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A global energy crisis casts shadow on crucial climate summit. The energy supply crisis is showing how difficult ending the dependence on fossil fuels would be,” Bloomberg News noted. “China is driving demand for coal as it tries to secure the fuel to keep the lights on and factories running.

“Europe, which remains reliant on gas supplies from Russia, is seeing its companies seeking more coal for electricity generation ahead of winter with gas prices at record highs and supply hard to come by.””

https://www.washingtonpost.com/world/2021/10/08/global-energy-crisis-cop26/


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Coal supply shortages are pushing prices for the fuel to record highs and laying bare the challenges to weaning the global economy off one of its most important—and polluting—energy sources

“The world’s reliance on coal has tended to fluctuate with economic growth rather than governments’ climate ambitions, analysts say.”

https://www.wsj.com/articles/coal-shortages-push-up-prices-weigh-on-economies-11633525885


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China orders coal miners to boost output to counter energy crunch.

“China has ordered coal miners to boost production urgently as the energy crisis threatens factories across the world’s second-biggest economy and forces Xi Jinping’s administration to backtrack on climate change promises.”

https://www.ft.com/content/e4290d41-d45d-49c1-b779-59f01f29d4e8


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China’s Consumer Spending May Suffer ‘Long Covid’ Contraction…

“…economists are saying that despite the post-epidemic recovery in China, less spending by consumers and the knock-on economic impact may be around for the long haul.”

https://www.caixinglobal.com/2021-10-07/in-depth-chinas-consumer-spending-may-suffer-long-covid-contraction-economists-warn-101783715.html


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China’s Energy Crisis Is Hitting Everything From iPhones to Milk.

“The hit from China’s energy crunch is starting to ripple throughout the globe, hurting everyone from Toyota Motor Corp. to Australian sheep farmers and makers of cardboard boxes.”

https://www.bloomberg.com/news/articles/2021-10-07/china-s-energy-crisis-envelops-an-already-slowing-global-economy


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India Aluminum Makers Face ‘Precarious Situation’ on Coal Crunch…

“Most aluminum factories, which have their own power generation plants, have stockpiles for only one to two days, B.K. Bhatia, additional secretary general at the Federation of Indian Mineral Industries said by phone.”

https://www.bloomberg.com/news/articles/2021-10-07/india-aluminum-makers-face-precarious-situation-on-coal-crunch


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The U.S. was right — Europe has become a ‘hostage’ to Russia over energy, analysts warn…

““Europe has now left itself hostage to Russia over energy supplies,” said Timothy Ash, emerging markets senior sovereign strategist at Bluebay Asset Management, in a research note Wednesday, calling the situation “unbelievable.””

https://www.cnbc.com/2021/10/07/europe-is-now-a-hostage-to-russia-over-energy.html


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Europe to Get Hit of Cool Weather Next Week Just as Wind Drops.

“Cooler weather is set to increase demand for heating across Europe from next week adding pressure to already strained energy markets where price moves have become extremely volatile.”

https://www.bloomberg.com/news/articles/2021-10-08/europe-to-get-hit-of-cool-weather-next-week-just-as-wind-drops


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Oil explorers need to raise drilling budgets by 54% to more than half a trillion dollars to forestall a significant supply deficit in the next few years, according to Moody’s Investors Service Inc.

“Crude and natural gas drillers chastened by last year’s unprecedented collapse in demand and prices haven’t responded to the recent market rebound as the industry typically does by expanding the search for untapped fields.”

https://www.worldoil.com/news/2021/10/7/oil-industry-needs-500-billion-to-avoid-future-supply-crises-says-moody-s


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Boris Johnson isn’t worried about the UK economy. He should be.

“…the threat of an imminent rise in interest rates looms over the economy,” said Ruth Gregory, a senior UK economist at Capital Economics… “Clouds are darkening over the outlook for the UK economy. A combination of broadening shortages, the fuel crisis, less fiscal support and the risk of higher interest rates will make it difficult for the UK economy…”

https://edition.cnn.com/2021/10/05/business/boris-johnson-uk-economy-growth/index.html


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UK schools told to stock up on tinned food amid fears of shortages…

“One of the largest canteen suppliers in the UK has written to school catering staff advising them they should stock up on frozen and tinned food to ensure that children are properly fed over the winter.”

https://www.independent.co.uk/news/education/education-news/schools-stock-up-food-shortages-b1934499.html


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Bankrupt US companies gave $165 million in bonuses to top execs before going belly up last year…

“Chuck E. Cheese, Hertz and J.C. Penney are three very different companies but share one thing in common: oddly timed executive bonuses before their corporate bankruptcy filings.”

https://www.cbsnews.com/news/government-accountability-office-bankruptcy-chapter-11-retention-bonus/


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Mexico’s Inflation Hits 6%, Fueling Rate-Hike Pressure…

““The picture will remain fairly challenging in the coming months,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. “With the start of tapering by the Fed, it’s likely that Banxico will remain cautious and will continue raising its key rate.””

https://www.bloomberg.com/news/articles/2021-10-07/mexico-s-inflation-accelerates-to-6-fueling-rate-hike-pressure


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Peru Raises Key Rate to Curb Fastest Inflation in 12 Years.

“Peru tightened monetary policy for a third straight month after inflation surged to its highest rate in 12 years and political volatility roiled the currency.”

https://www.bloomberg.com/news/articles/2021-10-07/peru-raises-key-rate-again-to-curb-fastest-inflation-in-12-years


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Nigeria: Debt – “We Borrowed Our Way Out of Recessions” – Buhari.

“President Muhammadu Buhari has disclosed that the government used borrowing to stimulate the economy as response to the two recent economic recessions the country experienced.”

https://allafrica.com/stories/202110080012.html


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Kenya’s schools are staring at a financial crisis when they reopen next week if the government does not release funds by Friday.

“Operations in secondary schools are likely to grind to a halt, with head teachers yesterday raising the alarm that they will be running virtually on empty.”

https://allafrica.com/stories/202110070130.html


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Public discontent, defined as the collective feeling of frustration and unmet expectations, has risen globally, despite improvements in overall wealth. The same is true for Africa

“According to a recent OECD study, this paradox can be explained by the disparate distribution of resources, widening inequality and systemic relative deprivation among various groups of people. COVID-19 has exacerbated these hardships and frustrations.”

https://issafrica.org/iss-today/africas-rise-in-protests-is-about-more-than-macroeconomics


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Lebanon’s telecoms sector days from collapse as fuel crisis deepens.

“The worsening financial crisis in Lebanon has made diesel scarce – so much so that state-run network operators may soon have to shut down.”

https://www.totaltele.com/511222/Lebanons-telecoms-sector-days-from-collapse-as-fuel-crisis-deepens


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Short of cash and dreams, Afghan businesses readjust to Taliban rule…

“Foreign aid, which accounted for more than 40 per cent of gross domestic product, has vanished. The freezing by the US of $9.5bn in currency reserves took away the central bank’s ability to supply cash to the economy or defend the value of the afghani…”

https://www.ft.com/content/299a2c04-fee2-4d39-9ab4-7a7c8fd9c801


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North Korea’s most vulnerable risk starvation after it slipped deeper into isolation during the COVID-19 pandemic

“The worsening humanitarian situation could turn into a crisis and it is coinciding with a global “creeping apathy” about the plight of North Korea’s people, said Tomas Ojea Quintana, U.N. special rapporteur on human rights…”

https://www.reuters.com/world/asia-pacific/exclusive-un-expert-calls-nkorea-sanctions-be-eased-starvation-risk-looms-2021-10-07/


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Containergeddon’: Supply chain crisis drives Walmart and rivals to charter their own ships…

“The aim is to bypass log-jammed ports and secure scarce ship space at a time when COVID-19, as well as U.S.-China trade ructions, equipment shortages and extreme weather, have exposed the fragility of the globe-spanning supply lines we use for everything from food and fashion to drinks and diapers.”

https://www.reuters.com/business/autos-transportation/containergeddon-supply-crisis-drives-walmart-rivals-hire-their-own-ships-2021-10-07/


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South Korea’s global battery dominance raises supply chain risks…

“South Korea’s dominance of the world’s rechargeable battery market industry is emerging as a potential new bottleneck for global supply chains as demand for electric vehicles surges, new data show.”

https://www.ft.com/content/1be9bd48-28b7-4919-ae91-35e06ac926d7


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The world economy’s shortage problem…

Around the world, economic nationalism is contributing to the shortage economy… This week Joe Biden’s administration confirmed that it would keep Donald Trump’s tariffs on China… Britain’s lack of lorry drivers has been exacerbated by Brexit. India has a coal shortage in part because of a misguided attempt to cut imports of fuel.”

https://www.economist.com/leaders/2021/10/09/the-world-economys-shortage-problem


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The Wait for Semiconductors Turns Ominous for Automakers…

“The gap between putting in a semiconductor order and taking delivery, known as the lead time in the industry, rose another five days in September to an average of 21.7 weeks, according to research by Susquehanna Financial Group. That wait has increased for nine months in a row…”

https://www.bloomberg.com/news/articles/2021-10-07/the-wait-for-semiconductors-turns-ominous-for-automakers


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Skoda Auto sees more pain from chip shortage in blow to Czech economy.

“Skoda Auto, part of Volkswagen and the Czech Republic’s biggest exporter, will significantly reduce or perhaps halt production from the week starting Oct. 18 until the end of the year due to the global shortage of chips hobbling the automotive sector.”

https://www.reuters.com/business/autos-transportation/vws-skoda-may-halt-production-due-chip-shortage-2021-10-07/


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US government bond specialists are starting to fret over how the world’s most important market will cope when the Federal Reserve pulls back its pandemic-era support

“The Treasury market system “is primed so that high-frequency traders and primary dealers pull back when there are problems”, said Yesha Yadav, a professor at Vanderbilt Law School in Nashville…

“The way this is set up is designed to fail. It is exceptionally fragile,” Yadav said.”

https://www.ft.com/content/dc916fa5-6b7b-420b-9117-5123ef707356


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As Central Banks Taper, Investors Should Take Cover This time… the two banks [the Fed and ECB] are set to taper in tandem, amplifying the effect on money flow. This should terrify investors.

“Recent pioneering research by Xavier Gabaix and Ralph Koijen shows that flows not only move asset prices; they move them disproportionately. A dollar added to the stock market can increase aggregate market valuation by as much as $5. A dollar subtracted can have the opposite effect, decreasing aggregate valuation by $5.”

https://www.wsj.com/articles/european-central-bank-federal-reserve-taper-tantrum-investor-inflation-covid-liquidity-11633528056


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

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