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

On the second anniversary of Washington unleashing its first trade war tariffs on Beijing, tensions continue to flare over issues ranging from Hong Kong to technology, with observers in both countries agreed that the superpower relationship between China and the United States is at its lowest ebb in decades.

“The motivation for US President Donald Trump was to close America’s trade deficit with China, and it has narrowed. China continues to purchase American farm goods, seen as crucial to Trump’s plans to win re-election in November, but these are widely viewed as sticking plasters on ties that otherwise appear on the verge of collapse.

““I don’t know that we would have thought we would have fallen this far,” said Clark Jennings, former White House trade adviser to former US president Barack Obama.”


“China has been very obstructionist” in blocking requests for access to its audit records, Silvers said.

““There is a growing sense of frustration with China, and now with the trade wars and the Covid-19 outbreak there is a growing appetite to pick a fight with China. There is a change in the geopolitical climate.””


Chinese state lenders are revamping contingency plans in anticipation of U.S. legislation that could penalise banks for serving officials who implement the new national security law for Hong Kong, sources at five state financial institutions said.”


It looks like China will not meet its Phase One trade deal promise to import more U.S. fuel products, including LNG, market watchers are now saying. Maybe that analysis is too easy to make at this point.

“China has as good excuse as any: the economy is climbing out of a pandemic sized hole…”


“China has imposed limits on businesses and individuals in the Hebei province for withdrawing large amounts of cash without prior approval… This two-year programme will be expanded to the provinces of Zhejiang and Shenzhen later this year. According to another report, 586 banks and financing firms were classified as “highly risky” by the authorities.

China’s banks are failing because the country has been fueling its growth with debt and years of borrowing has made the banks hollow.”


As new Covid-19 cases continue to surge in states throughout the US, another 1.3 million people filed for unemployment last week, highlighting the grim reality that any type of economic recovery may be far off…

“…even though some jobs have come back, millions more are still indefinitely out of work.”


Wells Fargo is considering cutting thousands of jobs as part of a broad strategic review to restore the bank’s profits from unsustainably low levels, according to a person familiar with the situation.

“America’s third-biggest bank, which employs 263,000 globally, has said it will cut dividends in the third quarter…”


U.S. companies are preparing to open their books on a quarter that is set to show the biggest earnings fall since the financial crisis, leaving investors looking for light at the end of the tunnel.

“The season unofficially begins on Tuesday with results from some of the biggest U.S. banks.”


“Hertz’s demise has drawn attention to the relentless build-up in corporate debt in the US, where companies now owe a record $10tn — equivalent to 49 per cent of economic output. When other forms of business debt are added in, including to partnerships and small businesses, that already extraordinary figure increases to $17tn.

Even before the pandemic, the level of corporate leverage was beginning to cause alarm.”


The cost of household staples, ranging from meat and cheese to school uniforms and drinking glasses, will substantially increase if there is no Brexit trade deal, British retailers have warned.

“With just six months to go before the UK leaves the EU entirely by exiting the single market and the European customs union, retailers fear further damage to a sector already reeling from the coronavirus crisis…”


““The worst is behind us” on Covid-19 disruption but the economic recovery will be gradual, the chief economist of the German Central Bank said on Thursday…

Deutsche Bundesbank chief economist Jens Ulbrich noted that the German economy “won’t return to pre-corona levels of activity any time soon”.”


Thousands of Greeks protest against a government bill setting new restrictions on street protests. Clashes erupted, with protesters hurling petrol bombs and police using tear gas to disperse them.”



Serbian authorities have banned gatherings of more than 10 people in the capital, Belgrade, after two nights of violent clashes between police and thousands of demonstrators protesting coronavirus lockdown measures.

“Thousands, however, defied the ban.”


Covid-19 threatens to push tens of millions of people in emerging markets back into poverty. It also risks exacerbating inequality and triggering a fresh wave of social unrest, giving a fresh boost to anti-incumbent populists… as virus-induced recessions hit emerging markets with full force, budget deficits will blow out, triggering a wave of downgrades by ratings agencies and scaring away investors.

“A stress test by Absolute Strategy, a London research firm, found that up to 37 per cent of the benchmark JP Morgan emerging market bond index could be at risk of default over the next year or so.”


“…unemployment in the region [Latin America and the Caribbean] is expected to rise to 13.5% from 8.1% last year, affecting more than 44 million people, compared to over 18 million in 2019.

“The poverty rate is expected to rise to 37.2% from 30.2%, meaning 230 million people will be affected compared to 185 million last year, it said.”


Philippine trade data for May showed both imports and exports cratering, down by 40.6% and 35.6% respectively.

“The narrowing of the trade deficit means should be supportive of the strong-peso for now, but it also highlights that the economy is headed for a protracted slump.”


Turkey’s lira this week slipped to its weakest level since hitting a record low in early May after inflation for the month of June was reported at 12.6%, a figure that topped economists’ expectations.

“With rapidly shrinking foreign reserves to prop up the currency, inflation and currency devaluation are showing no signs of a turnaround, analysts say.”


Syria could face severe bread shortages for the first time since the start of the war, another challenge for President Bashar al-Assad as he grapples with an economic meltdown and fresh U.S. sanctions, a U.N. official, activists and farmers said…

“…rampant inflation [is] driving up food prices.”


Nearly 14 million children in the United States went hungry in June, as the economic fallout from the pandemic continued to batter families.

“That’s an increase of more than 10 million since 2018, and nearly three times the number of children who went hungry during the Great Recession, according to an analysis of Census data released by the Hamilton Project on Thursday.”


New shipbuilding orders in the first half declined 57% to the lowest levels seen this century, according to data from Clarkson Research Services.

“Just 269 ships – equivalent to 5.75m cgt – were contracted in the first six months around the world, putting many yards in jeopardy of running out of business in the coming year.”


Gold prices ticked past $1,800 an ounce this week, and are now not far from the all-time highs reached in 2011, in the bleak aftermath of the financial crisis.

“New records could be ahead.”


Has the global economy seen the worst? It’s too early to tell.

“Not only are investors mistaking the rebound in activity for a sustainable recovery, they are also conflating the easing of lockdowns with a greater willingness to consume and hire…

“…the sharp improvement in economic data has done little to reduce the uncertainty faced by companies and investors. While the benchmark S&P 500 index just had its best quarter since 1998, a staggering 80 per cent of the index’s members failed to provide guidance on their earnings last quarter, data from Bloomberg shows.

“Analysts’ own forecasts, moreover, are resoundingly bleak.”


A new “unknown pneumonia” that is potentially deadlier than the novel coronavirus has reportedly killed more than 1,700 people this year in the Central Asian country of Kazakhstan, according to a warning issued by Chinese officials Thursday.”


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

9th July 2020 Today’s Round-Up of Economic News

As infection rates start rising in some European countries, the potential for civil unrest and political aftershocks is growing as patience wears thin, say analysts…

“Even before the pandemic, Europe was in the grip of rising political anger, and mainstream parties were rocked by populist stirrings that have been reshaping the continent’s politics. But the pandemic is making many on the continent angrier still, fueling protests, further polarizing politics and exposing long-simmering political and social tensions.”


The pandemic has effectively pulled away the first rung of the jobs ladder for many young Europeans

“Youth unemployment has long plagued Europe, lingering for years following the 2008/09 global financial crisis and hitting southern countries such as Spain and Greece especially hard.

“Yet early signs show things are about to get worse.”


President Aleksandar Vucic backtracked on his plans to reinstate a coronavirus lockdown in Belgrade this week, but it didn’t stop people from firing flares and throwing stones while trying to storm the downtown parliament building.

“A number of people were injured during clashes in front of the parliament that started peacefully but soon turned violent…”


The outlook for Spain’s economy is looking grim, particularly its leading tourism sector. By the end of the year, economists predict that unemployment rates in Spain will rise from 14% to a whopping 23%.”


The French government said it was geared for a possible surge in coronavirus cases in the coming months but ruled out another nationwide lockdown

…we’re not going to impose a lockdown like the one we did last March, because we’ve learned… that the economic and human consequences from a total lockdown are disastrous,” new prime minister Jean Castex said.”


German exports rebounded less than expected in May as demand remained subdued despite the lifting of lockdown measures introduced to contain the spread of the coronavirus, data published on Thursday showed.”


In his summer economic update to the House of Commons, Rishi Sunak warned the UK is facing “profound economic challenges” as a result of the coronavirus crisis.

“The chancellor admitted Britons are anxious about losing their jobs and rising unemployment, with the UK economy having shrunk 25% in just two months – the same amount it grew in the previous 18 years.”


European governments that frantically assembled plans to help their economies weather the coronavirus lockdowns are starting to focus on a cliff edge: how to prevent cascading bankruptcies that could derail the rebound.

“The next big idea gaining traction among officials and economists is potentially taking stakes in small and medium-sized businesses…”


“Usually, an uptick in debt levels pushes bond prices lower and yields higher. However, in this case, the Fed has essentially created a backstop to the debt market…

“The Fed has created its own monster. It can’t stop buying assets otherwise the whole system will collapse,” tweeted Otavio Costa, portfolio manager at Crescat Capital.”


Unemployment in the United States has risen to historic highs in recent months due to covid-19.

“Businesses struggled to stay afloat due to social distancing rules, and livelihoods were lost, much like the 2008 financial crisis. But a new study finds that the current crisis has hit the US economy even harder.”


United Airlines warned employees for months that mass layoffs loomed if travel didn’t rebound, and the airline put a grim face on the expected tally Wednesday.

In a memo to employees, the Chicago-based airline said 36,000 employees, or 45% of its front-line workers in the USA and more than a third of its overall workforce of 95,000, face layoffs on or around Oct. 1.”


Brooks Brothers, the 200-year-old company that dressed nearly every U.S. president, filed for bankruptcy protection Wednesday, the latest major clothing seller to be toppled by the coronavirus pandemic.”


“…housing courts are reopening, and eviction moratoriums are expiring in the coming weeks, if they haven’t already. CARES Act benefits that expanded unemployment are running out.

“Unless lawmakers intervene, the $600-per-week supplement will expire at the end of July.

“The United States is facing an eviction crisis of biblical proportions,” Aaron Carr, founder and executive director of the Housing Rights Initiative, a nonprofit housing watchdog group, told me.”


The rift between the United States and China threatens to become a chasm….

“This rapid descent into conflict has taken many by surprise. For most of this century, Sino-U.S. competition was moderated by the need to work together on a range of global economic, financial, and geopolitical issues that mandated cooperation.

“But these cooperative impulses have almost entirely disappeared…”


The deployment of three US nuclear-powered aircraft carriers to the South China Sea have further tested strained relations between China and the United States.

“The US naval exercises represent an enormous aggregation of firepower. Adding to tensions, the US deployment coincides with Chinese war games in the same vicinity.”


The director of the FBI has said that acts of espionage and theft by China’s government pose the “greatest long-term threat” to the future of the USHe said China had begun targeting Chinese nationals living abroad, coercing their return, and was working to compromise US coronavirus research.

“”The stakes could not be higher,” Mr Wray said.”


For Melbourne business owners like Mary Gurry, the city’s return to stage three restrictions is nothing short of devastating

“The Victorian Chamber of Commerce predicts that this six-week lockdown will spell the end for some businesses.”


Sudan began loosening lockdown measures Wednesday in and around the capital after three months of tight restrictions due to the coronavirus pandemic

“The confinement measures have compounded Sudan’s economic crisis, characterised by galloping inflation and foreign currency shortages.”


For many of those scavenging for goods in Lebanon, poverty is a new, and bitter, experience

“As Lebanon entered a Covid-induced lockdown earlier this year, the destruction of the middle class remained largely out of sight, but now, as it reopens, there’s no escaping the dystopian scenes of desperation repeated across the country.”


Hunger linked to the fallout from the COVID-19 pandemic could kill more people than the disease itself, Oxfam has warned

“The bleak scenario is outlined in its report, The Hunger Virus, and equates to as many as 12,000 people dying per day.”


““D&B is currently forecasting that the global economy will contract by 5.2 per cent in 2020 – the biggest decline since the Second World War and a far stronger contraction than the 1.7 per cent recorded in 2009 during the global financial crisis,” the report said.”


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

8th July 2020 Today’s Round-Up of Economic News

It will take years for the global economy to recover from the jobs taken away by the pandemic, and in Europe the recession will be significantly deeper than forecast just two months ago.

“Those were the findings on Tuesday in two reports, from the Organization for Economic Cooperation and Development and the European Commission, that provided the latest readings on how widespread and deep the economic impact of the coronavirus will be.

“The O.E.C.D. looked at jobs; the commission measured economic contraction. Experts conceded that the spread of the virus was unpredictable, making forecasts tenuous. But both reached similarly brutal conclusions.

“The number of job losses has been 10 times greater than the hit inflicted during the first months of the 2008 global financial crisis, O.E.C.D. economists said…”


“The coronavirus pandemic has hit every generation hard, disproportionately killing older Americans and spreading economic fear across the entire country.

For Gen Z, people born between 1997 and 2012, life has practically been upended and the ramifications of the virus and the financial crisis it has engendered threatens their livelihoods for years to come.”


The U.S. Consumer Financial Protection Bureau on Tuesday issued its long-awaited payday lending measure that rescinds an Obama-era proposal requiring lenders first ensure a borrower is able to repay them.

“Consumer advocates blasted the move as a further sign the Trump administration is going easy on predatory lenders.”


The number of UK jobseekers has surged at its fastest pace since 2009 as the coronavirus lockdown recession has hit jobs hard, recruiters have warned.

“Salaries for new starters are falling as more applicants chase fewer jobs, as employers across all industries cut back hiring, according to the Recruitment and Employment Confederation and KPMG.”


France, Italy and Spain will contract more than 10 percent this year, the commission said in its summer economic forecast on Tuesday.”


“Despite dealerships starting to open and the automotive sector resuming business, car sales in June in Germany, Spain and the UK were still down by more than 30% compared to 2019, and were 23% down in Italy.

The ACEA now forecasts a 25% fall in new car sales for the whole of 2020.”


Thousands of protesters have clashed with riot police in the Serbian capital Belgrade after the country’s president announced the reintroduction of a lockdown following a spike in coronavirus cases.

“Serbia went from one of the strictest lockdowns in Europe to a near complete reopening of the country at the beginning of May.”


Bond investors are losing their appetite for South African debt after the government increased issuance a second time this year to help plug a yawning budget deficit…

“…some analysts questioned whether investors have the stomach to continue absorbing the pile of new debt at a cost that’s still low enough for the government to afford.”


The government of Zimbabwe has spent millions of dollars on luxury cars for senior officials despite a deepening economic collapse that has plunged its people into profound hardship.

“The new cars, including dozens of Range Rovers and Toyota pick-up trucks… were distributed to ambassadors and senior civil servants.”


Experts have advocated a review of the national food security structure to address an imminent possibility of food security crisis that may hit Nigeria as a result of the effects of the COVID-19 pandemic in the agricultural sector.”


Ethiopia’s Water, Irrigation and Energy Minister Seleshi Bekele has pointed an accusing finger at Egypt over recent unrest

“The government says the neighbouring country’s motive was to stop Ethiopia from continuing with the Grand Renaissance Dam project… Construction of the mega dam has sparked tensions with neighbouring countries that are downstream on the Blue Nile.”


Kurdish authorities fear a humanitarian disaster in northern Syria where Turkey is accused of deliberately inducing a drought by cutting off water from the Euphrates River.

“Water levels have declined by up to two-thirds, with Syrian farmers in Qara Qawzaq — just outside Kobane — warning that their livelihood will be seriously hit by the shortages.”


During a demonstration held by small business owners in Tel Aviv in the morning, one protester, who is a single mother, said she currently has virtually no income from the four businesses she owns.

“”I have to choose when grocery shopping, what I can afford to buy my kids,” she said. “Bills have to be paid by July 10 and I have no money. My financial situation scares me more than the coronavirus.””


“One Lebanese woman asked for sugar, milk, and soap in exchange for a child’s dress. Another wanted canned goods in return for gym equipment.

“A 65-year-old seamstress now exchanges her sewing services for food, because her clients can no longer afford to pay her.

Bartering on Facebook has become the last resort for some people in Lebanon, where a financial meltdown has sent prices skyrocketing this year.”


Pakistan’s financial woes are going from bad to worse as the national fiscal deficit surges to over 7% of gross domestic product (GDP) and could breach 9-10% as state revenues dry up amid Covid-19 economic devastation.

That’s raising questions among analysts and business executives of whether the country is headed towards a budgetary blowout-induced financial collapse.”


“Investigations into at least three major crashes in Pakistan in the past decade found the pilots were either at fault or didn’t follow guidelines.

Khan said that 262 of over 850 pilots in Pakistan had fake qualifications and many didn’t even sit the exams themselves.


Iran has slashed crude oil production to its lowest level in four decades as storage tanks and vessels are almost completely full due to a fall in exports and refinery run cuts caused by the coronavirus pandemic…”


China went out and snapped up cheap crude at such a breakneck place that they now have their own critical oil storage issue.

“International news has been reporting for weeks on China’s jam-packed waterways filling up with crude tankers.”


Mexico’s state oil firm Pemex is asking some of its contractors if they would agree to be paid for their services next year, people familiar with the payment situation at the company with US$105 billion of debt told Bloomberg.”


Venezuela’s poverty rate surged in 2019 to levels unmatched elsewhere in Latin America as the once-prosperous OPEC nation’s hyperinflationary economic collapse continued for a sixth straight year, according to a study published on Tuesday…

““There is no wealth to distribute,” said Pedro Luis España, a UCAB sociologist who contributed to the study.”


The world’s top oil and gas companies locked in cheap borrowing rates to raise a record amount of debt in the second quarter of 2020 and boost cash reserves as a buffer against a collapse in revenues because of COVID-19.”


Big and mid-cap firms globally are expected to slash capital spending by an average 12% this year as they reel from the fallout of lockdowns and other measures imposed to rein in the coronavirus pandemic, analysts’ estimates show…

“The predicted cut is bigger than the 11.3% decline that occurred in 2009 in the wake of the global financial crisis.”


A review of the bank-specific results published by the Fed using February’s pre-pandemic assumptions shows that some large banks would be operating with thin capital margins even under those more benign scenarios.

“For instance, Goldman Sachs’s supplemental leverage ratio dipped as low as 3.5%; Morgan Stanley, 4.5%; JPMorgan Chase, 5.1%. Unfortunately, we don’t know how these and other large banks will fare under the more-distressed conditions caused by the pandemic.”


Absent the sharpest of V-shaped recoveries, Europe’s banks will at some point need to recognise the new economic reality and raise their provisions for loan losses dramatically.”


Japan’s financial regulator is running out of patience with regional banks that are struggling to adapt to an increasingly grim business environment.”


“Over the past decade, the UN, world leaders and pundits have promoted a self-congratulatory message of impending victory over poverty, but almost all of these accounts rely on the World Bank’s international poverty line, which is utterly unfit for the purpose of tracking such progress,” said Alston.

“The expert condemned the near universal reliance on the bank’s line, which he said is deeply flawed and yields a deceptively positive picture.””


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

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

From Thailand to Kenya and Argentina to Britain, coronavirus lockdowns abruptly left millions of people… unable to earn enough money to feed themselves and their families.

“This is a new poverty and three months ago it did not exist,” said Angela Frigo, secretary general of the Brussels-based European Food Banks Federation.

“Due the pandemic and lockdown measures, some persons who had a good or normal financial situation now find themselves in a situation of food insecurity,” said Frigo, whose non-profit works with food banks and organisations in 29 European nations.”


This period of national crisis has not inspired unity. Americans are aiming their anger at each other, talking past each other, invoking race, class and culture. They cannot even agree on the need to wear a mask to protect against a virus that has killed more than 130,000 Americans.

These forces are converging as the country hurtles toward a convulsive presidential election.”


New York City, hit hard by the coronavirus pandemic, is mired in the worst economic calamity since the financial crisis of the 1970s, when it nearly went bankrupt.

“The city is staggering toward reopening… Even so, the city’s unemployment rate is hovering near 20 percent — a figure not seen since the Great Depression.”


Hundreds of thousands of jobs have been lost [Hawai’i]. Thousands of businesses have shut down, some for good. Tax revenues have plummeted by hundreds of millions in just months since COVID-19 arrived in Hawai‘i.

“And Gov. David Ige on Monday said the worst is yet to come.”


With the coronavirus employment retention scheme currently supporting 9m jobs, but due to end in October, there are fears the UK could see joblessness soar to greater levels even than under Margaret Thatcher.”


Commerzbank CEO Martin Zielke and board chairman Stefan Schmittmann offered to resign Friday, bowing to ratcheting pressure from the bank’s second-largest shareholder, Cerberus, which made clear it remained unimpressed by the bank’s plan to return to profitability.”


German prosecutors said Monday (July 6) they have made a new arrest related to the spectacular collapse of payments provider Wirecard, which is shaping up to be the country’s biggest financial fraud scandal.

“The managing director of Cardsystems Middle East FZ-LLC, a Dubai-based subsidiary of Wirecard, was placed under arrest on suspicion of serious fraud, said prosecutors.”


Italy plans to dramatically expand public investment, focusing on boosting growth rather than reining in debt as the government plots its way out of the worst recession in a century

“Italy’s new investment plan takes into account grants and loans from the European Union’s aid programs that are still to be approved and will be discussed by leaders at a summit next week.”


While Sub Saharan Africa’s growth projection looks bad, a key longer-term concern is how real per capita GDP in the region is expected to contract by as much as -5.4% this year. The IMF says this will take the per capita GDP 7 percentage points below the level projected last October.

“In fact, it could effectively wipe out nearly ten years of progress made in reducing poverty in the region.”


Zimbabwe government is struggling with an economic and political crisis that has only been worsened by a lockdown. The measure was introduced to slow the spread of the coronavirus. Prices of goods in supermarkets have soared compared to what they were last December.

“Tensions are brewing while the country is under lockdown…”


Ethiopia, Africa’s second-largest country by population, is not only struggling to avoid a war with Egypt but also to pull itself out of the economic crunch caused due to the ongoing pandemic. Apart from this, it is reportedly on the verge of transitioning to democracy or descent into violence.

“On July 6, at least 166 people were killed…”


Demonstrators chant “We want to eat, we want to live,” as the economic hardship in Gaza takes a growing toll.”


With the reopening of Beirut airport on July 1 after more than three months of closure over coronavirus concerns, a massive brain drain is occurring.

“”People are getting really desperate. The only way out is to leave.””


“Desperate to afford her daughter’s overseas university fees, 58-year-old retired Iranian teacher Maryam Hosseini withdrew all her savings from the bank to buy U.S. dollars.

“It was not enough. With three years of study still to do, her daughter is heading back home, her future now on hold.”

Hosseini’s tale of growing poverty is an increasingly familiar one among Iranians…”


“…young [Indian] people who have invested in higher education are finding it increasingly hard to find work, potentially affecting their future prospects and potentially those of future generations.

“The pandemic is making this issue all the more acute.”


A squad of gun-toting police officers patrolled Myanmar’s sacred site of Bagan under the cover of night, taking on plunderers snatching relics from temples forsaken by tourists due to COVID-19 restrictions…

“Times are hard in an area dependent on tourism.”


Thailand has been cited as a success story in containing the coronavirus outbreak, having gone more than 40 days without any local transmission of Covid-19. Yet its economic outlook is the darkest in Asia.

“Gross domestic product is forecast to contract 8.1% this year, according to the Bank of Thailand.”


The second quarter of 2020 could be the worst three-month stretch on record for Macau’s six concessionaires.

“That’s as the special administrative region’s (SAR) gaming industry remains hindered by travel restrictions keeping gamblers away from the casino center.”


Malaysia is set to cut its benchmark interest rate to its lowest level on record as it seeks to support the reopening economy amid soaring unemployment and the threat of recession.”


The oil price crash that Russia helped create, along with the coronavirus-driven global recession, will result in Russia’s economy shrinking this year by the most in 11 years, the World Bank said in its latest economic report on Russia…

“The COVID-19 pandemic has weakened the Russian ruble and has resulted in lower fiscal revenues for the country, according to the bank.”


U.S. crude supply is falling at its quickest pace ever… Weekly U.S. output recently fell to 10.5 million barrels a day, down from a near-record of 13 million barrels a day from late March, government data show.

“With companies from Chevron Corp. to Continental Resources Inc. shutting in productive wells in response to the coronavirus, the slide marks the biggest 11-week drop on record in figures going back to 1983.”


These days, the Bakken is looking like anything but a boom.

“Drilling in the once-prolific shale formation straddling North Dakota, Montana and parts of Canada has all but halted — another victim of the pandemic that sapped fuel demand worldwide.”


Global oil demand could fall by 2.5 million barrels per day as coronavirus cases surge in several countries, including the U.S., according to a new report.

“If coronavirus-stricken regions impose new restrictions on business and travel, global oil demand could fall to 86.6 million barrels per day, down from the current 89 million barrels per day, a report from Rystad Energy said.”


Growth in company profits has slumped in recent times as the worldwide economy has cooled. Investors need to brace themselves for a shocking annual fall in 2020 too as the Covid-19 outbreak weighs, a report shows…

“According to the asset manager corporate earnings will sink by more than a fifth (22%) year on year…”


China’s stock market recorded its biggest rally in more than a year on Monday after state media encouraged investors to pile into the market and reap the benefits of a post-coronavirus economic boom.

State-owned Shanghai Securities News ran a story on Friday titled “Hahahahaha! The signs of a bull market are more and more clear.””


Markets, which we have come to view as all-encompassing judges of risk and opportunity, are reading this crisis wrong. Sharemarket optimism should be ignored. Its high-flying mood is nothing more than a punt on the flow of free money.”


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

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

The world economy is entering the second half of 2020 still deeply weighed down by the COVID-19 pandemic, with a full recovery now ruled out for this year and even a 2021 comeback dependent on a lot going right

“…the pandemic forced swathes of the global population into what the International Monetary Fund dubs “The Great Lockdown.” Central banks and governments responded with trillions of dollars in unprecedented support to prevent markets from melting down and to keep furloughed workers and struggling companies afloat until the virus passed.​

“Even with those rescue efforts, the world is still suffering its worst economic crisis since the Great Depression. While some gauges of manufacturing and retail sales in major economies are showing improvement, hopes for a V-shaped rebound have been shattered as the reopening of businesses looks shaky at best and job losses risk turning from temporary to permanent…

““There is a real danger of confusing rebound with recovery,” Carmen Reinhart, the World Bank’s chief economist, said at the Bloomberg Invest Global conference on June 23. “True recovery means you are at least as well off as you were before the crisis started, and I think we are a long way off that.””


Ongoing social distancing will mean that many firms will be smaller or not viable until a vaccine turns up.

But the economic impact of this crisis will last even once a vaccine prevents Covid-19 doing fresh damage…. while no one started 2020 expecting a global pandemic, we’ll all now think another one is around the corner, just as everyone kept predicting another banking crisis after the financial crash.

“…a more cautious world is not a good one economically… Covid-19, and its effects, are here to stay.”


As the U.S. reopens, Americans aren’t much interested in going out and spending.

A survey of 2,200 U.S. adults shows how Covid-19 has dramatically changed behavior in the world’s biggest economy, potentially for the long haul. The data flashes warning signs for the recovery…”


This Fourth of July, amid the coronavirus pandemic and nationwide Black Lives Matter protests, American patriotism has fallen to its lowest point in nearly 20 years. According to a new poll, less than half of Americans are “extremely proud” to be American.

According to Gallup, pride in the U.S. is the lowest it’s been since the analytics company first measured it in 2001.”


“…unemployment is becoming a more permanent fixture for millions of [US] workers, just as the financial lifelines that Congress created early in the pandemic are expiring without the president or Senate Republicans showing any urgency to act.”


The U.S. trade deficit widened in May as the COVID-19 pandemic pushed exports to their lowest level since 2009, strengthening expectations the economy will contract in the second quarter at its steepest pace since the Great Depression

Exports tumbled 4.4% to $144.5 billion, the lowest since November 2009. Goods exports plunged 5.8% to $90.0 billion, the lowest since August 2009.”


An astonishing 14 of the top 50 U.S. trade partners saw their total trade fall more than 40% in the most recent month, according to Census Bureau data released Thursday.”


Radical plans to give all adults £500 and children £250 in vouchers to spend in sectors of the [UK] economy worst hit by the Covid-19 crisis are being considered by the Treasury.”


Thirteen British universities face bankruptcy without a Government bailout, an analysis by the Institute of Fiscal Studies has found.

“Institutions at the greatest risk of financial collapse would need with a £140 million cash injection or debt restructuring to keep them “afloat” in the future.”


More than a quarter of the UK’s biggest listed companies and a third of large US public businesses spent more on dividends and buybacks in 2019 than they generated in net income, a move that has left many groups at greater risk of collapse.”


The giants of Wall Street and European banking are giving up their stronghold on London. In the coming months alone, Barclays Plc may ditch its investment bank’s headquarters in the capital; Credit Suisse Group AG is offloading nine floors of office space; and Morgan Stanley is reviewing its entire London footprint.

“And all of those moves were planned before the coronavirus hit. Now, with thousands of job cuts likely to follow what’s forecast to be the worst recession in three centuries, the tenants of the glass and steel towers that dominate the City of London and Canary Wharf may face an even bigger retreat.”


The risk of UK funds being frozen out of the European market at the end of the year has risen after Brexit negotiators missed a key milestone aimed at securing market access for the City of London.”


A social and economic crisis “is starting” in France as the health crisis persists, new Prime Minister Jean Castex said Saturday in his first comments to the media since he was appointed a day earlier by President Emmanuel Macron.”


Despite the first monthly double-digit increase, German industrial orders remain some 30% below their levels seen in the first quarter.”


Around one fifth of German companies (21%) believe their survival is threatened by the coronavirus crisis, Germany’s Ifo institute said on Monday, with travel agents, hotels and restaurants particularly concerned.”


Federal Reserve stress tests predicted large loan losses from European banks operating in the U.S. market, the Financial Times reported

“Deutsche Bank AG is expected to burn through capital quicker than the other 32 financial institutions whose performance was modeled, the tests showed.”


It is hard to see how Deutsche Bank can hit its cost savings target, despite management assurances, given that restructuring efforts were paused during the pandemic lockdown.

“The bank appears to have taken a far from conservative approach to provisioning for prospective loan losses — it has set aside a fraction of the amount peers did. And its original plan and profit projection gave it little scope for setbacks, let alone a global economic crash.”


A cardinal in northern Italy said Friday that the COVID-19 health crisis has created “immense” poverty in the area, and now is the time to rebuild, to take responsibility, and to share resources.

Indications from local charities and soup kitchens show that poverty in Bologna right now is “immense,” Cardinal Matteo Zuppi, the city’s archbishop, told journalists July 3. “The economic crisis has already started.””


Greece’s prime minister has said he will not accept strict EU conditions on the use of coronavirus emergency aid, in a sign of the difficult negotiations ahead for the bloc’s leaders on its proposed €750bn recovery fund.”


Some African leaders are nervous about taking up the debt relief recently offered by international lenders in the G20 group of countries to help poorer nations cope with the economic and fiscal devastation caused by the coronavirus crisis.

Even discussing relief could downgrade international credit ratings and trigger bond repayment clauses on the Eurobonds that African governments have been issuing at an increasing rate.”


South Africa’s central bank has issued a 3.45 billion rand ($200 million) guarantee to bail out the Corporation for Public Deposits (CPD), a government investment arm hit by surging defaults at state agricultural lender Land Bank.

The issue adds a further strain on state finances… which were already struggling before the coronavirus crisis…”


Now is the time for Africa to grow food

“This Covid-19 crisis has also exposed the extreme fragility of the global food system. Social-distancing and lockdown measures to curb the virus’s spread have significantly reduced people’s incomes and thus global food demand.”


“A lack of food security in developed countries like Israel is defined as a “lack of consistent access to enough food to allow a healthy and active life.”

“According to the National Insurance Institute, some 18 percent of families in Israel – about 440,000 families – were suffering from food insecurity.”


The United Arab Emirates imported 4,500 dairy cows from Uruguay as part of a drive to boost food security with the coronavirus disrupting global supply chains.

“The shipment of Holstein cattle is the first of many, state-run news agency WAM reported Sunday.”


A fire at Iran’s underground Natanz nuclear facility has caused significant damage

“Iran’s top security body said on Friday that the cause of the fire that broke out on Thursday had been determined but would be announced later.

“Some Iranian officials have said it may have been cyber sabotage and one warned that Tehran would retaliate against any country carrying out such attacks.”


The Iranian rial fell to a new low against the US dollar on the unofficial market on Saturday, as the economy comes under pressure from the coronavirus pandemic and US sanctions…

“The rial’s decline has continued despite assurances from Iranian Central Bank Governor Abdolnaser Hemmati last week that the bank had injected hundreds of millions of dollars to stabilise the currency market.”


Fewer than one in five of the 80 million migrant labourers allocated food aid by the Indian Government received supplies in May and June, according to new data.

Bureaucratic issues at a local level halted food from reaching those on the ground, explains Anindita Adhikari, of the Stranded Workers Action Network (SWAN) NGO.”


Sanjeev Singh (39), is among over 45,000 taxi operators in Jammu and Kashmir who are virtually on the verge of starvation due to the non-operation of their vehicles since the second week of March

“”There is no work at the local level as well. We are virtually on the verge of starvation. This taxi was the only source of income for me. — Sanjeev Singh, taxi operator.”


Japan’s huge public pension fund, the world’s biggest, said Friday it had suffered its largest annual loss since the global financial crisis, as markets tumbled amid the coronavirus pandemic.”


Cracks are appearing in China’s 21.3 trillion yuan (US$31 trillion) trust industry, a key component of the country’s shadow banking system, as fresh trouble at Sichuan Trust highlights growing risks in alternative funding for companies unable to access regular bank loans.”


Chinese regulators are urging struggling corporate bond issuers to seek voluntary debt restructuring in talks with their bondholders as a way to avoid default, as regulators last week issued new rules that seek to enforce investors’ protection amid rising defaults.”


Refining margins are absolutely catastrophic,” Patrick Pouyanne, the head of Europe’s top oil refining group Total SA, told investors last month, echoing a widely held view among executives, traders and analysts.

What happens to the oil refining industry at this juncture will have ripple effects across the rest of the energy industry.

“The multi-billion-dollar plants employ thousands of people and a wave of closures and bankruptcies looms.”


Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers

“Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency.”


The increase in global liquidity during the coronavirus crisis has happened at a much swifter pace that during the 2008 downturn, according to JPMorgan.

“Total money creation could exceed $15 trillion or more by the middle of next year as quantitative easing continues at a stronger-than-normal level, the strategists wrote.”


Countries that were already facing food insecurity before the pandemic began are particularly at risk for being pushed over the brink… we could see famine in multiple countries.”


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

3rd July 2020 Today’s Round-Up of Economic News

It is hard to imagine that the suffering and despair across the Middle East could worsen. But across Syria, Lebanon, and Iraq a new economic unravelling is continuing apace, threatening to throw the region into even deeper turmoil. In Lebanon and Syria state finances are collapsing and hyper-inflation is setting in, while in Iraq a dramatic collapse in oil revenues has depleted the budget…

“…the wider region is engulfed in a devastating economic collapse that is pushing millions of people into humanitarian crisis and risks provoking wider forces of instability. Economic implosion will further hollow out immensely weak states, laying the ground for social unrest and possible intensified conflict.”


Tribal conflicts in southern Iraq have become more frequent and deadly in recent months, as security forces have been hamstrung by local power structures and distracted by the coronavirus lockdown

“…the battles… threaten to destabilize areas around oil fields responsible for the large majority of Iraq’s production.”


Lebanon’s routine daily electricity cuts have increased up to five-fold in the capital Beirut in recent days following a corruption scandal involving Algeria’s national oil company that caused fuel shortages at power plants

“A Lebanese judge ordered the arrest of 17 people in April after fuel imported from Algeria was discovered to be tainted.”


The Palestinian government on Thursday said it will pay its employees half of their salary for the month of May, amid the decline in the country’s revenues.

“Shukri Bishara, Palestinian finance minister, said in a news conference in Ramallah that the payment of half salary will continue in the coming period “as long as the tax revenues crisis continues.””


European governments are fast learning that they’ll have to live with aid programs to save jobs and businesses longer than thought to keep the economy from falling off a cliff

“The outlook has forced officials to set aside concerns over rising debt to prolong their crisis measures…”


The collapse of Britain’s biggest shopping-mall owner is the starkest warning yet of the pandemic-related economic woes the country is likely to face.

“More than 100,000 retail jobs depend on the malls owned by Intu — and if a buyer cannot be found for the properties, those jobs will be lost.”


Almost three-quarters of UK manufacturers are preparing to cut jobs in the next six months, according to new figures that will heap further pressure on the government to protect employment ahead of an economic stimulus package expected next week…

“…executives said they were already shifting from using the furlough scheme to pay their workers to starting redundancy programmes given worries that demand will remain subdued for some time.”


The coronavirus recession has dealt a double blow to young people in the UK, who are more likely to have lost their jobs amid the lockdown and now face bleak career prospects, a leading think tank has warned.

“New research from the Institute for Fiscal Studies (IFS) today said the carnage in the hospitality and retail industries combined with the collapse of hiring is likely to “scar” young people’s careers.”


The UK and EU have said serious differences remain over a post-Brexit trade deal, following the latest negotiations in Brussels.”


“…while the White House has already boasted the report is a sign of successful economic recovery, the reality is that millions of Americans are still indefinitely out of work.

“And to make things worse, the report gets its data from a survey that was administered in the earlier half of June, before states such as California, Arizona and Texas reversed the reopening of businesses like gyms and bars in the wake of huge surges of new Covid-19 infections.”


“About 1.43 million workers filed first-time claims for unemployment insurance last week…

“That latest round of applications means more than 48 million Americans have made initial jobless benefits claims in just 15 weeks. Initial jobless claims are the nation’s most reliable gauge of layoffs.”


The U.S. trade deficit widened in May as the COVID-19 pandemic pushed exports to their lowest level since 2009, strengthening expectations the economy will contract in the second quarter at its steepest pace since the Great Depression

“Exports tumbled 4.4% to $144.5 billion, the lowest since November 2009. Goods exports plunged 5.8% to $90.0 billion, the lowest since August 2009.”


Latin American countries continue to struggle to control the spread of Covid-19, exacerbating uncertainty about the future of stay-at-home measures and complicating any assessment of the depth of the recession that regional economies will suffer this year

“Aggressive rate-cutting cycles, together with the rise in risk aversion, resulted in widespread FX weakness across the region.”


Brazil’s government on Thursday revised its 2020 fiscal outlook, forecasting significantly higher debt and wider deficits due to the COVID-19 crisis, and said it will be over a decade before public debt falls back to last year’s level

“Brazil is in for a prolonged period of severe austerity once the immediate crisis passes.”


Facing a perfect storm of sharply lower oil prices, a devastating coronavirus outbreak, loss of financing options and deep recession, Ecuador has chosen to restructure its global bonds (USD17.6 billion).

“With its resources constrained, prioritizing debt service against such a dire backdrop had become economically and politically untenable.”


A British judge rejected a claim by Venezuelan President Nicolás Maduro seeking the release of $1bn of the country’s gold reserves held in a Bank of England vault, a decision that sustains US-led efforts to cut off the authoritarian leader’s regime financially…

“[because] the UK government officially recognised US-backed opposition leader Juan Guaidó as Venezuela’s legitimate president…”


“Despite comparatively solid financial indicators through the end of March 2020, Fitch Ratings revised the Long-term Issuer Default Rating (IDR) Outlooks on the large, private-sector Peruvian banks it rates (with the exception of Scotiabank Peru, which benefits from support) to Negative from Stable in late April.”


Falling world oil prices and the coronavirus pandemic have made Angola one of the countries most exposed to financial crisis

“Angola is struggling to meet repayment deadlines for eurobonds issued by the country and will have to mobilise $1.5bn this year.”


[Ghanaian customers] fumed over the government’s announcement that they [customers] of collapsed banks should forfeit 50% of their deposits if they want their deposits paid back to them.

“They passionately called on their colleagues across the country to massively vote out the Nana Addo led New Patriotic Party’s government, accusing government of visiting innocent citizens with unjustified hardship.”


“Across the globe, the pandemic has tanked economies as the world faces its worst collective downturn since the Great Depression.

Russia has been particularly hard hit by the twin blows of the coronavirus and the collapse in oil prices. Russia relies on taxes from the oil and gas sector for 40 percent of its budget.”


As poverty rises in Japan, the country’s middle class is slowly eroding away, according to a recent report by Oxford Economics’ Shigeto Nagai.

““After the bubble burst in the 1990s, income has declined across the income percentiles, and the share of low-income households has risen as those of middle- and high-income groups shrink,” Nagai, who is head of Japan economics at the firm, wrote in the report.”


The ramifications of a new security law imposed on Hong Kong by China are still unfolding, as authorities moved to outlaw a popular protest movement slogan and at least one prominent activist fled the city rather than face potential arrest.

“Nathan Law, a former lawmaker and leader of the 2014 Umbrella Movement, said late Thursday that he had left Hong Kong…”


What is the credit market telling us exactly? Stresses lie ahead.”


“…an accentuation of the economic crisis could tip more companies into insolvency – sending credit defaults at banks surging. Those spared will revisit credit lines in March and April they tapped in the initial panicked weeks of the crisis to pad their liquidity cushions.

This type of «run» on credit, the bankers report, can lead to liquidity issues for banks – the interbank market threatens to dry up when institutes refused to lend to each other anymore (a phenomenon vividly demonstrated on a large scale in 2008/09)…

“…the fact the central bankers and financial supervisors have [this scenario] in their sights speaks volumes – and they are already issuing warnings.”


“…a negative interest rate environment can be particularly tough for anyone in retirement living off their savings.

“It can also be a very difficult concept to communicate to consumers. Jane Sydenham, investment director at Rathbones, said: “It’s hard to tell people they’ll earn negative interest on their savings. It doesn’t feel good and can potentially lead to people pulling money out of the banks and building societies and sticking it under the mattress, at risk of burglary and fire.””


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