by Panopticon | Nov 12, 2019 | Economy
“…what’s particularly worrying about this economic slowdown is that the recovery from the global financial crisis is not finished…
“If there was a debt crisis, that would likely tip an economy into recession.
“As economic growth slows, it could become harder for firms and households to repay the debt that they borrowed. It’s not dissimilar for governments.
“As income growth slows, debt become less manageable. That could affect banks as the monies that they lent may not be repaid which weakens their balance sheet.
“So, a slowdown that triggers a debt crisis could then become a recession or worse.”
https://www.forbes.com/sites/lbsbusinessstrategyreview/2019/11/11/global-slowdown-worries/#40d353e74a25
“It’s as bad a time for the global economy as any since the end of the last recession, according to two separate surveys released on Monday.
“The IHS Markit global business outlook—which surveys 12,000 companies three times a year—fell to the worst level since 2009, when data was first collected.
“The Ifo world economic outlook, which surveys 1,230 people in 117 countries, fell in the fourth quarter to the worst level since the second quarter of 2009.”
https://www.marketwatch.com/story/two-surveys-of-global-businesses-slump-to-gloomiest-level-since-recession-2019-11-11
“65% of [US] respondents to a recent CNBC + Acorns Invest in You survey on voter attitudes toward money and the economy think a recession is likely next year.
“What’s more, a large percentage of those are taking steps to prepare. Nearly half of those polled are paying down debt, 45% are cutting household spending, and over a third are putting money in an emergency fund.”
https://www.cnbc.com/2019/11/11/many-americans-are-fighting-the-fed-good-for-them.html
“Auto dealers, car buyers and vehicle salespeople are treating cars a lot like houses during the last financial crisis, piling on debt to the point where the debt often exceeds the car’s value.
“It’s a phenomenon known as being underwater — or negative equity — and it can leave car owners trapped, Wall Street Journal reported.”
https://moguldom.com/239106/underwater-consumers-are-treating-cars-a-lot-like-houses-during-the-subprime-mortgage-crisis/
“The companies that provide sand for hydraulic fracturing operations are the latest casualties of shale industry cutbacks as low oil prices and demands for higher investor returns stunt drilling activity.
““If you look at Permian frack sand prices, we estimate they are down about 80% from the peak,” he added in an interview on Monday, noting that at least two mines in West Texas have closed.”
https://uk.reuters.com/article/us-carbo-ceramics-results/us-frack-sand-suppliers-latest-casualties-in-shale-industry-slump-idUKKBN1XL25E
“More than 620,000 [UK] manufacturing jobs have been lost since the financial crash a decade ago, a study suggests. The GMB union said its research showed a fall of 17 per cent since 2007, when the UK supported 3.5 million permanent and temporary manufacturing jobs.”
https://www.thelondoneconomic.com/business-economics/620000-manufacturing-jobs-have-been-lost-since-financial-crisis/11/11/
“Britain’s economy has grown at the slowest annual rate in almost a decade, according to official figures. Year-on-year growth in the three months to end-September slowed to 1% from 1.3% in the second quarter, the Office for National Statistics said.
“An ONS spokesman said: “Looking at the picture over the last year, growth slowed to its lowest rate in almost a decade.””
https://www.bbc.co.uk/news/business-50373505
“Spain has suffered its most fragmented and polarised election result since returning to democracy in the late 1970s after holding its fourth general election in four years last weekend.
“The leader of Spain’s pro-market Ciudadanos party resigned after seeing its vote share crumble, while the hard-Right Vox party doubled its seat tally…”
https://www.telegraph.co.uk/news/2019/11/11/hundreds-catalan-independence-protesters-block-highway-france/
“Heralded by Zimbabwe’s central bank and its President Emmerson Mnangagwa as the answer to an acute cash shortage that has hamstrung the country’s economy, new low-denomination banknotes were due to enter circulation on Monday.
“But by noon they had seemingly failed to arrive.”
https://www.iol.co.za/news/africa/new-banknotes-fail-to-arrive-as-financial-crisis-in-zimbabwe-continues-37029610
“Iraqi protesters in Maysan province have blocked roads leading to Al-Shayib border crossing with Iran and one of the province’s largest oil fields, a security source said yesterday.
“Anadolu Agency quoted the source as saying that the protesters have closed the roads leading to the border crossing linking the province of Maysan and Iran, and set up roadblocks and set tyres on fire.”
https://www.middleeastmonitor.com/20191111-iraq-protesters-close-land-crossing-with-iran/
“Thousands of students at one of India’s most prestigious universities have clashed with police, amid massive protests over a hostel fee hike.
“Police used water canons against students from Jawaharlal Nehru University (JNU) after they broke through barricades and surged forward.”
https://www.bbc.co.uk/news/world-asia-india-50371487
“The main reason you can’t trust China’s national GDP statistics is that you can’t trust regional Chinese statistics.
“The leaders of China’s 32 regions are under heavy pressure to meet growth targets set by the national government, and local statistical agencies fudge the numbers to hit those targets. The central government acknowledges this…”
https://qz.com/1734563/chinas-regional-gdp-numbers-suggest-a-slowdown/
“A citywide anti-government protest plunged Hong Kong into transport chaos throughout Monday, crippling metro, bus and cross-border services and making it difficult for millions of commuters to get home after work.
“The turmoil was expected to persist on Tuesday as defiant protesters vowed to keep fighting…”
https://www.scmp.com/news/hong-kong/transport/article/3037270/hong-kong-plunged-commuter-chaos-protesters-block-roads
“The Chilean government has agreed to write a new constitution to replace one dating back to the Pinochet dictatorship, a central demand of protesters who have taken to the streets in recent weeks…
“The document would be put to a public referendum.”
https://www.aljazeera.com/news/2019/11/chile-write-pinochet-era-constitution-win-protesters-191111124718371.html
“Bolivia’s ousted president Evo Morales was flying to political asylum in Mexico on Monday night, the latest step the once-beloved leader’s rapid fall, while military and police deployed in the streets of La Paz to quell violence.
“Morales, who was the country’s first indigenous president, boarded a Mexican government plane from the central Bolivian town of Chimore…”
https://uk.reuters.com/article/uk-bolivia-election/bolivias-morales-boards-plane-to-mexico-as-protests-rage-in-la-paz-idUKKBN1XL1DZ
“Ratings agency Moody’s has issued a debt downgrade warning to the entire world on fears that political turmoil from Westminster to Hong Kong poses a threat to the economy.
“It cut its global sovereign outlook to “negative” from “stable” for 2020, cautioning that “disruptive and unpredictable” politics was worsening the slowdown in growth.”
https://www.telegraph.co.uk/business/2019/11/11/moodys-issues-debt-downgrade-warning-entire-world/
“…the [stock] market rallies appear to be at odds with the fundamentals and would seem to have more to do with liquidity, giving rise to a ‘disconnect’ whereby markets ‘melt up’ seemingly regardless of the economic landscape.
“This can only continue if the fundamental news begins to get better, catching up with the positive market trends. So far there are few signs that this is happening and with risks over trade, Brexit and geopolitics having not gone away, it is probably wise to view such a ‘disconnect’ cautiously.”
https://www.thenational.ae/business/money/the-disconnect-between-global-markets-and-the-economy-is-growing-1.935525
“Investment firm Schroders estimates global economic losses from climate change could reach $23 trillion per year in the long term if action isn’t taken.
“That’s almost four times the impact of the 2008 financial crisis.”
https://www.risk.net/risk-management/7147041/climate-risk-a-new-normal
Read the previous ‘Economic’ thread here and visit my Patreon page here.
by Panopticon | Nov 11, 2019 | Economy
“A decade after the global financial crisis, with the world’s leading economies still addicted to the near-zero interest rates of the emergency response of quantitative easing, it seems the global economy remains on life support, with our experts still flummoxed about how to restore economic health.
“…the UN Department of Economic and Social Affairs, the Organisation for Economic Cooperation and Development and the World Trade Organisation, are predicting worse to come.Trade across the world is stalling. Most leading economies are reporting near-zero economic growth. Investment is in decline. Most expert organisations, including the International Monetary Fund…
“After using so much of our monetary ammunition to fight off a recession in 2009 but still not putting risks to rest, there are worrying questions about where the resources can be found to fight off a new recession…
“If we are on the brink of a new recession, and even China is not on hand to provide fiscal stimulus, then how dangerously ill-equipped are we?”
https://www.scmp.com/comment/opinion/article/3037081/world-economy-headed-recession-china-wont-be-there-save-it-time
“China’s economy is in a deflation-inflation trap. Producer prices are falling, as consumer prices rise.
“That’s according to statistics published last week by National Bureau of Statistics (NBS). They show that the prices China’s factories charge to their clients are in a deflationary spiral, while prices charged by retailers to consumers are in an inflationary spiral.”
https://www.forbes.com/sites/panosmourdoukoutas/2019/11/10/chinas-price-trap/#49ff28505454
“Auto sales in China fell for a 16th consecutive month in October, with the number of new energy vehicles sold contracting for the fourth month in a row, data from the country’s biggest auto industry association showed.
“Total auto sales in the world’s biggest auto market fell 4% from the same month a year earlier, the China Association of Automobile Manufacturers said on Monday.”
https://www.euronews.com/2019/11/11/china-auto-sales-fell-4-percent-in-october-16th-month-of-decline
“Slowing economy puts strain on public finances and raises risk of social unrest. …
“China’s local governments face a record number of lawsuits for failing to pay their contractors as the country’s slowing economy puts a strain on public finances.””
https://www.ft.com/content/36a1115a-002b-11ea-b7bc-f3fa4e77dd47
“When the call came for local doctors and nurses to step up for their troubled community, the emergency wasn’t medical. It was financial.
“Ruzhou, a city of one million people in central China, urgently needed a new hospital, their bosses said. To pay for it, the administrators were asking health care workers for loans. If employees didn’t have the money, they were pointed to banks where they could borrow it and then turn it over to the hospital.”
https://www.nytimes.com/2019/11/10/business/china-debt-hospitals.html
“When Pakistan and China sat down recently for talks on Beijing’s major Belt and Road initiative known as the China-Pakistan Economic Corridor (CPEC)
“…the China side showed a distinct lack of enthusiasm toward pumping more money into new projects.”
https://asia.nikkei.com/Spotlight/Belt-and-Road/China-s-mood-chills-on-new-Belt-and-Road-projects-in-Pakistan
“China’s economy is slowing, Donald Trump’s “America First” policies are hurting global trade and China’s factories are becoming rivals to the German giants that once supplied them.
“The slowdown is not helping at a challenging time for Germany. Its economy contracted 0.1% in the second quarter and some analysts expect third-quarter gross domestic product (GDP) data due on Nov. 14 to show a similar decline…”
https://in.reuters.com/article/us-germany-economy-china/germanys-chinese-growth-engine-stalls-idINKBN1XL0PO
“The UK’s credit rating could be downgraded, according to ratings agency Moody’s, which says Brexit has caused “paralysis in policy-making”.
“It has changed the outlook on the UK’s current rating – which is a marker of how likely it is to pay back its debts – from “stable” to “negative”.
“Moody’s also criticised the general election promises to raise spending with “no clear plan” to finance it.”
https://www.bbc.co.uk/news/business-50361025
“Asian stocks sank overnight due to escalating violence in Hong Kong and lingering uncertainty over a potential trade deal between the US and China.
“Hong Kong’s Hang Seng Index slumped 2.79 per cent this morning after police fired into a crowd, shooting at least one protester, who was in critical condition following the incident.”
https://www.cityam.com/asian-stocks-slump-on-hong-kong-violence/
“He was once a boy scout and member of a patriotic flag-raising team in high school.
“But with student protests sweeping Jakarta and other cities in recent months in some of the worst civil unrest to hit Indonesia in decades, Manik Marganamahendra has emerged as an anti-establishment icon.”
https://www.nst.com.my/world/region/2019/11/537256/indonesia-braces-massive-heroes-day-protests-activist-icon-emerges
“India’s electricity demand declined for the third straight month, another indication of an economic slowdown that seems to be deepening.
“Electricity demand from distribution utilities declined 13.2 per cent in October from a year earlier, data from the Central Electricity Authority showed.”
https://www.business-standard.com/article/economy-policy/another-sign-of-economic-slowdown-india-s-power-need-shrinks-for-3rd-month-119110901429_1.html
“American credit rating agency, Moody’s Investors Service, often dubbed as Moody’s and contemplated as one of the top three credit rating agencies across the world alongside S&P and Fitch’s, cuts India’s credit ratings outlook to “negative” from an earlier “stable” on Friday, the 8th of November 2019.”
https://www.financial-world.org/news/news/business/3869/moodys-slashes-indias-outlook-to-negative-cites-growing-slowdown-risk/
“Iraqi doctors and nurses have been volunteering in Baghdad’s Tahrir Square to ensure wounded protesters have access to medical care.
“But they say security forces are targeting and attacking them along with the demonstrators.”
https://www.aljazeera.com/news/2019/11/iraq-protests-medics-targeted-191110161257415.html
“Lebanese bank deposits are safe and there is no need to panic, the head of the banking association said on Saturday, seeking to calm nerves about restrictions on some withdrawals imposed after nationwide protests.
“Already facing the worst economic crisis since the 1975-90 civil war, Lebanon has been pitched deeper into turmoil since Oct. 17 by a wave of rallies against the ruling elite that led Saad al-Hariri to resign as prime minister…”
https://www.reuters.com/article/us-lebanon-protests/no-need-to-panic-lebanon-banking-body-tells-depositors-as-protests-continue-idUSKBN1XJ0D7
“A family of four was found dead in southern Turkey in what appears to be the second collective suicide in a week amid growing economic hardship.
“Police officers discovered the bodies of a man, his wife and two children in their home in Antalya, the state-run Anadolu Agency reported on Saturday. The father left a note, saying he had been jobless for the past nine months and couldn’t go on…”
https://www.bloomberg.com/news/articles/2019-11-09/second-collective-suicide-in-turkey-in-a-week-highlights-crisis
“Bolivia’s President Evo Morales resigned Sunday, not long after the head of the nation’s electoral tribunal stepped down when allegations of irregularities with the presidential vote held last month sparked protests and ramped up calls for his ouster.
“I resign my post as president,” he said in a televised speech.”
https://www.cbsnews.com/news/bolivia-elections-president-evo-morales-resigns-today-after-reelection-fraud-protests-live-updates-2019-11-10/
“Our correspondent goes inside an eye trauma unit in Chile that’s responding to “an epidemic” of protesters who have been shot in the eye by police pellet guns.”
Video:
https://www.nytimes.com/video/world/americas/100000006795557/chile-protesters-shot-eye.html
“More than a decade after the crisis, markets that are finally moving into the modern technological age and more stringent capital rules are creating a secular slump in Wall Street’s biggest business.
“And 2019 is poised to set a new low with the sixth decline in the last seven years. Trading income at 12 of the largest global investment banks plunged $39bn from 2010 to last year, according to data from analytics firm Coalition.”
https://www.gulf-times.com/story/647066/Trading-slump-deepens-It-s-as-if-JPMorgan-Goldman-
Read the previous ‘Economic’ thread here and visit my Patreon page here.
by Panopticon | Nov 8, 2019 | Economy
“Global debt has hit an all-time high of $188 trillion, which is more than double the output of the global economy, the IMF warned today.
“The global debt load has surged to a new record of around 230 per cent of world’s output, IMF chief Kristalina Georgieva said.
“While private sector borrowing accounts for the vast majority of the total, the rise puts governments and individuals at risk if the economy slows, she said.
“‘Global debt – both public and private – has reached an all-time high of $188 trillion. This amounts to about 230 per cent of world output,’ Georgieva said in a speech to open a two-day conference on debt.
“That is up from the previous record of $164 trillion in 2016, according to IMF figures.
“While interest rates remain low, borrowers can use debt to make investments in productive activities or weather a bout of low commodity prices.
“But it can become ‘a drag on growth’, she said.
“‘The bottom line is that high debt burdens have left many governments, companies, and households vulnerable to a sudden tightening of financial conditions,’ she cautioned.”
https://www.dailymail.co.uk/news/article-7661737/Global-debt-hits-time-high-188-TRILLION-DOUBLE-worlds-economic-output-IMF-warn.html
“Low liquidity is creating higher volatility this earnings season. Stocks boosted by earnings are moving more than normal. Liquidity has reached some of its lowest points in a decade.
“Low liquidity preceded the 2007-2008 financial crisis.”
https://www.investopedia.com/how-liquidity-shortage-is-fueling-explosive-stock-swings-4775562
“Financial markets have seen this story before: The Federal Reserve rides in with piles of freshly minted digitized money that helps send the prices of stocks and other assets lurching forward.
“But this isn’t 2009…
““This really speaks to the idea that once again we’re on the brink of potentially being in this bubble, where valuations are about the story and the narrative and not about the cash flow and profits,” she said. “You would think we would have learned this lesson before. But here we go again,” said Lisa Shalett, chief investment officer at Morgan Stanley Asset Management.”
https://www.cnbc.com/2019/11/07/the-feds-monetary-juice-has-tied-directly-to-the-rise-in-stocks.html
“The growth outlook for the British economy has deteriorated largely as a result of a gloomier global backdrop, the Bank of England said Thursday as it refrained from cutting rates in the run-up to a general election that could have huge repercussions on Brexit.”
https://abcnews.go.com/Business/wireStory/bank-england-set-hold-rates-ahead-uk-election-66814195
“Investors withdrew a net £676m from UK equity funds in September as part of a widespread exodus from equity markets. Every single equity market sector in the Investment Association universe had outflows in September…
“Over the three months to the end of September, a total of £2.3bn was withdrawn from UK equity funds, the worst quarter in history…”
https://www.ftadviser.com/investments/2019/11/07/investors-flee-uk-equities-in-worst-ever-quarter/
“[UK] High street sales took a battering in the last week of October amid political upheaval as retailers face a “perfect storm” in the crucial Christmas trading period, new figures suggest.
“According to the latest BDO High Street Sales Tracker, retailers failed to stem the sales plunge despite deep autumn discounting and early seasonal promotions.”
https://www.retailgazette.co.uk/blog/2019/11/high-street-braces-perfect-storm-christmas/
“Brussels has cut its growth forecasts for the eurozone to their lowest level since the height of the bloc’s sovereign debt crisis, warning the slowdown will persist for at least the next two years.”
https://www.ft.com/content/1c5d9b0c-0156-11ea-b7bc-f3fa4e77dd47
Italy’s debt now riskier than Greece’s!
“Italy’s bond yields rose above those of three-time bailout recipient Greece on Thursday for the first time in more than a decade, amid expectations that political uncertainty will return in Italy and economic reforms had taken hold in Greece.”
https://uk.reuters.com/article/eurozone-bonds-greece/update-2-italian-bonds-yield-more-than-greeces-for-first-time-since-2008-idUKL8N27N7F8
“In Lebanon, corruption induced by debt has reached gigantic proportions, with serious consequences for the state and society alike. Debt is the primary source of lawful enrichment.
“Lebanon has become the world’s third most indebted nation, with public debt estimated at $80bn in 2018 – a whopping 151 percent of GDP. “
https://www.middleeasteye.net/opinion/lebanon-protests-people-want-downfall-bank
“Iraqi security forces killed 10 and wounded dozens on Thursday in another day of deadly protests that show no sign of letting up.
“In central Baghdad, security forces fired live rounds and tear gas at demonstrators who were attempting to remove barricades blocking their protest march. Six were killed and at least 41 injured.”
https://www.dw.com/en/iraq-deaths-mount-amid-deadly-protests/a-51160505
“A senior Iranian official said Tehran’s decision to increase its nuclear activity for the fourth time this year should act as a “wake-up call” for European signatories of Tehran’s 2015 atomic accord to resolve the deepening crisis.
“Hamid Baeidinejad… added that Iran would continue to increase its nuclear activity every two months unless it received the economic benefits it was promised when it signed the nuclear deal with the US, France, Germany, the UK, China and Russia.”
https://www.ft.com/content/46d3ab64-017f-11ea-b7bc-f3fa4e77dd47
“A Hong Kong student has died after falling during protests on Monday – sparking impromptu protests and vigils from pro-democracy activists. Alex Chow fell from the ledge of a car park… The exact circumstances of his fall are unclear, but reports say he was trying to get away from tear gas.
“The 22-year-old’s death came after another week of political violence in Hong Kong.”
https://www.bbc.com/news/world-asia-china-50343584
“The land Down Under… holds the world record for going for the longest time without a recession.
“The economy, however, is growing at the slowest pace since the global financial crisis a decade ago and retail sales in the year to September have suffered the biggest annual drop in 28 years, the Australian Bureau of Statistics revealed this week.”
https://www.dailymail.co.uk/news/article-7645747/Australians-richest-world-thanks-industries-export-trade-superannuation.html
“Argentina’s central bank has roughly $10 billion to its name and its government owes the International Monetary Fund around $22 billion in 2022 and another $22 billion in 2023.
“Even if the IMF cut that in half to $11 billion in 2022 it is still $1 billion more than the government has in reserves. And that doesn’t count the billions it owes this year and next in both local currency and foreign, dollar denominated debt.”
https://www.forbes.com/sites/kenrapoza/2019/11/07/argentinas-bonds-good-luck-figuring-this-one-out/#56fb77a87030
“In a spasm of violence related to last month’s disputed presidential election, protesters kidnapped the mayor of a small town in central
“Bolivia on Wednesday, forcibly cut her hair, drenched her with red paint, made her sign an improvised resignation letter, then marched her through the streets barefoot, witnesses said.”
https://www.nytimes.com/2019/11/07/world/americas/bolivia-mayor-protest-paint.html
“A Chilean police major who shot two students during a school protest has been arrested as a wave of political unrest enters a third week and the number of injured in street violence topped 2,000.
“Maj Humberto Tapia was arrested by detectives on Thursday and charged with illegally discharging his shotgun inside a public school…”
https://www.theguardian.com/world/2019/nov/07/chile-protests-police-arrest-shooting-students
“Financial markets roil and the banking system groans. The US Federal Reserve cuts interest rates, even as Chairman Jerome Powell claims that he expects the economy to remain strong.
“Meanwhile, the Fed is forced to intervene to lend emergency cash to banks shoring up their positions for the first time in ten years. As an already-struggling working class glimpses the early outlines of yet another mounting crisis, fears of recession mount.
“And well they should.
“The global economy is clearly headed for another recession…”
https://www.resilience.org/stories/2019-11-07/new-bubbles-mounting-debt-preparing-for-the-coming-crisis/
Read the previous ‘Economic’ thread here and visit my Patreon page here.
by Panopticon | Nov 7, 2019 | Economy
“Europe needs to come up with emergency plans, since monetary policy has all but exhausted its arsenal and risks spread, the fund warned.
“Given elevated downside risks, contingency plans should be at the ready for implementation,” the IMF said in its Regional Economic Outlook for Europe. “A synchronized fiscal response” may be necessary, the fund said in the report, highlighting the dangers from trade protectionism, a chaotic Brexit and geopolitics.
https://www.bloomberg.com/news/articles/2019-11-06/europe-warned-to-prepare-for-the-worst-as-imf-sees-clouds-darken
“The former head of the ECB, Mario Draghi, repeatedly called on euro zone countries to add fiscal support to stoke growth, saying because monetary policy could only do so much, and Wednesday’s readings suggest additional support may be needed….
“We expect growth to slow across the board,” said Melanie Debono at Capital Economics.”
https://www.reuters.com/article/us-eurozone-economy-pmi/euro-zone-economy-at-risk-of-contracting-in-the-fourth-quarter-pmi-shows-idUSKBN1XG190
“German industrial output fell more than expected in September, data showed on Thursday, pointing to ongoing weakness in the sector and indicating that Europe’s largest economy will slip into recession in the third quarter… Industrial output dropped by 0.6% on the month…
““It’s not a nice number. The decline in industrial production in September makes a technical recession almost official now,” said Thomas Gitzel, economist at VP Bank.”
https://uk.reuters.com/article/uk-germany-economy-industrialoutput/decline-in-german-industrial-output-adds-to-recession-fears-idUKKBN1XH0UQ
“A slowdown in global car sales and the threat of U.S. tariffs are curbing economic expansion in eastern Europe, a critical manufacturer for Europe’s auto industry.”
https://www.bloomberg.com/news/articles/2019-11-06/slowdown-in-global-car-sales-weighs-on-eu-s-eastern-economies
“The World Bank said on Wednesday it stood ready to back a new Lebanese government, warning the country had no time to waste to tackle an emerging economic crisis worsening by the day.
“The bank called for the rapid formation of a new cabinet and said it expected a recession in 2019 to be even more significant than an earlier projection of a 0.2% contraction in the economy.”
https://www.reuters.com/article/us-lebanon-protests/world-bank-ready-to-support-lebanon-urges-quick-formation-of-new-cabinet-idUSKBN1XG1LK
“Year after year, the economic effects of the world’s current environmental path are bearing out in New Delhi. Flights are canceled and schools closed. Car owners are limited to driving only on certain days.
“Construction is stalled, and hospitals are flooded with disease, as they will be flooded with chronic effects in coming decades. People miss work, become disabled, and exit the workforce. They consume more medical care and rely on safety nets.”
https://www.theatlantic.com/health/archive/2019/11/delhi-air-crisis/601507/
“Civil servants in Zimbabwe are demanding higher pay as economic conditions in the southern African country continue to deteriorate.
“Growing discontent in the public sector is a further challenge to the government of President Emmerson Mnangagwa as it struggles to battle soaring inflation, collapsing confidence in the country’s multiple currencies, the effects of an acute drought and rolling power cuts.”
https://www.theguardian.com/world/2019/nov/06/zimbabwe-civil-servants-protest-as-economy-deteriorates
“The weakest economic growth since the global financial crisis is fuelling speculation the Reserve Bank of Australia will join its global peers and kick-start quantitative easing.
“No fewer than seven countries around the world have used QE according to the Bank of International Settlements.”
https://www.bloomberg.com/news/articles/2019-11-06/qe-debate-in-australia-has-bond-traders-watching-for-these-signs
“A financial meltdown in China would probably cause a painful economic downturn in that country, which would impart a significant shock to global growth via the exports that China takes in from the rest of the world.”
https://www.fxstreet.com/analysis/is-china-a-financial-risk-to-the-global-economy-201911061323
“The productivity of American workers fell in the third quarter for the first time in almost four years, reflecting a cutback in production as the U.S. economy slowed toward the end of summer.
“Productivity declined at a 0.3% annual rate from July to September, the government said Wednesday.”
https://www.marketwatch.com/story/us-productivity-falls-for-the-first-time-in-almost-four-years-2019-11-06
“More millennials in the United States are suffering from chronic health problems, potentially restraining the lifetime economic potential of a generation.
“A jump in conditions such as depression, hypertension and high cholesterol among younger people could increase healthcare costs and lower incomes in coming years…”
https://www.latimes.com/business/story/2019-11-06/millennials-health-problems-raise-economic-concerns
“Income inequality in America is the highest in decades, and the highest of all high-income countries. It’s also growing rapidly—meaning that, as the saying goes, the rich are becoming richer and the poor poorer…
“…evidence highlighted by the study suggests that inflation is much higher for people at the lower end of the income scale.”
https://qz.com/1742839/inflation-inequality-is-making-americas-poor-even-poorer/
“This year’s flood of monetary easing is slowing to a trickle as the world’s central banks judge they’ve done enough to avoid a recession, giving investors cause to think sovereign bond yields have finally bottomed.
“Federal Reserve Chairman Jerome Powell last week said policy had reached an “appropriate” level after three cuts in interest rates this year. Mounting criticism of the European Central Bank’s negative rates leaves its new president, Christine Lagarde, under pressure to hold fire on additional stimulus, and Bank of Japan Governor Haruhiko Kuroda may be even closer to the limits of monetary policy.”
https://www.bloomberg.com/news/articles/2019-11-06/central-banks-hitting-peak-dovishness-prick-bond-market-bubble
“Cheapening money to incentivize economic activity is no longer working. European central banks in particular are out of ideas to jump-start economic activity. The near negative and declining interest rates in developed countries around the world have caused the dollar to soar, which has a knock-on effect in developing countries like Indonesia, Turkey and Nigeria that have borrowed heavily in dollars and must repay them from earnings in local currencies that have steadily devalued.
“Negative rates have a mal-effect on consumers and savers, though “real rates,” which account for inflation, are what they ultimately feel. Cheaper money does not necessarily filter down to the consumer at a retail level. Banks with interest-rate shortfalls in a world of near or actual negative rates will charge their customers higher fees for any service, whether overdrafts or use of out-of-network ATMs.
“Savers, in particular older people who rely on interest income receive nominal payments for saving, and struggle to make ends meet. About 25 percent of Europeans and 30 percent of Japanese are aged 60 or older. More alarming, pension funds – historically conservative investors – struggle to meet benchmarks of 7 to 8 percent returns, a common threshold for solvency, so shortfalls are emerging.
“The big test may be if the United States as the world’s largest economy tries negative rates. Allianz Economist Mohamed El-rian said recently, negative yields in the world’ largest financial market would “break things.” By break, he means a systemic failure or bank collapse.”
https://yaleglobal.yale.edu/content/global-economy-struggles-negative-rates
Read the previous ‘Economic’ thread here and visit my Patreon page here.
by Panopticon | Nov 6, 2019 | Economy
“Something weird happened in September, for reasons that remain a little murky. The repurchase agreement or “repo” market seized up.
“I’ll spare you a plumbing lesson; all you need to know is that repos are really, really important for overnight funding.
“Without them, it’s very hard for banks, brokers, funds, and other market participants to square their books. Modern banking simply wouldn’t function and the system would shut down.
“Now, this wasn’t a catastrophe. The Fed injected some liquidity and everything seems okay for now. The important part is that it shouldn’t have happened and worse, apparently no one saw it coming.
“We had a string of similar hiccups in 2007–2008. All were manageable but eventually they added up to something much worse. So, this wasn’t a good sign for market stability.
That’s the problem with unconventional monetary policy. It may solve your immediate problem but create bigger ones later… the Fed looks rattled and a rattled Fed is not what we need.”
https://www.forbes.com/sites/johnmauldin/2019/11/05/modern-central-banking-is-more-vulnerable-than-we-think/#789084e476d1
“…the Federal Open Market Committee’s summary of economic projections in September 2018 showed all its members calling for no interest-rate cuts in 2019. Instead they have cut rates three times this year.
“So why should we believe the Fed can protect the market against a sell-off in stocks and bonds when it is implying both are at risk of happening so it gave us three rate cuts and a $1trillion repo liquidity infusion?”
https://www.marketwatch.com/story/despite-the-feds-support-this-stock-market-is-headed-lower-2019-11-05
““Euphoric” U.S. equity futures positioning among asset managers is nearing July 2019, September 2018 and January 2019 peaks that are in line with highs seen just before the global financial crisis.
“That means stocks could be vulnerable to bad news… Earnings forecasts for 2020 are too high… Stocks are already accounting for the benefits of a phase one trade deal…”
https://www.marketwatch.com/story/euphoric-investors-trigger-alarm-bells-over-stock-market-rally-2019-11-05
“Those who assume the recent inversion – and reversal – in the U.S. Treasury yield curve are foreshadowing an oncoming recession might be missing the point, said Jeffrey Kleintop, senior vice president, chief global investment strategist at Charles Schwab.
“Instead, the steady decline in long-term rates speaks to pessimism about the prospects for the global economy, Kleintop told advisors…”
https://www.fa-mag.com/news/schwab-s-kleintop–the-global-economy-is-on-shaky-ground-52588.html
“These are tumultuous times in South America. Chile and Ecuador have been convulsed by violent protests…
“Bolivia stands on a knife edge after Evo Morales was elected to a fourth term as president… Argentinians have just returned to office Cristina Fernandez de Kirchner as vice president… The context to remember is that Latin America suffers some of the worst income inequality on the planet.”
https://www.thenational.ae/opinion/comment/protests-from-chile-to-bolivia-is-this-south-america-s-version-of-the-arab-uprisings-1.933666
“A million salmon are starving or rotting in abandoned farms and processing plants in Chile, the world’s second-largest producer of the fish, as protests prevent workers from accessing facilities.
“The risk of environmental damage is imminent, with 800,000 fish waiting to be fed and harvested, and 320 tons decaying in processing plants…”
https://www.bloomberg.com/news/articles/2019-11-05/a-million-salmon-starve-and-rot-as-protests-block-chile-farms
“Tens of thousands of people have been protesting in Chile after a student protest against a 3% hike in subway fares, later scrapped, sparked nationwide uprising demanding economical and political changes.
“At least 18 people have died and thousands have been arrested amid widespread outbreaks of violence and arson.”
https://www.theguardian.com/world/video/2019/nov/05/weve-reached-crisis-tens-of-thousands-protest-in-chile-video-report
“The UK’s service sector stagnated last month while car production slumped 6.7 per cent in the latest signs that Brexit uncertainty is damaging the economy.
“Output by services firms, which make up four-fifths of the UK economy, flatlined in September according to a closely watched poll of purchasing managers.”
https://www.independent.co.uk/news/business/news/brexit-latest-uk-private-sector-contraction-service-sector-pmi-car-industry-a9185776.html
“Germany’s manufacturing sector remained stuck in recession in October as new orders fell for the 13th month running and factories slashed jobs at the fastest pace in almost 10 years….
“IHS Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of Europe’s largest economy, edged up to 42.1 last month from September’s 41.7, staying well below the 50.0 mark separating growth from contraction.”
https://www.reuters.com/article/us-germany-economy-pmi/german-manufacturing-stuck-in-recession-factory-job-losses-accelerate-pmi-idUSKBN1XE0TB
“Moody’s Investors Service on Tuesday downgraded Lebanon’s rating to Caa2, citing the increased likelihood of a debt rescheduling it would classify as a default, following protests that toppled the government and shook investor confidence.
“Lebanon’s issuer rating, which was lowered from Caa1, remained under review for downgrade, Moody’s said. Moody’s classifies Caa ratings as very high credit risk.”
https://aawsat.com/english/home/article/1977681/moodys-downgrades-lebanon-cites-default-risk
“Iraqi security forces shot dead at least 13 protesters over the past 24 hours, dispensing with weeks of relative restraint in favour of trying to stamp out demonstrations against political parties that control the government…
“More than 260 protesters have been killed since the anti-establishment demonstrations erupted in early October in Baghdad and several southern cities.”
https://www.aljazeera.com/news/2019/11/protesters-killed-south-iraq-pressure-gov-mounts-191105102107761.html
“Thousands of anti-government protesters, led by Jamiat Ulema-e-Islam Fazi (Jui-F) party leader Fazl-ur-Rehman, have been camped out on a highway in the Pakistani capital since Thursday night, demanding that Prime Minister Imran Khan resign and fresh elections are held…
“Khan’s PTI government inherited an economy on the ropes with a spiralling current account and fiscal deficits and rising inflation.”
https://www.aljazeera.com/news/2019/11/pakistan-anti-government-protests-191105110114858.html
“Whether they sell luxury watches from Switzerland or farm hens from Mississippi, a surprising concern is occupying a number of corporate executives this earnings season: Hong Kong’s protests…
“The far-reaching impact of the protests speaks to the outsized role that Hong Kong has hitherto played as a thoroughfare for Chinese shoppers. Buyers have flocked to the city for its zero consumption tax and variety of global imports, whether luxury handbags or infant formula.”
https://finance.yahoo.com/news/companies-around-world-hit-hong-210000877.html
“China on Tuesday sold 4 billion euros in a three-part debt deal, its first re-issue of euro-denominated sovereign bonds in 15 years.
“The deal sets a benchmark for Chinese issuers in the euro market, which could help steer corporate issuance away from dollar-denominated debt, at a time when China and the United States aim to defuse a 16-month-old trade war.”
https://uk.reuters.com/article/china-debt-issuance/china-sells-4-bln-euros-in-debt-first-in-15-years-idUKL2N27L21C
“Japanese Services sector activity fell into contraction for the first time since 2016 in October, mainly due to a powerful typhoon and dwindling domestic demand on the sales tax hike, the latest survey conducted by Jibun bank showed on Wednesday.
“The final Japan Services Purchasing Managers’ Index (PMI) dropped to 49.7 in October…”
https://www.fxstreet.com/news/japans-services-sector-shrinks-for-first-time-since-2016-usd-jpy-tests-lows-201911060058
“Chesapeake Energy helped pioneer America’s shale natural gas revolution. Now, the company is warning that it may not survive the era of cheap gas it helped to usher in.
“The Oklahoma-based energy company said Tuesday in a filing to the Securities and Exchange Commission that if “depressed prices persist,” there is “substantial doubt” about its ability to continue as a “going concern.””
https://edition.cnn.com/2019/11/05/investing/chesapeake-energy-debt-going-concern-natural-gas/index.html
““Signs of stress have appeared in the global economy, and the outlook for global growth, at least in the short- and medium-term, has been revised down repeatedly over the past year,” OPEC said in its World Oil Outlook.
“The group said it would likely cut production of crude and other products to 32.8 million barrels per day by 2024, down from 35 million barrels per day in 2019.”
https://www.cfo.com/the-economy/2019/11/opec-cuts-demand-forecasts/
“…it appears that negative interest rates have failed to boost inflation rates closer to central bank targets… negative rates have not lead to any consistent improvement in GDP growth.”
https://www.cmegroup.com/education/featured-reports/negative-rates-not-the-gift-that-keeps-on-giving.html?source=rss
FWIW my impression is that the latest round of interest rate cuts by the central banks + the Fed’s hurried return to (don’t call it) QE have helped calm some jitters – there’s less of a sense of panic in the news.
Of course the very fact that the central banks have had to intervene so significantly in the economy is itself cause for concern.
Read the previous ‘Economic’ thread here and visit my Patreon page here.
by Panopticon | Nov 5, 2019 | Economy
“As the global economy faces its sharpest slowdown since the financial crisis, one industry is both culprit and victim.
“The motor industry affects the health of the global economy far more than its share of total output would suggest: carmakers have long supply chains to source parts; they are also big consumers of raw materials and chemicals, textiles and electronics; and their fortunes affect millions of service sector jobs in sales, repairs and maintenance.
“Last year the sector shrank for the first time since the global crisis. The IMF believes this fall in output accounted for more than a quarter of the slowdown in the global economy between 2017 and 2018. The sector may also be responsible for up to a third of the slowdown in global trade growth between 2017 and 2018, the fund said last month, after factoring in the spillover effects on trade in car parts and other intermediate goods…
“Research published by Fitch Ratings earlier this year argued that this global fall in car sales could have reduced world gross domestic product by as much as 0.2 per cent — significantly more than the IMF estimates — after taking account of spillovers to other industries and the effects of lower wages and profits on household and business spending.
“Much of the downturn elsewhere appears to be cyclical: the decline followed several years of surging sales, and it came just as many carmakers were being forced to make large investments to develop electric vehicles that will be lossmaking in the near term at least. But pervasive uncertainty over trade — and the resulting worries over global growth — do not help.
“As Holger Schmieding, an economist at Berenberg, pointed out, this kind of uncertainty tends to scare consumers off big ticket purchases: “If you are uncertain . . . you don’t have to buy the car.””
https://www.ft.com/content/cd2f8bdc-fef6-11e9-be59-e49b2a136b8d
“Global manufacturing shrank for a sixth straight month in October as new export orders extended their longest downturn since 2002.”
https://www.bloomberg.com/news/articles/2019-11-04/global-manufacturing-contracts-for-a-sixth-month-on-export-slump
“[US] Factory orders fell 0.6% in September, the Commerce Department said Monday. Economists were expecting a 0.4% drop, according to a MarketWatch survey. Durable goods orders fell a revised 1.2%, down slightly from last week’s initial estimate of a 1.1% decline.”
https://www.marketwatch.com/story/us-factory-orders-slump-in-september-2019-11-04
“Many Americans are still recovering from the 2008 financial crisis. Almost everyone knows someone who lost a job, their retirement savings or even a home in its aftermath.
“When the housing bubble burst and sent home prices plummeting, it set off a chain of defaults that snowballed into a recession. This cautionary tale of risky lending, ballooning debt and market speculation should be a clear warning of looming perils in the student loan industry.”
https://www.cnbc.com/2019/11/04/we-should-all-be-concerned-about-the-student-debt-crisis.html
“The subprime mortgage-backed bond may be dead in America a decade after it helped trigger the global financial crisis, but a security with some of the same high-risk characteristics is starting to take off.
“It’s called the non-qualified mortgage — basically a loan granted to borrowers whose checkered financial record made them ineligible for conventional mortgages. Lenders have bundled more than $18 billion worth of these loans into bonds this year.”
https://www.bloombergquint.com/business/risky-mortgage-bonds-are-back-and-delinquencies-are-piling-up
“The US Federal Reserve is buying Treasury bills and other high-quality collateral to pump billions of dollars of liquidity into the short-term market to make sure that a sudden spike in the overnight lending rate doesn’t happen again.
“The year-end period, when corporate tax payments are due, will be a key test of whether the Fed has regained control of the repurchase, or “repo,” rate that banks charge each other for short-term loans.”
https://www.gfmag.com/magazine/november-2019/repo-rate-spike-triggers-more-fed-purchases
“Among the recent troubles he thinks are connected are repo market woes, negative-yielding debt, global trade conflicts and collapsing manufacturing. And every cycle ends with excess.
“The “mother of all bubbles” in the sovereign debt market, Zidle says, is the catalyst that will likely trigger the next recession. He expects that to happen between mid-2020 and the end of 2021.”
https://www.marketwatch.com/story/the-mother-of-all-bubbles-could-blow-up-the-economy-if-profits-dont-improve-warns-blackstone-strategist-2019-11-04
“Worryingly for policymakers at the European Central Bank, who have restarted a 2.6 trillion euro (£2.3 trillion) bond-buying programme after cutting interest rates on deposits in September, the malaise appears to be spread across the region… struggles appear widespread and manufacturing activity in Germany, Europe’s largest economy, remained stuck in recession last month…”
https://uk.reuters.com/article/uk-eurozone-economy-pmi/euro-zone-factories-stuck-in-a-slump-as-trade-war-still-biting-idUKKBN1XE0TV
“The UK has fallen into an earnings recession following “the worst set of quarterly results in years” in Q3, with more than half of companies reporting lower profits for the second consecutive quarter, according to The Share Centre.
“The third quarter of 2019 saw profits fall by 4.5% overall…”
https://www.investmentweek.co.uk/news/4006510/worst-quarterly-results-push-uk-earnings-recession
“Italy’s south entered a recession in 2019, with GDP down by 0.2%, while the country’s GDP in the centre and north grew 0.3%, according to a report by the Association for Industrial Development in the Mezzogiorno (SVIMEZ) released Monday.”
http://www.ansa.it/english/news/2019/11/04/south-italy-in-recession-report-says_ffec53cb-1cd3-4162-9b5c-17543bf656f0.html
“Europe’s private banks face a growing crisis as their business models are undermined by negative interest rates the boss of Edmond de Rothschild Vincent Taupin has warned.”
https://citywire.co.uk/wealth-manager/news/rothschild-private-banks-facing-growing-crisis/a1290107
“Protesters blocked roads in Beirut and other parts of Lebanon on Monday, pressing a wave of demonstrations against the ruling elite that have plunged the country into political turmoil at a time of acute economic crisis…
“Saad Hariri resigned as prime minister last week. There has been no sign of progress yet towards agreement on a new government.”
https://www.irishtimes.com/news/world/middle-east/roads-blocked-across-lebanon-as-wave-of-protests-continues-1.4072056
“In Baghdad’s Tahrir Square, Iraqi society has been turned upside down.
“Young men driving tuk-tuks, the three-wheeled vehicles driven and ridden in by the poor, have become heroes. Unpaid, they brave crowds of protesters, facing off against Iraqi security forces to rush the wounded to ambulances.”
https://www.npr.org/2019/11/04/776173262/protests-in-iraq-are-growing-in-both-size-and-ambition
“India’s main services index signaled a contraction for a second straight month, the weakest stretch since 2017, amid a prolonged economic slowdown.”
https://www.bloomberg.com/news/articles/2019-11-05/india-services-gauge-remains-in-contraction-zone-in-october
“More female farmers are committing suicide in the western Indian state of Maharashtra where a decades-long agrarian crisis has reportedly driven more than 30,000 farmers to end their lives…
“…the Indian government’s policies to withhold data about it might only be complicating the situation.”
https://www.aljazeera.com/indepth/features/farm-debt-grows-indian-women-farmers-lives-191023193523782.html
“Business activity in Hong Kong’s private sector fell to its weakest in 21 years in October, weighed down by anti-government protests and softening global demand, according to an IHS Markit survey published on Tuesday…
“Demand from mainland China declined at the sharpest pace in the survey’s history – which started in July 1998 – while companies also cut back on purchasing and input inventories at the fastest clip since the series began.”
https://www.reuters.com/article/us-hongkong-economy-pmi/hong-kong-business-activity-contracts-at-fastest-pace-in-21-years-idUSKBN1XF06Z
“China’s central bank cut the interest rate on its one-year medium-term lending facility (MLF) loans on Tuesday for the first time since early 2016, as policymakers work to prop up a slowing economy hit by weaker demand at home and abroad.”
https://www.reuters.com/article/us-china-economy-mlf/china-central-bank-cuts-a-key-loan-rate-for-first-time-since-2016-as-growth-slows-idUSKBN1XF05K
“China will face another potential financial crisis in 2020 when local governments must pay-off over $283 billion in maturing municipal debt… the annual cost of Chinese municipal bond debt maturities has ballooned from $34 billion in 2017; to $118 billion in 2018; $183 billion in 2019; and is expected to top $283 billion in 2020, according to Bloomberg.”
https://www.theepochtimes.com/chinas-2020-crisis-283-billion-of-maturing-local-debt_3136522.html
“Thousands of Chileans took to the streets again yesterday to demand better social services, some clashing with police, as firebombs were thrown at officers and tear gas used on protesters.
“Demonstrators demanded an end to economic inequality in the county even as the government announced that weeks of demonstrations are hurting the country’s economic growth.”
https://www.dailymail.co.uk/news/article-7649219/Thousands-march-Chile-govt-says-protests-hit-growth.html
“The leveraged loan market has doubled in size over the last ten years, overshadowing high-yield bonds as a source of financing for riskier businesses. With global growth slowing, and growth in the developed world widely acknowledged to have peaked, investors are beginning to pull back from the market. Many worry that the next recession could bring about a string of corporate defaults that hits these lenders hard.
“Analysts at Bank of America Merrill Lynch recently wrote of the US leveraged loan market, “we are seeing numerous new signs of tightening credit conditions…ranging from wide market bifurcation, to a prevalence of downgrades, rising distress, lower availability of capital for the lowest rated names”.”
https://reaction.life/crunching-the-credit-signals/
Read the previous ‘Economic’ thread here and visit my Patreon page here.
