“Stocks and bond markets shed more than $30 trillion in ‘brutal’ 2022.
“Global stocks were on Friday set to close out the worst year since the 2008 financial crisis after the battle by central banks to tame inflation and the war in Ukraine sent powerful waves rushing across asset markets.
“The broad MSCI All-World index of developed and emerging market equities has shed nearly a fifth of its value in 2022, with bourses from Wall Street to Shanghai and Frankfurt all notching up significant losses.
“Bond markets also endured heavy selling: The US 10-year government bond yield, a global benchmark for long-term borrowing costs, has shot up to 3.8 per cent from about 1.5 per cent at the end of last year — the biggest annual increase on Bloomberg records stretching to the 1960s…
“The grim year for financial markets came as central banks led by the US Federal Reserve ratcheted up borrowing costs in an attempt to control the worst spell of inflation in decades.”
https://www.ft.com/content/87ed8ea6-4913-4452-9135-498040ad338f
“Wealth managers are grappling with one of their worst years in a century after high inflation and a sell-off in stocks and bonds hammered returns. The threat of stubbornly higher inflation presents a challenge to preserving wealth in real terms that has not been faced in decades…
““This year is one of the most significant years of wealth destruction in nearly 100 years,” said Renaud de Planta, who leads Pictet, the 217-year-old Swiss partnership…”
https://www.ft.com/content/b9464ea6-6506-49a6-8ea9-42a36708554e
“The Charts That Show World Economy’s Turbulent Course Over 2022. Above all, it was the year of inflation.
“The cost of living soared all over the world in 2022. Pandemic price pressures, dismissed as transitory, turned out to be enduring with Russia’s war in Ukraine causing a fresh spike in food and energy costs. In June alone, inflation was mentioned in more than 250,000 news stories on the Bloomberg Terminal.”
“Bumpy 2023 for markets as central banks face high inflation and low growth.
“Driving in a straight line is relatively easy, but going around a corner requires greater skill. For central bankers, 2022 would seem like a straight road, given what could come in 2023. The risk of policy error is rising.”
“Here’s what could tip the global economy into recession in 2023.
““It is likely that the world economy will face recession next year as a result of the rises in interest rates in response to higher inflation,” Kay Daniel Neufeld, director and head of forecasting at the Center for Economics and Business Research, said this week.”
https://edition.cnn.com/2022/12/29/business/global-economy-2023-recession/index.html
“Central banks buy gold at fastest pace in 55 years; Analysts are pinning China and Russia as big buyers.
“Data compiled by the World Gold Council (WGC), an industry-funded group, has shown demand for the precious metal has outstripped any annual amount in the past 55 years. Last month’s estimates are also far larger than central banks’ official reported figures…”
https://financialpost.com/commodities/mining/central-banks-buy-gold-fastest-pace-55-years
“Fed reverse repo facility hits record $2.554 trillion.
“The New York Fed said that its reverse repo facility took in $2.554 trillion in cash from money market funds and other eligible financial firms, besting the prior high water mark seen on Sept. 30, when inflows totaled $2.426 trillion… The reverse repo facility takes in cash from eligible financial firms in what is a de facto loan from the Fed.”
https://www.reuters.com/markets/us/fed-reverse-repo-facility-hits-record-2554-trillion-2022-12-30/
“Funding strains emerge as banks build wholesale borrowings.
“Wholesale borrowing by banks has been shooting up as a deposit surge in 2020 and 2021 has started to reverse. Systemwide wholesale funding levels remain considerably lower than before the pandemic, but analysts say the data could indicate pockets of acute stress.”
“As the UK falls into a recession that could soon swallow Europe, this town offers clues on England’s cost-of-living nightmare…
“Nowhere is the UK’s cost-of-living crisis more keenly felt than in Burnley, which is experiencing the highest rates of inflation in the UK… While the country’s inflation rate sits at 10.7 per cent, Burnley’s inflation rate hit 11.7 per cent last quarter, according to the Centre for Cities thinktank.”
“Rail strikes ‘cost UK hospitality sector £1.5bn in December alone’.
“The rail strikes have cost bars, pubs, restaurants and hotels in the UK at least £1.5bn in December alone and – coupled with the cost of living crisis – will result in a “huge swathe of businesses and jobs lost”, industry bodies have warned.”
https://www.theguardian.com/business/2022/dec/30/rail-strikes-cost-uk-hospitality-sector
“Farmers appeal for fair prices to avoid shortages.
“Soft fruit, vegetables and pork produced locally will follow eggs as the next food items to be rationed, Scotland’s farming union has said… The rising cost of energy, wages, fuel and animal feed have all added to pressure on the bottom line for farmers and crofters.”
https://www.thetimes.co.uk/article/farmers-appeal-for-fair-prices-to-avoid-shortages-kmlb906rp
“Lützerath: How Germany’s energy crisis reignited coal…
“Lützerath has been occupied by protesters since 2020, when plans emerged to demolish the village and dig up the brown coal — or lignite — beneath it. Since the end of World War II, around 300 towns in Germany have been demolished for lignite mining, causing more than 120,000 people to be resettled.”
https://www.dw.com/en/l%C3%BCtzerath-how-germanys-energy-crisis-reignited-coal/a-64203214
“Europe’s energy sacrifices: the winter test of resolve…
““It is good that we are saving energy and we have to keep on saving energy,” Ursula von der Leyen, European Commission president, said in a speech this month as she warned that next year could be even harder than the last.”
https://www.ft.com/content/6e08003e-5de0-4707-93c3-43b64480443e
“European Bonds Plagued by Inflation Set for Record Annual Loss.
“European bonds tumbled, extending their worst year on record, as signs of persistent inflation rekindled concern over how much further the central bank will have to raise interest rates… The ECB is also expected to start shrinking its balance sheet in March…”
“Bank of Japan makes unscheduled bond purchases for third straight day.
“The Bank of Japan continued a run of unscheduled purchases of government bonds in an attempt to control a surge in yields caused by speculators betting it will pivot away from its ultra-loose monetary policy.”
https://www.ft.com/content/e6013acc-e17c-468f-a5b7-012f22525b24
“South Korea plans to raise its electricity rates by an unprecedented amount next year as the state-run utility faces a record loss from sky-high fuel costs.
“Electricity prices will be increased by 13.1 won per kilowatt-hour (1 US cent) for the first three months of 2023, according to a statement Friday from Korea Electric Power Corp.”
“South Korea chip output falls most since financial crisis.
“South Korea’s semiconductor production last month fell by the highest rate since the global financial crisis, weighing on the nation’s industrial output and pointing to a further cooling of overseas demand for tech components as the world economy slows. Chip production shrank for a fourth straight month, falling 15 percent from a year earlier…”
https://www.taipeitimes.com/News/biz/archives/2022/12/30/2003791650
“China Factory Activity Worsens in December as Covid Spreads.
“China’s manufacturing activity contracted at a steeper pace in December as the country suddenly reversed its Covid Zero policy and the virus swept through major cities, causing people to stay home and businesses to shut… High-frequency data suggested that economic activity was pushed off a cliff…”
https://www.bloomberg.com/news/articles/2022-12-31/china-dec-manufacturing-pmi-47-est-47-8
“Hong Kong Exports Drop Most in Almost 7 Decades on Global Slump.
“Hong Kong’s exports plummeted in November by the most in nearly seven decades as a slump in China’s economy and global demand worsened, making the road to recovery even tougher for the financial hub. Overseas shipments plunged 24.1% last month from a year earlier…”
“Indian economy confronting strong global headwinds amid global recessionary risks: RBI.
“The Reserve Bank of India (RBI) on 29 December released the 26th issue of the Financial Stability Report (FSR) and said that with the global economy facing formidable headwinds with recessionary risks looming large, India is confronted with strong global headwinds.”
“Prices Rose and Protests Convulsed South Asia in 2022.
“2022 was a tumultuous year for South Asia. Unprecedented protests and prolonged political and economic crises convulsed the region.
“Several countries witnessed leadership changes and there was even an attempt on the life of a former prime minister.”
https://thediplomat.com/2022/12/prices-rose-and-protests-convulsed-south-asia-in-2022/
“Worst year for Pakistan’s economy and businesses.
“The major victims of the economic recession in 2022 were the textile industry and its allied sectors; agriculture, import material-based industries and automobiles. All of this has led to a fear of major unemployment in the country.”
https://tribune.com.pk/story/2393391/worst-year-for-pakistans-economy-and-businesses
“Over 100 arrested as Gwadar unrest grows (Balochistan, Pakistan)…
“The police have rounded up some 100 protesters in the last four days after tensions erupted in the district after months of peaceful protests for basic rights… Maulana Hidayatur Rehman, who is leading the protests, said people were simply asking for their basic rights like water, electricity and jobs…”
https://www.dawn.com/news/1728969
“Fresh Unrest In Iran As Memorial Gatherings Turn Into Protests.
“Memorial services for several protesters killed by security forces turned into new protests in several Iranian cities Thursday, including in the capital Tehran. “This blossom killed in the bud was an offering to the homeland”, a large crowd of protesters who gathered around Hamidreza Rouhi’s grave at Behesht-e Zahra Cemetery in the south of Tehran chanted…”
https://www.iranintl.com/en/202212295075
“Iran central bank governor resigns amid currency crisis.
“The replacement comes after weeks-long sharp declines in the value of the rial, and one day after it dropped to all-time lows, with one US dollar sold for 440,000 rials. The troubled market had triggered the removal of the central bank’s foreign exchange chief only two weeks ago.”
https://www.al-monitor.com/originals/2022/12/iran-central-bank-governor-resigns-amid-currency-crisis
“Arab region registers world’s highest unemployment rate, UN survey find…
“Meanwhile, poverty measured against national lines also surged, affecting 130 million people in Arab countries, revealed the Survey. Excluding Libya and Gulf Cooperation Council countries, more than one-third of the region’s population is affected.”
https://news.un.org/en/story/2022/12/1132112
“Debt spiral engulfs Turkish voters months before polls.
“The growing pile of debt notices covering the Ankara district mayor’s desk hint at the scale of the economic crisis facing Turkish voters months before crucial presidential polls… Turkish media say the total number of debt recovery cases rose by about 1.5 million in a year and exceeded 24 million at the height of the crisis in August.”
https://uk.finance.yahoo.com/news/debt-spiral-engulfs-turkish-voters-060020037.html
“Lebanon in 2023: A demographic bomb on verge of exploding…
“According to Dr. Faour, Lebanon has experienced unheard-of economic, social, and demographic changes since 2019. By the end of 2022, the situation had reached a comprehensive economic and financial collapse, followed by the failure to approve a plan for an economic and financial recovery.”
https://www.lbcgroup.tv/news/d/press/679956/lebanon-in-2023-a-demographic-bomb-on-verge-of-exp/en
“Tunisia Hikes Rates As Inflation, Policy Tensions Surge.
“Tunisia hiked rates Friday, as the cash-strapped North African nation grapples with surging inflation and growing public anger over spending cuts… concerns have been building about the nation’s ability to withstand more economic shocks.”
“It was a tough Christmas for most Africans.
“From historical food inflation rates, low purchasing power, hiked fares, power cuts, and unpaid Christmas bonuses to civil war, and food insecurity, Africa had one of its worst Christmas moments in recent years.”
https://finance.yahoo.com/news/tough-christmas-most-africans-120500921.html
“At the start of 2022, sub-Saharan Africa was reeling from Covid-19. The year is ending with many nations staring down another crisis: unsustainable debt.
“It’s been in the making for years with long-term loans more than doubling to $636 billion in the decade to 2021 — that exceeds the combined gross domestic product of more than 40 African nations.”
“Brazil arrests four people for alleged coup attempt in Bolsonaro riots.
“Brazilian police said they had arrested at least four people and carried out nationwide raids on Thursday in investigations into an alleged coup attempt during riots by supporters of defeated far-right President Jair Bolsonaro.”
“Protesters in Bolivia attacked buildings, torched cars and blocked highways over arrest of right-wing regional governor on a ‘terrorism’ charge.
“As night fell on Friday, protesters in parts of Santa Cruz torched cars and tires and hurled fireworks toward police forces, who used tear gas to try to disperse the crowds.”
You can read the previous “Economic” thread here. I’ll be back on Monday with a “Climate” thread.
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Happy New Year!!!
One guy with an internet connection does a better job than all the news networks combined. Thanks and good luck for 2023.
Aw, shucks – thanks so much, Rob. Hope 2023 brings you good things. For readers who may not know, Rob writes the excellent Un-Denial blog:
https://un-denial.com/