“As recession fears rise, Washington begins to weigh how to respond…
“…with Wall Street trembling, and many private forecasters warning that recession is likely, preliminary talks about policy options are underway around town…
“On Capitol Hill, congressional officials have begun discussing the challenge of intervening to alleviate the pain of a recession in ways that do not exacerbate inflation. At the White House, aides have informally begun weighing hypothetical options, such as unemployment benefits and food stamp assistance…
“…Washington’s options for providing relief could be constrained by the effort to fight inflation. During the pandemic and the Great Recession, Washington flooded the economy with aid to the unemployed and other cash supports. If enacted now, such policies would risk pushing inflation higher.
“Meanwhile, with the Fed hiking interest rates faster than it has in decades as part of its battle against inflation, the new federal spending would require additional borrowing at a time when debt is becoming increasingly expensive.”
https://www.washingtonpost.com/us-policy/2022/10/20/recession-inflation-white-house-fed/
“Wall Street’s ‘Dr. Doom’ says central banks are screwed and we can’t avoid a financial crisis. ‘Damned if you do, damned if you don’t’…
““Unfortunately, at this point, damned if you do, damned if you don’t. There is no easy way out of this,” Roubini said. “If you fight inflation, you’re going to have a recession and a financial crisis. And if you don’t fight inflation, you’re going to have de-anchoring of inflation and you get stagflation and still a financial crisis.””
“US Treasuries have entered the longest sustained slump in 38 years, as policy makers signal their determination to keep raising rates until they are sure inflation is under control.
“The yield on benchmark 10-year notes jumped 23 basis points this week to 4.26% on Friday, heading for a 12-week streak of increases that would match the duration of the 1984 episode when then-Federal Reserve Chairman Paul Volcker was carrying out a series of rapid interest rate hikes.”
“Existing US home sales fall to a 10-year low in September, as mortgage rates soar…
“Sharply higher mortgage rates are causing an abrupt slowdown in the housing market. The average rate on the 30-year fixed home loan is now just over 7%, after starting this year around 3%. That is making an already pricey housing market even less affordable.”
https://www.cnbc.com/2022/10/20/existing-home-sales-fall-to-a-10-year-low-in-september.html
“Global Housing Market Pain Has Echoes of a Crash 30 Years Ago…
“…interest rates are rising rapidly, bringing to a close the era of easy money that’s defined the years since the 2008 global financial crisis. There are also implications for household wealth and economic growth at a time when recession risks already hang over many countries.”
“The World’s Oil Buyers Are Being Crushed by a Surging Dollar.
“Brent oil has dropped more than 30% from this year’s high, but you wouldn’t know it if you live in Paris, Mumbai or Accra… fuel prices remain a significant factor driving up the cost of living across most of the world.”
“New York, New England Ration Heating Oil Even Before Peak Winter…
“Some wholesalers in Connecticut are putting retailers on allocation… The measure, designed to prevent panic buying, highlights the extreme fuel tightness across the New York Harbor and New England regions that has attracted the attention of the White House.”
“Canada recession may be ‘necessary evil’ as central bank queues big hike.
“Even as recession worries intensify in Canada, the central bank is likely to go ahead with another supersized interest rate hike next week after data showed underlying inflation was stubbornly persistent despite aggressive tightening, analysts said.”
“Sweden’s Home Price Slump Worsens to Reach Double Digits.
“The plunge in the Swedish housing market deepened last month to most since the financial crisis… The largest Nordic property market that was one of the hottest during the pandemic is now among the bellwethers for the global housing cooldown amid central banks’ aggressive interest rate-increases seeking to tackle soaring consumer prices.”
“UK housing sales fall but real ‘horror story’ yet to come… Experts say mini-budget has fed ‘sense of mounting dread’ into market with sales likely to plunge…
“The number of homes sold in September fell by nearly 40% as transaction levels returned to normal following the big spike caused by the Covid stamp duty holiday, with experts suggesting the real “house sales horror story” is still to come.”
“Falling retail sales fuel concerns of looming UK recession…
“Emma Mogford, manager of the Premier Miton Monthly Income Fund, said Friday’s “troubling” retail sales figure added to the view that the “UK is headed for recession”. “I expect retail sales to get worse in 2023 as consumers face higher mortgage costs, higher rental costs and possibly higher energy bills too,” she said.”
https://www.ft.com/content/c9061599-e610-4bc0-bd35-068ca55e928c
“Sales of Spam and fish heads have risen a third as people seek out cheaper meals amid the cost of living crisis.
“The famously unfashionable canned meat, made of ground-up pork shoulder and ham, is up 36%, according to Waitrose’s annual food and drink report… And while fish heads may not be to everyone’s taste, sales are up 34% this year as people increasingly use them in curries, soups, stews and stocks.”
“‘Tsunami of need’ – UK’s biggest food bank network launches emergency appeal.
“Britain’s biggest food bank network on Thursday launched an emergency appeal, warning it faces its most difficult winter ever as more people risk going hungry in a worsening cost-of-living crunch. The Trussell Trust, which supports a network of 1,300 food bank centres across the United Kingdom, said it had experienced a dramatic increase in levels of need.”
“Macron Lashes Out at United States Over Double Standard Energy Policies…
“To compensate for its declining nuclear fleet and Russia’s complete halt of natural gas shipments into the country, France has turned to the United States for LNG—only Macron is unhappy with the price it’s paying.”
“U.S. Oil Exports to France Fall to Zero Amid Refinery Strikes.
“…returning to normal will take time: Exxon has said that the restart of its refineries in France after industrial action there ended earlier this month will take between two and three weeks. The strikes shut down some 70 percent of France’s refining capacity and led to fuel shortages in different parts of the country.”
“Uniper in need of another cash boost as Germany scraps gas levy.
“The German government had expect to raise funds to support the nationalised firm through a gas levy on consumers, which has subsequently been ditched following public pressure. It is now considering whether to pump tens of billions of euros of additional funding into Uniper to weather the European gas crisis amid an elevated threat of blackouts this winter…”
https://www.cityam.com/uniper-in-need-of-another-cash-boost-as-germany-scraps-gas-levy/
“A new debt crisis could be looming as European countries throw huge sums of money at the energy crisis.
“Europe is facing a macroeconomic storm. Amid an energy crisis, sky-high inflation, and a possible recession, some experts think a new debt crisis could be looming for some European nations as governments ramp up spending to shield consumers from soaring energy costs.”
“Energy crisis tests resilience of Italian businesses…
“Italian business lobby Confindustria has warned of an “economic earthquake”, saying the new government will struggle to offset the hit from energy prices on firms like Draghi managed to do without hurting Italy’s fragile public finances.”
“Giorgia Meloni has formed Italy’s new ruling coalition, giving the country its first far right-led government since the end of the second world war.
“A presidential palace official announced that Meloni, set to become the first woman to serve as the country’s prime minister, and her cabinet would be sworn in on Saturday. Meloni’s Brothers of Italy, a party with neo-fascist roots, was the top vote-winner in Italy’s national election last month.”
“Inflation protests across Europe threaten political turmoil… [picture from Thursday’s protests in Romania]
“Energy prices have driven inflation in the 19 countries that use the euro currency to a record 9.9%, making it harder for people to buy what they need. Some see little choice but to hit the streets… “There’s no quick fix to the energy crisis,” said Torbjorn Soltvedt, an analyst at Verisk Maplecroft. “And if anything, inflation looks like it might be worse next year than it has been this year.””
“South Australia will not provide gas to New South Wales in a supply crunch, the state’s energy minister has warned in an extraordinary speech to industry.
“The mining and energy minister, Tom Koutsantonis, made the comments on Thursday during a candid address at an oil and gas industry event in Adelaide, where he warned public sentiment was turning against them.”
“Bank of Japan, battling rising yields, will conduct emergency bond buying for 2nd day.
“The Bank of Japan said on Friday it would conduct emergency bond buying operations for a second day, as the 20-year government bond yield rose to a new high in a further challenge to the central bank’s resolve to defend its easy policy stance.”
“Japanese Finance Minister Shunichi Suzuki said on Friday that authorities were dealing with currency speculators “strictly”, as an extended sell-off of the yen kept markets on heightened alert for further dollar-selling intervention by Tokyo.
“Suzuki’s comments came after the yen weakened beyond the key psychological level of 150 per dollar on Thursday for the first time since August 1990.”
“China’s yuan fell on Friday to its weakest level against the dollar since the global financial crisis of 2008, despite attempts by major state-owned banks to stabilise the market.
“Sources told Reuters that state banks sold dollars in the onshore foreign exchange market to prevent the spot price from weakening past the 7.25 per dollar level.”
https://uk.sports.yahoo.com/news/yuan-falls-lowest-since-2008-093700843.html
“Hong Kong stocks hit 13-year low as Chinese growth slows.
“Shares in Hong Kong dropped to their lowest level since the end of the global financial crisis as investors reacted to the city’s economic recovery plans and the 20th Chinese Communist party congress in Beijing, where President Xi Jinping is expected to secure a third term.”
https://www.ft.com/content/a4054823-75d3-4eaf-a584-bc38c9bbc8da
“China’s former president Hu Jintao unexpectedly escorted out of party congress.
“Mr Hu, President Xi Jinping’s immediate predecessor, appeared confused and slightly disoriented as the assistants escorted him out. He appeared to resist leaving, turning back to his seat at one point.”
“‘A clash of two Brazils’: presidential election divides voters – even gangsters.
“The stark choice between Lula and Bolsonaro has fractured families, friendship circles, workplaces and church congregations, with Lulistas convinced Bolsonaro is a hate-filled authoritarian extremist and Bolsonaristas calling Lula a corrupt communist thief.”
“Indigenous protest in Bogotá descends into clashes with police.
“At least 24 people were injured, including 11 law enforcement officers who were attacked with sticks and stones by demonstrators protesting their living conditions and the government’s lack of help… Bogotá Mayor Claudia López has demanded assistance from the central government in managing the crisis.”
“Colombia is on the Brink of an Energy Crisis.
“The risks posed by Petro’s goal of ending contracting for oil exploration are exacerbated by the Andean country’s meager proven natural gas reserves and weak production volumes… there is growing apprehension Petro’s plans will endanger Colombia’s energy security triggering a crisis that could roil the economy…”
https://oilprice.com/Energy/Crude-Oil/Colombia-Is-On-The-Brink-Of-An-Energy-Crisis.html
“At least five injured in Guinea anti-government protest…
“At least four people were shot dead and several wounded during anti-government demonstrations in July. Another protester was shot dead in June during demonstrations over fuel price hikes. A police officer was charged with his murder.”
https://www.reuters.com/world/africa/least-five-injured-guinea-anti-government-protest-2022-10-20/
“Dozens dead in Chad capital as security forces fire on protesters…
“Palls of black smoke could be seen in some areas in N’Djamena and the crack of teargas grenades could be heard throughout much of the day. Several roads had been blocked with barricades and burning tyres and most shops closed their doors to avoid looting.”
“Protests against ‘oppression’ in Tunisia expand for the sixth day.
“From the north to the south of the country, dozens poured out to the streets Wednesday night, protesting once again the death of Malek Sellimi, a 24-year-old Tunisian who was severely injured in a police chase before dying of his wounds.”
https://english.alaraby.co.uk/news/protests-tunisia-expand-sixth-day
“Lebanon fails to elect president for third time amid financial meltdown.
“Outgoing President Michel Aoun’s term ends on Oct. 31 and divisions remain among political blocs over the makeup of a new cabinet. Lebanon has been without a fully functioning government since May.”
“Turkish central bank makes huge rate cut amid 83% inflation.
“Turkey’s central bank has slashed interest rates for the third month in a row, making its biggest drop this year despite sky-high inflation that is squeezing people’s finances as it follows President Recep Tayyip Erdogan’s unorthodox economic views.”
“Sri Lanka consumer inflation hits record 73.7% in September.
“Sri Lanka’s National Consumer Price Index (NCPI) rose to a new high of 73.7% in September from a year earlier, quickening from 70.2% in August, the statistics department said. Annual food price inflation picked up to 85.8% from 84.6% in August…”
“Iranian teachers call for nationwide strike in protest over deaths and detention of students.
“A teachers’ union in Iran called for a nationwide teacher strike in protest over the recent deaths and detention of students in the country, the Coordinating Council of Iranian Teachers’ Trade Associations (CCITTA) said in a statement on Telegram on Thursday.”
“Indonesian women join Iran’s hijab protests amid fears own rights under threat.
“Activist Ririn Sefsani, the head of the NGO “Commitment for Change” and one of the organisers of the Jakarta rally, called on the Indonesian government to speak up and urge Iran to stop all forms of violence against citizens fighting for human rights.”
“Economic woes, shifting ties complicate Pakistan’s flood recovery.
“…many analysts believe that a globally faltering economy, a rising energy crisis and Western questions over Pakistan’s geopolitical alliances mean providing much-needed funding will remain a stark challenge.”
“The energy crisis is distracting us from the real emergency…
“Amid rampant inflation, war and a deepening energy crisis, it seems that the world’s climate problem is being overshadowed. But it isn’t going away — and nor are the young activists who care. The next protest might involve something stronger than tinned soup and a target less protected than a Van Gogh.” [Unfortunately, it is starting to become clear how limited and unpalatable our options are, and how all-encompassing our predicament.]
https://www.ft.com/content/53e305a5-353d-4d46-9aa7-7938558a4b3f
You can read the previous “Economic” thread here. I’ll be back on Monday with a “Climate” thread.
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