conte-led administration is teetering on the brink of collapse after the former prime minister, Matteo Renzi, pulled his small Italia Viva party from the ruling coalition.”
https://www.theguardian.com/world/2021/jan/14/italians-angry-and-perplexed-as-government-teeters
“Taxpayers still at risk if EU banks were to fail, warns watchdog:
“The process for winding down failing banks in Europe is still lacking “key elements”, the European Court of Auditors has warned, more than a decade after taxpayers had to pour hundreds of billions into banks during the global financial crisis.”
“South Africa’s Unemployment Insurance Fund may restart payments to help people unable to work because of the coronavirus outbreak, the country’s biggest labor group said…
““Government realizes it has to extend some form of relief,” Parks said by phone on Thursday. “We might need to consider a reduced monetary amount.””
“South African state-owned Land Bank said on Thursday it was working on a new debt restructuring plan after the National Treasury declined to provide a partial government guarantee.
“The country’s largest agriculture-focused lender defaulted on its debt in April and has been in talks with creditors since.”
“Food has become so expensive in Turkey that some people are spending what money they have to stock up on rice and pasta to avoid swallowing even higher prices in the months ahead.
“Parents have switched to discount baby biscuits, the cost of eggs has nearly doubled in a year…”
“Inflation in Brazil ended 2020 at 4,5% the stats agency IBGE revealed on Tuesday, above the central bank’s target, with food prices rising, 14,1%, the most in two decades.”
https://en.mercopress.com/2021/01/13/brazilian-2020-inflation-4-5-but-food-prices-skyrocketed-14-1
“Latin America is the world’s worst-hit region by the coronavirus pandemic and its economy faces a slow and painful recovery, with a growing risk that worsening poverty and inequality will trigger political upheaval, economists have warned.”
https://www.ft.com/content/24cdcbda-a088-48c3-840d-710778824230
“For more than 60 years, Cuba supplied at least some rice, milk, beans, sugar, chicken, electrical power and even cigarettes to its people nearly free of cost regardless of whether they worked, allowing many to survive without a job or depend solely on remittances.
“But this year, Cuba’s government is implementing a deep financial reform that reduces subsidies…”
https://finance.yahoo.com/news/cuba-tweaks-socialist-model-encourage-151719495.html
“Debt at China’s state-owned firms in spotlight as credit tightening raises default pressure: Chinese state firms defaulted on 71.8 billion yuan (US$11.1 billion) worth of debt in 2020 – the largest total since China allowed defaults in 2014
“Analysts say any defaults of weak state-owned enterprises would be highly contagious and impact the entire credit market.”
“China’s government has been slow to announce plans on special local bond sales this year, another sign that it’s seeking to rein in debt.
“Unlike in the past two years, Beijing has so far given no indication of how much local governments can borrow from the bond market in 2021.”
“Even before the pandemic, India’s banks were struggling. With among the highest ratios of bad loans in the world, at least five lenders have had to be rescued from collapse since late 2018. Several more were in a precarious state.
“Already creaking under the strain, the sector now faces one of its biggest tests: emerging intact from the crisis.”
https://www.ft.com/content/e5954d89-245f-4e86-86f1-72b479553459
“Borrowing Costs for Indian Firms Jump on Steps to Drain Cash:
“The Reserve Bank of India’s move to drain excess cash from the financial system may have inadvertently ruined the debt party for the nation’s weaker borrowers.”
“Yemen’s war and the ensuing economic collapse has left 80% of the population reliant on aid.
“On Thursday, the United Nations’ aid chief warned that U.S. sanctions would push the country into a famine on a scale not seen for nearly 40 years.”
“Most applaud Federal Reserve rescues and are relying on them to prop up our stock and bond markets. Hurray Fed!
“These rescues are simply money printing like the world has never seen before. That’s bad. We may be sacrificing our future in order to ease our current pain. No one knows how much money printing is too much. It could get ugly.”
https://seekingalpha.com/article/4398839-good-bad-and-ugly-of-federal-reserve-rescues
“It may be counterintuitive to say that the oil demand crash and the resulting glut in 2020 could lead to an oil supply crunch in just a few years…
“Yet, a growing number of experts and international agencies warn that the world could be headed for an oil shortage… 2020 investments hit a new low.”
https://oilprice.com/Energy/Crude-Oil/The-Pandemic-Could-Lead-To-A-Major-Oil-Supply-Crunch.html
“Performance test looms for $900bn private debt market. Investors who made loans during calmer times before pandemic face a reckoning, analysts say…
“Fund managers say there was a loosening in lending standards in the years before the pandemic, which helped propel the private credit market to $887bn by June 2020 from $575bn at the end of 2016.”
https://www.ft.com/content/8b829e7e-8074-4e8e-ab99-ab7d4ebbb151
“Achieving herd immunity and bringing the coronavirus in check won’t resolve all of the pandemic’s economic damage, Carmen Reinhart, chief economist at the World Bank, said Tuesday.
“What began as a health crisis is creating “your classic balance sheet problems” and risks plunging the world into a dire financial crisis, Reinhart said…”
You can read the previous ‘Economic’ thread here. I’ll be back over the weekend with a ‘Climate’ thread.
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