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Archegos avalanche shows cracks are hidden under the surfaceThere are worrying pockets of bizarre price behaviour in the shadow banking world… the episode exposes broader vulnerabilities in the financial system.

“After all, as any back-country skier knows, avalanches do not usually occur just because of an idiosyncratic shock, but because the underlying snowpack is unstable…

“…the key point is this: the Archegos rubble shows that years of excessively loose monetary policy have not just left asset prices elevated but created half-concealed pockets of leverage, too. When the two collide, disaster can erupt.”

https://www.ft.com/content/4459a6b2-b842-4d21-b19b-bda138a5bfdf


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For many US college students, pandemic life is disappointing. For others, it is a financial crisis.

“…a new survey took a closer look at the profound effect the pandemic has had on the highest-risk students. Many, it found, have faced challenges just to make ends meet, with nearly three in five struggling for access to housing and food.”

https://www.nytimes.com/2021/03/30/world/college-students-economic-struggle.html


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America is starting to claw its way out of the economic fallout from the coronavirus pandemic, but food insecurity persists, especially for children and older adults.

“Food banks around the U.S. continue giving away far more canned, packaged and fresh provisions than they did before the virus outbreak tossed millions of people out of work…”

https://abcnews.go.com/US/wireStory/us-hunger-crisis-persists-kids-older-adults-76810395


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Pentagon chief reaffirmed unwavering support for Ukraine’s sovereignty:

U.S. Secretary of Defense Lloyd J. Austin III… condemned recent escalations of Russian aggressive and provocative actions in eastern Ukraine and offered condolences to Minister Taran on the deaths of four Ukrainian soldiers on March 26th.”

https://defence-blog.com/news/army/pentagon-chief-reaffirmed-unwavering-support-for-ukraines-sovereignty.html


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U.S. and China’s next economic battle will be over climate change, experts say:

“Having long been at loggerheads over trade, technology and capital markets, the world’s foremost economic superpowers are turning their attention to climate change as the next path to commercial supremacy.” [Oh, the hubris! It is Mother Nature who will emerge as the dominant superpower, of course.]

https://www.cnbc.com/2021/04/01/us-and-chinas-next-economic-battle-will-be-over-climate-change-experts-say.html


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China’s Commodities Binge Makes America’s Future More Expensive:

“The U.S. spending plan faces a big problem: Beijing got to all the raw materials first… the U.S. is going to need more commodities. There’s just one problem: China.”

https://www.bloomberg.com/news/articles/2021-04-01/u-s-infrastructure-plan-faces-problem-china-s-commodities-copper-binge


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US has ‘enormous respect’ for how Australia is standing up to China’s ‘economic coercion’:

Washington’s top diplomat in Canberra says the countries are discussing how they would respond to a range of scenarios including conflict in the Taiwan Strait.”

https://www.theguardian.com/australia-news/2021/apr/01/us-has-enormous-respect-for-how-australia-is-standing-up-to-chinas-economic-coercion


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Western brands caught between US and China over human rights:

“Western companies are being forced to choose between supporting human rights and profits from China, caught up in a battle the US and its allies are waging with Beijing over its persecution of Uyghur Muslims.”

https://www.ft.com/content/a0be4094-2aba-4275-a3ca-ec5e58cc5032


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The risk is that the process of decoupling from China will not be slow and wary but will accelerate… Economic nationalism and the drive for increased self-sufficiency risk stoking those tensions, creating uncertainty about access to resources. That includes capital…

For both businesses and investors, the end of globalisation is sure to be fraught with dangers.

https://www.thetimes.co.uk/article/history-warns-that-retreat-from-globalisation-can-lead-to-disaster-vs9j38l7m


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“‘We haven’t seen anything yet’: tidal wave of [UK] debt still to come, warns charity:

Thousands more households have been pushed to the brink of financial ruin, the Salvation Army has warned, with a “tidal wave” of debt problems to come as the furlough scheme is unwound.”

https://www.telegraph.co.uk/money/consumer-affairs/havent-seen-anything-yet-tidal-wave-debt-still-come-warns-charity/


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Shaken by Greensill, German towns pull millions from banks:

“German towns and cities are pulling money from small, private banks, spooked after losing millions in the closure of Greensill Bank, an experience they said has shattered their faith in the country’s government and financial system.”

https://www.globalbankingandfinance.com/analysis-shaken-by-greensill-german-towns-pull-millions-from-banks/


Spain’s public debt reached 120% of gross domestic product last year, above the previously reported 117.1%, the Bank of Spain said on Wednesday, after adding ‘bad bank’ liabilities stemming from the financial crisis a decade ago as demanded by Brussels.”

https://www.reuters.com/article/spain-debt/update-1-spains-decade-old-bad-bank-liabilities-push-debt-to-120-of-gdp-idUSL8N2LT3NV


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Pandemic and economic crisis pushes Argentina’s poverty rate up to 42%:

Poverty in Argentina rose to 42% at the end of 2020, INDEC national statistics bureau reveals – the highest level since 2004.”

https://www.batimes.com.ar/news/argentina/pandemic-and-economic-crisis-pushes-poverty-rate-up-to-42.phtml


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Hunger grows in Brazil amid pandemic:

Lines at food distribution points are getting longer and longer in Brazil’s big cities, where hunger is gaining ground amid of the coronavirus crisis.”

https://riotimesonline.com/brazil-news/miscellaneous/covid-19/hunger-grows-in-brazil-amid-pandemic/


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Suriname Defaults as Time Runs Out for Third Debt Payment Delay: Suriname skidded into default after the government ran out of time to convince bondholders to yet again push back bond payments…

“That’s Suriname’s third default event of the Covid era per Fitch’s criteria.”

https://www.bloomberg.com/news/articles/2021-04-01/suriname-defaults-as-time-runs-out-for-third-debt-payment-delay


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The Nicaraguan army said Thursday that since the start of the year it has detained and expelled 1,166 migrants from various countries who had apparently entered the country from Costa Rica at clandestine crossing points…

Most migrants making the hike through the dangerous Darien Gap are from Haiti or Cuba…”

https://uk.news.yahoo.com/nicaragua-turns-back-1-166-215713718.html


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The reason many Guatemalans are coming to the US border? A profound hunger crisis

As more and more Central American families arrive at the United States’ southern border, the municipality of Panzós offers a stark illustration of the deepening food crisis that is contributing to the new wave of migration.”

https://www.washingtonpost.com/world/2021/04/02/us-border-migrants-guatemala/


Africa faces severe debt crisis, UN warns: The UN says elevated public debt was limiting the capacity to boost spending across the continent.”

https://www.premiumtimesng.com/news/headlines/452425-africa-faces-severe-debt-crisis-un-warns.html


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Action needed as hunger looms in Horn of Africa:

FAO report says almost 50 million people in the Horn require urgent food and water assistance.”

https://www.theeastafrican.co.ke/tea/news/east-africa/hunger-looms-in-horn-of-africa-3344344


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How Isis has flourished in poverty and neglect of southern Africa:

Insurgents who overran town of expats to threaten huge natural gas project have been growing in strength in the shadows…”

https://www.thetimes.co.uk/article/rising-gang-of-mozambican-rebels-unfurl-the-black-isis-flag-5mjjx2qcn


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A list of failure – South Africa’s state-owned companies facing financial crisis

There were 21 public entities that disclosed uncertainty about whether they will be able to continue as a going concern.”

https://businesstech.co.za/news/government/480025/a-list-of-failure-south-africas-state-owned-companies-facing-financial-crisis/


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South Africa’s cash-strapped Land and Agricultural Development Bank missed a March 31 deadline to conclude a debt restructuring plan with lenders, the state-owned company said on Wednesday.

In April 2020 the country’s largest agricultural-focused lender defaulted on some repayments on its R50bn debt, triggering credit downgrades and fears of cross default on the debt of other state firms.”

https://www.timeslive.co.za/sunday-times/business/2021-04-01-land-bank-misses-deadline-for-debt-restructuring-plan/


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Biggest South African Bank Raises Alarm on Loan-to-Grant Proposal:

“Standard Bank Group Ltd. has raised the alarm around proposals to revive a faltering government-backed credit program designed to aid South African businesses battered by Covid-19… “”…converting loans into grants would set a very undesirable precedent,” Chief Executive Officer Sim Tshabalala said.”

https://www.bloomberg.com/news/articles/2021-04-01/specter-of-virus-stimulus-2-0-spooks-biggest-south-african-bank


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Will Lebanese banks crash Middle East finances?

Lebanon has long been a financial capital in the region. But neighboring nations say billions are stuck in the country’s failing financial system… It is already clear that billions of dollars may never be recovered because Lebanese banks simply don’t have the funds to pay out to depositors.”

https://www.dw.com/en/lebanese-banks-financial-crash-middle-east/a-57061393


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Many of Lebanon’s children ‘may never get back to school’: Since the start of the coronavirus pandemic, more than 1.2 million children in Lebanon have been out of school.

“Lebanon’s dire economic crisis faces the risk of turning into an “education catastrophe”… with vulnerable children facing the possibility of never returning to school.”

https://www.aljazeera.com/news/2021/4/1/many-of-lebanons-children-risk-never-returning-to-school-report


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The coronavirus pandemic has worsened long-standing inequalities around the world, which left unaddressed could undermine economic stability and lead to unrest, the IMF warned on Thursday…

“The findings show that the warnings fund economists sounded last year have come to pass.”

https://www.france24.com/en/live-news/20210401-pandemic-sharpens-inequalities-could-fuel-unrest-imf-warns


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There’s an underappreciated side effect of all the disruptions across global supply chains: the cost of producing and distributing everything from furniture and foam to cars and machinery is rising

“…building consumer momentum around green cars will take a hit too: If nickel prices hit a historic high of $50,000 per ton, that could add $1,250 to $1,500 per electric vehicle.”

https://www.bloomberg.com/opinion/articles/2021-03-31/prices-are-going-up-across-supply-chains-will-inflation-come-for-you-too


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Automakers cannot afford to abandon the just-in-time system’s down-to-the-penny cost consciousness in a business where profit margins are often less than 10 cents on a dollar of revenue…

Unexpected events like the pandemic and chip shortage are just a sign of the times,” said Steven Merkt, president of transportation solutions at TE Connectivity…

This isn’t a series of black-swan events,” Merkt said. “This is a precursor of what life is going to be like.”

https://www.reuters.com/article/us-autos-semiconductors-supply-chain/auto-industry-rethinks-cost-cutting-playbook-as-covid-19-chip-shortages-disrupt-supply-chains-idUSKBN2BO4ZW


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A Reckoning In Bubble Assets Is Coming: It’s time for a reckoning in bubble assets. Not since 1999 have I seen so much garbage trading at such crazy prices…

“No one knows when. But it’s not a question of if.”

https://www.forbes.com/sites/jamesberman/2021/04/01/a-reckoning-in-bubble-assets-is-coming/?sh=170739e0677e


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S&P 500 closes above 4,000 for the first time

“The index of the world’s largest publicly traded companies last crossed a 1,000-point threshold just 21 months ago, when it hit 3,000 in July 2019. Before that, it took five years to go from 2,000 to 3,000.”

https://www.nbcnews.com/business/markets/s-p-closes-above-4-000-first-time-n1262778


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

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