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Cash Is the Only Winner in a Market Gripped by Stagflation Fear… Investors are eschewing almost everything except cash in this selloff

“…investors are focused on one thing right now: capital preservation. Slowing economic growth, persistent inflation and more Covid lockdowns in China have combined to make a toxic investing landscape. Even commodities, a favorite inflation play, succumbed to the global selloff on Monday.”

https://www.bloomberg.com/news/articles/2022-05-09/cash-is-the-only-winner-in-a-market-gripped-by-stagflation-fear


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Half of institutional investors say the Ukraine crisis will plunge the global economy into stagflation, while a fifth think it will trigger a financial crisis worse than the Great Recession of 2008.

“A CoreData Research study of more than 200 global institutional investors found 51% think the surge in energy prices triggered by the invasion of Ukraine will push the world economy into stagflation.”

https://ifamagazine.com/article/ukraine-war-to-trigger-financial-crisis-worse-than-2008-say-a-fifth-of-investors/


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If you aren’t an oil baron, I have bad news: it’s as if oil is trading somewhere between $150 and $275 a barrel.

The oil market is projecting a false sense of stability when it comes to energy inflation. Instead, the real economy is suffering a much stronger price shock than it appears, because fuel prices are rising much faster than crude, and that matters for monetary policy.”

https://www.bloomberg.com/opinion/articles/2022-05-09/crude-hovers-at-110-a-barrel-but-the-refinery-margin-makes-us-pay-a-lot-more


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Electricity Shortage Warnings Grow Across U.S…

“From California to Texas to Indiana, electric-grid operators are warning that power-generating capacity is struggling to keep up with demand, a gap that could lead to rolling blackouts during heat waves or other peak periods as soon as this year.”

https://www.wsj.com/articles/electricity-shortage-warnings-grow-across-u-s-11652002380


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‘It’s a nightmare’: baby formula shortage leaves US parents desperate…

“During the week starting 24 April, 40% of baby formula was out of stock in more than 11,000 stores across the country, CNN and USA Today reported… In six states – Texas, Tennessee, North Dakota, South Dakota, Iowa and Missouri – more than half of available baby formula in stores was sold out…”

https://www.theguardian.com/us-news/2022/may/09/baby-formula-shortage-abbott


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New York Hospitals Battle Supply Shortages on Shanghai Lockdown.

“Shanghai’s strict Covid-19 curbs are disrupting health care services halfway across the world, with hospitals in New York suffering a shortage of chemicals used in imaging tests — the latest example of how the city’s five-week-long lockdown is snarling global supply chains.”

https://www.bloomberg.com/news/articles/2022-05-09/new-york-hospitals-battle-supply-shortages-on-shanghai-lockdown


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“The NHS is facing shortages of blood pressure pills, painkillers, hay fever tablets and anti-depressants as drug producers are hit by supply problems [UK].

“Companies providing medications for millions of people face ‘unprecedented pressure’ with supply chains and red tape, a leading industry body has warned.”

https://metro.co.uk/2022/05/10/shortages-of-hay-fever-drugs-and-painkillers-as-nhs-faces-supply-mess-16615114/


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‘I come to the library to keep warm’: Norfolk residents battling fuel poverty…

“When Joan Mulholland, 89, found out last month her energy bills were due to increase again, she panicked. “I rang up the company and said: ‘I’m not going to be able to afford £200 a month.’” She gets by on a state pension and is worried it will not be enough this winter.”

https://www.theguardian.com/society/2022/may/08/downham-market-library-norfolk-residents-fuel-poverty-older-vulnerable-money


Serbia grain exports to fall with ban. Serbia’s wheat and corn exports are expected to drop significantly from earlier estimates in 2021-22 due to the ongoing Russia-Ukraine war, which led Serbia to ban exports it deems important to food security…”

https://www.world-grain.com/articles/16875-serbia-grain-exports-to-fall-with-ban


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In Ukraine, gas shortages further complicate daily life.

“As Russia’s invasion of Ukraine grinds through its third month, gas shortages are spreading across the country, adding to people’s misery and testing their resilience in new ways. Lines are forming at service stations in major cities…”

https://www.washingtonpost.com/world/2022/05/10/ukraine-gas-shortages/


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Russia’s Economy Facing Worst Contraction Since 1994.

“The Bank of Russia said April 29 it expects a contraction between 8% and 10% this year. The International Monetary Fund forecast one of 8.5%, while a Bloomberg survey of economists found a median decline of 10.3%. If the Finance Ministry’s forecast proves accurate, that would erase about a decade of economic growth…”

https://www.bloomberg.com/news/articles/2022-05-09/russia-s-economy-facing-worst-contraction-since-1994


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‘Stop asking why’: Shanghai tightens COVID lockdown, Beijing keeps testing.

“Shanghai authorities were tightening the city-wide COVID lockdown they imposed more than a month ago, prolonging into late May an ordeal that China’s capital Beijing was desperate to avoid by turning mass testing into an almost daily routine.”

https://www.reuters.com/world/china/beijing-covid-outbreak-proves-stubborn-mass-tests-becoming-routine-2022-05-08/


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China’s premier has warned its job market faces a “complicated and grim” outlook as the country’s zero-Covid strategy causes trade exports to plunge.

“Li Keqiang warned of job losses as Beijing and Shanghai tightened curbs on residents as part of efforts to contain the pandemic.”

https://www.telegraph.co.uk/business/2022/05/09/china-faces-complicated-grim-future-zero-covid-hits-economy/


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Emerging markets hit by ‘toxic’ mix of rising rates and slower growth…

““We have had this cooling down of Chinese demand coming at a time when the Fed is hiking interest rates and inflation is still pushing higher,” said Cristian Maggio, head of emerging markets portfolio strategy at TD Securities. “As if that weren’t enough we still have the risks related to the war in Ukraine. It’s a very toxic combination.””

https://www.ft.com/content/daef0fd1-595a-4c4a-9eab-cd4d94752ff2


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Southeast Asia will face a “big risk” of social unrest if there are “big surges” in food prices, an ASEAN economist at Bank of America Securities told CNBC.

“That’s because, relative to other countries, food consumption accounts for a large proportion of what people spend on in countries like the Philippines, Indonesia and Vietnam, said Mohamed Faiz Nagutha on Friday.”

https://www.cnbc.com/2022/05/09/big-risk-of-unrest-in-asean-if-food-inflation-surges-says-economist.html


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Protests break out as Philippines election returns a Marcos to presidency…

“The Philippines woke to a new but familiar political landscape on Tuesday, after an election triumph by Ferdinand Marcos Jr. paved the way for a once unimaginable return to the country’s highest office for its most notorious political dynasty.”

https://www.reuters.com/world/asia-pacific/philippines-election-win-returns-marcos-power-polarisation-2022-05-10/


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[Indian] Rupee slumps to all-time low against Dollar.

“The Indian currency extended its losses and touched an all-time low of 77.42 against the US dollar in Monday’s early trade weighed down by the strength of US dollar in the overseas market, foreign fund outflows and fall in domestic equities.”

https://www.livemint.com/market/stock-market-news/rupee-slumps-to-all-time-low-of-77-42-against-us-dollar-11652070432646.html


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Cotton prices hit 11-year high on possible India export ban.

“Cotton prices have soared to their highest levels since May 2011 as concerns grow over a possible export ban by top exporter India and a severe drought hitting U.S. yields.”

https://asia.nikkei.com/Business/Markets/Commodities/Cotton-prices-hit-11-year-high-on-possible-India-export-ban


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Troops rescue outgoing Sri Lanka PM [who has resigned] as houses torched in deadly night of unrest.

“Sri Lanka has deployed thousands of troops and police to enforce a curfew after five people were killed in the worst violence in weeks of protests over an unprecedented economic crisis.”

https://www.theguardian.com/world/2022/may/10/troops-rescue-outgoing-sri-lanka-pm-as-houses-torched-in-deadly-night-of-unrest


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Sri Lanka stops supplying gas for domestic use.

“Amid the ongoing economic crisis, Sri Lanka’s leading liquefied petroleum gas supplier Litro Gas Lanka Limited on Monday said that they are unable to supply gas to domestic consumers until new stocks arrive.”

https://www.siasat.com/sri-lanka-stops-supplying-gas-for-domestic-use-2323538/


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Lebanon’s descent into turmoil: assassinations, war, financial collapse.

“Lebanon holds an election on May 15 that could see a shift of power that sends shockwaves far beyond this small country squeezed between Syria and Israel.”

https://www.reuters.com/world/middle-east/lebanons-descent-into-turmoil-assassinations-war-financial-collapse-2022-05-09/


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Thousands face jail as Jordan heads to lift moratorium on debt imprisonment…

“In March 2021, then in the midst of the Covid-19 pandemic , Jordanian authorities issued a one-year moratorium on arresting people for failure to repay debts, but the measure is set to expire next month. Tens of thousands of Jordanians could face jail time for their debts…”

https://english.alaraby.co.uk/news/thousands-jordanians-could-face-jail-debt-next-month


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Hundreds of Tunisians demonstrated to support President Kais Saied on Sunday and to back his rewriting of the constitution….

“Saied’s supporters, whose rally in central Tunis was smaller than recent opposition protests, said the president’s opponents were corrupt and called for opposition parties to be banned.”

https://www.wionews.com/photos/tunisian-presidents-supporters-demand-actions-against-the-opposition-477389#we-ask-saied-to-arrest-the-corrupt-477383


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Zimbabwe’s bank lending freeze will worsen economic crisis, business chamber says.

“Zimbabwe’s decision to suspend bank lending in a desperate bid to arrest the rapid devaluation of its currency will worsen the economic crisis and expose borrowers to predatory loans, the country’s business chamber said on Monday.”

https://www.reuters.com/business/zimbabwes-bank-lending-freeze-will-worsen-economic-crisis-business-chamber-2022-05-09/


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Eskom Generation Chief Quits Amid Spiraling South Africa Outages.

“The top executive for power production at South Africa’s Eskom Holdings SOC Ltd. has resigned as the fragile electricity grid struggles to meet demand, threatening economic growth… The utility announced nationwide power cuts on Monday.”

https://www.bloomberg.com/news/articles/2022-05-09/eskom-generation-chief-quits-amid-spiraling-south-africa-outages


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South Africa’s Minister of Transport, Fikile Mbalula, has called for a ban on the export of scrap metal as the theft and vandalism of critical rail infrastructure sabotage the country’s economy.

“”We are unequivocal in our call to ban the export of scrap metal and will support any measure that will bring us closer to this reality,” the Minister said on Monday.”

https://allafrica.com/stories/202205090711.html


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The threat of an airline shutdown in Nigeria isn’t going away…

“For the second time this year, domestic airlines in Nigeria have threatened to shut down their operations, citing rising costs, only to back off after a few days… AON said the price of aviation fuel (JetA1) has risen from 190 naira per liter to N700 ($1.68), and that it could no longer absorb the costs.”

https://qz.com/africa/2163243/the-threat-of-a-nigerian-airline-shutdown-isnt-going-away/


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As Wheat Prices Soar, Africa Pivots to Cheaper Alternatives.

“Food producers in Kenya, Egypt, Democratic Republic of Congo, Nigeria and Cameroon say they’re mixing cheaper alternatives into their breads, pastries and pastas. Local rice, manioc flour and sorghum are substituting for wheat, which has spiked about 40% this year…”

https://finance.yahoo.com/news/wheat-prices-soar-africa-pivots-061502523.html


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

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