“Silicon Valley Bank scrambles to reassure clients after 60% stock wipe-out.
“The funding winter is a fallout of a relentless increase in borrowing costs by the Federal Reserve over the last year as well as elevated inflation.
“The SVB turmoil raised investors’ concerns about broader risks in the sector…
“Thursday’s slump evaporated over $80 billion in stock market value from the 18 banks making up the S&P 500 banks index, including a $22 billion drop in the value of JPMorgan.”
“Some of Silicon Valley Bank’s customers are struggling to transfer funds out of their bank accounts, numerous sources tell TechCrunch.
“The seeming wave of attempted withdrawals comes after SVB announced yesterday that it lost $1.8 billion in the sale of U.S. treasuries and mortgage-backed securities that it had invested in, owing to rising interest rates.”
https://techcrunch.com/2023/03/09/silicon-valley-back-withdrawal-issues/
“Crypto bank Silvergate announces liquidation amid sector turmoil…
“The California-based bank had warned last week it was “less than well capitalised” after depositors demanding their money back, adding that it was evaluating its ability to operate as a going concern.”
“Credit Suisse shares have dropped to a new record low after US regulators questioned the beleaguered bank about its accounts.
“The stock fell more than 5pc to as little as 2.51 Swiss francs in Zurich after the lender announced that publication of its annual report would be delayed following a call late on Wednesday evening from the Securities and Exchange Commission (SEC).”
“U.S. Shale Boom Shows Signs of Peaking as Big Oil Wells Disappear…
“Frackers are hitting fewer big gushers in the Permian Basin, America’s busiest oil patch, the latest sign they have drained their catalog of good wells. Shale companies’ biggest and best wells are producing less oil, according to data reviewed by The Wall Street Journal.”
“Pioneer CEO: The Shale Boom Is Over…
““The aggressive growth era of US shale is over,” Scott Sheffield, the chief executive of Pioneer Natural Resources, the top shale independent in the country, told the FT in January. “The shale model definitely is no longer a swing producer.””
https://oilprice.com/Energy/Crude-Oil/The-Shale-Boom-Is-Over.html
“[US] Corporate borrowers squeezed by rising rates.
“Corporate debt rose from roughly $16.3 trillion just before the pandemic hit to about $19.8 trillion near the end of 2022, according to the Federal Reserve. Economists and analysts expect some kind of recession to hit the U.S. economy in 2023 and the severity of it could weigh heavily on both large and small companies as they repay debt.”
“Credit Card Nation: How we went from record savings to record debt in just two years [US]…
“Schlesinger says stimulus checks, lockdown and pay raises had people in really strong financial shape, with the highest personal savings rate on record. “But then 2022 starts and inflation doesn’t go down,” says Schlesinger. “And then we saw many people plow through those pandemic era savings, left with nothing.””
“FCA urges UK banks to consider cutting mortgage payments for those struggling.
“The UK regulator has told banks to consider slashing mortgage payments for borrowers struggling with rising bills, as it revealed that 356,000 homeowners could be at risk of missing their monthly instalments by summer 2024.”
“EDF extends operating life of two UK nuclear plants by two years…
“The plants, which have a combined capacity of 2.3 gigawatts and provide around 5% of Britain’s power supply, had been slated for closure in 2024, but EDF said last year it would review whether there was a case to keep them open beyond that.”
https://uk.finance.yahoo.com/news/edf-energy-extend-lifetime-two-145303061.html
“Crack in French nuclear reactor pipe highlights maintenance issues for state-run EDF’s aging plants.
“French energy group EDF has reported discovering a significant new crack in a cooling pipe at a nuclear power plant on the Channel coast, in the latest such incident to plague the energy sector.”
“Europe Loses Another Smelter as Energy Crisis Leaves Deep Scars.
“Another European aluminum smelter is closing, in a fresh sign of the damage wrought by an energy crisis that’s hammered the region’s industrial economy and crimped supplies of critical raw materials.”
“U.S. Steel: Taking Advantage Of EU Steel Production That Is On The Verge Of Imploding.
“While European and to a lesser extent Asian countries are grappling with high energy and other input prices for steel production, U.S. Steel enjoys the benefits of North America’s affordable energy. EU steel production is currently near 25-year lows…”
“EU unveils green subsidy scheme to fend off competition from US.
“Brussels will make it easier for EU member states to match subsidies being offered by the US in an effort to keep European companies in crucial sectors from moving operations outside the bloc. Under plans that will be announced on Thursday, the subsidies will target several green industries.”
https://www.ft.com/content/a7438c5a-41da-42ab-845f-25176205a5c7
“Investors Bet on Europe’s Inflation Matching US in Echo of Financial Crisis.
“The risk of persistently high inflation is starting to upend some of the basic assumptions in markets. One of those longstanding truths is that US inflation is generally higher than Europe. That’s been the case for decades… But now, market-based measures suggest that traders are starting to alter some of those beliefs.”
“Russia’s energy conflict with Europe is turning attritional.
“Russia’s war against Ukraine has many fronts, not least energy. And as with the Kremlin’s plans for a swift victory in Ukraine, both sides in the energy conflict have seen their dreams of rapid triumph collapse amid grinding and attritional trench warfare.”
https://www.ft.com/content/cde8696f-3c48-4f40-8599-79626b903591
“Workers striking in protest against proposed changes to France’s pension system continued to block fuel deliveries and reduce electricity production at several sites on Thursday.
“Power supply was reduced by 8.2 gigawatts (GW), or 13% of overall production, across some of the country’s nuclear, thermal and hydropower sites due to the strike, EDF data showed.”
“Massive hospital disruptions across South Africa as health workers continue strike.
“On Wednesday, Nehawu continued its strike for a third day, with patients across South Africa struggling to access hospitals, surgeries and dispensaries. Appointments are being cancelled and staff intimidated.”
“Tunisia’s president to dissolve local authorities in latest power grab.
“Tunisia’s authoritarian president said he would dissolve the country’s elected local authorities in a further dismantling of democratic institutions, just as doubts over a critical $1.9bn IMF loan deal deepened its economic crisis.”
https://www.ft.com/content/bfa4158d-b3b6-4980-8e2f-94f6e31abfeb
“Egypt’s Crisis Redux Stokes Debt Distress, Devaluation Fears.
“Credit-default swaps, used to insure against non-payment, have risen by the most worldwide after Ecuador in the past month and signs of distress are flashing in the bond market again. Derivatives are showing the risk of another currency devaluation ahead.”
“Egypt is selling citizenship: How economic turmoil has left the Arab nation desperate.
“To address its foreign currency shortages, Egypt is offering citizenship to foreign investors on certain conditions. The Arab country has been reeling from an economic crisis that pushed its annual inflation to 26.5 per cent in January. It is expected to rise further.”
“Israeli mass protests against reforms block roads and airport.
“Protesters in Israel have blocked roads and attempted to stop the prime minister flying out the country amid nationwide demonstrations against controversial judicial reforms. Vehicles obstructed access roads to Ben Gurion airport, from where Benjamin Netanyahu later took off for Rome.”
https://www.bbc.co.uk/news/world-middle-east-64866881
“Lebanon’s commercial banks do not have the liquidity to return money to depositors who retain their savings in the country’s bank accounts, the head of the Lebanese banking association said on Wednesday.
““These numbers show beyond any doubt that there is no liquidity with the banks”, the Association of the Banks of Lebanon’s Fadi Khalaf said in a monthly report.”
“Honda to Shut Production Plant in Pakistan Due to Financial Crisis.
“Honda Atlas Cars, which assembles Honda automobiles in Pakistan, on Wednesday announced that it would not be able to continue with production and will be shutting down its plant for the rest of this month, media reports said.”
“India fears a torrid summer of long power cuts.
“India has just witnessed its hottest February in the last 122 years [ie since records began] —and the country’s weather department thinks it’s only going to get worse. But between drastic weather conditions and fear of brutal heat waves lies another worry: hours-long power cuts.”
https://qz.com/india-fears-a-torrid-summer-of-long-power-cuts-1850206535
“Bolivia sells dollars to public as reserves dwindle.
“The Central Bank of Bolivia announced it would sell US dollars to individuals at its own offices and through state-owned Banco Unión, as a deepening crisis threatens to break the country’s exchange rate peg.”
“The Panama Canal Authority has forecasted a decline in cargo volume for the 2023 fiscal year…
“…the institution expects only 500 million tonnes of goods to pass through the waterway, which is 10.3 million tonnes less than the previous forecast. The decrease in volume is due in part to the war in Ukraine, concerns about a global recession, and reduced commercial activity in China.”
https://www.porttechnology.org/news/panama-shrinking-volumes-threaten-economic-crisis/
“Growing numbers of Chinese citizens set their sights on the US – via the deadly Darién Gap…
“The march through the Darién Gap of Haitians, Venezuelans and Cubans fleeing economic collapse and political persecution has been well-documented. But far less is known about the growing number of Chinese citizens trekking through the jungles between Colombia and Panama.”
“Recession Risk Looms Large as Bond Markets Price in Steeper Rate Hikes Globally.
“Forget about interest-rate cuts. The bond market is now pricing in a steeper path for monetary tightening by central banks around the world, raising the danger of recessions as policymakers struggle to bring inflation under control.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Ah yes the steel and aluminium factories in Europe !
I grew up in the smoke of the blast furnaces in Ijmuiden. I was proud of it, it meant progress and prosperity. When I was 17, I went there to work on the cold rolling mill in shifts during the holidays. It paid well. And so your love for steel, the smell of the coke ovens, the heat and fire is born. Truly archetypal basic experiences that I would never have wanted to miss just like sailing on cargo ships and living in port cities. Then, in all the decades I worked as a documentarian, I closely followed the collapse of the steel and aluminium industries in the EU, the UK the GDR, Poland and other former Soviet satellite states.
The valley of the Fensch in France and Wallonie where steel would always flow….
So no. It led to tragedy and misery in those regions, including many ‘ guest workers’ from everywhere and nowhere. Corus… British steel, Tata, all an accumulation of ‘ collapse’ with a lot of state aid just thrown away.
In the aluminim the same, a hopeless struggle that in the Netherlands has only led to postponement by ridiculously low energy gas deals !
Well and now goes the final ‘swan song’ in an ultimate attempt to get the EU to produce ‘ green’. Totally hopeless mission. Tatasteel demands 1 billion in subsidies in the Netherlands ! To get things ‘ green’. Really ridiculous.
Well meanwhile in China and India…..see how ‘clean’ they are going to produce there with their second-rate coke and when the ‘pollution’ shore will turn the ship around…. But then again, maybe the kids there are proud of their ‘ future’ like me who knows 🙂
Just deposit 1 billion for a ‘ green future’ of one Tata steel plant! They are smart over there in India!
https://www.rtlnieuws.nl/economie/bedrijven/artikel/5369332/tata-steel-wil-1-miljard-subsidie-voor-schone-staalproductie
“I grew up in the smoke of the blast furnaces in Ijmuiden. I was proud of it, it meant progress and prosperity.” You’ve led quite a life, Zip!
Your comment made me think of the intro to the very good comedy, “The Full Monty”, set in Sheffield after the collapse of the steel industry; If you haven’t seen it, I highly recommend it:
https://www.youtube.com/watch?v=yf9ucX2vOto
Holland is different from Sheffield! I lived on the coast just below IJmuiden ( 6 miles) in what used to be the richest village in the Netherlands: Bloemendaal, where the ex-colonials had their villas.
And on Sundays I cycled with my father, who was a socialist at heart, to the ‘ factories’, the blast furnaces, the harbours, took the ferry and marvelled at the division of the world… because that was his theme 🙂 He had a truly heartfelt awe for those who provided social welfare there daily….
Ah yes Sheffield and the demise of the coal pits , the run-down villages and the fight in against Thatcherism 🙂 Another dramatic period in your history…. the transition to nuclear power stations which are now being kept open by EDF for a few more years. They can’t come up with much more either.
I grew up amid the millionaires and we hate them! But we didn’t go ‘full monty’ to give them a hard time