“Global economy approaching a recession, central banks unchained: Reuters poll…
“The global economy is approaching a recession as economists polled by Reuters once again cut growth forecasts for key economies while central banks keep raising interest rates to bring down persistently-high inflation…
“Michael Every, global strategist at Rabobank, said “risk of a global recession” is what everyone’s talking about and has become mainstream in forecasts. “I think that’s pretty much a no-brainer when you look at the trend in all the key economies.”…
“In the meantime global equity and bond markets are in disarray while the U.S. dollar is at a multi-decade peak in foreign exchange markets based on U.S. rate expectations.”
“IMF chief wants central banks to keep raising rates to hit ‘neutral’ level.
“International Monetary Fund chief Kristalina Georgieva said on Wednesday that central banks should keep raising interest rates further to fight inflation until they hit a “neutral” level, though in most cases they have not reached this point.”
“Recession or a coming financial crisis? Economists say the difference is vast…
“Interest rates are creeping higher, and the word “recession” is on everyone’s lips. But so far, only a few financial commentators are warning of something much worse that could abruptly change the rules of the game: The threat of a financial crisis.”
https://www.cbc.ca/news/business/financial-crisis-column-don-pittis-1.6627032
“Amundi warns on hidden leverage in the financial system.
“Europe’s largest asset manager has warned that the tremors in the UK pensions market should be a “wake-up call” to investors and regulators about the dangers of hidden leverage in the financial system.”
https://www.ft.com/content/4dfd546b-bff6-4dfa-a858-06b855001faa
“Hedge Funds Are Slashing Leverage to Weather Market Slump.
“Hedge funds have cut portfolio leverage this year in a conservative turn that has sucked borrowed money from global markets, adding selling pressure to stocks and bonds… The decline in leverage also reflects belt-tightening among investment banks as interest rates rise and the outlook for the global economy dims.”
https://finance.yahoo.com/news/hedge-fund-managers-worry-another-000000567.html
“U.S. mortgage interest rates jump to 7.16%, highest since 2001.
“The average interest rate on the most popular U.S. home loan rose to its highest level since 2001 as tightening financial conditions weigh on the housing sector, data from the Mortgage Bankers Association (MBA) showed on Wednesday.”
“Subprime loan delinquency rates are higher than the 2008 recession levels today, with unemployment still near all-time lows and the layoff cycle just beginning.
“But the Fed won’t rescue the housing market. Risk markets are likely to rally on news of slower monetary tightening, but historically, market bottoms do not come until 70% through recessions…”
https://seekingalpha.com/article/4548810-biblical-mean-reversion
“Deranged diners, inflation and staff shortages: American restaurants are struggling.
“Cohen, as an owner, is feeling the impact of inflation first-hand across the board: ingredients are more expensive, labor is more expensive, equipment is more expensive, and as a result, dinner out is more expensive.”
https://www.theguardian.com/food/2022/oct/26/post-pandemic-restaurant-industry-inflation
“The US exported a record amount of crude and fuel last week, even as the East Coast grapples with shortages of both diesel and gasoline.
“Total petroleum shipments reached 11.4 million barrels a day, according to the Energy Information Administration… The imbalance highlights the difficulty in moving fuel from the Gulf Coast refining hub to consumer centers on the East Coast.”
“UK Real Wages Fell at Sharpest Pace Since 2010 Financial Crisis.
“Inflation, which is lingering at its highest level in 40 years, is eating away at a 5% increase in the headline level of wages. That’s adding to pressure on the central bank to rein in price increases and on the government to help those families that are struggling.”
“The UK’s net bond sales are set to be the highest in history for the coming fiscal year, according to the nation’s debt chief.
“The view from Robert Stheeman is in line with forecasts by bank strategists, who worry the jump in supply could renew the pressure on gilts seen in recent weeks.”
“Europe Risks Diesel Supply Shock as Russia Oil Sanctions Near…
“Getting rid of Russian supply won’t be easy. France, one of Europe’s biggest importers, recently had its own diesel production slashed by strikes at its oil refineries, forcing it to source more. Domestic output in Germany, where the continent’s diesel demand is strongest, is also at risk because the Schwedt refinery is set to lose access to crude oil via the Druzhba pipeline.”
“Europeans close shop as economic downturn looms…
“Company failures, especially SMEs, have been increasing steadily over 2022 and are due to continue into 2023 across the EU “due to a weaker economic outlook with high inflation and energy prices and monetary tightening and the expiry of government support,” according to Atradius Collections, a debt collector.”
https://www.euractiv.com/section/all/short_news/europeans-close-shop-as-economic-downturn-looms/
“BASF has said it will have to downsize “permanently” in Europe, with high energy costs making the region increasingly uncompetitive.
“The statement from the world’s largest chemicals group by revenue came after it opened the first part of its new €10bn plastics engineering facility in China a month ago, which it said would support growing demand in the country.”
https://www.ft.com/content/f6d2fe70-16fb-4d81-a26a-3afb93e0bf57
“The CEO of German automaker Audi has said introducing highway speed limits and “car-free days” could help the country as it faces the energy crisis and effects of the Russia-Ukraine war, according to local media.
“”We have to rethink, realize that our lives are changing,” Markus Duesmann told the daily Suddeutsche Zeitung…”
“The black sheep of the EU head for crisis as Brussels cuts off lifelines; Viktor Orban desperate to unlock frozen funds as inflation surges in Budapest…
““Financial crisis and economic downturn in the EU. Migration invasion in the south. War in the east and economic crisis in the West,” Orban said in front of a massed rank of flags.”
https://www.telegraph.co.uk/business/2022/10/26/eus-black-sheep-head-crisis-brussels-cuts-lifelines/
“Desperate Australians are turning to everything from coupons to gambling to make ends meet, according to new research by Finder.
“A nationally representative survey of 1,058 respondents revealed 3 in 5 Australians (59%) – equivalent to 11.8 million people – are taking action to give themselves some breathing room from the cost of living pressures.”
https://www.finder.com.au/australians-are-taking-action-to-combat-the-cost-of-living-crisis
“China fiscal deficit balloons to nearly $1 trillion as economy cools.
“China’s fiscal deficit ballooned to an all-time high of nearly $1 trillion in the first nine months of the year, analysis of government data by Bloomberg showed, as a real estate crisis and tax rebates to boost a cooling economy emptied government coffers.”
https://uk.sports.yahoo.com/news/china-fiscal-deficit-balloons-nearly-060327256.html
“A historic sell-off in Hong Kong stocks has dealt a blow to the nest eggs of the city’s millions of workers, saddling them with losses of about HK$62,400 (S$11,170) each that may take years to recover.
“The Mandatory Provident Fund (MPF) – Hong Kong’s official pension system – shed about HK$286 billion this year as at Monday, according to researcher MPF Ratings.”
https://www.straitstimes.com/business/hong-kong-pension-fund-s-biggest-slump-since-2008-fuels-anger
“Global Economy in ‘Disequilibrium’ Has Big Risks, Singapore Says…
““The pullback in household and business spending, together with a further tightening in financial conditions, could potentially interact with existing vulnerabilities in the financial system, and exacerbate the economic downturn,” according to the Monetary Authority of Singapore’s biannual Macroeconomic Review published Thursday.”
“South Korea moves again to ease credit crunch sparked by Legoland developer default.
“South Korea’s central bank announced more measures on Thursday to improve liquidity in the banking system and mitigate the fallout from a developer’s debt default which is sparking fears of a credit crunch in Asia’s fourth-largest economy.”
“‘Sudden slump in demand’ leaves Asia Pacific air cargo carriers ‘in limbo’…
“Director general Subhas Menon said, “The outlook for the cargo market remains subdued in the near term. Overall, the region’s airlines continue to face a challenging operating environment, with costs under pressure as a result of high fuel prices and weak local currencies.””
https://theloadstar.com/sudden-slump-in-demand-leaves-asia-pacific-air-cargo-carriers-in-limbo/
“Asian Currency Reserves are Reaching Their Limit.
“Asia’s central banks have fought hard to protect the value of their currencies this year as the dollar has soared. But each of them has a limited appetite for that defence.”
“Vietnam’s fuel importers under increasing strain from record low currency, tight credit.
“Vietnam’s oil product importers are struggling to buy from the global market as the dong plunges against the dollar and bank credit tightens, deepening their reliance on domestic refineries that are ramping up production above capacity in a bid to alleviate critical fuel shortages…”
“Collapsing currencies are exacerbating food crisis, World Bank warns…
“Even as most food and energy prices have moderated in recent months, following sharp spikes in the immediate wake of Russia’s invasion of Ukraine, many countries are not feeling relief because of the dollar’s strength and their own currencies’ weakness. The poor spend more of their money on food.”
“Fleeing Farmers to Worsen Food Crisis in Conflict-Riven Myanmar…
“Inflation is rising in the military junta-controlled country, while humanitarian needs have intensified as fighting continues. As well as high fertilizer and fuel costs that have hurt agricultural production, loss of farmland and harvests will play an even bigger role in worsening food insecurity…”
“Bolivia to temporarily suspend exports of food products amid protests…
“The move is aimed at safeguarding food security in Bolivia, said the minister of Productive Development and Plural Economy, Nestor Huanca, adding that the export suspension will include soybean grain, soybean flour, soybean meal, sugar, oil and beef.”
“Argentina Downgraded by Fitch on Rising Debt Repayment Risk.
“Argentina was slashed deeper into junk by Fitch Ratings on risk the nation’s deep macroeconomic imbalances and “highly constrained” external-liquidity position will undermine its ability to repay debt. The South American nation’s credit score was cut by a notch to CCC-…”
“Cuba’s state-owned oil company, Unión Cuba Petróleo (CUPET), announced Wednesday a shortfall in fuel availability throughout the country.
“Cuba has been suffering for months from an energy crisis that has caused daily power outages for months throughout the island, which in turn has increased social discontent and the number of protests over supply cuts, aggravated by the passage of Hurricane ‘Ian’…”
https://www.msn.com/en-gb/news/world/cuba-announces-fuel-deficit-on-the-island/ar-AA13pIZg
“Petrol Shortage Hits Lagos [Nigeria] as Queues Emerge in Filling Stations…
“The Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, earlier said the current fuel scarcity in Abuja and other surrounding states is caused by the inability of fuel trucks to have access to Lokoja roads. The regulatory body said the roads were flooded.”
https://saharareporters.com/2022/10/25/petrol-shortage-hits-lagos-queues-emerge-filling-stations
“UN: Syria facing `acute violence’ and worst economic crisis.
“Syria is facing “acute violence,” the worst economic crisis since the war began in 2011, and a rapidly spreading cholera outbreak with more that 24,000 suspected cases reported throughout the country and at least 80 deaths, U.N. officials said Tuesday.”
“Why billionaires are obsessed with bunkers.
“A couple of years ago, Douglas Rushkoff, a professor of media and digital economics in New York, was asked to give a speech at a swanky resort in a remote American desert… he was shocked to find himself in front of half a dozen ultra-rich tech and hedge fund luminaries, instead of a conference.
“The men — yes, they were all men — were collectively torn, they said, over a particular choice: New Zealand or Alaska? They feared the world was heading for what they termed “The Event” — some kind of “environmental collapse, social unrest, nuclear explosion, solar storm, unstoppable virus or malicious computer hack that takes everything down”, Rushkoff says. And they wanted to know which region would be safest to retreat to.
“Other questions that preoccupied them included: was climate change scarier than biological warfare? How long would they likely need to remain in a bunker for anyway? And, crucially, how could they stop their own security forces from murdering them? They sought these answers from Rushkoff because he had previously written Present Shock, a well-regarded book about the future of tech.
“Rushkoff admits he did not have many answers to offer, except for noting that if the billionaires wanted to avoid being murdered by the help, they should start being extremely nice to them now.”
https://www.ft.com/content/c0ee992f-2fb8-4ae0-816f-bc849bf1b60b
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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