17th April 2021 Today’s Round-Up of Economic News

The economy is running on a stimulus-fuelled caffeine high. What will happen when it wears off? [Caffeine is putting it mildly!]

“…One-time spending has rarely been the catalyst for long-term growth. Fiscal and monetary policy that now serve as irresistible tailwinds could soon turn into headwinds.”


Biggest Banks Can’t Keep Up With U.S. Money Printing: Bank of America, Citigroup and other retail-facing banks are all experiencing declining loan growth as deposits surge…

“… the magnitude of the government response to the Covid-19 crisis is causing some difficulties at the largest U.S. financial institutions.”


High street’s woes hit UK’s private landlords… the coronavirus crisis has emerged as a profound threat for …private commercial property investors, who range from local entrepreneurs and self-employed professionals… to wealthy millionaires on national newspaper rich lists.

The pandemic has pushed many tenants to the brink and forced painful discussions about who will take the hit as incomes in retail plummet, leaving behind a swelling pile of rent arrears.”


New research reveals… more than 440 firms in banking and financial services have relocated part of their business, moved employees or set up new entities in the EU following Brexit.

Banks have moved or plan to move more than £900bn in assets to the EU, equivalent to 10 per cent of the entire UK banking system. Insurance firms and asset managers have transferred more than £100bn.”


The euro zone economy will recover at a much weaker rate this quarter than expected only a month ago, according to a Reuters poll of economists who cited a slower vaccine rollout as the biggest risk over the next three months.”


Germany warns of lasting economic damage as Covid cases spin out of control:

Germany’s decentralised health system that seemed to work so well at the start of the pandemic is now a slow-moving disaster a year on.”


“…the European speculative-grade default rates are being pencilled in at 4.7% according to Moody’s and 5.3% according to S&P.

However, Moody’s baseline forecast estimates a sharp decrease in default rates by the end of this year. We think this is too optimistic… we expect default rates to stay elevated for longer.”


Inequality virus’ threatens ‘catastrophe for all’ unless crisis can be overcome together… said UN Deputy Secretary-General, Amina Mohammed.

Developing countries have faced “ballooning debt burdens” and constrained fiscal budget, and high borrowing costs, with a limited ability to respond to the pandemic, Ms. Mohammed explained.

The diverging world that we are hurtling towards is a catastrophe for all of us”, she spelled out.”


Emerging markets fall behind their developed-world counterparts:

While developed-world markets look forward to a recovery, emerging market stocks have tumbled as foreign investors pull out cash.”


Unwelcome Inflation Heats Up in Mexico, Brazil, and as Always in Argentina:

“Brazil’s central bank struck back with shock-and-awe rate hike. Mexico’s central bank faces tough spot after big hit to economy. Argentina’s inflation exceeds 42%.”


Cuba’s economic woes may fuel America’s next migrant crisis:

“The pandemic hammered Cuba’s tourist industry, which suffered a 75% decline – a loss of roughly $2.5 billion… These external shocks hit an economy already weakened by the decline in cheap oil from crisis-stricken Venezuela… Since Cuba imports most of its food, the island nation has experienced a food crisis.”


‘It’s a day off’: wiretaps show Mediterranean migrants were left to die

“The conversation, recorded by prosecutors in Sicily investigating sea rescue charities for alleged complicity in people-smuggling, lays bare the indifference of individuals on the Libyan side to the plight of migrants and to international law.”


Hunger Deepens in West Africa, With 31 Million People at Risk

“More than 31 million people in the region are expected to be food insecure and unable to feed themselves between June and August, a period when food is scarce ahead of the next harvest, the United Nations organization said in a statement Friday.”


‘It is really bad’: Nigerians go hungry as food inflation soars

““Not long after Nigeria’s statistics agency revealed that one in three people in the continent’s largest economy were unemployed, on Thursday it announced that food inflation has accelerated at the highest pace in 15 years, compounding the misery of many households.”


U.N. agencies said Friday that tens of thousands of Nigerians are fleeing deadly attacks by armed groups and the continuing clashes between the rebels and national forces in the country’s troubled northeastern Borno state

The incidents mark the latest violence in the Lake Chad basin area which in recent years has uprooted some 3.3 million people…”


US warns pandemic could push some Middle East countries to collapse: By the end of 2021, the number of people in the MENA region living beneath the poverty line will reach 192 million, the World Bank’s estimates.

“”As a result, some states are likely to experience destabilizing conditions that may push them close to collapse,” the intelligence report said.”


The price of iftar [Ramadan evening meal after fast] is soaring across much of the Arab world… food prices have steadily risen in recent months…

“…in the Arab world, where most countries are net importers of food, particularly staples such as grains, the effects are particularly severe.”


Syria devalued the official price of its local currency on Thursday, two days after the central bank governor was sacked, state media reported.

The decision came as the Syrian pound has continued to crash in recent months in the war-torn country, hitting record lows and throwing more Syrians into poverty.


“With food and fuel, Hezbollah braces for the worst in Lebanon collapse…

Lebanon’s Hezbollah has made preparations for an all-out collapse of the fracturing state, issuing ration cards for food, importing medicine and readying storage for fuel from its patron Iran, three sources familiar with the plans told Reuters.”


A recovering world economy that depends upon the synchronized, smooth running of global supply chains is now being slammed by what has turned out to be synchronized disruptions

The pressures on supply chains are increasing and global disruptions are likely to only get worse as summer approaches and the economy booms. Disruptions have converged at the same time in three important pillars of the global economy – shipping, computer chips, and plastics.”


Fans of bubble tea may soon find themselves unable to enjoy the beverage as the US reportedly faces what may be a months-long shortage of boba

“…a backlog at US ports occurring as a result of the ongoing pandemic means that the ingredients used to make the popular drink… aren’t becoming available fast enough to keep up with the demand.”


The spread of the arbitrage economy – Troubles rise as companies exploit the opaque gaps between regulations

“The debacle at Archegos bears a remarkable resemblance to the near-collapse of the Long-Term Capital Management hedge fund in 1998, which foundered because of overleveraged positions in risky derivative instruments. Despite frenetic regulatory activity since then this experience raises the worrying possibility that we are in a vicious circle where financial crises breed rafts of new regulations which in turn breed more financial arbitrage which precipitate further, bigger crises.”


Nasdaq Is Entering A Mighty Bubble: A moving 18-month slope of the NASDAQ provides overwhelming evidence that the index has ascended far above its normal path.

If the NASDAQ pops, its bursting power is so strong that the aftermath can be comparable to that of the Great Depression.”


Bloated Central Bank Balance Sheets: There are good reasons to believe that there will be no return to the pre-QE configuration of balance sheets.”


Global markets have got central banks over a barrel.

Both bond and stock markets have become so dependent on ultra-loose monetary policy, so hyper-sensitive to any perceived possibility of a change in conditions, that there is little monetary authorities can now do to avert the dreaded taper tantrum if they threaten the status quo…

The new normal is a world with lots of QE and rock-bottom interest rates. Anything else will cause ructions in stimulus-dependent markets.”

[This is not in any way “normal” and nor is it sustainable. This is hyper-financialisation, as the financial system keeps stretching and mutating in an ultimately doomed effort to offset growth constraints in the physical economy of goods and services. The elastic limit approaches.]


You can read the previous ‘Economic’ thread here. I’ll be back on Monday with a “Climate” thread.

If you found value in this content, please help me continue this work by becoming a patron of my work via patreon.com.

15th April 2021 Today’s Round-Up of Economic News

Loose monetary policy is today’s biggest market risk: Explosive growth in debt has severely curtailed central banks’ freedom of action

“There are no two ways about it, argues Jeremy Grantham: “The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble”.

“The co-founder of Boston-based-based fund manager GMO says: “Featuring extreme overvaluation, explosive price increases, frenzied issuance and hysterically speculative investor behaviour, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.””


The US budget deficit climbed to a record $1.7 trillion last month after stimulus spending in March lifted the shortfall.

“The government spent roughly $927 billion as the first half of the fiscal year came to a close, the Treasury Department said Monday. Much of the surge was linked to Democrats’ $1.9 trillion stimulus package…”


How are stimulus checks being spent? Two-thirds of recipients say they use them for groceries, monthly bills

“”For all the talk of revenge spending and pent-up demand for travel… just 13 percent of stimulus check recipients plan to spend the money on discretionary activities or nonessential items,” said one analyst.”


Continued US trade war with China could stoke inflation

“War is always inflationary; a war with our largest goods supplier would be an inflation nightmare.”


Big Beef: Australia’s cattle industry is in crisis thanks to trade war with China – as shoppers face a huge price spike at the supermarket checkouts.

“Low cattle supplies, higher prices, an appreciating Australian dollar and trade tensions with China continue to create headwinds for the national beef industry, an agribusiness banking specialist says.”


China’s Very Bad Bank: Inside the Huarong Debt Debacle

“Will the Chinese government stand behind $23.2 billion that Lai borrowed on overseas markets — or will international bond investors have to swallow losses? Are key state-owned enterprises like Huarong still too big to fail, as global finance has long assumed – or will these companies be allowed to stumble, just like anyone else?”


Surprise drop in Japan machinery orders stokes recovery fears:

“Japan’s core machinery orders unexpectedly fell the most in about a year in February, government data showed, dashing hopes for a pick-up in capital expenditure needed for a private sector-led recovery from the coronavirus-induced slump.”


Halifax: UK house prices near ‘pre-financial crash levels’… The lender said that the affordability of houses was “close to pre-financial crisis levels”, as house prices remained historically high at an average of £252,765.

“The difference between the 2007 financial crash and today, is that mortgage rates are considerably lower.”

[Better hope we can keep them low then!]


Austria, Spain follow Italy with long-dated debt sales: A 50-year bond sale from Austria on Tuesday will further test investor appetite for ultra-long dated debt after high demand for a similar sale from Italy last week, while Spain will sell 15-year paper.”


India’s banks fear second wave of defaults as curbs bite:

“Bankers fear the lockdown-like curbs, including curfews, travel restrictions and mall shutdowns, are likely to hurt borrowers, triggering a second wave of defaults. Without a repayment moratorium like the one announced by the RBI last year, the defaults are likely to pinch banks harder.”


Food parcels arrive in Brazil’s favelas as pandemic sparks wave of hunger:

“Brazil is one of the world’s most important agricultural producers, but millions of people in Latin America’s biggest country are struggling to put food on the table as the COVID-19 outbreak wreaks havoc on the economy.”


Argentine town bears scars of poverty as pandemic sharpens economic crisis:

“In a run-down part of Manzanares, on the outskirts of Buenos Aires, the scars of poverty are clear. People cook with firewood. Some have no electricity, gas or running water. Children play barefoot with old toys next to rudimentary homes.”


In Venezuela Bond Market, Gunmen and Bags of Cash Are Required:

“In what is perhaps the tiniest and almost certainly the most primitive bond market in the world, default isn’t the greatest risk that investors face.

Mugging is.”


‘My four children died’: Afghanistan’s young starve as Covid pushes families further into poverty

““The economic situation has deteriorated, which means parents can’t afford food. Fighting has also increased. Due to the pandemic, some health services in the provinces are limited, meaning that families have to travel long distances to see a doctor.””


NATO allies on Wednesday agreed to wind down their operations in Afghanistan, after President Joe Biden’s administration announced all US troops would leave the country by September 11.

“The US invaded Afghanistan in 2001 following the 9/11 attacks by jihadist organization al-Qaida, with other NATO countries also deploying military forces to the South Asian country.”


Archegos collapse ripples through banks’ lucrative hedge fund units

“…the collapse of Archegos, the family office of former hedge fund trader Bill Hwang, has underscored the risks banks are taking with these clients, even when their loans are secured by collateral.”


Greensill: the collapse threatens to kill off a form of financing that is vital to global economy

“…one major question getting less attention concerns the future of supply chain finance (SCF), an important tool in the financial arrangements between suppliers and their customers. Greensill was closely associated with this financing and has potentially rendered it unviable.”


Stagflationary forces are building, Roubini warns

“Make no mistake: inflation’s return would have severe economic and financial consequences. We would have gone from the “Great Moderation” to a new period of macro instability. The secular bull market in bonds would finally end, and rising nominal and real bond yields would make today’s debts unsustainable, crashing global equity markets.”


Unsustainable corporate and government debt racked up during the coronavirus pandemic is emerging as a major credit risk to the global economy and trade.

“Marsh, one of the world’s biggest insurance brokers, says its annual political risk map has tracked the largest ever increases in economic risk for 2021…”


Surging inflows into ETFs hit $1tn in record-breaking 12-month streak:

“A trillion dollars in new cash has surged into exchange traded funds over the past 12 months in a powerful demonstration of growing confidence in the global economy’s recovery from the coronavirus pandemic.”


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a “Climate” thread.

If you found value in this content, please help me continue this work by becoming a patron of my work via patreon.com.

13th April 2021 Today’s Round-Up of Economic News

Europe Is Heading Toward a New Financial Crisis …Adopting the single currency has yielded great benefits, from frictionless trade to improved global competitiveness. But the euro also obliged member states to relinquish the independent monetary policies that can help backstop national debts and financial systems.

“One result is that distress at banks presents a heightened threat to individual governments’ finances, and vice versa — the so-called “doom loop” that played out in spectacular fashion during the early 2010s, when the euro area nearly broke apart…

“At the end of February, Italian banks’ holdings of Italian government debt amounted to 124% of their capital and loss reserves, rendering them extremely vulnerable in the event of fiscal distress.”


Rome restaurateurs and other small-business owners clashed Monday with police for the second week in a row, demanding to be allowed to open after being shut down for much of the past year.

“Italy has been one of the hardest-hit nations over the course of the pandemic, with more than 114,000 deaths from COVID-19.”


Survival courses gain popularity in Spain since the onset of the coronavirus pandemic.

“It may seem like a strange hobby, but more and more Spaniards and expats are using their free time to learn the skills to survive life-threatening situations, and ‘survivalism’ has really taken off since the beginning of the pandemic.”


The Bank of England now biggest holder of UK government debt: The Bank of England’s holding of UK government debt has surpassed the two largest groups of private investors after policymakers accelerated debt purchases to bolster the economy against the blow from the pandemic.

“The £741bn of gilts on the BoE’s books has surpassed the amount held by overseas investors and pension and insurance companies…”


The US government spent $660 billion more in March than it collected in revenue, the third-largest monthly deficit on record.

“Stimulus plan and $1,400 checks drove spending much higher as the White House and Republicans clash over where to spend money next.”


Ukraine Tells Russia to Pull Back Troops as U.S. Warns of Costs

“Tensions between the two neighbors are the highest since the end of large-scale fighting in the conflict that began after President Vladimir Putin annexed Crimea in 2014. The war over the status of two breakaway regions in Ukraine’s east has already cost more than 13,000 lives.”


Russia Escalates War on Food Inflation With New Oilseed Export Tax

“Russia widened its battle against domestic food inflation by imposing an increased export tax on sunflower seeds and oil. Russia is the largest exporter of sunflower seeds and the country’s new trade-restrictive measure will likely fuel further price gains for vegetable oils worldwide.”


Rising inflation complicates Brazil’s Covid-19 crisis… With much of Latin America’s largest economy being shuttered, inflation is surging to its highest level in years, fuelling a silent scourge of hunger…

“The high price of staple foods — rice and beans, for example — has led to the disappearance of these items from the table of millions of Brazilians…””


Ecuador votes for next president amid COVID and economic crises

“More than 13 million eligible Ecuadorian voters are heading to the polls on Sunday as left-wing economist Andres Arauz goes up against conservative former banker Guillermo Lasso in the country’s presidential runoff.”


Hardships caused by the coronavirus pandemic have forced former sex workers in Mexico back into the trade years after they left, made it more dangerous and reduced some to having sex in cars or on sidewalks for lack of available hotels…

““Some days you don’t have anything to eat. … You might eat one day and not the next,” said Laura.

“”As for avoiding coronavirus, “I put my trust in God” and hand sanitiser.”


Lebanon civil war survivors say today’s crisis even worse… During the civil war that ended over 30 years ago Abla Barotta survived shelling and clashes, but she now fears a “slow death” from Lebanon’s worst economic crisis in decades.

“The 58-year-old mother of three is a survivor among the more than 50 percent of Lebanese today living in poverty.”


Economic crisis begins to crack the bedrock of Assad’s Alawi support

“In Syria’s coastal towns, memorials to dead soldiers mark the sacrifice made by the Alawi minority to defend President Bashar al-Assad, also an Alawi. But, more than a decade since the civil war began, his regime is struggling to keep even the lights on in his heartland.”


Protests across Pakistan after far-right TLP leader arrested

“Protests have erupted in several cities across Pakistan after police took into custody the leader of a far-right religious party known for holding mass demonstrations over the issue of “blasphemy”. On Monday evening, several major intercity highways were closed by police…”


With Its Economy in Free Fall, Myanmar Braces for the Worst

“Shipping lines have suspended operations as truck drivers strike, leaving cargo containers trapped at the ports. Restrictions on cash withdrawals have businesses struggling to pay employees. The military has restricted internet access, making it harder to reach customers.”


Bonds of China’s largest bad debt investor plunge to record low:

“The prices of bonds issued by China’s largest manager of distressed debt tumbled to record lows as global investor fears mounted over its financial health following the execution of its former chair for bribery.”


US put off derivatives rules for a decade before Archegos blew up.

“Rules written in the aftermath of the 2008 financial crisis to limit the potential for a blow-up like Archegos Capital have still not been fully implemented, throwing a spotlight on regulators in a fiasco that has shocked Wall Street and raised questions on Capitol Hill.”


Investors rush into high-risk assets in easy credit environment… vast liquidity released by central banks flowing into shadow banking sector:

“High-risk assets have recently become the investments of choice as global markets swim in liquidity while interest rates remain at historic lows, spurring worries about another financial crash.”


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a “Climate” thread.

If you found value in this content, please help me continue this work by becoming a patron of my work via patreon.com.

10th April 2021 Today’s Round-Up of Economic News

The Global Debt Problem… kicking cans down the road just ends up at some point with a pile of cans that can no longer be kicked. But politicians aware of mounting obligations and still doing the can-kicking believe that will be their successors’ problem, and you never know, something might turn up…

“…the imminent failure appears to be that of using monetary inflation to puff financial markets. Once they stall on the back of rising bond yields all these debt obligations will end up being wiped out in a collapse of the fiat currencies along with the financial markets with which their fortunes have become firmly linked.”


Yellen tells world’s big economies: spend big, danger lurks:

“U.S. Treasury Secretary Janet Yellen on Thursday warned of the risk of a permanent divergence in the global economy in the wake of the COVID-19 crisis, and urged major economies to inject significant new fiscal support to secure a robust recovery.”


In 2020, there was an epic collapse of demand. Now, the problem is supply… Just a few months ago, the US faced an enormous shortage of demand for goods and services, which threatened to prolong the pandemic-induced downturn long beyond the point at which the virus was contained.

“The central economic problem of 2021 is looking like the polar opposite… “The global economy is vulnerable because it never really recovered,” said Nada Sanders, a professor of supply chain management at Northeastern University.”


Inflation Has Gone K-Shaped in the Pandemic Like Everything Else… Low-income Americans bore the brunt of job losses when the pandemic arrived. Now they’re getting hit hardest by price increases as the economy recovers.

“Some of the biggest price hikes of recent months, for example, have come in gasoline… Food-price inflation is running at more than double the headline rate, and staples like household cleaning products have also climbed.”


US expresses concern as Russia ‘sends ballistic missiles’ to Ukraine border.

“The United States on Thursday said it was discussing Russia’s military build-up near the Ukrainian border with Nato allies as fresh reports showed Russia deploying ballistic missiles to the area.”


The consequences of Boris Johnson’s careless Brexit are playing out in Belfast:

“This week’s violence is an ominous sign that leaving the EU took a wrecking ball to the Good Friday agreement.”


ECB Steps Up Warnings to EU Not to Delay Joint Recovery Stimulus

“Bank of Italy Governor Ignazio Visco called the European Union recovery fund “crucial” in an interview with Bloomberg TV, and Executive Board member Isabel Schnabel said separately that a long delay would be a “disaster.””


Coronavirus impact on Spain’s economy is worse than we feared:

“Spain’s government has slashed its forecast for an economic recovery during 2021, blaming a Covid-induced contraction in the first quarter and delays to the arrival of EU rescue funds.”


Almost half of Italian businesses structurally at risk:

“Around 45% of Italian firms involved in productive sectors are structurally at risk. This is one of the major findings of a new report on the competitiveness of productive sectors in Italy released by the bureau of statistics ISTAT on Wednesday.”


Italy and Greece risk post-pandemic debt crunch… Italy, Greece and other heavily indebted eurozone countries risk a financial crunch after the pandemic because of the cost of fighting Covid, analysts have warned.

“Mounting debts risk spooking investors and driving up borrowing costs…”


Unrestrained rises in property prices may pose the biggest threat to the Australian financial system, according to Australia’s central bank…

“The fear, say the RBA and financial experts, is that if prices ultimately fall to any significant degree heavily indebted institutions and households could face a financial crisis.” [Same applies to the UK, Sweden, Canada and I’m sure many other places, too].


ILO: Pandemic caused 26-million job loss in Latin America, Caribbean

“Roxana Maurizio, a specialist in labour economics at the ILO, warned that in 2021 “there could be a significant increase in the unemployment rate, when the millions of people who had stopped participating in the labour force return to the work.””


Brazil sets record daily COVID-19 death toll, Senate to probe Bolsonaro government’s response

“Brazil on Thursday set a daily record of 4,249 COVID-19 deaths, with overwhelmed hospitals running low on supplies and the senate about to open an investigation…”


Mexico, Argentina urge debt relief for middle-income nations:

“Mexico and Argentina call for international debt relief for middle-income countries home to many of the people pushed into extreme poverty by the coronavirus pandemic… The nations said that middle-income countries have been forgotten…”


Exit of Cuba’s last Castro brings curtain down on revolutionary era

“Cuba’s last Castro is set to leave the political stage, as Fidel’s 89-year-old brother Raúl cedes power to a younger generation at next week’s communist party congress which must also tackle a dire economic crisis and growing political dissent.”


Currency Collapse Mirrors Turkmenistan’s Extreme Economic Woes

“When the exchange rate of Turkmenistan’s national currency, the manat, fell to 40 to the dollar on the black market on April 3, it was more than 11 times the long-standing official rate of 3.5 manats per dollar. It was also an all-time low…”


Foreign lenders cutting ties with Lebanon’s central bank:

“Foreign lenders including HSBC and Wells Fargo are cutting ties with Lebanon’s central bank, sources familiar with the matter told Reuters news agency, underlining the country’s international isolation as it reels from economic crisis.”


Don’t Lend to Our Government, Debt-Weary Kenyans Demand of IMF:

“Some citizens in East Africa’s biggest economy don’t want any more loans for their government, saying a lot of the cash will be embezzled by state officials, and are signing online petitions to the Washington-based lender.”


Food crisis worsening in West Africa after COVID-19 and attacks:

“Nearly 20 million people are starving in West Africa and the Sahel region as the vast area is torn by conflicts and the coronavirus pandemic, experts warned Thursday. The situation could worsen between June and August…”


China’s producer prices climbed in March by the most since July 2018 on surging commodity costs, adding to worries over rising global inflation as the pandemic recedes.

“The producer price index rose 4.4% from a year earlier after gaining 1.7% in February, the National Bureau of Statistics said Friday…”


Global Food Costs Keep Climbing in Threat to Consumer Wallets… The global food-price rally that’s stoking inflation worries and hitting consumers around the world shows little sign of slowing.

“…a United Nations gauge of global food costs rose for a 10th month in March to the highest since 2014.”


You can read the previous ‘Economic’ thread here. I’ll be back on Monday with a “Climate” thread.

If you found value in this content, please help me continue this work by becoming a patron of my work via patreon.com.

8th April 2021 Today’s Round-Up of Economic News

How Debt and Climate Change Pose a ‘Systemic Risk to the Global Economy’

“How does a country deal with climate disasters when it’s drowning in debt? Not very well, it turns out. Especially not when a global pandemic clobbers its economy.”


Nearly a quarter of all unemployed workers in the U.S. have been out of work for at least a year, a stretch of joblessness dating to the early days of the Covid pandemic.

The dynamic speaks to persistent — and rising — long-term joblessness even as the national unemployment rate falls.”


Yellen’s Global Tax Plan is on the level of Trump’s Trade War with China: If you expected the administration of President Joe Biden to be a return to normalcy on trade issues after the drama of Trump-era tariff battles and tweet diplomacy, Treasury Secretary Janet Yellen has other ideas.

That’s because her plans announced Monday to introduce a global minimum corporate tax rate represent quite as much of a shock to the international economic order as Trump’s decision to wage trade war on China.”


The U.S.-China Trade War Isn’t Over Yet… observers who have been hoping the new administration will mark a return to normalcy on trade issues after the drama of tariff battles and tweet diplomacy of the Trump-era will be sorely disappointed.

“…the U.S.-China cold war remains alive and well despite a change of guard.”


Trump’s steel tariffs could be a big boost to Biden’s infrastructure push

China is by far the world’s leading producer of steel: In 2019, the country produced 996.3 million tonnes, with India in second at 111.2. Japan, U.S., and Russia rounded out the top five…”


After a year of head-spinning volatility in American petro-diplomacy, a reversion to normal is under way. The US wants cheap oil again.

““I had a productive call with Saudi Energy Minister Abdulaziz bin Salman al-Saud today,” tweeted US energy secretary Jennifer Granholm last week. “We reaffirmed the importance of international co-operation to ensure affordable and reliable sources of energy for consumers.””


The Trump-era order Biden is using to turn away most migrants: Title 42, invoked last year amid COVID pandemic, allows US to immediately return adults and families at the border…

“In February alone, US authorities sent more than 72,000 people back across the southern border.”


Northern Ireland executive to meet after sixth night of unrest

“Boris Johnson also condemned the violence. The prime minister tweeted: “I am deeply concerned by the scenes of violence in Northern Ireland, especially attacks on PSNI who are protecting the public and businesses…”


Unemployment has continued to rocket among older workers [UK] with another 107,000 over-50s made redundant during the lastest lockdown.

The redundancy rate for those older than 50 has been higher than all other age groups.”


Turkey sells gold amid currency crisis

“Turkey sold almost 11.7 tons of gold in February as its currency was hammered by an ongoing economic crisis, new data show.

“While central banks were net buyers of the precious metal during February, Turkey bucked the upward trend…”


India joins the money printers:

“QE – once the preserve of reserve currency central banks, is now becoming pretty mainstream. India yesterday joined the ranks of Indonesia and the Philippines in Asia who have dabbled with this policy.”


Argentina’s pandemic strategy shifts for second wave – Argentina’s President Alberto Fernandez was clear when COVID-19 first hit the country early last year: saving lives at all costs trumped any economic concerns.

“Now facing a second wave of infections, the South American nation has adjusted its strategy to prioritize protecting its fragile economy.”


A Cornered Bolsonaro Is Bad News for Brazil’s Democracy:

“As Brazil heads into a perfect storm—an out-of-control pandemic combined with economic collapse and growing political discontent—Bolsonaro appears to be surrounding himself with loyalists who are willing to protect him and his four sons, all of whom are under investigation for crimes ranging from embezzlement of public funds to nepotism and money-laundering.

“This could have troubling implications for Bolsonaro’s political fortunes and, more importantly, for Brazil’s democracy.”


North Korean leader Kim Jong Un has acknowledged his country was facing the worst-ever situation as he addressed thousands of grassroots members of his ruling party during a major political conference in Pyongyang…

“Experts say Kim is facing perhaps his toughest moment as he approaches a decade in rule…”


Myanmar teeters toward state collapse and civil war

“In a dramatic development, the anti-coup movement won the backing of multiple militia groups that claim to represent various marginalized ethnic minorities scattered around the country’s borderlands.”


Egypt announced on Tuesday that the latest round of talks with Ethiopia and Sudan over the Grand Ethiopian Renaissance Dam in Kinshasa ended with no progress being made

Egypt fears the dam will imperil its supplies of Nile water…”


Yemen at ‘tipping point’ as second Covid-19 wave hits war-torn country just weeks ahead of expected cholera season… In the past month, coronavirus cases have increased 22 fold in the past month…

“The UN Office for the Coordination of Humanitarian Affairs warned that more than 16 million people in Yemen will go hungry this year, with some half a million already living in famine-like conditions.”


Record Number of People in DR Congo Face Acute Hunger

“The World Food Program reports a record 27.3 million people in Democratic Republic of the Congo are facing acute hunger and are in urgent need of food aid.”


Government Admits Zimbabwe Dollar Collapse, Pegs Passport Fees In US$…

“The government on Wednesday admitted the Zimbabwe dollar has indeed collapsed, adding it was not helping in procuring passport production material which have seen the travel document applications’ backlog surpassing 250,000…

“Thousands of Zimbabweans require travel documents to escape the country worsening economic and political crises.”


Hunger spreading as Mozambique crisis reaches tipping point

“….thousands [are] sheltering in displacement camps with limited food supplies across Cabo Delgado, where an armed group known locally as al-Shabab has plundered villages and towns since 2017.”


Lex Greensill boasted to staff that his company had “enormous” liquidity just three weeks before the finance firm collapsed into insolvency, according to reports…

The Australian financier reassured Greensill Capital staff in an internal video on 15 February that a funds held by Credit Suisse were robust, the Financial Times reported.”


Morgan Stanley dumped $5 billion in Archegos’ stocks the night before massive fire sale hit rivals..

Morgan Stanley sold about $5 billion in shares from Archegos’ doomed bets to a small group of hedge funds late Thursday, March 25, according to people who requested anonymity to speak frankly about the transaction.”


Ballooning global debts need to be restructured before it is too late… The world is in a monstrous fiscal bind

“I suspect that global debt ratios have passed a point of no return.

“At some juncture two or three big beasts will get into trouble at the same time and trouble will spread.”


Underneath the global economic recovery lurks concerns about debt that have intensified through the pandemic, including a lack of transparency around the debt and its conditions, as well as the risks building up outside of the banking sector

“While the unprecedented amount of fiscal stimulus pumped into the global economy last year averted a debt crisis, economists at a virtual briefing suggested it was too early to sound an all-clear, especially amid concerns some countries may not be able to grow fast enough to deal with their burgeoning debt levels.”


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a “Climate” thread.

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6th April 2021 Today’s Round-Up of Economic News

The likelihood of a co-ordinated global economic rebound from the coronavirus pandemic has diminished as slower vaccination rollouts and a fresh wave of infections in some countries result in “sharply divergent growth prospects”, according to exclusive research for the Financial Times…

The world economy faces sharply divergent growth prospects across various regions, as prospects of a uniform swift snapback from a dismal 2020 have become clouded,” said Professor Eswar Prasad of the Brookings Institution.”


Risky Borrowers [in the US] Are Falling Behind on Car Payments:

A greater share of people [in the US] with low credit scores has been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic.”


The Fed Summarily Rejects The Possibility Of Inflation: Itself A Risky Position:

“Bond traders and investors have begun to see troubling inflationary straws in the wind. Yields on both treasury and corporate bonds have risen accordingly. Federal Reserve Board (Fed) policy makers have dismissed these investor concerns out of hand…”


Bank of Canada: Canadians Are Piling on Debt to Chase Soaring House Prices… The Bank of Canada is sounding the alarm on mortgage debt.

“….Governor Tiff Macklen said that he was concerned Canadians are stretching their finances to buy houses. Citing higher loan-to-value ratios, he said household indebtedness is on the rise.”


Leaders’ appeals for calm went unnoticed on Saturday as violence erupted in loyalist parts of Northern Ireland for yet another successive night, fuelled by anger over Brexit and the policing of a formerly senior IRA figure’s funeral…

“It came hours after Stormont’s first minister, Arlene Foster, and the Northern Ireland secretary, Brandon Lewis, called for an end to the violence…”


EU and UK pledge backing to Ukraine after Russian military buildup:

“The European Union and UK have pledged “unwavering” support for Ukraine’s government amid concerns of a military escalation in the east of the country or a possible new offensive against the Nato ally after recent Russian troop movements.”


A wave of companies across the UK and the rest of Europe are at risk of going under with new figures showing that the default rate on corporate loans has doubled.

Businesses across Europe, including the UK, face a €1.8 trillion (£1.5  trillion) wall of debt maturing in the next four years, including €290bn in 2021…”


Pandemic destroys hopes for French economy rebound:

The French government’s deficit will deepen and public debt rise after a lingering coronavirus disease (COVID-19) crisis smashed hopes of a rapid economic rebound, Finance Minister Bruno Le Maire said on Sunday.”


Italian and French banks revive ‘doom loop’ fears with bond buying

“Italian and French banks’ exposure to the sovereign debt of their own countries has hit record highs since the pandemic started, reviving fears about the sector’s links to increasingly indebted governments.”


Japan’s soft household spending, wages signal prolonged COVID-19 economic strains:

“Japan’s household spending dropped for a third straight month in February, data showed on Tuesday, as emergency curbs to prevent the spread of the coronavirus hurt consumption and raised the risk of a more prolonged and bumpier economic recovery.”


China Asks Banks to Curtail Credit for Rest of Year:

“China’s central bank asked the nation’s major lenders to curtail loan growth for the rest of this year after a surge in the first two months stoked bubble risks, according to people familiar with the matter.”


With Swarms of Ships, Beijing Tightens Its Grip on South China Sea:

After building artificial islands, China is using large fleets of ostensibly civilian boats to press other countries’ vessels out of disputed waters.”


At the spring meetings of the IMF and World Bank this week, we can expect measures to support low- and middle-income countries’ pandemic recovery that are laudable but fall well short of what is required…

The IMF’s support measures will certainly not prevent managing director Kristalina Georgieva’s warning of a “dangerous divergence” between economies from becoming a reality.


Thai households struggle with record debt, COVID-19 increases burden:

Thai households are among the biggest borrowers in Asia, racking up a debt mountain of 14 trillion baht, or 89.3% of gross domestic product (GDP) by the end of December, a sharp rise from 78.1% in 2017. And, they are finding it increasingly difficult to keep up with payments.”


Is Brazil Barrelling Toward an All-Out Economic Crisis?

“…Brazil’s politicians have used costly welfare programs to keep the economy and their approval ratings afloat during the pandemic, and are now adverse to putting a cap on public sector spending. Brazil’s fiscal sustainability is at risk due to rising inflation, high public debt and a recession triggered by the COVID-19 pandemic.”


Is Venezuela Preparing For A Military Strike On Colombia?

“…In recent weeks Venezuelan military and police have been conducting offensive operations in the southwestern state of Apure near the Colombian border. Aside from the humanitarian toll they are taking on the local civilian populace, they have sparked fears that Caracas is once again ramping up pressure on its perceived mortal enemy Colombia.”


Turkey’s consumer price inflation is expected to exceed 16% in March, multiple surveys estimated, rising for the sixth straight month.


Beirut’s blast-hit silos must be demolished, experts warn… Confirmation that the silos cannot be salvaged for future use compounds an already alarming food supply outlook.

“The country, grappling with its worst economic crisis in decades, has received donations of grain and flour in the aftermath of the explosion.”


Nigeria’s graduates live hand to mouth as jobs crisis worsens: Unemployment rate has quadrupled to 33% since Buhari took office in 2015

Akinnouye is one of millions of jobless young Nigerians, victims of an economic crisis that is driving up poverty and sowing insecurity across Africa’s most populous country.”


More than 1,800 prisoners have escaped from a prison in Nigeria after an attack by suspected militants armed with rocket-propelled grenades and machine guns

“It was among a series of coordinated assaults launched in the early hours of Monday, which also targeted police and military facilities in the capital of Imo state.”


They cut out his heart’: Machete killers run wild in Congo’s hidden war:

Frenzied armed gangs have forced the population of an area the size of Ireland to flee in a humanitarian crisis the world has forgotten.”


Powerful armed group in Central African Republic vows to leave rebel coalition

“Tensions have been high in the Central African Republic since the December election, although the surge in violence in recent months is just the latest flare-up in a civil war that has lasted eight years since the ouster of president Francois Bozize.”


At least 40 killed in tribal clashes in Sudan’s West Darfur: UN

“At least 40 people have been killed and 60 others wounded in tribal clashes in the Sudanese city of El Geneina, the United Nations said on Monday, in a renewal of bloodshed following a major flare-up of violence earlier this year.”


Ethiopian military forces are now fighting a “difficult and tiresome” guerrilla war in the northern Tigray region, prime minister Abiy Ahmed has admitted…

A wave of atrocities including massacres of hundreds committed by Ethiopian troops and their Eritrean allies have fuelled recruitment to the Tigray People’s Liberation Front.”


Mozambique’s Growing Insurgency May Pose Threat to Shipping… The insurgency in Northern Mozambique is steadily morphing into a serious maritime security threat in the Western Indian Ocean…

Since their first attack in 2017, the insurgents in Cabo Delgado province have shown increasing capability in conducting amphibious attacks.”


Cargo Ship Bottleneck Off Los Angeles Nears Six-Month Mark:

Ship congestion outside the biggest U.S. gateway for Asian imports remained elevated with the wait to offload containers lengthening to eight days, adding costs and complications for companies trying to stay well-stocked in an accelerating economy.”


Logjam deepens at world’s ports as pandemic strikes shipping

“The global shipping network that keeps food, energy and consumer goods circulating — and the world economy afloat — is facing its biggest stress test in memory.”


Why Shortages of a $1 Chip Sparked Crisis in Global Economy

““It’s not like you can just make do. If you have everything else, but you don’t have a display driver, then you can’t build your product,” says Stacy Rasgon, who covers the semiconductor industry for Sanford C. Bernstein.”


Oil Prices Retreat Amid Demand Worries:

“Oil prices fell Monday, extending a recent stretch of volatility with some traders worried that rising coronavirus cases will halt a rebound in fuel demand.”


Financial crises get triggered about every 10 years — Archegos might be right on time:

“No one, for now, can say for sure that the so-called family office’s billions in investment losses won’t spread.”


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a “Climate” thread. Btw, I’m aware that we’ve switched our days around here, so my apologies if that is less desirable. I’ll stick with it for the time being but will no doubt switch back again when there’s another bank holiday if not before.

If you found value in this content, please help me continue this work by becoming a patron of my work via patreon.com.