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The next financial crisis is fast approaching.

“Central banks need to prepare because global stock markets and real estate are overvalued, while leverage is near record levels for households, corporations, banks and governments… Today’s risk-asset valuations are utterly detached from reality.”

https://www.marketwatch.com/story/the-next-financial-crisis-is-fast-approaching-11633447555


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US default would trigger ‘significant volatility’ and ‘breakages’ in financial system, SEC Chairman warns.

“Gary Gensler, the chairman of the Securities and Exchange Commission, warned lawmakers Tuesday that a US default would likely set off historic stress in financial markets because Treasuries are the bedrock of the entire system.”

https://edition.cnn.com/2021/10/05/business/us-default-debt-ceiling-warning-sec-chairman/index.html


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Lead Times for U.S. Factories Lengthen to Record on Supply Crunch…

“The Institute for Supply Management’s latest survey of purchasing managers showed the average lead time for production materials in September increased to 92 days, the highest in data back to 1987.”

https://www.bloomberg.com/news/newsletters/2021-10-05/supply-chain-latest-lead-times-for-u-s-factories-lengthen-to-a-record


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US natural gas prices jump 9.5 percent to highest since 2008…

“As the northern hemisphere heads into winter-heating season, low U.S. auxiliary supplies have sparked concerns about potential shortages as demand for the furnace fuel ramps up.”

https://www.aljazeera.com/economy/2021/10/5/us-natural-gas-futures-jump-9-5-percent-to-highest-since-2008


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U.K. Gas Price Record Lifts Borrowing Costs, Alarms Industry.

“U.K. natural gas prices surged to a record high in a dramatic move that pushed up the British government’s borrowing costs and prompted industry to warn of shutdowns.”

https://www.bloomberg.com/news/articles/2021-10-05/u-k-gas-surges-to-record-300-pence-a-therm-on-supply-concerns


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Gazprom to prioritise Russia’s home market for winter.

“Russia’s top gas producer Gazprom plans to prioritise its home market over export sales because the winter will be cold and snowy, the head of its domestic gas selling business was quoted by Interfax as saying on Tuesday.”

https://www.nasdaq.com/articles/gazprom-to-prioritise-russias-home-market-for-winter-2021-10-05


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European natural gas prices shot to record highs on Tuesday, dragging down bond markets in a sign that investors were expecting wider economic damage.

“European gas contracts for delivery in November leapt 23 per cent to €117.50 a megawatt hour, up from just €18 six months ago…”

https://www.ft.com/content/c94cee7d-4ffe-4946-a83b-b4f85026b74f


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Gas Crisis Hits Food as Giant Dutch Greenhouses Go Dark.

“Skyrocketing power prices are forcing the vast network of Dutch glasshouses — the continent’s biggest — to go dark or scale back, threatening to cut supplies at Europe’s fruit and vegetable stalls and flower shops.”

https://www.bloombergquint.com/onweb/your-tomatoes-may-cost-more-as-gas-prices-hit-dutch-greenhouses


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France and Spain demand changes to EU energy market.

“France and Spain have joined forces to demand sweeping changes to the EU’s energy market rules in the face of “unbearable” electricity price increases that are hitting consumers and driving up inflation.”

https://www.ft.com/content/463d0eed-c9c3-4a2d-9958-0125c864237d


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Fears of a ‘Bottleneck Recession’: How Shortages Are Hurting Germany…

“In Germany, where one in four jobs depends on exports, the crisis gumming up the world’s supply chains is weighing heavily on the economy, which is Europe’s largest and a linchpin to global commerce.”

https://www.nytimes.com/2021/10/05/business/germany-economy.html


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Chip crisis dashes European auto industries hopes for post-pandemic sales…

“Hopes that 2021 would recover much of the auto sales lost to the pandemic in 2020 are fading as the semiconductor shortage continues.”

https://europe.autonews.com/automakers/chip-crisis-dashes-industrys-hopes-post-pandemic-sales-recovery


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Fuel Prices Soar Across Asia as Global Energy Crunch Deepens.

“Asian buyers are paying top dollar for a variety of fuels that can be fed into steam boilers or power turbines as they seek alternatives to increasingly pricey natural gas.”

https://uk.finance.yahoo.com/news/fuel-prices-spike-across-asia-210000049.html


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The economic threats from China’s real estate bubble…

“…the economy’s dependence on demand from investment in real estate must end. That will impose a huge adjustment and create a big headache for the authorities: what can replace property investment in creating demand?”

https://www.ft.com/content/1abd9d4b-8d94-4797-bdd7-bee0f960746a


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Fantasia downgraded to default status by rating companies as Chinese property sector crisis worsens.

“Missed debt payment by Fantasia this week adds to China property sector concerns spawned by Evergrande’s liquidity crisis. S&P, Fitch and Moody’s all cut Fantasia to default or near default status.”

https://www.scmp.com/business/banking-finance/article/3151335/fantasia-downgraded-default-status-rating-agencies-chinese


China May Enter Recession For The First Time In Nearly 30 Years… The most dramatic global economic story is that many economists now expect China to fall into recession for the first time in nearly 30 years…”

https://seekingalpha.com/article/4458554-china-may-enter-recession-for-the-first-time-in-nearly-30-years


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China-Taiwan military tensions ‘worst in 40 years’.

“Military relations with China are at their worst in 40 years, Taiwan’s defence minister has said. Chiu Kuo-cheng also warned China would be capable of mounting a full-scale invasion of the island by 2025.”

https://www.bbc.co.uk/news/world-asia-58812100


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Korea Inflation Exceeds Estimate, Backing Further Rate Hike.

“South Korea’s inflation came in faster than expected in September, adding support to the view that the central bank will raise interest rates again this year.”

https://www.bloomberg.com/news/articles/2021-10-05/korea-inflation-exceeds-estimates-backing-further-bok-rate-hike


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New Zealand Raises Rates to Tame Inflation With More to Come.

“New Zealand’s central bank raised interest rates for the first time in seven years and signaled further increases will likely be needed to tame inflation.”

https://finance.yahoo.com/news/zealand-raises-rates-tame-inflation-010711567.html


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Central banks differ on dispelling nightmare of stagflation.

“Central banks almost everywhere face the same bad dream: a mix of slowing growth and inflationary supply shocks that together threaten stagflation. So far, they are confronting the problem in different ways.”

https://www.ft.com/content/35b9b640-8b44-4f4b-b03c-40cd2fff2cfd


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Winter energy crisis warning as Opec refuses to tame oil prices. Oil could hit $120 a barrel — analysts…

“Oil prices could rocket in the next few weeks exacerbating the fuel shortage and leading to a winter energy crisis… That in turn will put intense pressure on central banks to shove up interest rates faster than they would like.

https://www.standard.co.uk/business/winter-energy-crisis-warning-opec-refuses-to-tame-oil-prices-b958844.html


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Hedge funds flock to oil as energy shortages worsen…

“Portfolio managers purchased the equivalent of 42 million barrels in the six most important petroleum futures and options contracts in the week to Sept. 28, according to records published by regulators and exchanges.”

https://www.reuters.com/article/global-oil/rpt-column-hedge-funds-flock-to-oil-as-energy-shortages-worsen-kemp-idUSL1N2R00R9


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Commodity traders face big margin calls as gas prices soar.

“The world’s top commodity trading houses are being told by brokers and exchanges to deposit hundreds of millions of dollars in extra funds to cover their exposure to soaring gas prices…”

https://www.reuters.com/business/energy/exclusive-commodity-traders-face-big-margin-calls-gas-prices-soar-2021-10-04/


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IMF cuts global economic forecast as pandemic ‘hobbles’ growth…

““We face a global recovery that remains hobbled by the pandemic and its impact,” Kristalina Georgieva, the IMF’s managing director, said. “We are unable to walk forward properly – it is like walking with stones in our shoes!”

https://www.theguardian.com/business/2021/oct/05/imf-cuts-global-economic-forecast-as-pandemic-hobbles-growth


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

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