“The world’s top central banks are about to embark on “the largest quantitative tightening in history”, analysts at Morgan Stanley said on Friday, estimating that $2.2 trillion worth of support would disappear over the next 12 months.
“A surge in global inflation is forcing the U.S. Federal Reserve, European Central Bank, Bank of Japan and Bank of England to reel in the support measures used during the coronavirus pandemic.”
“Negative Rates Under Attack as Bond Traders See Hikes Everywhere… Underscoring the gravity of moves in markets, the world’s enormous pool of negative-yielding debt shrank by a record 20% over the space of a day.
“Sizzling inflation is pushing central banks to scrap the extreme measures they imposed during the Covid-19 pandemic…”
“Trigger points loom over equity markets. After declining for 40 years, rising bond yields pose a risk for stocks.
“The year has not started well for equity markets. Fears of inflation and tighter monetary policy are weighing on share prices as tensions between Russia and Ukraine darken the outlook.”
https://www.ft.com/content/5de87cc7-fdbe-4886-98dc-f8756ca28f13
“Oil closes in on $100 a barrel as European storage sites hit by cyber attacks…
“…Brent was at its highest level in more than seven years, since October 2014. As oil prices head for their seventh weekly gain, West Texas Intermediate (WTI) also hit a fresh seven-year high as it neared $91 a barrel. It is on track for a jump of more than 4% this week.”
“Water problems at Iraq’s mega southern oil fields operated by international oil companies may hamper the country’s ability to pump more crude from the key region in OPEC’s second-biggest producer.
“Iraq’s water issues are likely to complicate the ability of OPEC+ to meet its increased oil production ceiling…”
“Oil Frackers Brace for End of the U.S. Shale Boom… Limited inventory leaves the industry with little choice but to hold back growth, even amid high oil prices…
“Frackers made a big dent in their inventory as many sought to harvest sweet spots to survive lower oil prices during the pandemic. In recent years, they’ve also discovered that their projections for how many wells they could cram into tight spaces were overly optimistic.”
https://www.wsj.com/articles/fracking-oil-prices-shale-boom-11643824329
“US gas [ie petrol/diesel] prices rose to the highest level in more than seven years Friday, on the heels of the U.S. oil benchmark topping $90 per barrel for the first time since 2014.
“The national average for a gallon of gas stood at $3.423 on Friday, according to AAA, slightly surpassing the prior high-water mark of $3.422 from Nov. 8.”
“Fertilizer Prices Jump in North America on Race for Supplies.
“North American fertilizer prices rose the most in almost five months this week as a global competition for supplies means farmers could still have a ways to go before seeing relief from high nutrient costs.”
“Today’s [US] Inflation Is Comparable To The 1973 Oil Crisis…
“…inflation… when using 1970s methodology… is comparable to the peak in 1974 during the first oil crisis (11.1%). There are only two years since 1920 with higher inflation rates: 1947, after WWII (14.4%), and 1980, during the second oil crisis (13.5%).”
“Thousands of Puerto Rico teachers protest for higher wages.
“Thousands of teachers across Puerto Rico have left their classrooms and took to the streets to demand higher wages, improved working conditions and better pensions amid an economic crisis… Several schools were void of teachers…”
“A week-long occupation of Canada’s capital by truckers opposed to vaccine mandates was set to ramp up Saturday with thousands of demonstrators expected to pile into Ottawa while other cities also braced for protests…
“”This remains… an increasingly volatile and increasingly dangerous demonstration,” Ottawa police Chief Peter Sloly told a news conference Friday.”
https://www.france24.com/en/live-news/20220205-canada-protests-against-covid-measures-set-to-ramp-up
“Bank of England calls for wage restraint to keep grip on inflation.
“Two top Bank of England officials stressed on Friday the need for restraint on pay rises, drawing an icy reaction from unions and government, a day after the BoE sought to head off inflation running at a 30-year high by raising interest rates again.”
“From Liverpool to London, Tighter Wallets and Colder Homes…
“Prices are rising steeply in the United States and across Europe, driven by rising energy costs and supply-chain issues triggered by the easing of pandemic rules. But in Britain, there is a fear that sharply escalating heat and electricity bills, combined with food inflation, will push millions more into poverty.”
https://www.nytimes.com/2022/02/04/business/uk-inflation-cost-of-living.html
“Northern Ireland’s government on verge of collapse over Brexit trade checks.
“Paul Givan, the Democratic Unionist Party first minister [has now resigned] – a move that will also force Michelle O’Neill, his Sinn Fein deputy out of office. Although the rest of the Stormont Executive could remain in place, it could not take significant decisions, preventing the coalition from agreeing a crucial three-year budget.”
https://www.independent.co.uk/news/uk/politics/northern-ireland-brexit-paul-givan-b2006740.html
“France has escalated its battle to shut out the City of London from the EU’s financial markets, calling for British clearing houses to be barred from 2025.
“Clement Beaune, the European affairs minister, said a “clear signal” must be given to financiers so that clearing moves from the UK to the continent.”
“‘Biggest greenwashing exercise of all time’: EU presses ahead with inclusion of fossil gas in green investment taxonomy.
“…the EU’s proposals to allow fossil gas to be labelled as sustainable has been the subject of major controversy, with investors, academics, economists, campaigners, the European Investment Bank, and some member states…”
“The final pieces – three new signs have been observed which suggest a Russian invasion of Ukraine could be imminent.
“The building of a field hospital, the movement of additional troops to the border, and the deployment of the Russian military police suggest yet more invasion preparations are now in place.”
“Russia Signs Oil and Gas Deals With China as Relations With the West Sour.
“Russia’s gas giant Gazprom PJSC signed deal to increase gas supply to the world’s largest energy consumer via a new route from the Far East. “We will make another step in the gas sphere,” President Vladimir Putin told his counterpart Xi Jinping at start of talks in Beijing Friday.”
“‘We want the truth’: families of ethnic Pamiris killed in Tajikistan call for justice as tensions rise.
“Urgent protection for minority groups facing increased repression needed in crisis connected to escalating clashes across central Asian ex-Soviet region… other factors have contributed to the destabilisation of the area, such as the collapse of Afghanistan, the intensification of jihadist activity and interference from Russia and China.”
“At least 21 dead after Pakistan army clashes with militants for third day.
“The violence erupted on Wednesday when insurgents from the Baloch Liberation Army (BLA) launched twin assaults on bases of the paramilitary Frontier Corps in the Naushki and Panjgur districts, leading to the deaths of at least 12 soldiers and nine militants.”
“As economy collapses, some young Lebanese turn to militancy.
“Dozens of young men from Lebanon’s impoverished north have disappeared in recent months, often re-emerging with the Islamic State group in Iraq. The flow has raised fears that Lebanon’s economic collapse is fueling a new wave of radical recruitment…”
“Sri Lanka urges expats to send money home as cash crisis deepens… Data shows that overseas remittances — the nation’s main foreign exchange earner — have fallen by nearly 60 percent in December from a year earlier…
“Sri Lankans are facing shortages of milk powder, cooking gas, kerosene and other essentials.”
“The threats exacerbated by blackouts, high fuel prices and the disruption caused by Covid-19 at the start of 2022 have the Western Cape economy [South Africa] on crutches.
“Black Business Chamber secretary-general Mntuwekhaya Cishe said the issues of a fuel price hike, electricity increases and blackouts were some of the indicators the country [South Africa] was heading for the worse.”
“Durban North suburbs [KwaZulu Natal, South Africa] left in the dark for over 40 hours.
“It is uncertain as to when power will be restored and residents will be updated on social media as new information becomes available.”
https://northglennews.co.za/282133/durban-north-suburbs-left-in-the-dark-for-over-40-hours/
“Zimbabwe’s largest ferrochrome producer, Zimasco is battling increased power outages which have seen the firm resorting to expensive sources of power…
“Many businesses including miners have resorted to alternative power sources, such as generators, which are expensive to operate given the increase in global oil prices.”
https://www.theindependent.co.zw/2022/02/04/power-shortages-cripple-miners/
“Why Poor Nations Now Face a Pandemic Debt Crunch… Indebted governments from Latin America to Africa spent money they didn’t have to shore up rickety health systems and provide a safety net for citizens…
“Creditor nations helped them by suspending debt repayments and lending them more. Now those waivers have ended and global borrowing costs are on the rise, raising the risk of disorderly defaults.”
“Food Prices Approach Record Highs, Threatening the World’s Poorest.
“A global index released on Thursday by the United Nations Food and Agriculture Organization showed food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya.”
https://www.nytimes.com/2022/02/03/business/economy/food-prices-inflation-world.html
“A shortage of lithium salts essential for producing batteries for mobile devices and electric vehicles is putting the energy transition at risk.
“Over the past 18 months, the prices of lithium carbonate and lithium hydroxide have risen at absurd rates, and the squeeze has only accelerated since the beginning of this year.”
https://www.ft.com/content/780f26ed-fd3a-4712-8378-fe3ab2cc3eab
“Climate change and inflation…
“Today I’d like to talk about the long-term trend in inflation. I’m worried that one reason inflation might be higher than we expected for longer than we expected could be climate change. That’s a big problem for central banks. Higher interest rates can do nothing o increase the supply of food, just choke off demand.”
https://www.fxstreet.com/analysis/climate-change-and-inflation-202202041438
You can read the previous ‘Economic’ thread here. I’ll be back on Monday with a ‘Climate’ thread.
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