12th August 2020 Today’s Round-Up of Economic News

We entered this pandemic in a position of weakness with 0% growth in Q4 of 2019. To add to our woes, Brexit is still unresolved.

UK economic output shrank by 20.4% in the second quarter of 2020, the worst quarterly slump on record, pushing the country into the deepest recession of any major global economy.

“This crash in GDP in the April-June period is the worst since quarterly records began in 1955 and follows a 2.2% contraction in the first quarter. Industries most exposed to government lockdown measures to contain the coronavirus pandemic — services, production and construction — saw record drops.

“”Today’s figures confirm that hard times are here,” UK finance minister Rishi Sunak said in a statement. “Hundreds of thousands of people have already lost their jobs, and sadly in the coming months many more will.”

https://edition.cnn.com/2020/08/12/economy/uk-economy-gdp/index.html


“…we have not yet seen the full economic damage of the lockdowns. Even if Europe’s economies quickly restore their full pre-pandemic activities, the losses run up during the downturn will leave scars

“…the collapse may have irretrievably damaged the balance sheets of many private companies.”

https://www.ft.com/content/8a73f56b-fe55-447d-ad88-3d2ee85da88f


“President Trump’s executive order to boost weekly aid for unemployed Americans is meant to alleviate “acute financial distress” for families across the country.

“However, restrictions on that extra assistance — a $400-a-week increase in benefits — means it likely won’t be available to a big chunk of unemployed US workers.”

https://www.cnbc.com/2020/08/11/at-least-1-million-people-may-not-get-trumps-400-unemployment-boost.html


Another North Texas Food Bank food distribution at Fair Park drew a big crowd… As the cars formed a mile-long queue through the parking lots, each told a story of a family in crisis…

““If it wasn’t for this, we’d probably go hungry,” shared Richard Archer.”

https://dfw.cbslocal.com/2020/08/11/car-line-stretches-mile-fair-park-food-giveaway/


Like millions of other people in Florida and across the country, Tucker is a victim of an unemployment system unable to cope with the record number of claims that have swept the country during the coronavirus pandemic.

“In Florida the situation is particularly catastrophic.”

https://www.theguardian.com/world/2020/aug/11/florida-unemployment-coronavirus-benefits-system


The United States’ fumbling response to the pandemic and its dithering over a new aid package is casting doubt on its economic prospects and making it one of the chief risks to a global rebound.

“After springtime restrictions, many U.S. states prematurely declared victory over the virus and began to reopen their economies…

“Confirmed infections are rising in most states, and many businesses have had to scale back or even cancel plans to reopen.”

https://abcnews.go.com/US/wireStory/virus-surge-makes-us-weak-link-global-economic-72300871


“While many today are focused on WeChat and TikTok, and others are fretting over the US elections and the unrelenting tit-for-tat provocations, the longer view is even more disturbing…

“…we’re long past debating whether a cold war with China is coming. It’s here, and by some accounts Washington is preparing for a hot war.”

https://www.scmp.com/comment/opinion/article/3096780/forget-cold-war-and-tiktok-wechat-bans-us-preparing-hot-war-china


As a US ally and part of a loose coalition of Western economies, Australia, so dependent on China as a customer for our resources and a producer of manufactured goods, has more at stake than most in the impacts of the pandemic and the geopolitical tensions on global trade flows and the shift in focus from the efficiency of “just in time” sourcing to supply chain resilience and national security.”

https://www.smh.com.au/business/companies/australia-s-economy-in-crosshairs-as-pandemic-threatens-global-supply-chains-20200812-p55kya.html


Kuwait is preparing to force as many as 360,000 foreign workers to leave the country, according to local press reports, in the latest sign of how the Gulf expatriate labor force is bearing the brunt of an economic slowdown caused by low oil prices and the coronavirus crisis…

“…the Gulf has suffered badly from the coronavirus pandemic, with businesses pulling down the shutters and sending their staff home.”

https://www.forbes.com/sites/dominicdudley/2020/08/11/kuwait-deport-gulf-expat-exodus/#188fcb66542f


Turkey has also spent well more than it should, but it has done so in way that hid the costs deep in its financial system, leaving them invisible to all but the most committed financial sleuths.

“There’s relatively little sovereign debt—the type usually funded by international bonds—to be found, though its overall value is ticking up somewhat. The big borrowing has been by the country’s banks, including both private and state-owned banks—and that is where Turkey’s trouble has built up.”

https://foreignpolicy.com/2020/08/11/erdogan-economic-disaster-turkey-banks-debt-dollars/


Through past political instability, Lebanese always somehow kept their way of life unshaken. This time, it seems to have been wiped away. Over the last 10 months, Lebanese have had to deal with a dizzying series of events that have upended an artificial sense of security…

“After forging ahead through Lebanon’s crises, the 29-year-old Boumelhem feels her resolve might finally be broken.”

https://www.japantimes.co.jp/news/2020/08/12/world/myriad-crises-lebanese-broken/#.XzOhWShKjIU


Venezuelans are steadily losing access to cheap basic services from water to cooking gas that have helped them survive economic crisis, forcing many to find creative solutions… from wood-burning stoves and long walks to find cellular coverage to improvised pipes for siphoning water off a mountain.

“Others simply do without.”

https://uk.reuters.com/article/venezuela-services/priced-out-of-services-venezuelans-turn-creative-for-water-and-gas-idUKL1N2F819L


Angry residents in Peru’s Andean and Amazon regions have attacked three mining and oil sector firms in the last week, two of which were forced to halt operations after deadly clashes, as a second wave of COVID-19 infections hits the country.

“The main reason: demand for economic aid and healthcare support during the pandemic.”

https://uk.reuters.com/article/uk-peru-oil-protests/peru-unrest-flares-as-pandemic-second-wave-hits-with-resources-firms-in-focus-idUKKCN2571HV?il=0


“…in a world where deflationary forces are gaining steam, and pressure on GDP growth will likely persist for some time. Lower yields on long-term government bonds seem the logical conclusion, as this 40 year bull market continues and the curve flattens towards 0%.”

https://seekingalpha.com/article/4367542-coming-depression-part-ii-age-of-deflation


“…deflation remains far more likely [than inflation]. Only once in the 46 years that Cornerstone tracked was deflation a greater specter than it is today, and that was for a brief interlude during the global financial crisis.”

https://theprint.in/economy/why-deflation-is-a-bigger-risk-for-the-global-economy-than-inflation/480042/


Around the world, young people armed with new degrees, diplomas and professional qualifications are struggling to enter the workforce as the pandemic pushes the global economy into recession.

“COVID-19 has thwarted hopes of landing first jobs – important for jumpstarting careers – as employers cut back graduate recruiting plans or even revoke job offers.”

https://abcnews.go.com/Business/wireStory/pandemic-wrecks-global-class-2020s-hopes-job-72277339


You can read the previous ‘Economic’ thread here and visit my Patreon page here.

11th August 2020 Today’s Round-Up of Economic News

“Between the US-China trade war, Brexit, the coronavirus and global recession, the world has entered a dangerous fusion of risk. If global leaders are lucky, the illusion of perpetual policy plenty can last long enough for sustainable recovery to finally take hold. If policymakers are unlucky, the show could come apart, with ugly consequences. There is no turning back.

Global capitalism is reaching its limits and our future prosperity is on the line. Hopefully, there are still tenable backup options just in case. If not, we are all in trouble.”

https://www.scmp.com/comment/opinion/article/3096703/signs-recovery-are-welcome-global-economy-still-course-crash


“Apartment rent payments have largely held up in August although several property executives warned that weaknesses were emerging and that a failure to extend federal aid programmes could prove calamitous.

As of August 6, 79.3 per cent of US households made a full or partial rent payment… property executives noted that the proportion of renters who used credit cards to make their payments was increasing, one sign of growing financial strain. They also argued that the federal aid had kept many families afloat as jobless claims have surged due to the pandemic, and should be extended.”

https://www.ft.com/content/94d4c81f-1d35-4487-93ee-888550a3380d


Corporate bankruptcies — more than any other factor — stand to halt the stock market’s steady run higher, Mohamed El-Erian, chief economic advisor at Allianz, said on Monday

“…many companies still face major insolvency risks, and a chain reaction of corporate defaults could revive a bearish slump, the famed economist said.”

https://markets.businessinsider.com/news/stocks/stock-market-outlook-bankruptcies-biggest-risk-prices-recession-el-erian-2020-8-1029488709#


Struggling UK companies have warned they will be pushed closer to collapse by the resumption of business rates collection by councils after months of forbearance.

“A number of councils have started chasing businesses for unpaid rates bills, as well as residential tenants for council tax, without which they say they may struggle to deliver their services.”

https://www.ft.com/content/e692bc6d-942f-439f-a4ff-ca8cb3d5e464


Company payrolls have fallen by 730,000 since the start of the coronavirus crisis lockdown as the UK braces for a feared acceleration in unemployment.

“Data released by the Office for National Statistics (ONS) showed a leap of 81,000 last month alone, despite continuing support for employers via government loan vehicles and the furlough scheme.”

https://news.sky.com/story/coronavirus-730-000-have-lost-their-job-since-lockdown-began-12046850


UK businesses are in more debt than at any point during the past 13 years, as struggling firms continue to borrow a “staggering amount” to survive the economic impacts of the coronavirus pandemic.

“Business lending is expected to grow by more than 14% in 2020, according to economic forecasters at the EY Item Club — significantly more than the 2% increase seen in 2019.”

https://uk.finance.yahoo.com/news/coronavirus-uk-business-debt-levels-highest-in-13-years-075104583.html


Belarusian opposition leader Svetlana Tikhanouskaya has joined her children in neighbouring Lithuania after two nights of clashes following the contested re-election of President Alexander Lukashenko

“Helmeted police fired tear gas, rubber bullets and stun grenades and used batons to disperse thousands of people in Minsk in a second night of violence.”

https://uk.reuters.com/article/uk-belarus-election/belarusian-opposition-leader-tikhanouskaya-safe-in-lithuania-after-clashes-idUKKCN2570SO


There are only few options for the development of the current economic situation in Turkey.

“One of the options is for Turkey to gain financial support to be able to deal with the capital outflow, whilst stopping the dollarization of the economy. Otherwise, it will face a set of sharp devaluation of the Lira, inflation, and probably a state default.”

https://communalnews.com/is-turkey-on-the-verge-of-economic-collapse/


Lebanon is facing the genuine prospect of economic collapse.

“Since the financial crisis officially began in October 2019 the price on many basic food items, including meat, sugar and bread have increased by a third. Now the Lebanese pound has lost 80 per cent of its value. According to an estimate from Lebanon’s social affairs minister, 75 per cent of Lebanese are facing poverty. This is how revolutions start.”

https://www.spectator.co.uk/article/lebanon-s-existential-crisis


“We’ve had plenty of economic shocks since coronavirus struck. Jobs figures, GDP stats and companies going bust. But if there’s one measure to show the state we all find ourselves in then look no further than the Saudi Aramco results which came out yesterday.

“The company’s income dropped by 73% over April, May and June this year as the world’s oil consumption ground to a halt.”

https://www.standard.co.uk/business/saudi-aramco-s-results-economic-shock-this-year-a4521201.html


Stressed loans totalling ₹5.7 trillion may not be eligible for the proposed one-time debt recast aimed at saving borrowers affected by the coronavirus outbreak, three Indian bankers said.

“These are so-called special mention accounts (SMAs) where repayments were already late by over 30 days on 1 March, Reserve Bank of India’s (RBI’s) cut-off date to be eligible for the new scheme.”

https://www.livemint.com/industry/banking/banks-in-a-spot-as-most-bad-loans-out-of-recast-ambit-11597108251779.html


China’s banking industry earnings slumped the most in at least a decade in the second quarter as bad loans climbed and the government told lenders to sacrifice $211 billion in profit this year to alleviate the worst economic slump in 40 years…

“The industry’s soured loans climbed for the sixth straight quarter, to 2.7 trillion yuan, the highest in more than a decade.”

https://news.bloomberglaw.com/banking-law/china-bank-profits-slump-after-state-order-to-bail-out-economy


When it comes to buying food for daily meals, Chinese consumers are increasingly being forced to swallow unaffordable prices for two staple products – so-called flying pigs and rocketing eggs. Supply-side problems have sent the price of pork surging this year…

“Last month, pork prices rose by 85.7 per cent on-year and expanded 10.3 per cent from June, new data from the National Bureau of Statistics showed. The price of pork has more than doubled in the first seven months of the year from the same period in 2019.”

https://www.scmp.com/economy/china-economy/article/3096777/chinese-consumers-grapple-flying-pigs-and-rocketing-eggs


Singapore’s record recession was deeper than first thought in the second quarter, data showed on Tuesday, signalling a lengthy path to recovery as the coronavirus pandemic dealt a major blow to Asia’s trade-reliant economies…

““The painful truth is this – we are not returning to a pre-COVID world. Recovery will be some time yet,” said trade minister Chan Chun Sing.”

https://uk.reuters.com/article/uk-singapore-economy-gdp/singapore-warns-of-slow-recovery-as-virus-slams-asias-exporters-idUKKCN257003


Indonesia’s economy contracted for the first time since the aftermath of the Asian Financial Crisis more than two decades ago, as movement restrictions to contain the coronavirus outbreak took a toll on Southeast Asia’s largest economy.”

https://www.bloomberg.com/news/articles/2020-08-05/indonesia-s-gdp-shrinks-5-32-first-contraction-in-two-decades


Beyond the health and economic crises of Covid-19, the global pandemic has the potential to cause political instability and undermine state security across the Pacific, the region’s chief diplomat has warned.

“Dame Meg Taylor, secretary general of the Pacific Islands Forum, said the region’s economies were struggling with the virus-induced shocks, and a prolonged crisis could worsen existing problems of hunger, poor healthcare, and state fragility.”

https://www.theguardian.com/world/2020/aug/11/pacific-states-face-instability-hunger-and-slow-road-to-covid-recovery-dame-meg-taylor


Bolivia’s government said on Monday it had ordered police and military to protect key installations and the transport of medical oxygen after clashes broke out over protests and roadblocks by opposition supporters demanding a quick election

“The standoff threatens to convulse the landlocked country and revive memories of last year’s deadly clashes following a disputed election that led to the resignation of Morales, dozens of people being killed and buildings being set on fire.”

https://uk.reuters.com/article/uk-bolivia-election-clashes/bolivia-protests-rattle-political-truce-as-military-mobilized-idUKKCN2562QO


“In an interview by Successful Farming from his office in Rome, Italy, Ambassador Tom raised an alarm that he’s calling the “crisis after the crisis:”

“…warning that the number of food-insecure people – they feed 130 million people a day today – could double in the next year.”

https://www.agriculture.com/news/business/crisis-after-the-crisi-of-world-hunger-looms


The COVID-19 pandemic is making the world worse in lots of ways. One of the more unexpected ways is that the already difficult task of ending modern slavery is even more challenging…. desperate workers will be more likely to accept risky job offers or high-interest loans to survive, only to end up trapped in exploitative situations.

“Companies, anxious to ramp up production after months of lost income, may be more willing to hire the cheapest labor available, including from unethical recruiters, and to skip labor inspections and other oversight measures—thereby enabling human traffickers to thrive.”

https://foreignpolicy.com/2020/08/10/as-the-global-economy-melts-down-human-trafficking-is-booming/


The main driver of the sharp rise in international migration is a very severe contraction in the developing economies around the world.

“From India to Latin America and passing through Africa… The UN estimates that close to half a billion people will be or have already been pushed below the poverty line.”

https://www.arabnews.com/node/1716931


You can read the previous ‘Economic’ thread here and visit my Patreon page here.

10th August 2020 Today’s Round-Up of Economic News

Forests have been razed at an alarming rate across Asia, Africa and Latin America during the coronavirus pandemic, according to new research, as environmental law enforcement has been sidelined and villagers have turned to logging for income in parts of the tropical world.

“Since the start of the coronavirus pandemic, forest loss alerts have increased by 77 per cent compared to the average from 2017-2019, according to data from Global Land Analysis and Discovery…

““In some parts of the world there has been a collapse in the local economy and people are turning to the land around them to find what they need to survive,” said Mike Barrett, executive director of science and conservation at WWF-UK.

““And, far more sinister than that are those parts of the world where we’re seeing deliberate attempts to use the cover of the pandemic to deforest.””

https://www.ft.com/content/b72e3969-522c-4e83-b431-c0b498754b2d


Although the US has added more than 9 million jobs over the past three months, many readers have told CNN that they are being offered only part-time shifts.

“Others say their employers have cut their pay. In July alone, when the economy added a total of 1.8 million jobs, the number of people working part-time rose by 803,000 to 24 million.”

https://edition.cnn.com/2020/08/08/economy/part-time-work-coronavirus/index.html


Trump said he would use unspent funds from the Cares act to continue unemployment payments to millions of newly unemployed Americans at a rate of $400 per week – a $200 drop from the earlier $600 payment, defer payroll tax through the end of 2020, defer student loans and interest, and extend the federal eviction moratorium.”

https://www.theguardian.com/us-news/2020/aug/08/trump-signs-orders-for-coronavirus-relief-with-lower-level-of-extra-aid-for-jobless


After seeing food banks struggle to meet demand once the pandemic hit and the economy tanked, the Washington state Department of Agriculture began preparing to buy and stockpile tons of food

“The new stockpile is driven by two major factors: A nearly doubling in demand for food assistance across the state and a national food supply chain that is bogged down amid an overwhelming surge in demand.”

https://www.seattletimes.com/seattle-news/homeless/from-peanut-butter-to-applesauce-washington-state-stockpiles-tons-of-food-for-the-need-ahead/


As many as a third of UK employers expect to cut jobs by October, according to a survey that suggests that the economic impact of the coronavirus pandemic will accelerate in the coming weeks…

“The poll suggests the UK is likely to experience a wave of job losses across the economy as the government starts to withdraw the coronavirus job retention scheme.”

https://www.theguardian.com/business/2020/aug/10/one-in-three-uk-firms-expect-to-cut-jobs-by-autumn-poll-finds


Thousands of people took part in a rally against coronavirus restrictions in Stuttgart, Germany, on Saturday.

“Participants gathered in the Lower Schlossgarten in the city center, carrying umbrellas, displaying banners that said “With mask – without me” and chanting “freedom, freedom,” Deutsche Welle reported.”

https://www.tasnimnews.com/en/news/2020/08/09/2323793/thousands-protest-against-coronavirus-restrictions-in-germany-s-stuttgart-video


Phalanxes of Belarusian police in full riot gear violently dispersed thousands of demonstrators who poured into the streets to challenge the early count from Sunday’s presidential election indicating the longtime authoritarian leader won a sixth term by a landslide.

“Hundreds of people were detained, according to a leading rights group.”

https://www.marketwatch.com/story/police-protesters-clash-after-belarus-presidential-election-2020-08-09


Police in Beirut fired teargas and rubber bullets at thousands of people who had turned out to demand accountability for one of the biggest non-nuclear explosions the world has seen.

“They also shot live ammunition in the air, in an attempt to disperse the furious crowds.”

https://www.theguardian.com/world/2020/aug/08/beirut-explosion-protests-lebanon-answers-and-justice


Police and municipal inspectors clashed on Sunday with demonstrators as they cleared a protest site near Prime Minister Benjamin Netanyahu’s official residence for a fifth time.

“The encampment was part of the ongoing “black flag” anti-corruption protests against Netanyahu…”

https://www.timesofisrael.com/clashes-as-police-clear-protest-encampment-near-netanyahu-residence-for-5th-time/


Iran and its allies are under significant pressure financially due to the strain US sanctions have imposed on Tehran… Iran’s militants are reportedly not getting their salaries and benefits, making it extremely difficult for them to continue fighting…

Revenues from drug trafficking can be a significant boost to Hezbollah, the Syrian regime and Iran.”

https://www.arabnews.com/node/1716966


Hundreds joined anti-government protests across Thailand on Sunday following a day of rallies in the country’s capital where protesters were calling for new elections and constitional reforms

“Demonstrations have returned to Thailand’s streets, calling for the removal of the government of 2014 coup leader Prayuth Chan-ocha after a disputed election last year.”

https://www.reuters.com/article/us-thailand-protests/thai-anti-government-protesters-hold-rallies-outside-bangkok-idUSKCN2550J6


Demonstrators in Bolivia have dynamited Andean passes, scattered boulders across highways and dug trenches along rural roads to protest against repeated delays to a rerun of last October’s deeply contentious election, which led to the downfall of the long-serving leftwing president Evo Morales…

“…[bringing] the country to a standstill for six days.”

https://www.theguardian.com/world/2020/aug/09/bolivia-protesters-bring-country-to-standstill-over-election-delays-covid-19-evo-morales


At least three indigenous people from Peru’s Amazon region were killed and 17 other residents and police injured in a conflict with Canadian energy company PetroTal Corp

“The clash between local tribesmen and police occurred in the early hours of Sunday near the oil field after about 70 residents equipped with spears arrived at the scene demanding a stop to production at Lot 95…”

https://www.reuters.com/article/us-peru-oil-protests/three-amazon-tribesmen-in-peru-killed-during-protest-against-oil-firm-idUSKCN2550XJ


The prospect of starvation looms for carriage horses and other animals normally used in Morocco’s tourist mecca, since visitors vanished during the coronavirus pandemic…. hundreds of Morocco’s carriage horses and donkeys are threatened amid the collapsing tourism industry.

“They are among the estimated 200 million horses, donkeys, camels and elephants worldwide providing various livelihoods for over a half-billion people.”

https://www.trtworld.com/life/carriage-horses-face-starvation-as-morocco-tourism-collapses-38769


Currency depreciation, inflation, negative growth, businesses closed: Algeria’s economy has been battered by the one-two punch of the coronavirus crisis and tumbling oil revenues.

“And unless remedial action is taken on a massive scale, a slide into foreign debt will become inevitable, economists warn.”

https://english.aawsat.com/home/article/2438061/algeria-economy-rocked-virus-crisis-falling-oil-revenues


Zimbabwe will “implode” unless its citizens are allowed to speak out

“…protests were called over an economic crisis that has led to a currency collapse and triple-digit inflation, and evidence of rampant corruption that this week triggered US sanctions on a leading supporter of Mr Mnangagwa.”

https://www.ft.com/content/90741fca-dc41-4b21-9622-ea50ce972972


The world’s five largest oil companies collectively cut the value of their assets by nearly $50 billion in the second quarter, and slashed production rates as the coronavirus pandemic caused a drastic fall in fuel prices and demand

“Fuel demand at one point was down by more than 30% worldwide, and still remains below pre-pandemic levels.”

https://www.reuters.com/article/us-global-oil-majors/oil-giants-production-cuts-come-to-1-million-bpd-as-they-post-massive-writedowns-idUSKCN255063


As government support schemes are withdrawn and borrowers start to come up short on their loans, banks may have to sacrifice their prized role as the good guys.

“So far, they have been willing conduits for trillions of government support and largely sympathetic to customers in distress, but that will change.”

https://www.ft.com/content/b0b241d9-7c94-4b91-b727-d39245005d07


This is what de-growth looks like. Until it snowballs and becomes something a whole lot worse.

“Eric Knight of fund manager Knight Vinke argues that reinvestment risk may turn out to be the single most destructive risk now facing long-term investors — the risk that investments providing a good return today cannot be replaced by equally attractive investments tomorrow when the existing ones reach maturity.”

https://www.ft.com/content/b7288334-49e4-4bb7-aeb8-400daa7877db


Trade tensions, cyber attacks and climate risks from heatwaves to hurricanes are all exposing companies to increasingly costly interruptions

“…companies can on average expect a disruption lasting more than a month to hit them every 3.7 years, costing more than 40 per cent of a year’s profits every decade.”

https://www.ft.com/content/a4544767-f93d-48b0-bde4-ad8a582922ab


You can read the previous ‘Economic’ thread here and visit my Patreon page here.

7th August 2020 Today’s Round-Up of Economic News

The Next Global Depression Is Coming and Optimism Won’t Slow It Down… Depressions don’t just generate ugly stats and send buyers and sellers into hibernation. They change the way we live…

“This coronavirus has ravaged every major economy in the world. Its impact is felt everywhere…

“Social safety nets are now being tested as never before. Some will break. Health care systems, particularly in poorer countries, are already buckling under the strain. As they struggle to cope with the human toll of this slowdown, governments will default on debt.

“For all these reasons, middle-income and developing countries are especially vulnerable, but the debt burdens and likelihood of defaults will pressure the entire global financial system.”

https://time.com/5876606/economic-depression-coronavirus/


Another 1.18 million people in the US filed for unemployment benefits last week as economists worry the expiration of enhanced unemployment benefits will lead to a sharp drop-off in household spending and set back the US economy’s near-term recovery.”

https://www.theguardian.com/business/2020/aug/06/us-unemployment-august-benefits-expire-coronavirus


President Trump said Thursday he plans to sign sweeping executive orders “tomorrow afternoon” if Democrats won’t agree to a new coronavirus stimulus bill.”

https://nypost.com/2020/08/06/trump-threatens-executive-order-on-covid-19-stimulus-bill/


“Throughout the second half of the year, the US economy is expected to be operating alongside the nation’s wide-spread epidemic, racial tensions and domestic factionalism. Potential social risks brought about by the three issues will further hinder the economic recovery of the US…

“As the world’s largest economic entity, the US recession will directly drive down the growth rate of the global economy. Since the US has maintained close economic and trade ties with most of the major economies around the world, its recession will lead to a drastic plunge in global demand, further causing contractions in trade and investment of those economies.”

https://www.globaltimes.cn/content/1197003.shtml


President Donald Trump signed an executive order on Thursday directing some federal agencies to prioritize purchasing certain drugs and medical materials when made in the United States

“It comes after an initial scramble within the United States to obtain medical supplies and equipment at the start of the coronavirus pandemic, much of which has been produced or sourced from abroad.”

https://edition.cnn.com/2020/08/06/politics/donald-trump-medical-manufacturing-executive-order/index.html


Ottawa will impose retaliatory tariffs on U.S. goods in response to President Donald Trump’s decision to restore a 10 per cent tariff on Canadian aluminum imports.

“Prime Minister Justin Trudeau and Deputy Prime Minister Chrystia Freeland announced the measures Thursday evening hours after Trump said he would impose the tariffs…”

https://www.cbc.ca/news/business/trump-aluminum-tariff-1.5677036


U.S. President Donald Trump has unveiled sweeping bans on U.S. transactions with the Chinese owners of messaging app WeChat and video-sharing app TikTok, escalating a high-stakes confrontation with Beijing over the future of the global tech industry

““This is the rupture in the digital world between the U.S. and China,” said James Lewis, a technology expert with Washington-based think tank Center for Strategic and International Studies. “Absolutely, China will retaliate.””

https://uk.reuters.com/article/uk-usa-wechat-trump/trump-issues-bans-on-chinas-tiktok-wechat-stoking-tension-with-beijing-idUKKCN25304F


Britain is facing the most severe recession since the aftermath of the First World War, according to the Bank of England…

“It warned the economy will recover more slowly than hoped, with around 1.2million workers still facing losing their jobs.”

https://www.dailymail.co.uk/news/article-8601891/Worst-recession-100-years-not-300-years-feared-Bank-England-predicts.html


Britain’s most vulnerable firms are facing a £50billion cash-flow crisis which will fuel a surge in insolvencies and a fresh wave of job losses, the Bank of England warned…

“…worse is to come, as firms which have racked up huge debts or were already weak when the crisis hit are pushed over the edge.”

https://www.thisismoney.co.uk/money/news/article-8601307/Britain-faces-tsunami-insolvencies-amid-50bn-cash-flow-crisis.html


Lebanese security forces fired teargas at demonstrators in Beirut, as rage over the country’s leadership grew following a massive explosion that laid waste to large parts of the capital on Tuesday…

“Protesters had gathered near parliament… Shock has turned to anger in the city…”

https://www.theguardian.com/world/2020/aug/07/beirut-explosion-lebanon-security-forces-fire-tear-gas-at-protesters-as-anger-mounts-over-blast


Two dozen democracy advocates in Hong Kong were charged on Thursday with taking part in an annual vigil honoring the victims of the 1989 Tiananmen Square protests, the latest sign of the aggressive clampdown on dissent in the semiautonomous Chinese territory

“The charges came on the heels of a politically fraught week as the authorities in Beijing and Hong Kong invoked a sweeping new national security law to crack down on the opposition.”

https://www.nytimes.com/2020/08/06/world/asia/hong-kong-tiananmen-protest.html


Baoshang Bank, the centrepiece of Chinese oligarch Xiao Jianhua’s Tomorrow Group, will be forced into bankruptcy

“Baoshang Bank was put under the Chinese government’s ward in May 2019, part of an onerous process by the financial and banking regulators to clean it up, recapitalise and resuscitate it to avoid a whole scale collapse in China’s financial system.”

https://www.scmp.com/business/china-business/article/3096443/chinas-central-bank-declares-baoshang-bank-bankrupt-it


“As the months-long pandemic is taking a heavy toll on South Korea, the economy has slumped into a recession, delivering the worst performance in over two decades…. Economic lockdowns in major import countries were the biggest drag on the growth of Asia’s fourth-largest economy as it marked a 13.6 percent plunge in exports. This is the sharpest year-on-year decline in exports since 1974…”

Photos of crisis fatigue in South Korea:

http://www.koreatimes.co.kr/www/nation/2020/08/510_294026.html


Japan’s benchmark bond, once a landmark for negative rates, is holding above 0% even as the world’s pile of negative-yielding debt surges. A perception that the Bank of Japan won’t cut rates, limited foreign demand…

The amount of bonds with negative yields globally has jumped over 40% this year to almost $16 trillion.”

https://www.bloomberg.com/news/articles/2020-08-06/japan-s-bonds-hold-above-0-even-as-more-debt-goes-negative


A collapse in real yields — the return that bond investors can expect once inflation is taken into account — is rippling through global financial markets and driving record rallies in assets from gold to technology stocks, investors say…

““There isn’t an interest rate anywhere in the world that looks attractive once you take inflation into account,” said David Vickers, a multi-asset portfolio manager at Russell Investments. “That makes just about everything else seem more appealing.””

https://www.ft.com/content/2895520f-5d23-4add-a431-7cc954fb78a4


Gold was headed for its best week since the global financial crisis as investors weighed up the latest potential flare-up in tensions between Washington and Beijing…

“The precious metal, which often serves as a haven in times of uncertainty, is on track for its strongest weekly rise since November 2008.”

https://www.ft.com/content/4f81a8f9-39b7-47fc-a1f8-8f5479a3f96e


Glencore became the first major mining company to scrap its dividend, saying on Thursday the economic outlook was too uncertain because of the coronavirus pandemic and that it would prioritise cutting debt instead…

“Glencore ended up posting a net loss of $2.6bn – the same amount it had been due to pay in dividends.”

https://www.aljazeera.com/ajimpact/glencore-major-mining-company-scrap-dividend-200806133717788.html


“High-profile bankruptcies, refinancing deals, and drastic cost-cutting involving the likes of Brooks Brothers, JCPenney, Hertz, Neiman Marcus, Ford, and GM are testament to the financial distress wrought by the Covid-19 pandemic.

“But a less visible crisis deep within supply chains is destabilizing small and medium-sized enterprises and could add to the woes of the global economy.”

https://hbr.org/2020/08/a-financial-crisis-is-looming-for-smaller-suppliers


This ‘dire’ economic situation ‘deserves to be called a depression — a pandemic depression’

Don’t confuse ‘a rebound for a recovery’, say economists Carmen Reinhart and Vincent Reinhart.”

https://www.marketwatch.com/story/coronavirus-collapse-is-nothing-less-than-a-depression-a-pandemic-depression-warn-top-economists-11596728170


You can read the previous ‘Economic’ thread here and visit my Patreon page here.

6th August 2020 Today’s Round-Up of Economic News

Beirut Gov. Massan Abboud told Agence France-Presse that at least 300,000 residents have been made homeless as a result of the explosion, and damage to the city is tallied so far at $3 billion.

“Lebanon’s Director of Islamic Relief, Nidali Ali, told the BBC that “catastrophic” shortages of food are expected over the next two months.”

https://www.forbes.com/sites/lisettevoytko/2020/08/05/300000-made-homeless-by-beirut-explosion-catastrophic-food-shortages-predicted/#40ea893f7aa2


The US economy is suffering an even bigger shock than after the 9/11 terror attacks or the 2008 financial crisis.

“What will happen next for America’s economic scene? It appears a depression may be here because of the pandemic and poor policy decisions.”

https://www.arabnews.com/node/1715091


America’s fragile jobs market recovery, after just two months of improvement, appears to be losing steam as Covid-19 infections rise and federal funds for businesses begin to dry up…

“Although most economists say the pace of the recovery slowed in July, some say it reversed.”

https://edition.cnn.com/2020/08/05/economy/july-jobs-report-preview/index.html


Losing a $600 boost to weekly unemployment benefits puts 6 million people at risk of not being able to pay their bills this month, a new survey found.

“That financial hardship comes at a time when jobs are hard to find, lawmakers are at an impasse over continuing federal jobless aid and eviction moratoriums have expired in around 30 states.

“A federal moratorium ended in late July.”

https://www.cnbc.com/2020/08/05/the-600-unemployment-boost-leaves-6-million-without-enough-cash.html


The Fed’s [huge bond-buying spree], coupled with heightened investor demand in the face of a dimming economic outlook, have helped to push Treasury yields to all-time lows, but the coming wave of issuance of longer-dated debt could alter this dynamic, strategists say.

“Moreover, they warn that the borrowing estimates put forward by the Treasury — an additional $2.2tn by the end of the year — could swell even further if yet another fiscal stimulus package beyond the one currently under debate is delivered.”

https://www.ft.com/content/c1d0847f-1f9a-4304-8413-5d64501c2ef4


The UK is drowning in private debt. At least £6bn of household debt – and probably much more – has been racked up by 4.6m people during the pandemic. More than one in eight people on furlough have defaulted on a payment… There will be no “V-shaped recovery” – and recognising the scale of over-indebtedness is key to understanding why.

UK households and businesses were already over-indebted before the pandemic… This made our economy extremely fragile – even more so than before the crash of 2008.”

https://www.theguardian.com/commentisfree/2020/aug/05/uk-private-debt-crisis-recession-coronavirus


UK recruiters are reporting the steepest rise in the number of people seeking work since the depths of the financial crisis, as companies dismiss staff who had previously been furloughed.

“The increase in the supply of temporary staff in July was the biggest in 23 years of records, according to the Recruitment & Employment Confederation.”

https://www.ft.com/content/2a056fbc-7e63-4b9e-bb0d-2045836a4b03


The coronavirus pandemic will cost nearly three million travel and tourism jobs in the UK because of the collapse of the industry, according to the World Travel & Tourism Council.

“Bosses described the job losses as ‘heartbreaking’ and warned that positions were ‘disappearing by the day’.”

https://www.dailymail.co.uk/news/article-8592619/Covid-cost-THREE-MILLION-UK-travel-tourism-jobs-bosses-warn.html


The holiday island of Cyprus had hoped British tourists would give a badly-needed boost to its pandemic-hit tourism sector, but only a trickle of sun-seekers have arrived.

“2020 is a lost season,” said beach bar manager Giannis Aggelopoulos in the resort town of Larnaca…”

https://www.channelnewsasia.com/news/world/covid-19-britain-tourists-cyprus-larnaca-travel-restrictions-12992484


“We need at least 100 charter flights a day,” says Plamen Kopchev, head of the hotel owners’ association in Bulgaria’s Black Sea resort of Sunny Beach, laid waste by the coronavirus pandemic.

“But the trouble is, only a fraction of those flights have been arriving, a disaster for a resort Kopchev explains “is made for mass tourism”…”

https://www.arabnews.com/node/1715306/business-economy


China’s 290 million migrant workers have been the hardest hit by the coronavirus having already been under pressure from the US-China trade war.

“One worker, Rao Dequn, has worked for 25 years in Chinese factories making goods for overseas markets, but will lose her job in less than a month.”

https://www.scmp.com/economy/china-economy/article/3096248/chinas-migrant-workers-facing-end-era-worlds-factories-winds


China’s efforts to curb predatory lending to the country’s small and medium-sized enterprises could harm the sector rather than helping it by cutting off access to crucial finance, analysts have warned.

“Multiple shadow banking lenders have told the Financial Times they would stop servicing medium to high-risk borrowers after the Supreme Court announced a plan last month to “significantly” cut the interest rate shadow banks could charge.”

https://www.afr.com/world/asia/fears-for-china-smes-after-crackdown-on-shadow-banking-20200806-p55j9m


I look forward to the inevitable Netflix movie about Wirecard:

A German businessman responsible for one of Wirecard’s biggest sources of stated profits has been reported dead a month after Philippine authorities announced he was under investigation over the payments company’s collapse

“Wirecard collapsed in June after saying €1.9bn purportedly held in escrow accounts in the Philippines did not exist.”

https://www.ft.com/content/a22f372e-87bc-4cfd-8caf-052a98dc873f


Five months since the coronavirus outbreak began in Africa, the impact is clearly visible across the continent, with massive job losses, indefinite closure of businesses and increasing poverty rates

“…some businesses were already grappling with various challenges before the advent of coronavirus, the pandemic has worsened the situation…”

http://global.chinadaily.com.cn/a/202008/05/WS5f2aaee8a31083481725e733.html


“The growing number of uneducated youths is a significant burden on the economy as this demographic is likely to struggle amidst an economic downturn. To worsen the situation, most of the approximately 40 million SMEs in the country, where young people find employment, have also been badly hit by the pandemic and necessary restrictions to business activity.

To summarise, Nigeria is in a precarious position.”

https://www.theafricareport.com/36412/nigeria-what-is-most-important-is-we-put-millions-of-young-people-in-jobs-and-quickly/


Poverty in Argentina is set to rise sharply this year due to the impact of the coronavirus pandemic, but the rate was already climbing amid a recession since 2018 and high inflation…

“Experts say half the country’s population could be plunged into poverty this year.”

https://uk.finance.yahoo.com/news/argentines-battle-rising-poverty-hunger-120546938.html


Expiring emergency payments to millions of low-paid Brazilians and the likely restoration of growth-choking austerity measures, as unemployment rises, risk torpedoing growing optimism that Latin America’s economy may not tank as much as feared.”

https://uk.reuters.com/article/uk-brazil-economy-risks-analysis/brazil-unemployment-end-of-emergency-aid-threaten-economic-recovery-idUKKCN25126I


“Against masks and lockdowns: Wave of anti-coronavirus protests swept the world

“Over the weekend in Berlin, about 20 thousand people violated quarantine: they took off their masks and marched against government measures.

“A similar thing happened in several cities in the Netherlands, and in Serbia a couple of weeks ago demonstrators pelted the police with stones during a rally against the curfew.”

https://112.international/society/against-masks-and-lockdowns-wave-of-anti-coronavirus-protests-swept-the-world-53650.html


“…this depression arrived at a time when the economic fundamentals in many countries—including many of the world’s poorest—were already weakening. In part as a result of this prior instability, more sovereign borrowers have been downgraded by rating agencies this year than in any year since 1980.

“Corporate downgrades are on a similar trajectory, which bodes ill for governments, since private-sector mistakes often become public-sector obligations. As a result, even those states that prudently manage their resources might find themselves underwater…

The shadow of this crisis will be long and dark…”

https://www.foreignaffairs.com/articles/united-states/2020-08-06/coronavirus-depression-global-economy


You can read the previous ‘Economic’ thread here and visit my Patreon page here.

5th August 2020 Today’s Round-Up of Economic News

Gold hit $2,000 an ounce on Tuesday, a milestone that caps a record-breaking rally driven by depressed bond yields and fears over the impact of Covid-19 on the global economy

““The root cause [behind the rally] is uncertainty,” said George Cheveley, a fund manager at Ninety One.”

https://www.ft.com/content/566dd8f7-7efe-45b6-8a44-b20f7f0f283e


The 10-year yield hit a low of 0.513% in North American morning trade, the second-lowest yield ever recorded at that maturity.

“The lowest was hit on March 9 as the coronavirus pandemic was gathering steam in the United States, prior to the Federal Reserve’s intervention in financial markets.”

https://uk.reuters.com/article/usa-bonds-idUKL1N2F60YM


Congressional leaders and White House officials warned on Tuesday that they were still far away from a deal on more economic stimulus

“Democrats have called for a $3.4tn stimulus package, but Republicans have said they would only support a smaller deal. Mr Mnuchin said on Tuesday: “We’re not going anything close to $3.4tn.””

https://www.ft.com/content/575ed375-b48a-4012-8acf-fb7ac3e68a65


Even if Congress passes a new rescue package with more unemployment benefits, the cumulative effect of the ongoing economic catastrophe may finally trigger a credit card default deluge, a new survey reveals.

“More than half of consumers with credit card debt said they will need more bailout money to make minimum payments over the next three months.”

https://www.bloomberg.com/news/articles/2020-08-05/more-bailout-cash-may-just-delay-wave-of-credit-card-defaults


The U.K. plans to adopt its full no-deal Brexit border plan to avoid traffic chaos when it completes its split from the EU in 2021, even if the two sides sign a free-trade agreement

“Britain is bracing for an economic shock when the Brexit transition period finishes at the end of the year, as commerce with its largest trading partner becomes subject to new red tape and paperwork.”

https://www.bloomberg.com/news/articles/2020-08-04/u-k-to-use-no-deal-brexit-border-plan-fearing-traffic-chaos


Britain’s banks took a gloomier view than almost all their European peers in their second quarter earnings, as coronavirus fears, Brexit and low interest rates caused them to bake tougher “worst-case” scenarios into their risk models…

“The British economy is forecast to shrink 11.5% this year, while the euro area contracts 9.1%, according to OECD forecasts in June.”

https://uk.reuters.com/article/us-health-coronavirus-britain-banks/britains-banks-brace-for-22-billion-loan-losses-as-outlook-darkens-idUKKCN2510NG


Hundreds of thousands of small UK businesses are unable to access emergency funding as banks take weeks to process applications or turn down customers – sometimes without giving reasons why.

“Almost 250,000 of the 1.4 million applications for Government-supported “bounce back” loans were either still being processed or had been declined as of Aug 2. 

https://www.telegraph.co.uk/money/consumer-affairs/small-businesses-brink-banks-delay-250000-bounce-back-loans/


Société Générale has culled its top ranks, announcing the departure of two deputy chief executives, after the French bank slumped to its worst quarter for more than a decade.

“France’s third-largest bank on Monday revealed a surprise €1.26bn loss for the three months to June…”

https://www.ft.com/content/37483951-8a8a-4bba-9bb4-8169045c33c9


The Spanish tourism sector has lost 27.3 million visitors and €28.4 billion in revenue in the first half of the year compared with the same period last year.

“And the new outbreaks, coupled with travel advisories issued by several countries, suggest that things will not improve significantly during the second half of the year.”

https://english.elpais.com/economy_and_business/2020-08-05/covid-19-crisis-devastates-spains-tourism-industry.html


The coronavirus pandemic is deepening the pain for Japan’s regional lenders, heightening concerns that a potential wave of business closures will test policymakers’ ability to avert a damaging banking-sector crisis.

“Many central government and bank officials see the risk of a crisis emerging in the next few months, when more struggling firms could go under and hit regional banks already weakened by a shrinking domestic economy and years of ultra-low interest rates.”

https://uk.reuters.com/article/us-health-coronavirus-japan-banks-insigh/japan-short-of-rescue-plans-for-regional-lenders-hit-by-pandemic-idUKKCN250317


A fresh mass outbreak of Covid-19 could increase the risks of an external debt crisis among emerging and developing economies which are vulnerable to sudden capital outflows, the IMF warned on Tuesday.

“The economic impact of the pandemic has been especially acute for countries that rely on oil, tourism or remittances from migrant workers.”

https://www.ft.com/content/4da1ab53-bb92-4c87-895a-f827a517a627


Philippine GDP shrank an annualized 0.7% in the first three months, worse than the preliminary 0.2% year-on-year contraction reported last May

“The downward adjustments, which are regularly done to reflect late data arrivals, increase the likelihood of a bigger economic collapse…”

https://www.philstar.com/business/2020/08/05/2033090/philippine-economy-shrinks-faster-initially-thought-q1


Indonesia’s economy contracted for the first time in over two decades in the second quarter as efforts to contain the new coronavirus dealt a blow to consumer demand and business activity in Southeast Asia’s largest economy.

“Gross domestic product shrank by a bigger than expected 5.32% in the April-June period from a year ago…”

https://www.bangkokpost.com/business/1963199/indonesias-economy-contracts-for-first-time-since-financial-crisis


A fire broke out at an Iranian industrial area near Tehran on Tuesday, Iran’s state TV reported, the latest in a string of fires and explosions, some of which have hit sensitive sites

“There have been several other incidents at facilities in the past weeks, including a fire at the underground Natanz nuclear facility last month which caused significant damage…”

https://www.arabnews.com/node/1714531/middle-east


A massive explosion rocked downtown Beirut on Tuesday… It was stunning even for a city that has been shaken by civil war, suicide bombings and bombardment by Israel.

“Even for a country already on the brink of collapse.

Lebanon is hurtling toward a tipping point at an alarming speed, driven by financial ruin, collapsing institutions, hyperinflation and rapidly rising poverty – with a pandemic on top of that.”

https://eu.usatoday.com/story/news/world/2020/08/04/even-before-beirut-explosion-lebanon-teetered-toward-ruin/3291081001/


“…half a million children are hungry in Beirut…

The explosion destroyed the country’s largest port – which will now make it harder to import food and other aid – as well as silos that contain the national grain reserve

“About 85 per cent of the country’s cereals are stored in the facility, according to trading company Mena Commodities.”

https://www.abc.net.au/triplej/programs/hack/beirut-explosion-blew-up-wheat-port-in-city-of-hungry-children/12526984


China’s New Export Orders Index rose to 48.4 in July but much more is needed for the country’s manufacturing industry to close the gap, and more new export orders are needed to stage a sustainable recovery for the global container shipping industry…

WTO has estimated that global trade declined by 18.5% in Q2 (compared with Q2 last year).”

https://www.hellenicshippingnews.com/shipping-number-of-the-week-new-export-orders-rise-to-48-4-in-july-is-not-enough-to-stage-a-recovery/


Over the next five years investment in container port capacity is expected to tumble following coronavirus-induced global trade slowdowns.”

https://afloat.ie/port-news/port-and-shipping-news/item/47181-container-port-investment-hit-by-covid-19-slowdown


You can read the previous ‘Economic’ thread here and visit my Patreon page here.