12th May 2022 Today’s Round-Up of Economic News

The global fertilizer shortage is pushing farmers to poop-based products.

“Pandemic supply chain shocks compounded by the war in Ukraine have caused a global shortage of chemical fertilizers. With no end to the war in sight and spring planting season in full swing in the northern hemisphere, farmers are turning to animal and plant waste instead.

“Manure suppliers in particular are selling out. There’s not enough manure to meet the demand of farmers in the US. The pressure is being felt globally, with farmers in the UK even opting to buy treated human sewage sludge.”


OPEC Kingpins Sound Alarm Over World’s Dwindling Energy Capacity…

“I am a dinosaur, but I have never seen these things,” Saudi minister Prince Abdulaziz bin Salman, who’s been attending OPEC meetings since the 1980s, said Tuesday at a conference in Abu Dhabi, referring to the recent surge in prices for refined products. “The world needs to wake up to an existing reality. The world is running out of energy capacity at all levels.””


Biden blames Russia’s war in Ukraine for food supply shortages and price hikes.

“President Joe Biden on Wednesday blamed Russia’s invasion of Ukraine for domestic price hikes and global food supply shortages, praising American farmers for being the “breadbasket of democracy” amid the war. “America is fighting on two fronts,” Biden said…”


NYC Billionaire Catsimatidis Warns of Looming East Coast Diesel Rationing.

“The diesel crisis in the US may get worse this summer with the potential of shortages and rationing on the East Coast, said billionaire refinery and fuel station owner John Catsimatidis… East Coast stockpiles of the fuel have fallen to the lowest in data going back to 1990.”


In another blow to the US economy, prices at the pump soared to fresh record highs.

“The national average price for regular gasoline climbed more than four cents on Tuesday to $4.37 a gallon, according to AAA. That takes out the prior record of $4.33 set on March 11. The gas spike — prices are up 17 cents in the past week alone — will only add to inflationary pressures…”


After Pain at the Pump Comes the Electric Shock.

“Inflation is arriving fast for gas and power bills — and putting great strain on utilities’ return on investment… On all fronts, the 2010s were halcyon years. The shale boom suppressed the price of natural gas and, by extension, of producing electricity… Now it’s safe to say that shale dividend has run its course.


Mortgages drive increase in US household debt to nearly $16tn. US households added $266bn to their debt balances in the first quarter, led by mortgage loans, in the largest single-quarter increase since 2006, according to the Federal Reserve Bank of New York.”


Analysis: UK consumer despair suggests government mishandling inflationary crunch.

“The tide of pessimism sweeping through Britain’s households is unmatched elsewhere among Europe’s major economies and suggests the government may have misjudged its response to an escalating cost-of-living crunch.”


German households will be prioritised in gas supply emergency, regulator says.

“Households won’t be first to be hit when it comes to the potential rationing of gas in Germany should Russian supplies be disrupted, the head of the country’s energy regulator said, rejecting calls for a prioritisation of industry.”


Ukraine halts some Russian gas flows to Europe.

“Ukraine suspended the flow of some Russian natural gas to Europe on Wednesday, blaming Moscow for diverting supplies from the vital pipeline network… in a statement late Tuesday, the Ukrainian gas transmission system operator said it had decided to suspend operations at a major transit point because of “interference by the occupying forces.”


Major China Developer Sunac Defaults as Debt Crisis Spreads.

“Sunac China Holdings Ltd. has defaulted on a dollar bond, becoming one of the biggest Chinese property companies to renege on its obligations amid a record-breaking wave of missed payments.”


Don’t Expect Chinese Stimulus to Save the Global Economy.

“Responding to the 2008 financial crisis [and to a lesser extent in 2016], China unleashed a fiscal package of 4 trillion yuan ($586 billion at the time), plus an unprecedented surge in bank lending that spurred demand for commodities and consumer goods. All that, in the process, lifted trading partners… This time it’s different…”


Japan, China, South Korea finance leaders urge caution amid Ukraine crisis.

“The financial leaders from Japan, China and South Korea urged caution against heightening risks from sooner-than-expected normalisation of monetary policy, accelerating inflation and supply chain disruptions on top of the Ukraine crisis.”


With governments globally grappling with surging electricity prices as the war in Ukraine strains fossil fuel supply chains, authorities are examining almost every possibility to reduce power demand.

“In Tokyo, officials are urging residents to watch an hour less TV a day, switch off the keep-warm mode on rice cookers, and refrain from using heater functions on toilet seats until winter.”


Soaring food, fuel ramp up social unrest risk for emerging markets.

“Rising fuel and food prices look set to stoke an “inevitable” rise in civil unrest, with developing middle-income countries such as Brazil or Egypt particularly at risk, a report by a risk consultancy said… Argentina, Tunisia, Pakistan and Philippines were also among the countries to watch…”


Brazil’s Inflation Hits Highest Since 2003 as Food Prices Soar.

“Latin American central banks will likely extend their monetary tightening campaigns beyond what was originally expected after inflation surged past forecasts in April, with steep increases in food and fuel costs stinging policy makers.”


Peru’s spring of discontent.

“President Pedro Castillo’s radical programme has faltered. With seemingly no end to the political gridlock, Peruvians are taking to the streets… Nine months after the country elected the former teacher and union leader Pedro Castillo as its president, Peru is once again in crisis.”


South Africa Set for Worst Year of Power Cuts as Plants Fail.

“State-owned Eskom Holdings SOC Ltd. said it will again ration electricity on Tuesday after various generation units were shut for repairs or didn’t return to service as expected. That means nationwide cuts will have occurred on seven of the 10 days in May so far…”


Africa Faces Unrest as Thumping Food Prices Hit It Hardest.

“Higher food prices coupled with soaring fuel bills and rising unemployment make for a volatile political environment on the continent and have prompted governments to react even at the expense of fiscal consolidation, said Nel and van Eck.”


Tunisia to raise the prices of some foodstuffs after farmers’ protests.

“Tunisia will raise the prices of some foods including milk, eggs and poultry this week, the agriculture minister said, following protests by farmers against a jump in animal feed barley prices due to the war in Ukraine and an increase in energy costs.”


First Signs Of Civil Unrest As Bread Prices Soar In Iran…

“Raisi’s cash-strapped administration has looked to cut major government subsidies. But the step is likely to come at a cost: potential civil unrest. The first signs of discontent over bread prices came in the southwestern province of Khuzestan…”


Lao Economy Grinding to a Halt as Fuel Crisis Deepens.

“Motorists in the Lao capital Vientiane have been forced to queue for hours at petrol stations as a fuel crisis tightens its grip, the latest sign in a brewing economic crisis in the nation of 7 million… Economists have long warned that Laos’ foreign debt was on an unsustainable path.”


Sri Lanka unrest: shoot on sight order issued as troops deployed in Colombo…

“As footage emerged on Wednesday of armoured military vehicles in Colombo and military checkpoints being set up across the country, fears grew that the path was being laid for a military takeover… A nationwide curfew has done nothing to stop protesters gathering…”


Central Banks Can’t Fend Off Stagflation Alone…

“Stocks and bonds are already flashing red about the economic dangers ahead. Fiscal and monetary policies can and should be coordinated without undermining the independence of either set of policy makers. It’s time for the global authorities to repeat the creativity they displayed during the pandemic. They should act now, in haste.” [And do what exactly?!]


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

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10th May 2022 Today’s Round-Up of Economic News

Cash Is the Only Winner in a Market Gripped by Stagflation Fear… Investors are eschewing almost everything except cash in this selloff

“…investors are focused on one thing right now: capital preservation. Slowing economic growth, persistent inflation and more Covid lockdowns in China have combined to make a toxic investing landscape. Even commodities, a favorite inflation play, succumbed to the global selloff on Monday.”


Half of institutional investors say the Ukraine crisis will plunge the global economy into stagflation, while a fifth think it will trigger a financial crisis worse than the Great Recession of 2008.

“A CoreData Research study of more than 200 global institutional investors found 51% think the surge in energy prices triggered by the invasion of Ukraine will push the world economy into stagflation.”


If you aren’t an oil baron, I have bad news: it’s as if oil is trading somewhere between $150 and $275 a barrel.

The oil market is projecting a false sense of stability when it comes to energy inflation. Instead, the real economy is suffering a much stronger price shock than it appears, because fuel prices are rising much faster than crude, and that matters for monetary policy.”


Electricity Shortage Warnings Grow Across U.S…

“From California to Texas to Indiana, electric-grid operators are warning that power-generating capacity is struggling to keep up with demand, a gap that could lead to rolling blackouts during heat waves or other peak periods as soon as this year.”


‘It’s a nightmare’: baby formula shortage leaves US parents desperate…

“During the week starting 24 April, 40% of baby formula was out of stock in more than 11,000 stores across the country, CNN and USA Today reported… In six states – Texas, Tennessee, North Dakota, South Dakota, Iowa and Missouri – more than half of available baby formula in stores was sold out…”


New York Hospitals Battle Supply Shortages on Shanghai Lockdown.

“Shanghai’s strict Covid-19 curbs are disrupting health care services halfway across the world, with hospitals in New York suffering a shortage of chemicals used in imaging tests — the latest example of how the city’s five-week-long lockdown is snarling global supply chains.”


“The NHS is facing shortages of blood pressure pills, painkillers, hay fever tablets and anti-depressants as drug producers are hit by supply problems [UK].

“Companies providing medications for millions of people face ‘unprecedented pressure’ with supply chains and red tape, a leading industry body has warned.”


‘I come to the library to keep warm’: Norfolk residents battling fuel poverty…

“When Joan Mulholland, 89, found out last month her energy bills were due to increase again, she panicked. “I rang up the company and said: ‘I’m not going to be able to afford £200 a month.’” She gets by on a state pension and is worried it will not be enough this winter.”


Serbia grain exports to fall with ban. Serbia’s wheat and corn exports are expected to drop significantly from earlier estimates in 2021-22 due to the ongoing Russia-Ukraine war, which led Serbia to ban exports it deems important to food security…”


In Ukraine, gas shortages further complicate daily life.

“As Russia’s invasion of Ukraine grinds through its third month, gas shortages are spreading across the country, adding to people’s misery and testing their resilience in new ways. Lines are forming at service stations in major cities…”


Russia’s Economy Facing Worst Contraction Since 1994.

“The Bank of Russia said April 29 it expects a contraction between 8% and 10% this year. The International Monetary Fund forecast one of 8.5%, while a Bloomberg survey of economists found a median decline of 10.3%. If the Finance Ministry’s forecast proves accurate, that would erase about a decade of economic growth…”


‘Stop asking why’: Shanghai tightens COVID lockdown, Beijing keeps testing.

“Shanghai authorities were tightening the city-wide COVID lockdown they imposed more than a month ago, prolonging into late May an ordeal that China’s capital Beijing was desperate to avoid by turning mass testing into an almost daily routine.”


China’s premier has warned its job market faces a “complicated and grim” outlook as the country’s zero-Covid strategy causes trade exports to plunge.

“Li Keqiang warned of job losses as Beijing and Shanghai tightened curbs on residents as part of efforts to contain the pandemic.”


Emerging markets hit by ‘toxic’ mix of rising rates and slower growth…

““We have had this cooling down of Chinese demand coming at a time when the Fed is hiking interest rates and inflation is still pushing higher,” said Cristian Maggio, head of emerging markets portfolio strategy at TD Securities. “As if that weren’t enough we still have the risks related to the war in Ukraine. It’s a very toxic combination.””


Southeast Asia will face a “big risk” of social unrest if there are “big surges” in food prices, an ASEAN economist at Bank of America Securities told CNBC.

“That’s because, relative to other countries, food consumption accounts for a large proportion of what people spend on in countries like the Philippines, Indonesia and Vietnam, said Mohamed Faiz Nagutha on Friday.”


Protests break out as Philippines election returns a Marcos to presidency…

“The Philippines woke to a new but familiar political landscape on Tuesday, after an election triumph by Ferdinand Marcos Jr. paved the way for a once unimaginable return to the country’s highest office for its most notorious political dynasty.”


[Indian] Rupee slumps to all-time low against Dollar.

“The Indian currency extended its losses and touched an all-time low of 77.42 against the US dollar in Monday’s early trade weighed down by the strength of US dollar in the overseas market, foreign fund outflows and fall in domestic equities.”


Cotton prices hit 11-year high on possible India export ban.

“Cotton prices have soared to their highest levels since May 2011 as concerns grow over a possible export ban by top exporter India and a severe drought hitting U.S. yields.”


Troops rescue outgoing Sri Lanka PM [who has resigned] as houses torched in deadly night of unrest.

“Sri Lanka has deployed thousands of troops and police to enforce a curfew after five people were killed in the worst violence in weeks of protests over an unprecedented economic crisis.”


Sri Lanka stops supplying gas for domestic use.

“Amid the ongoing economic crisis, Sri Lanka’s leading liquefied petroleum gas supplier Litro Gas Lanka Limited on Monday said that they are unable to supply gas to domestic consumers until new stocks arrive.”


Lebanon’s descent into turmoil: assassinations, war, financial collapse.

“Lebanon holds an election on May 15 that could see a shift of power that sends shockwaves far beyond this small country squeezed between Syria and Israel.”


Thousands face jail as Jordan heads to lift moratorium on debt imprisonment…

“In March 2021, then in the midst of the Covid-19 pandemic , Jordanian authorities issued a one-year moratorium on arresting people for failure to repay debts, but the measure is set to expire next month. Tens of thousands of Jordanians could face jail time for their debts…”


Hundreds of Tunisians demonstrated to support President Kais Saied on Sunday and to back his rewriting of the constitution….

“Saied’s supporters, whose rally in central Tunis was smaller than recent opposition protests, said the president’s opponents were corrupt and called for opposition parties to be banned.”


Zimbabwe’s bank lending freeze will worsen economic crisis, business chamber says.

“Zimbabwe’s decision to suspend bank lending in a desperate bid to arrest the rapid devaluation of its currency will worsen the economic crisis and expose borrowers to predatory loans, the country’s business chamber said on Monday.”


Eskom Generation Chief Quits Amid Spiraling South Africa Outages.

“The top executive for power production at South Africa’s Eskom Holdings SOC Ltd. has resigned as the fragile electricity grid struggles to meet demand, threatening economic growth… The utility announced nationwide power cuts on Monday.”


South Africa’s Minister of Transport, Fikile Mbalula, has called for a ban on the export of scrap metal as the theft and vandalism of critical rail infrastructure sabotage the country’s economy.

“”We are unequivocal in our call to ban the export of scrap metal and will support any measure that will bring us closer to this reality,” the Minister said on Monday.”


The threat of an airline shutdown in Nigeria isn’t going away…

“For the second time this year, domestic airlines in Nigeria have threatened to shut down their operations, citing rising costs, only to back off after a few days… AON said the price of aviation fuel (JetA1) has risen from 190 naira per liter to N700 ($1.68), and that it could no longer absorb the costs.”


As Wheat Prices Soar, Africa Pivots to Cheaper Alternatives.

“Food producers in Kenya, Egypt, Democratic Republic of Congo, Nigeria and Cameroon say they’re mixing cheaper alternatives into their breads, pastries and pastas. Local rice, manioc flour and sorghum are substituting for wheat, which has spiked about 40% this year…”


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

If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you. I really appreciate it and it is a huge help, especially with the cost of living spiralling relentlessly upwards.

7th May 2022 Today’s Round-Up of Economic News

[Global] Economic downturn spreads as more sectors report falling output and record price rises.

“Detail sector PMI data compiled by S&P Global, derived from information provided by panels of over 30,000 companies in 45 countries, revealed a broadening of the global economic slowdown in April….

“Prices are meanwhile rising for all goods and services, though of particular concern is a record rise in food prices amid falling food production, which is likely to add to the global cost of living crisis.”


Global food prices held near a record as crop trade is disrupted by the war in Ukraine, exacerbating tight supplies and stoking inflation…

“High fertilizer prices and weather worries are adding to the threat for global crop supplies, including drought curbing the U.S. wheat crop. That risks compounding a deepening hunger crisis.”


Wheat production in Ukraine is likely to be at least a third lower than in normal years, according to analysis of satellite images of the country…

“…with more disruption from the war extremely likely, and fighting concentrated in the east where the main wheat-growing regions are found, Kayrros estimates that the wheat harvest is likely to be down by at least 35% this year compared with 2021.”


The world is ‘crying out for diesel.’…

“Retail gasoline prices in the U.S. are up 45% year on year. Diesel used by American truckers is up 75% and just hit an all-time high. But this is not just an American problem. Pain at the pump is global… Fuel flows globally to where it earns the highest return.”


U.S. distillate stocks fall critically low.

“U.S. distillate fuel oil inventories have fallen to a 14-year low as refiners prove unable to satisfy strong demand from freight hauliers and manufacturers, sending diesel prices surging and pulling crude prices higher in their wake.”


Central banks must play economic manoeuvres in the dark…

“This is a time of incredible complexity: each week has thrown up a new shock or revealed that the problems we saw coming were bigger than we thought. Markets whiplashed back and forth this week in response to the Fed’s announcements…”


The Stock Market Panic Is Here…

“Why panic? Because negative developments are everywhere, and they are the last thing standing in the dismal bond and stock markets. The rationalization, “but the economy is still doing well,” is based on past data.”


It’s the Worst [US] Bond Market Since 1842. That’s the Good News…

“So far in 2022, with inflation raging, bonds have lost 10%… Almost never has the U.S. bond market lost as much money as in the first four months of 2022, according to Edward McQuarrie, an emeritus professor of business at Santa Clara University who studies asset returns over the centuries.”


The U.S. currency vaulted to two-decade highs this week, and its strength is tightening financial conditions just as the world economy confronts the prospect of a slowdown.

“The surge threatens “to damage the broader market environment and expose the economic and financial cracks in the system,” said Samy Chaar, chief economist at Lombard Odier.”


Americans are racking up debt at record rates.

“Consumer debt levels for March 2022 climbed by $52.4 billion, an annual increase of 14%, seasonally adjusted, according to Federal Reserve data released Friday. Revolving credit, which includes credit cards, surged by 21.4%.”


Bird Flu Outbreak Nears Worst Ever in U.S. With 37 Million Dead.

“A bird flu virus that’s sweeping across the U.S. is rapidly becoming the country’s worst outbreak, having already killed over 37 million chickens and turkeys and with more deaths expected through next month as farmers perform mass culls across the Midwest.”


‘Chaos On The Horizon’: Concern Grows Over Potential Summer Power Outages In California…

“California’s power grid operator is predicting an energy shortage for the hot summer months. The California Independent System Operator (Cal ISO) said the state could be 1,700 megawatts short of what it needs for the grid to function properly.”


Gas prices hit record highs across the country [Canada]…

“According to Gas Wizard, a site that tracks gas prices across Canada, prices have jumped by four to six cents in many urban centres across the country. In Vancouver, the price of regular gasoline reached $2.17.”


Three graphs that show UK’s looming economic turmoil.

“Inflation will rocket… GDP will flatline… unemployment is expected to surge as the looming economic disaster rears its head. The Bank of England warns that unemployment could rise by 8 per cent by 2025 – the worst level since the banking crisis ended.”


Germany heading for recession as Putin’s war hits factory production.

“Industrial production in Europe’s biggest economy plunged by 3.9pc in March, a fall three times larger than economists had expected, leaving GDP 7.6pc below its pre-pandemic level. It shows the severe impact the war is [already] having on Germany’s vital manufacturing sector…”


Bulgaria industry on tenterhooks after Russia gas cut.

“The halt of Russian gas supplies to Bulgaria last week has left companies big and small scrambling as they fear cuts to deliveries and rising prices. “We are already on the brink. We’ll have to raise our prices further,” said Valery Krastev, who owns a bread factory in the northern town of Montana.”


Euro Crisis 2.0? …It’s been a decade since the Greek debt crisis dominated financial news…

“Relative and absolute levels have increased since 2011. Even with debt relief, Greece’s debt-to-GDP ratio is lower, because its economy has shrunk. Only Germany and Ireland, where companies have relocated to take advantage of lower taxes, have seen their debt-to-GDP ratios fall.”


‘We see a big recession in the making’: Top CEOs are fearing the worst in Europe.

“The euro zone faces concurrent economic shocks from the war in Ukraine and a surge in food and energy prices exacerbated by the conflict, along with a supply shock arising from China’s zero-Covid policy.”


EU needs to make food security a priority for gas supplies.

“…farmers do not have enough mineral fertiliser or diesel fuel to maintain food production. As one fertiliser industry person I know put it, accurately in my view: “the last few drops of diesel should be used by a tractor to spread fertiliser made with the last bit of gas”. That is not the set of priorities that is set by current European law.”


‘I’m Very Anxious’: China’s Lockdowns Leave Millions Out of Work…

“Migrant workers and recent college graduates have been hit hardest by shuttered factories, closed construction sites and an anemic job market… The government’s new support measures suggest that the problem is more serious than officials have let on…”


Shipping delays are back as China’s lockdowns ripple around the world…

“…global shipping will suffer well into the summer. That could exert even more pressure on global supply chains already reeling from Russia’s invasion of Ukraine, and keep inflation running hot… To add to the problem, many truck drivers have struggled to reach ports in China to pick up containers because of travel restrictions and Covid testing requirements.”


Chinese yuan short bets hit record high on slowdown fears, Fed policy.

“Short positions on the Chinese yuan touched their highest on record and bearish bets on other Asian currencies surged on worries over an economic slowdown in China and aggressive policy tightening in the United States, a Reuters poll found.”


India invokes emergency law to operate idle coal import-based utilities.

“India has evoked an emergency law in a bid to start generation at some idle power plants running on imported coal which are not producing power because of financial stress or due to high international prices of coal, the government said on Friday.”


Anger over fuel shortage on major highways as people return from Raya break [Malaysia]…

“There have been reports of acute fuel shortages on the east coast and other parts of the country, which have sent tempers flaring… Many took to social media to vent their frustration after finding that many petrol stations had run out of RON95 petrol, with only the pricier RON97 available.”


Turkey’s inflation rate soars to almost 70 percent.

“Turkey’s official inflation rate has spiralled to nearly 70 percent in April, posing a huge challenge to President Recep Tayyip Erdogan, whose unconventional economic policies are often blamed for the economic turmoil.”


As Bread Costs Skyrocket In Iran, So Does The Risk Of Social Unrest.

“A dramatic rise in the price of flour in Iran is leading to concerns that the authorities’ recent decision to end subsidies for imported wheat could come at the cost of social unrest… the cost of flour has soared by around 500 percent and is expected to increase further.”


Over 97% Of Afghans Affected By Food Shortages, Says UN…

“Living costs and food prices have skyrocketed since Taliban took control of Afghanistan in August last year. The Afghan newspaper report cited World Bank findings saying that incomes are likely to have fallen by around a third since the capture of power by Taliban.”


Sri Lanka ‘risks running out of food and fuel’ and could descend into ‘anarchy’, former energy minister says…

President Gotabaya Rajapaksa declared a state of emergency across the country on Friday evening effective from midnight. It comes amid widespread protests calling for the resignation of Mr Rajapaksa and his brother Mahinda, who is prime minister, as Sri Lanka faces its worst economic crisis in recent memory.”


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

If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is a huge help, especially as the cost of living crisis is biting here in the UK.

5th May 2022 Today’s Round-Up of Economic News

Fraying central bank consensus spurs dollar and market stress.

“The highest inflation in decades is unraveling whatever policy consensus there was between the world’s major central banks since the Great Financial Crisis and global markets could buckle under resulting waves of stress and volatility.”


Federal Reserve announces biggest interest rate hike since 2000.

More rate rises are expected. The Economist Intelligence Unit expects the Fed to raise rates seven times in 2022, reaching 2.9% in early 2023. Starting in June, officials also plan to shrink their $9tn asset portfolio, a policy move that will further push up borrowing costs.”


“…The Fed Can’t Fix Our Broken Banking System… the Fed tells us it can reverse course and unwind the emergency measures it first launched back in 2008… Unfortunately, given the underlying structure of our financial system today, the Fed is not likely to get very far…

If legislators do not act soon, another 2008-level crisis (or worse) will eventually force their hand. When that happens, the economic, political, and social costs could be catastrophic.


Distressed debt levels double in US corporate bond market.

“Investors have started backing away from the riskiest corporate bonds in the US, with the amount of debt that trades at distressed levels doubling since the start of the year… Further monetary tightening by the Fed will push more debt into the distressed zone.


The Hot Housing Market Makes the Fed’s Inflation-Fighting Job Even Tougher.

“Federal Reserve officials are counting on higher mortgage rates to throw cold water on the frenzied housing market as they work to tame the highest inflation in decades. But the market may not cool fast enough.”


U.S. natural gas surged Tuesday to the highest level in nearly 14 years as Russia’s invasion of Ukraine wreaks havoc on global energy markets.

“Henry Hub prices jumped more than 9% at one point to a session high of $8.169 per million British thermal units (MMBtu) during morning trading on Wall Street, the highest level since September 2008.”


Diesel prices hit yet another new record on Wednesday at $5.43 per gallon, now some $1.2 more than a gallon of gasoline, according to AAA.

“While high prices at that pump for gasoline have somewhat leveled off, diesel continues to steadily rise, causing an increase in prices of consumer goods because it fuels the trucks that transport an estimated 70% of consumer goods freighted in the United States.”


The U.S. Shale Patch Is Facing A Plethora Of Problems.

“… the rig count is going steadily higher, but production from the eight major shale basins has leveled off and, as of Feb, 22, has actually slightly declined. If the May edition of the DPR confirms this trend then there is going to have to be a drastic reevaluation of what will be expected from shale in the future.”


U.S. Offshore Oil Boom Is No Cure For Global Supply Crunch.

“According to Bloomberg, a new wave of oil platforms is sweeping across the U.S. Gulf of Mexico as oil companies rush to capitalize on oil prices at multi-year highs. The bad news: A ramp-up in U.S. offshore output is not likely to close the global oil supply gap thanks to years of underinvestment.”


OPEC Has Missed Its Oil Output Target Once Again.

“Force majeure in Libya and under-production in Nigeria have led to a much lower increase in OPEC production for the month of April than was called for by the cartel’s supply agreement.”


The oil market could lose as much as 2 million barrels a day of Russian crude in coming weeks, when the hit from existing sanctions becomes apparent, BP’s chief executive has said…

“Looney added BP doesn’t expect any “let off” in oil prices and market volatility soon, given the drop in volumes reaching the market.”


Germany Says Ready to Halt Russian Oil After EU Agrees Embargo…

“Economy Minister Robert Habeck… said the main challenge is a refinery in Schwedt near the Polish borders, which is operated by Russia’s Rosneft PJSC and has little incentive to switch suppliers. Germany is preparing legislation that could pave the way for it taking control of the facility.”


Swiss preparing for possible ‘severe’ electricity and gas shortages.

“The Swiss government is setting up a gas sector crisis intervention group and a monitoring system for early detection of an impending electricity shortage, it said on Wednesday, as it prepares for the possibility of “severe” power shortages.”


Covid lockdowns hammer China’s services sector…

“The Caixin China services purchasing managers’ index, which asks companies whether they experienced an increase or decrease in business activity compared with the previous month, fell to 36.2 in April from 42 in March, the second-sharpest fall since the survey was launched in 2005.”


Mexico to boost output of staple foods in plan to curb inflation.

“Mexico will increase production of staple foods such as corn, rice and beans as part of a plan agreed with business leaders to control consumer price inflation which is at a two-decade high, Finance Minister Rogelio Ramirez de la O said on Wednesday.”


Ghana at Risk of Debt Default, Main Opposition Leader Warns… Debt servicing costs have risen 500% from 2017, Mahama Says

““More than half of what government collects in taxes is used to service debt, with the remainder going almost exclusively into public-sector wages,” Mahama said. “The effect of this, is that government is unable to meet its spending obligations in the most critical sectors of the economy…”


Blackouts force Syrians to return to old ways to keep lights on…

“Syrians, who are experiencing their worst bout of economic hardship since their country was ravaged with war more than a decade ago, have been increasingly relying on vintage kits and old ways to cope with fuel shortage and long hours of electricity outages.”


Turkey’s farmers battle with soaring costs and mounting debt.

“…those who work the land today are struggling, like many of the half a million farmers across Turkey. A collapse in the value of the Turkish lira over the past 12 months has combined with a surge in global commodity prices to vastly increase their input costs.”


A debt typhoon is set to engulf the world, and India won’t escape unscathed…

“Today, Indians are indignant at soaring prices of petrol and diesel. Opposition parties demand further duty cuts by the central government while the prime minister wants the states to cut their fuel taxes. Neither side dares broadcast the bad news that even today’s prices are unsustainably low and will soar much higher.”


India Mulls Wheat Export Curbs in Latest Food Supply Squeeze.

“India is considering restricting wheat exports as severe heat waves have damaged crops, exacerbating tight global supplies after the war in Ukraine sent food inflation soaring… The South Asian nation experienced its hottest March on record, shriveling the wheat crop…”


Top Fertilizer Maker Nutrien Sees Market Chaos Beyond 2022.

“Fertilizer prices have soared to all-time highs as Russia’s invasion of Ukraine and sanctions on Belarus have thrown a massive chunk of the world’s supply into disarray. The sanctions have the potential to create more long-lasting impacts…”


World Hunger to Worsen After Spiking 25% Before Ukraine War…

“Almost 193 million people across 53 countries or territories suffered acute food insecurity in 2021, meaning their lack of meals posed an immediate threat to their lives or livelihoods, the international alliance said in a report. That’s up from 155 million in 55 countries for the prior year…”


Worldwide factory output falls for first time since June 2020 as supply conditions worsen…

“…China’s downturn, combined with disruptions caused by the Ukraine war, also led to a worsening global supply situation, which in turn pushed price pressures higher and led to a further drop in global business expectations for output in the year ahead.”


Global chemicals face negative growth on inflation, more logistics problems and a deep downturn in China…

“Inflation is also at levels that we haven’t seen since the 1970s. Even if supply is available of durable, non-essential goods made from chemicals and polymers (most finished goods are of course made in China), demand may well collapse because of rising costs. Or the collapse may have already started.”


Deloitte: Stagflation shock coming for global economy.

“Many other central banks around the world have already commenced lifting their official rates to stem inflationary pressures, and they are doing so at a tricky time because expectations around economic growth are weakening.”


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

If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is a huge help, especially as the cost of living crisis is biting here in the UK.

3rd May 2022 Today’s Round-Up of Economic News

Can the World Feed Itself? Historic Fertilizer Crunch Threatens Food Security…

“For the first time ever, farmers the world over — all at the same time — are testing the limits of how little chemical fertilizer they can apply without devastating their yields come harvest time. Early predictions are bleak…

““Food security is in peril,” Philippines Agriculture Secretary William Dar said in a text message to Bloomberg News. Rising food prices, without a corresponding increase in incomes, have a long history of triggering social unrest.”


The global stagflation shock of 2022: How bad could it get? [Picture from Paris at the weekend]

“The prospect of stagflation’s return strikes fear into policymakers because there are few monetary tools to address it. Raising interest rates may help reduce inflation, but increased borrowing costs would further depress growth. Keeping monetary policies loose, meanwhile, risks pushing prices higher.”


End of Easy Money Brings a $410 Billion Global Financial Shock.

“The global shift away from easy money is poised to accelerate as a pandemic bond-buying blitz by central banks swings into reverse, threatening another shock to the world’s economies and financial markets.”


US 10-year Treasury yield reaches 3% for first time since 2018…

The yield on the government bond has profound effects on the economy, feeding into home mortgage rates and borrowing costs for companies. The higher yield, which rises when bond prices fall, is tightening financial conditions after two years of the coronavirus pandemic.”


Why every American should care that diesel prices are surging across the country.

Without diesel fuel, the U.S. economy would collapse in a matter of days. Our supply chains would completely shrivel, almost overnight. Trucks use it to haul our goods across the country. Of all Class 8 trucks (the big ones), 97% use diesel. No, Elon Musk is not going to save us here.”


Trucking shortage shifts from drivers to vehicles…

On both sides of the Atlantic… a longstanding shortfall of equipment — due originally to coronavirus restrictions and chip shortages — is becoming more severe as Russia’s invasion of Ukraine shuts down the supply of key components and Chinese lockdowns threaten further turmoil in global supply chains.”


Bank of England ‘duty bound’ to trigger recession to curb inflation…

“Britain’s central bank policymakers are “duty bound” when they meet this week to push the UK into recession to cap rising inflation, a former Bank of England official has said. Adam Posen… said… it should hike interest rates now to squeeze out inflationary pressures made worse by Brexit trade and immigration restrictions.”


EU Rejects Russia’s Ruble-For-Gas Scheme, Warns Of Supply Shock.

“At the conclusion of its Monday meeting, the European Union has said it will not heed Russian demands to pay for gas in rubles, with a mid-May deadline for payment looming. The bloc also warned its member states to prepare for Russia to cut off gas to all members.


Euro zone factory output growth stalled in April.

“Euro zone manufacturing output growth stalled last month as factories struggled to source raw materials while demand took a knock from steep price increases and fears about the economic outlook, a survey showed.”


Protests erupt across Europe as tens of thousands rally to honor workers on May Day…

“Tensions erupted in Paris, as some demonstrators smashed windows… French police moved in, firing rounds of tear gas… Turkish police detained 164 people for demonstrating without permits and resisting police… Rising inflation and fears of upcoming food shortages from the war in Ukraine are feeding discontent around the world.”


China’s Economy Appears to Be Stalling, Threatening to Drag Down Global Growth.

“On Saturday, purchasing manager indexes released by China’s government showed contractions in factory and service-sector activity for a second straight month in April… Cement production in mid-April was less than 40% of full capacity.”


Singapore PM warns of global recession… “Singaporeans are already feeling the impact of the war on the cost of living”, as the city-state faced an $S8 billion ($8.2 billion) hit a year from higher energy prices, he said.

Mr Lee joins a growing list of global policymakers, market participants, economists and companies warning of recession risks.


Three people were wounded by gunfire and two arrested in clashes at May Day demonstrations in Chile, police said.

“The shooting occurred during a Sunday march called by a union in the capital Santiago as some protesters erected barricades and entered commercial premises, clashing with merchants.”


Human rights violations mount with Colombia protests.

“At the end of May Day, protests continued to rage across Colombia, and a couple of months after the one-year anniversary of the initial lockdown marking the COVID-19 pandemic.”


Peru’s annual inflation rate hits 24-year high in April.

“Peru’s annual inflation rate hit 7.96% in April, its highest level in 24 years, as the copper-producing Andean nation grapples with protests over rising food and energy costs… To combat inflation, Peru’s central bank has steadily raised the country’s benchmark interest rate this year.”


Nigeria: May Day Amid Strike Fevers…. Already, Nigerian workers and their counterparts in the informal sector are struggling to cope with low purchasing power…

“This year’s May Day comes at a time when the Nigeria Labour Congress, NLC, and other organised Labour groups are in a “war” mood.”


Tunisia announces ‘national dialogue’, excluding opposition groups…

“On Sunday, UGTT leader Noureddine Taboubi appealed to Saied to launch the national dialogue, saying it was “probably the last chance” to bring the country together and avoid “a dismantling of the state and a financial and economic collapse”.”


Pakistan: Farmers decry urea crisis after gas supply to fertilizer units worsens.

“Farmers of Pakistan fear that the urea crisis would be severe this year because of the reduction in the gas supply that has been diverted to help overcome the electricity shortage in the country.”


Eid brings little joy for millions of Afghans facing hunger.

“More than 90 percent of Afghans have been facing a shortage of food, according to the United Nations. Jamal, who did not wish to share his real name, is among those for whom Eid, which marks the end of the Muslim holy month of Ramadan, brought little joy.”


Tanker strike worsens fuel woes in crisis-hit Sri Lanka.

“A strike by owners of fuel tankers over the weekend renewed Sri Lanka’s long queues for diesel and petrol on Monday as pumps ran dry, compounding the island nation’s economic and energy crisis.”


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

If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is a huge help, especially as the cost of living crisis is biting here in the UK.

30th April 2022 Today’s Round-Up of Economic News

We are sailing into a perfect storm. And it may hit us worse than anything that has come before it.

“The situation will only get worse in the coming months. It will become more and more costly for countries to secure staple products in the international markets. As the risk of economic defaults increases, the financial space for governments to respond to the needs of their citizens will become more constrained – and the most vulnerable will suffer even more.”

We are not talking about a crisis that will come and go in a matter of weeks or months.”


Governments Tighten Grip on Global Food Stocks, Sending Prices Higher.

“Dozens of countries have thrown up trade barriers in the past two months to protect scarce supplies of food and commodities, but experts say the policies will only exacerbate a global food crisis… policymakers have quickly dropped the language of open markets and begun advocating a more protective approach.


Soy Oil Jumps to Another All-Time High on Global Shortage Fears.

“Russia’s invasion of its neighbor is upending trade of key agriculture crops from a major exporting region, driving up commodity prices and causing nations to go into hoarding mode to avert massive food shortages and potential civil unrest.”


Diesel In ‘Crisis’ Mode As Prices Break Records…

““I’ve started to use the term diesel ‘crisis’, Tom Kloza, head of global energy research at OPIS, told CNBC. “It clearly is a crisis that’s happening before our eyes. I wouldn’t rule out lines, shortages or $6 [price] in places beyond California. I wouldn’t say it’s a shortage yet. Europe, I think they’re headed for a shortage,” he said.”


Global Bonds Set for Worst Ever Month Before Burst of Rate Hikes…

“Fears of quickening inflation have torpedoed bonds worldwide, with a cut in Russian gas supply to Poland and Bulgaria and a red-hot Australian inflation print fueling expectations that the rout may continue.”


Stress emerges again in Treasuries market.

When the world’s biggest and most liquid market shows signs of stress, investors should take note. At the beginning of this month, major financial market participants trading in the US Treasury bond market had difficulty meeting the demands for collateral made by their counterparties.”


Nasdaq index marks worst monthly drop since 2008 financial crisis.

“The Nasdaq Composite stock index has undergone its heaviest one-month sell-off since the depths of the global financial crisis, as concerns about rising interest rates and slowing economic growth were exacerbated by softer business updates from tech giants such as Amazon, Apple and Netflix.”


US economy records surprise contraction during first quarter but big rate hike still on the cards.

“The commerce department’s first estimate for January to March gross domestic product (GDP) showed an annual rate contraction of 1.4%. Economists had predicted growth of 1.1%.”


Labor issues, idle trains leave U.S. grain and food stranded – shippers.

“Rail backlogs in the United States are delaying shipment of grains as well as processed flour and corn syrup, contributing to the national problem of inflation, food and grain companies said at a hearing this week.”


‘Doomsday’ fuel plan to push ordinary motorists to the back of the queue [Ireland]…

“Ordinary motorists will be pushed to the back of the queue if the fuel crisis escalates and rationing is introduced amid war in Ukraine. The Irish Independent has learned details of an emergency fuel allocation plan, drawn up to deal with any ‘doomsday scenario’.”


Rosneft cuts diesel exports from key Russian port to zero.

“Exports of Russian diesel from Primorsk, a key supply source for Europe, are set to drop by over 30% in May from a month earlier to 1.114 million tonnes, data from traders showed on Friday.”


An EU Embargo On Russian Oil Is Imminent.

“Members of the European Union are expected to agree on an embargo of Russian crude oil imports as early as next week, according to officials, in a move that would lay to rest a point of contention among its members.”


Road Freight Index for Europe Hits All Time High…

“The worst effects of this fuel price increase may be yet to be registered in the quarterly index, as the price spike did not occur until after the invasion of Ukraine on the 24th of February…”


Half of France’s nuclear reactors taken offline, adding to electricity demand on European grid.

“On Friday 28 of France’s 56 reactors were shut down due to routine maintenance or defects, forcing EDF to buy electricity from the European grid instead, at a time of soaring demand amid the gas crisis.”


Euro Zone Barely Grows as Germany Dodges Recession.

“Output increased 0.2% from the previous quarter in the three months through March… The figure reflects a contraction in Italy, stagnation in France and weaker-than-expected growth in Spain. Germany, the region’s largest economy, narrowly avoided a recession.”


Lockdown Drives China’s Jilin Into Contraction in Sign of Covid Zero Costs.

“A Covid lockdown in Jilin forced the Chinese automotive and farming hub into a steep contraction in the first quarter, flashing a warning sign about the mounting economic costs of Covid Zero as Shanghai and other regions currently grapple with similar restrictions.”


Major Brazil Soybean Grower to Cut Fertilizer Use Amid Shortage…

“SLC’s plan offers a glimpse of how growers in the agriculture superpower are preparing to deal with a global shortage of crop nutrients in the wake of Russia’s invasion of Ukraine that has caused prices to skyrocket, threatening to reduce production of staple crops exported around the world.”


Colombian protesters clash with police on anniversary of unrest.

“Potesters clashed with police in several Colombian cities Thursday as hundreds of demonstrators marked the one-year anniversary of a mass uprising against outgoing conservative president Ivan Duque. In Bogota, Medellin and Popayan, hooded protesters threw stones, Molotov cocktails and fireworks at riot officers.”


Libya is losing $60m a day in oil shutdown: Oil minister.

“Libya is losing tens of millions of dollars a day from the shutdown of its oil facilities, while global prices are at their highest in years, the country’s oil minister told AFP. Oil is the lifeblood of the North African country…”


KE blames fuel shortage as citizens suffer longer power cuts [Pakistan]…

“The people of Karachi were left baffled on Thursday as the sole power supplier to Karachi, the KE, announced a new schedule for loadshedding ahead of the Eid-ul-Fitr in specific areas of the city already affected by extended periods of power outages.”


Nepal is cutting its official workweek, hoping a longer weekend will help save the country’s economy.

“…to save on oil imports—which Nepal needs for transportation—Nepal decided to shorten its workweek… Nepal spends roughly $8.2 million a day on fuel imports, and the country’s state-owned oil company announced in January that it was effectively bankrupt.”


Sri Lanka teachers, bank workers join mass walkout over economic crisis.

“Many schools in Colombo were shut and several train stations deserted on Thursday as teachers and train drivers joined mass walkouts demanding President Gotabaya Rajapaksa’s government quit over Sri Lanka’s worst financial crisis in decades.”


The emerging-markets debt crisis.

“Slowing global growth, surging inflation and rising interest rates are squeezing emerging economies harder than most. Are we on the brink of a major catastrophe?


The Ukraine Food Price Crisis is Just a Preview of What Could Happen as Climate Change Worsens…

“The ripple effect of the Ukraine crisis on global grocery bills, however, is just a taste of what is to come as climate change disrupts the world’s agricultural areas. As temperatures rise due to increasing greenhouse-gas emissions, so too will the price of food.”


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

If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is a huge help, especially as the cost of living crisis is biting here in the UK.