“Fed warns of hidden leverage lurking in financial system:
“The US Federal Reserve has warned that existing measures of hedge fund leverage “may not be capturing important risks”, pointing to the collapse of Archegos Capital as an example of hidden vulnerabilities in the global financial system.
“…the Fed also acknowledged that regulators lack the tools to monitor the risk taking of traders like Bill Hwang, who placed large leveraged bets on stocks through his Archegos family office.”
https://www.ft.com/content/cd723c4e-b182-416c-b511-bd3d516978d3
“US economy picks up just 266,000 April jobs as hiring slows sharply…
“Economists had been forecasting stronger growth in US jobs as pandemic restrictions are gradually relaxed and the Biden administration pumps trillions of dollars of fresh stimulus into the economy…”
https://www.theguardian.com/business/2021/may/07/us-job-report-april-latest-slowdown
“Consumer spending is surging – but so is inflation… After a shockingly poor U.S. jobs report for April, Wall Street is rethinking just how strong the U.S. economy is…
“…all the pent-up spending appears to have a downside: Higher prices… The consumer price index, the main tool for tracking the cost of living, is forecast to rise in April for the 11th month in row.”
https://www.marketwatch.com/story/consumer-spending-is-surging-but-so-is-inflation-11620419808
“US inflation fears mount as the Fed ‘monetises’ Joe Biden’s deficits…
“The US Federal Reserve and Treasury are repeating one of the most disturbing episodes of the 1940s and risk stoking a destructive inflationary boom, a leading monetary watchdog has warned.”
“Rising Bond Yields Threaten Financial Markets…
“Bank credit for industry is contracting, commodity prices are soaring, and supply chains remain disrupted.
“Fuelled by earlier expansions of money supply and further expansions to come, the world faces a far larger increase in price inflation than currently contemplated, and therefore far higher interest rates, threatening to destabilise both financial markets and fiat currencies.”
https://seekingalpha.com/article/4425740-rising-bond-yields-threaten-financial-markets
“A bubble could be brewing in steel stocks. The pandemic brought the American steel industry to its knees last spring,… But as the recovery got underway, mills were slow to resume production, and that created a massive steel shortage.
“Now, the reopening of the economy is driving a steel boom so strong that some are convinced it will end in tears. “This is going to be short-lived. It’s very appropriate to call this a bubble,” Bank of America analyst Timna Tanners told CNN Business…”
https://edition.cnn.com/2021/05/06/investing/steel-shortage-stocks-bubble/index.html
“Copper must rally 50% for supply to meet demand, Glencore chief says.
“The price of copper needs to rise 50 per cent to encourage enough new supply to meet projected demand from the global green revolution, says the chief executive of Glencore… “You will need $15,000 copper to encourage a lot of this more difficult investment,” Ivan Glasenberg told the FT…”
https://www.ft.com/content/beeb325f-1d39-456b-a4fc-22cd50429fbb
“Colombia enters second week of violent unrest as police crack down on protests…
“Colombia has entered its second week of violent unrest as riot police continued a brutal crackdown on nationwide protests against poverty and inequality exacerbated by the coronavirus pandemic.”
“Libyans struggling in poverty, chaos 10 years after NATO intervention…
“Besides economic degradation, the security situation has also been worsening. According to Ali Al-Khalfouni, a 56-year-old Libyan elementary school teacher, the quality of life today is “tens of times worse” than 10 years ago.”
“17 policemen, 200 Palestinians said hurt after hundreds riot on Temple Mount, Jerusalem…
“Israeli police burst into the Temple Mount compound on Friday evening after Palestinians threw rocks and bottles at officers, as widespread clashes in Jerusalem spread to the holy site following prayers held there on the last Friday of the Muslim holy month of Ramadan.”
“‘A dirty business’: how one drug is turning Syria into a narco-state…
“The manufacture of Captagon in the regime heartland has become one of Syria’s only recent business success stories; a growth industry so big and sophisticated that it is starting to rival the GDP of the flatlining economy itself.”
https://www.theguardian.com/world/2021/may/07/drug-captagon-turning-syria-into-narco-state
“Lebanon’s lights may go off this month because cash for electricity generation is running out, a lawmaker said on Thursday, as the country grapples with a deep economic crisis…
““We should not forget that starting May 15, gradual darkness will start,” said Nazih Negm, a member of parliament…”
https://thearabweekly.com/lebanon-could-go-dark-cash-electricity-runs-out
“About 230 million Indians fell into poverty due to the COVID-19 pandemic last year with young people and women the hardest hit, and the current second wave threatens to make matters even worse, a new study has said.
“India’s stringent months-long lockdown from last March put about 100 million people out of work…”
“The global chip shortage is starting to have major real-world consequences… South Korean tech giant Samsung said last week that the chip shortage is hitting television and appliance production, while LG admitted the shortage is a risk…
“Production of low-margin processors, such as those used to weigh clothes in a washing machine or toast bread in a smart toaster, has also been hit.”
https://www.cnbc.com/2021/05/07/chip-shortage-is-starting-to-have-major-real-world-consequences.html
“Carmakers are stripping out digital bells and whistles as global chips shortages send assemblers back to analogue features.
“Nissan is leaving navigation systems out of thousands of vehicles that typically would have them, while Ram no longer offers its 1500 pickups with a standard “intelligent” rear-view mirror… Renault has stopped offering an oversized digital screen behind the steering wheel…”
“High Package Costs Hit Food Makers as Recycled Paper, Corn Soar.
“In a year of food supply-chain disruptions hitting from all angles, here are two more things for producers and consumers to worry about: recycled paper and corn, and how they affect packaging.”
“Global climate change stimulus could fuel a green investment bubble.
“Investment bubbles often form following extremely stimulative policies enacted in the wake of global recessions. They are born of easy money, grow on speculation and fuelled by a strong fundamental theme and high investor confidence. They become disconnected from their intrinsic value and as money tightens, they collapse.”
https://www.cityam.com/global-climate-change-stimulus-could-fuel-a-green-investment-bubble/
“The Global House Price Boom Could Haunt the Recovery From Covid-19.
“House prices around the world have rallied through the economic turmoil. Growing leverage and decreasing affordability raise both financial and political risks.”
“The share of US dollar reserves held by central banks fell to 59 percent – its lowest level in 25 years – during the fourth quarter of 2020, according to the IMF’s COFER survey.
“Some analysts say this partly reflects the declining role of the US dollar in the global economy… If the shifts in central bank reserves are large enough, they can affect currency and bond markets.”
“The Federal Reserve is warning that prices of stocks and other financial assets are rising to levels that could set investors up for big losses from sudden declines…
““Asset prices may be vulnerable to significant declines should risk appetite fall,” the Fed report warned.”
You can read the previous ‘Economic’ thread here. I’ll be back on Monday with a “Climate” thread.
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