Daily updates on climate change and the global economy.

Economy 7 Aug 2018 China will not be blackmailed

China will not be blackmailed“China’s state media continued its aggressive rhetoric against U.S. President Donald Trump’s administration, accusing Washington of being “double-faced” amid an ongoing trade dispute.

“”Pointing China with (sic) gun and artillery and then asking for a talk, the U.S. showed zero sincerity,” said the People’s Daily newspaper late on Monday.

“”Washington is playing double-faced tactics in the ongoing trade war,” the official newspaper of the Chinese Communist Party said in its editorial.”


“A major police presence sealed off a large section of Beijing’s financial district as petitioners gathered to protest over losses from investing in risky and unregulated peer-to-peer (P2P) lending platforms… Problems in the P2P investment business, estimated by Bloomberg to be worth €167 billion annually and with 50 million users, have been brewing for a while. The sector is largely unregulated and many investors have not been able to access their funds in recent weeks.”


“The Iranian central bank’s top foreign exchange official was arrested as part of a crackdown on financial fraud, the judiciary said on Sunday. Ahmad Araghchi’s detention happened one day after he was fired and as a new plan was revealed to ease forex rules amid a plummeting currency and rising prices.”


“Inflation [in the Philippines] continues to surprise on the upside making an aggressive monetary policy response imperative.”


“Kenya is weighed down by swelling public debt and faces the possibility of a debt crisis (where the government can’t repay what it owes).”


“I think that the new US sanctions have increased the odds of a balance-of-payments crisis in Turkey. I worry about the heavily indebted corporate sector. Turkish banks have about $55bn in forex deposits but they face heavy external debt repayments in the next 12 months. Both Turkish banks and companies need to retain access to external markets.”


“Brazil closed its northern border to Venezuelans on Monday to slow mass migration from the South American country saddled with a crippling political and economic crisis, police said.”


“Venezuelan consumer prices rose to 82,766 percent in the 12 months ending in July, a member of the opposition-run congress reported on Monday, as the OPEC nation’s hyperinflation continues to accelerate amid a broader economic collapse.”


“The pound fell to a fresh eleven month low against the U.S. dollar Monday amid concern that Britain could leave the European Union next year without a formal trade deal, a so-called ‘Hard Brexit’ that could seriously damage growth prospects in the world’s fifth-largest economy.”


“…overall drug-related deaths [in the UK] last year rose to the highest levels since records began.”


“Germany’s total construction activity growth halted in July on a renewed downturn in civil engineering.”


“The “golden years” of retirement are significantly tarnished for some older Americans, whose ranks among the bankrupt have surged fivefold since 1991. Even though the U.S. population is aging, the spike in older Americans entering bankruptcy far exceeds the demographic shift… The culprit appears to be cutbacks in the social safety net — such as raising the retirement age and requiring seniors to pay more out-of-pocket health care costs — as well as a shift in risk from government and corporations onto individuals.”


“Put simply, the indicator is the total market cap of all U.S. stocks relative to the country’s GDP. When it’s in the 70% to 80% range, it’s time to throw cash at the market. When it moves well above 100%, it’s time to lean toward risk-off. Where’s it now? Approaching 140% and a new record high, according to Adem Tumerkan of Palisade Research. In our call of the day, he says that the indicator proves stocks are “extremely overvalued” and there’s “huge downside ahead.””


Read yesterday’s ‘Economy’ thread here.

Economy 6 Aug 2018 World unprepared for GFC 2.0

We have limited tools for GFC 20.0“Nobody really knew it at the time but 10 years ago the world was sitting on the edge of the precipice. It seemed like a normal sleepy August but the calm was illusory. The global financial system was seizing up. The collapse of Lehman Brothers was but a month away.

“Eventually policy makers finally understood the enormity of what was happening. They responded swiftly and decisively as the crisis spread from the banks to the rest of the economy. They needed to. During the winter of 2008-09, trade and industrial production were collapsing more quickly than they had during the Great Depression.

“Now imagine if something similar were to happen again… China’s debt; Brexit; a global trade conflict: any of them could blow up into something serious. These sort of events form the basis of the war games that policy makers play from time to time.

“In the winter of 2008-09 action was taken to prevent a deep recession turning into a 1930s-style slump. What’s worrying is that it might not be possible to do the same again, at least not by the means used last time…

“There are at least four ways in which policy is more constrained than it was a decade ago. First, and most obviously, there is monetary policy; the options available to central banks…

“One of the small comforts from the crisis of 2008-09 was that it generated a sense of international solidarity because the world’s biggest economies quickly realised they need to help each other… As Adam Tooze notes in his new book about the crisis, Crashed, the US Federal Reserve quietly acted as the lender of last resort to Europe’s troubled banks…

“Feast has been replaced by famine. Wage rises have turned into pay freezes; living standards have stagnated and the public sector bears the scars of a decade of cuts. Austerity fatigue has set in, making it nigh on impossible for governments to insist that voters endure a new round of sacrifices. The public mood is already sour.

“To summarise, the scope for monetary policy is limited, finance ministries are wary of borrowing more, the international community is riven and populism is on the rise almost everywhere…

“So what options are there? Initially, the response will be more of the same: monetary and fiscal policy will be eased to the extent that it can be. But if that does not work, more radical ideas will be canvassed, including reducing the size of the state; negative interest rates; a more targeted form of QE to fund infrastructure; and tax cuts financed by the printing of money.”


“The [UK] services sector contracted for the first time in eight years last month amid growing fears about a possible no-deal exit from the European Union. The BDO Output Index recorded a drop of more than two points in services output in July, pushing the survey into negative territory for the first time since early 2010.”


“The UK appears set to crash out of the EU without a Brexit deal due to the “intransigence” of the Brussels machine, Liam Fox has claimed. The international trade secretary put the chances of a no-deal Brexit at “60-40”.”


“German factory new orders fell dramatically in June slumping -4.0% over the month in June compared to -0.2% monthly decline expected.”


“As the world’s major central banks seem anxious to normalize monetary policy, there is one important factor that they are overlooking. It is that well before year-end, their plans to raise interest rates and to temper their asset-buying programs could be upended by an economic and financial market crisis in Italy, the eurozone’s third-largest economy… That in turn could shake the global economy to its foundations. Unlike Greece, Italy is too big to fail for the euro to survive in its present form, yet it could also prove to be too big for Europe to save it.”


“Greece tops all countries in the developed world in unemployment according to the Organization for Economic Cooperation and Development’s (OECD) Employment Outlook 2018. Greece has suffered a dramatic spike in unemployment, with the 2017 total climbing to 21.7% of the working population, more than double the 2006 figure.”


“The 2008 “Lehman shock” is finally catching up with China. Beijing beat the odds for a decade, with the Chinese economy growing at above 6.5% year after year. It managed that feat with an epic explosion of credit and debt at government and corporate levels… That bill is now coming due. This year marks one of the busiest redemption periods for yuan and offshore debt since the post-Lehman Brothers collapse. Between now and Dec. 31, companies face $365 billion of bond payments… There are two reasons to think things will get worse — a sliding Chinese currency and Donald Trump’s escalating trade war.”


“Outstanding consumer loans — used for vehicle purchases, holidays, household renovations and buying expensive household goods — in China grew nearly 40 per cent last year to reach Rmb6.8tn, according to Chinese investment bank CICC.”


“President Donald Trump’s trade war with China is entering its sixth month, and there are no signs it will end anytime soon. Both Trump and China continue to issue new threats of tariffs. And negotiations have been scarce, increasing the possibility of a drawn-out fight. Ed Mills, a policy analyst at Raymond James, said in a note to clients that while the possibility of a breakthrough deal remains, it is unlikely to come without increased trade restrictions.”


“The mood in America is arguably as dark as it has ever been in the modern era. The birthrate is at a record low, and the suicide rate is at a 30-year high; mass shootings and opioid overdoses are ubiquitous. In the aftermath of 9/11, the initial shock and horror soon gave way to a semblance of national unity in support of a president whose electoral legitimacy had been bitterly contested only a year earlier. Today’s America is instead marked by fear and despair more akin to what followed the crash of 1929…”


“These days, though, most workers don’t receive their fair share of economic output. An outsize share instead flows to corporate profits and the rich… Add it all up — faster inflation plus mediocre nominal-wage growth — and you get a stagnation in real wages. Welcome to the Trump wage slump.”


“If inflation accelerates as I expect, the Fed is likely to dial up interest rates rapidly. I have recently bumped up my interest rate forecast, predicting that the Fed Funds rate rises by 1.5 percentage points a year, rather than the one point per year they currently expect.”


“Venezuelan authorities said Sunday they arrested six suspects tied to an alleged plan to assassinate President Nicolás Maduro using a pair of drones armed with explosives, showing the leader’s fragile hold on power amid a crippling economic crisis. Critics warned that Maduro could use the purported plot, which injured seven soldiers and interrupted him as he addressed a military parade Saturday in downtown Caracas, as a pretext to intensify a crackdown on dissidents.”


Read the previous ‘Economy’ thread here.

Economy 3 Aug 2018 Turkish lira hits record low

“Turkey’s currency plummeted to a record low against the dollar Wednesday after the Trump administration said it plans to impose sanctions on its NATO ally for failing to release a detained American pastor who has been imprisoned in the country for nearly two years…

“The lira has shed nearly a third of its value against the dollar this year. It has faced mounting pressure following the June reelection of President Recep Tayyip Erdogan, who grabbed newly-granted executive powers in the historic political change…

“The weakening currency is expected to hit the Turkish economy hard given the country’s heavy dependency on outside sources of funding which will now be more expensive to service.”


“Iran faced fresh warnings over human rights abuses on Tuesday as its economic crisis worsened and hundreds of protesters took to the streets.”


“Pakistan’s incoming finance minister estimates the economy may need more than $12 billion to halt a looming financial crisis, with a decision on where to source the funds to be made within six weeks.”


“China-focused stocks and the renminbi fell in the morning session in Asia on Friday as fears over the trade war between the US and China continued to worry investors.”


“The yuan has weakened by 9 per cent against the US dollar since mid-April. This is the steepest fall for the micro-managed exchange rate for a quarter century… The weak yuan is no longer just a strong US dollar story. The currency has been tumbling against the other big world currencies, the euro and the yen. China’s leaders have breached their pledge to hold the country’s currency basket “generally stable”. The People’s Bank (PBOC) commands $US3.1 trillion of foreign exchange reserves. And it has chosen not to use this firepower to stabilise the yuan.”


“Australia’s four biggest banks have used their dominant position to exploit customers, deliver inferior products, charge exorbitant fees and block competition, according to a new government report calling for more competition and integrity in the industry.”


“Swelling government debt levels are shaping up to be the biggest economic challenge for President Donald Trump, a problem that could spill into the stock market.”


“Higher prices. Disrupted supply chains. Wavering exports. Those are some of the ways that some of Europe’s biggest companies have been affected by President Trump’s trade war, offering a preview of how tensions in global commerce could begin to ripple through the European economy.”


“The Bank of England raised its benchmark interest rate for only the second time in a decade, as worries over inflation trumped concerns about Brexit and a brewing global trade war.”


“The Bank of England’s decision to raise interest rates on Thursday was seen in some quarters as a welcome step on the road to post-financial crisis normality, putting the UK central bank in step with policymakers at the US Federal Reserve. For others, it was a reckless misjudgment, given the existing pressures on consumers and the growing risks of a no-deal Brexit that could derail the economy.”


“The Trussell Trust, an anti-poverty charity, said an increase in food bank use over the summer was driven by a rise in demand by children, as it released figures from its network of more than 420 food banks across the country.”


“Italian government debt sold off sharply for the second day running on Friday morning, hitting lows not seen since a post-election crisis in June sparked fears a new populist coalition was contemplating a departure from the eurozone… The moves took Italian yields to their highest level since early June, and reflect investors’ persisting concerns about the country’s economic and fiscal outlook under the Eurosceptic coalition government.”


Read yesterday’s ‘Economy’ thread here.

Economy 2 Aug 2018 global economy vulnerable

Ten years ago, deteriorating confidence in the value of US sub-prime mortgages threatened a liquidity crisis. The US Federal Reserve injected considerable capital into the market, but could not prevent the 2008-2009 global financial crisis…

“Most developed country governments are now more heavily indebted than in 2008, when they bailed out large financial institutions, but failed to sustainably revive the world economy. Major monetary authorities do not have much policy space left after long pursuing unconventional expansionary policies.

“Meanwhile, developing countries have been subject to increasing international integration, e.g., through global value chains, foreign financial institutional investments and increased short-term capital flows induced by the unconventional monetary policies of the US Fed, ECB and Bank of Japan, while debt-sustainability concerns for some are growing again.

“These vulnerabilities have been compounded by growing trade protectionism, and dwindling precautionary reserve holdings of many developing economies as global trade has slowed. Even before President Donald Trump’s election, developed countries had effectively killed the Doha Development Round, not least by opting for bilateral and plurilateral, instead of multilateral free trade deals.

“Trump’s more explicit rejection of multilateralism in his efforts to eliminate major US bilateral trade deficits are now expected to further set back prospects for world economic recovery. Despite pious declarations to the contrary, most national policymakers typically turn from rhetoric about international cooperation to focus on domestic issues.

“It has not been different this last time. A decade after the worst economic downturn since the 1930s’ Great Depression, the world economy remains vulnerable.”


“U.S. interest rates are moving higher because the U.S. government is taking on more longer term debt and global central banks are stepping back from some of the easy policies they adopted in the financial crisis… For its part, the European Central Bank is also stepping away from easy policies, though more stridently. It is expected to soon end its asset purchase program. That, too, could pressure global rates higher.”


“The Bank of England is poised to raise interest rates above the level set since the aftermath of the financial crisis for the first time, despite a weakening outlook for the British economy and growing risks from Brexit.”


“Factory growth stuttered across the world in July, heightening concerns about the global economic outlook as an intensifying trade conflict between the United States and China sent shudders through trading partners.”


“President Trump is expected to provide an update on the China trade war later today. Expectations are that the $200 billion worth of Made in China goods being tossed around to get hit with a 10% duty at American ports will now be upped to 25%.”


“Police fired tear gas to disperse stone-throwing protesters in Harare on Wednesday as the main opposition leader accused the ruling party of trying to rig the result of Zimbabwe’s election.”


“South Africa’s white farmers on Wednesday criticized the ruling African National Congress’ (ANC) decision to endorse constitutional changes to allow the state to seize land without compensation, saying the move would be “catastrophic”.”


“Saudis are increasingly taking on such “low status” jobs in a new age of austerity when gas is no longer cheaper than water, with the government trimming oil-funded subsidies and tackling sluggish economic growth and high unemployment.”


“Mohammad is among the hundreds of thousands of Afghan migrants who once flocked to Iran for work but who have returned to their war-torn homeland amid a crippling economic crisis.”


“The southern city of Basra was once known as the “Venice of the East” because of its freshwater canals, and Iraq itself is still known as the “Land Between the Two Rivers” — the Tigris and the Euphrates — which have nourished civilizations since antiquity. But upstream dams in Turkey, Syria and Iran have shrunk the rivers and their tributaries, seasonal rainfall has dropped and infrastructure has fallen into disrepair. The result is an acute lack of freshwater…”


“The Pakistan Bureau of Statistics (PBS) has said that the Consumer Price Index-based inflation rate in Pakistan has surged to a four-year high in the month of July 2018.”


“Turks registered 64,341 motor vehicles in June, a decline of 36 percent from May and 33 percent compared with the same month of 2017, the Turkish Statistical Institute said on its website on Wednesday.”


“According to the United Nations High Commissioner for Refugees (UNHCR), at least 23,000 people have fled Nicaragua to Costa Rica due to the neighboring country’s violent conflict.”


“Venezuelan gangs are already making their influence felt in Guayanese territory. In April miners in the town of Eterinbang, south of Whitewater, reported that heavily armed sindicatos had set up a base on the Cuyuni river and were attacking boats that refused to give in to their extortion attempts.”


“The last time Argentine companies embarked on buyback programs on a large scale was during the 2008-2009 financial crisis that plunged Argentina into recession. The only other time was in 2002, when the country defaulted on its foreign debt and the economy collapsed.”


Not good, as we need robust debt growth: “State and local governments and companies are expected to issue fewer bonds this year for the first time since 2015, a cautionary sign for the economy as market volatility and rising interest rates start to weigh on appetites for borrowing. Global bond issuance is expected to fall to roughly $6 trillion in 2018, down 4.2%.”


Read yesterday’s ‘Economy’ thread here.

Economy 1 Aug 2018 US fiscally reckless

US borrowing most since financial crisis“The Treasury Department predicted in a report Monday that the government’s borrowing needs for the second half of 2018 will be $769 billion — the highest its borrowed since 2008 during the financial crisis.

“Bloomberg reports that Treasury foresees issuing $329 billion in net marketable debt between July and the end of September, and another $440 billion between October and the end of the year. The total $769 billion comes in at the highest borrowing estimate since $1.1 trillion between July and December of 2008 in the middle of the financial crisis.

“The net marketable debt the Treasury expects to issue from July through September is also the fourth-largest total for that quarter and far higher than was estimated earlier this year.”


“Before 2030, we could have trillion-dollar annual interest payments. Interest rates have been low until now, but that is changing. As rates go up, we have to pay more on new debt and on all accumulated debt.

The amount we pay in interest on the debt is set to triple over the next ten years. But if interest rates rise just 1 point higher than expected, the government will owe an extra $1.9 trillion over 10 years.”


“In the longer term, the cut will further denude the US government of revenues at a time when an ageing population is pushing up the cost of Social Security and Medicare.”


“It is crucial for banks to maintain sufficient loss-absorbing capital buffers to weather the next economic downturn. Research shows, however, that bank capital levels are still too low. It is particularly important for regulators to address this issue promptly given the economy’s position in the business cycle.”


“A widening in credit spreads means that investors require additional returns to hold corporate bonds — indicating that there is more risk and that economic conditions are expected to deteriorate. In a note earlier this month, Crossborder Capital said that wider spreads are not just a risk for the United States, but also to other international markets, “such as European high-yield and emerging markets credits” that “could be sucked into the vortex.””


“Mexico’s economic output shrank slightly in the second quarter as a decline in industrial production offset gains in services.”


“The rolling power blackouts in the [Venezuelan] state of Zulia pile more misery on Venezuelans living under a fifth year of an economic crisis that has sparked malnutrition, hyperinflation and mass emigration.”


“Brazil’s central bank is likely to hold interest rates at an all-time low on Wednesday even after inflation jumped back within its target range, due to an underwhelming economic recovery keeping a lid on price pressures”


“Turkish government bonds extended losses amid concern that a diplomatic spat with the U.S. over a detained American pastor in Turkey is escalating. The yield on 10-year debt jumped …to an all-time high of 18.86 percent after Sabah newspaper reported that a Turkish court rejected an appeal by lawyers for Andrew Brunson to be released and for his travel ban to be lifted. The U.S. is threatening imminent sanctions on Turkey should he not be released.”


“Hundreds of Iranians joined a street protest Tuesday in the central city of Isfahan to denounce the government’s handling of economic problems, including the record low value of Iran’s currency.”


“Officials in Islamabad have accused Washington of trying to strong-arm Pakistan into scaling back billions of dollars’ worth of Chinese investment in their country’s infrastructure as part of a potential bailout by the IMF.”


“While a meeting of the [Chinese] Politburo Tuesday recognized that the external environment — read Donald Trump’s trade war — has “significantly changed,” the nation’s top leadership under President Xi Jinping affirmed that the campaign will continue, albeit at a more measured pace. That matches the approach of the government as a whole, which has rolled out targeted policy shifts from tax breaks to bond-market support in recent weeks.”


“The manufacturing sector in South Korea continued to contract in July, and at a faster rate, the latest survey from Nikkei revealed on Wednesday with a PMI score of 48.3. That’s down from 49.8 in June, and it moves farther beneath the boom-or-bust line of 50 that separates expansion from contraction.”


“House prices have fallen at their fastest rate in more than six years, fuelling concerns that prices in Sydney and Melbourne may fall “too far, too quickly”, hurt economic growth and drive anxiety among policymakers.”


“The eurozone’s economy slowed further in the three months through June, as exports sputtered and business confidence weakened on worries over future relations with the currency area’s largest trading partners.”


“…even the most committed euro enthusiast cannot honestly say that the single currency has been a success. Europe has quite plainly overextended itself. Unfortunately, the sociologist Ralf Dahrendorf was right to conclude: “The currency union is a grave error, a quixotic, reckless and misguided goal, that will not unite but break up Europe.””


“Greece still faces an uphill struggle after the end of its bailout program and it is not clear that its public debt load will be sustainable in the long term, the International Monetary Fund said Tuesday.”


“A wave of defaults from sellers in the internal market in Russia has exacerbated quality-driven concerns over the size of this year’s wheat crop…”


Read yesterday’s ‘Economy’ thread here.

Economy 31 July 2018 US housing market ominous

US housing market raises red flag“Friday’s report on US economic growth spurred a presidential victory lap after it showed that gross domestic product rose at a 4.1% annual rate, the fastest in nearly four years.

“But it had an ugly detail about the housing market that added to evidence of a slump: Residential investment, which includes construction and brokers’ fees, shrank in the second quarter for a third quarter out of four.

“Add this to the worst housing affordability in nearly a decade and rising mortgage rates, and you have a recipe for a slowdown.

“For Lindsey Piegza, the chief economist at Stifel, the housing market “raises a large red flag” about economic growth in the second half of the year. She added that home sales help drive other parts of the economy, including consumer confidence and the pace of construction.”


“Many [US] retirement funds could face insolvency.”


“”I don’t want to scare the public, but we’ve never had QE,” [Jamie] Dimon said. “We’ve never had the reversal. Regulations are different. Monetary transmission is different. Governments have borrowed too much debt, and people can panic when things change.””


“Canada is finding it harder to attract the foreign investment in its bonds and stocks that it needs to finance a current account deficit, as yields rise at a faster pace in the United States and structural headwinds stifle prospects for domestic economy.”


“[UK] Households are piling billions of pounds of debt on to credit cards, overdrafts and personal loans at record levels in a trend that economists are warning is unsustainable just as interest rates are set to rise. Years of weak wage growth and a recent rise in inflation has led consumers to borrow huge amounts of unsecured credit in order to sustain their normal spending over the past year.”


“Spanish economic growth slowed to its weakest pace in four years in the second quarter of the year, providing the latest evidence that the eurozone boom of late 2017 has moderated since the start of the new year.”


“The Turkish Treasury’s domestic debt has increased by 25.8 billion lira since the beginning of the year, reaching 561.2 billion lira, whilst the Treasury’s external debts have increased by 67.6 billion lira in 6 months, reaching 408.6 billion lira. Household debt, meanwhile topped 500 billion lira as of May this year.”


“As Libya slips deeper into an economic crisis, cracking down on smuggling has risen higher on the agendas of local authorities and militias. Gasoline, in particular, has become contentious – and last year, amid increasing public outrage in western Libya, the informal agreements that regulate border smuggling started to limit quantities of gasoline. As a result, the price of the gasoline consumed by many in southern Tunisia has more than doubled. “


“China’s official factory gauge cooled this month as the impact of trade turbulence with the U.S. on confidence and the currency began to bite.”


“China-based manufacturers were already in the process of moving to lower-cost Southeast Asia. Now that trade tariffs have been enacted on at least $50 billion worth of goods, and another $200 billion likely by summer’s end, they are shifting their supply chain. It’s happening.”


“A Bloomberg gauge tracking the performance of China-listed brokerages has fallen to its lowest reading relative to the Shanghai Composite Index in over a decade.”


“The weekly chart shows that after the June 7 high, the price of copper has declined for seven consecutive weeks… China is the world’s leading copper consumer and a trade dispute between the Chinese and United States is at the heart of the protectionist rhetoric and actions over recent weeks.”


“The summer slump in freight markets continued last week…”


“Indonesian President Joko Widodo has asked his ministers to make “serious” efforts to strengthen the country’s foreign exchange reserves amid pressures caused by a global trade war. “The country needs dollars now,” Widodo said in a cabinet meeting on Tuesday.”


“The Bank of Japan owns 80% of the country’s ETFs and is a top ten shareholder in nearly 40% of listed companies… Japan’s financial markets (the same situation exists in the Japanese bond market where the Bank of Japan owns a huge percentage of the market and is running out of bonds to buy in the world’s second largest bond market, which is also the world’s most illiquid bond market) are a study in Ponzi finance…

“At some point, presumably, the Bank of Japan and GPIF will have to stop or significantly slow down their buying, which will pull the rug out from under this entire phony market. And when that happens… it will cause serious problems in global financial markets.”


“Business confidence continues to slide [in New Zealand] according to the latest ANZ Business Outlook Survey. Business confidence, and firms’ views of their own activity, continued to fall in July, reaching the lowest levels since May 2008 and May 2009 respectively, ANZ chief economist Sharon Zollner said.”


Read yesterday’s ‘Economy’ thread here.