2nd April 2021 Today’s Round-Up of Economic News

Archegos avalanche shows cracks are hidden under the surfaceThere are worrying pockets of bizarre price behaviour in the shadow banking world… the episode exposes broader vulnerabilities in the financial system.

“After all, as any back-country skier knows, avalanches do not usually occur just because of an idiosyncratic shock, but because the underlying snowpack is unstable…

“…the key point is this: the Archegos rubble shows that years of excessively loose monetary policy have not just left asset prices elevated but created half-concealed pockets of leverage, too. When the two collide, disaster can erupt.”


For many US college students, pandemic life is disappointing. For others, it is a financial crisis.

“…a new survey took a closer look at the profound effect the pandemic has had on the highest-risk students. Many, it found, have faced challenges just to make ends meet, with nearly three in five struggling for access to housing and food.”


America is starting to claw its way out of the economic fallout from the coronavirus pandemic, but food insecurity persists, especially for children and older adults.

“Food banks around the U.S. continue giving away far more canned, packaged and fresh provisions than they did before the virus outbreak tossed millions of people out of work…”


Pentagon chief reaffirmed unwavering support for Ukraine’s sovereignty:

U.S. Secretary of Defense Lloyd J. Austin III… condemned recent escalations of Russian aggressive and provocative actions in eastern Ukraine and offered condolences to Minister Taran on the deaths of four Ukrainian soldiers on March 26th.”


U.S. and China’s next economic battle will be over climate change, experts say:

“Having long been at loggerheads over trade, technology and capital markets, the world’s foremost economic superpowers are turning their attention to climate change as the next path to commercial supremacy.” [Oh, the hubris! It is Mother Nature who will emerge as the dominant superpower, of course.]


China’s Commodities Binge Makes America’s Future More Expensive:

“The U.S. spending plan faces a big problem: Beijing got to all the raw materials first… the U.S. is going to need more commodities. There’s just one problem: China.”


US has ‘enormous respect’ for how Australia is standing up to China’s ‘economic coercion’:

Washington’s top diplomat in Canberra says the countries are discussing how they would respond to a range of scenarios including conflict in the Taiwan Strait.”


Western brands caught between US and China over human rights:

“Western companies are being forced to choose between supporting human rights and profits from China, caught up in a battle the US and its allies are waging with Beijing over its persecution of Uyghur Muslims.”


The risk is that the process of decoupling from China will not be slow and wary but will accelerate… Economic nationalism and the drive for increased self-sufficiency risk stoking those tensions, creating uncertainty about access to resources. That includes capital…

For both businesses and investors, the end of globalisation is sure to be fraught with dangers.


“‘We haven’t seen anything yet’: tidal wave of [UK] debt still to come, warns charity:

Thousands more households have been pushed to the brink of financial ruin, the Salvation Army has warned, with a “tidal wave” of debt problems to come as the furlough scheme is unwound.”


Shaken by Greensill, German towns pull millions from banks:

“German towns and cities are pulling money from small, private banks, spooked after losing millions in the closure of Greensill Bank, an experience they said has shattered their faith in the country’s government and financial system.”


Spain’s public debt reached 120% of gross domestic product last year, above the previously reported 117.1%, the Bank of Spain said on Wednesday, after adding ‘bad bank’ liabilities stemming from the financial crisis a decade ago as demanded by Brussels.”


Pandemic and economic crisis pushes Argentina’s poverty rate up to 42%:

Poverty in Argentina rose to 42% at the end of 2020, INDEC national statistics bureau reveals – the highest level since 2004.”


Hunger grows in Brazil amid pandemic:

Lines at food distribution points are getting longer and longer in Brazil’s big cities, where hunger is gaining ground amid of the coronavirus crisis.”


Suriname Defaults as Time Runs Out for Third Debt Payment Delay: Suriname skidded into default after the government ran out of time to convince bondholders to yet again push back bond payments…

“That’s Suriname’s third default event of the Covid era per Fitch’s criteria.”


The Nicaraguan army said Thursday that since the start of the year it has detained and expelled 1,166 migrants from various countries who had apparently entered the country from Costa Rica at clandestine crossing points…

Most migrants making the hike through the dangerous Darien Gap are from Haiti or Cuba…”


The reason many Guatemalans are coming to the US border? A profound hunger crisis

As more and more Central American families arrive at the United States’ southern border, the municipality of Panzós offers a stark illustration of the deepening food crisis that is contributing to the new wave of migration.”


Africa faces severe debt crisis, UN warns: The UN says elevated public debt was limiting the capacity to boost spending across the continent.”


Action needed as hunger looms in Horn of Africa:

FAO report says almost 50 million people in the Horn require urgent food and water assistance.”


How Isis has flourished in poverty and neglect of southern Africa:

Insurgents who overran town of expats to threaten huge natural gas project have been growing in strength in the shadows…”


A list of failure – South Africa’s state-owned companies facing financial crisis

There were 21 public entities that disclosed uncertainty about whether they will be able to continue as a going concern.”


South Africa’s cash-strapped Land and Agricultural Development Bank missed a March 31 deadline to conclude a debt restructuring plan with lenders, the state-owned company said on Wednesday.

In April 2020 the country’s largest agricultural-focused lender defaulted on some repayments on its R50bn debt, triggering credit downgrades and fears of cross default on the debt of other state firms.”


Biggest South African Bank Raises Alarm on Loan-to-Grant Proposal:

“Standard Bank Group Ltd. has raised the alarm around proposals to revive a faltering government-backed credit program designed to aid South African businesses battered by Covid-19… “”…converting loans into grants would set a very undesirable precedent,” Chief Executive Officer Sim Tshabalala said.”


Will Lebanese banks crash Middle East finances?

Lebanon has long been a financial capital in the region. But neighboring nations say billions are stuck in the country’s failing financial system… It is already clear that billions of dollars may never be recovered because Lebanese banks simply don’t have the funds to pay out to depositors.”


Many of Lebanon’s children ‘may never get back to school’: Since the start of the coronavirus pandemic, more than 1.2 million children in Lebanon have been out of school.

“Lebanon’s dire economic crisis faces the risk of turning into an “education catastrophe”… with vulnerable children facing the possibility of never returning to school.”


The coronavirus pandemic has worsened long-standing inequalities around the world, which left unaddressed could undermine economic stability and lead to unrest, the IMF warned on Thursday…

“The findings show that the warnings fund economists sounded last year have come to pass.”


There’s an underappreciated side effect of all the disruptions across global supply chains: the cost of producing and distributing everything from furniture and foam to cars and machinery is rising

“…building consumer momentum around green cars will take a hit too: If nickel prices hit a historic high of $50,000 per ton, that could add $1,250 to $1,500 per electric vehicle.”


Automakers cannot afford to abandon the just-in-time system’s down-to-the-penny cost consciousness in a business where profit margins are often less than 10 cents on a dollar of revenue…

Unexpected events like the pandemic and chip shortage are just a sign of the times,” said Steven Merkt, president of transportation solutions at TE Connectivity…

This isn’t a series of black-swan events,” Merkt said. “This is a precursor of what life is going to be like.”


A Reckoning In Bubble Assets Is Coming: It’s time for a reckoning in bubble assets. Not since 1999 have I seen so much garbage trading at such crazy prices…

“No one knows when. But it’s not a question of if.”


S&P 500 closes above 4,000 for the first time

“The index of the world’s largest publicly traded companies last crossed a 1,000-point threshold just 21 months ago, when it hit 3,000 in July 2019. Before that, it took five years to go from 2,000 to 3,000.”


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31st March 2021 Today’s Round-Up of Economic News

Protest movements are on the rise worldwide amid deepening inequalities and job crises worsened by the continuing coronavirus pandemic.

“In 2020, widespread COVID lockdowns sparked protests in countries across the world, with millions marching through the streets demanding jobs, democratic freedoms, social justice and an end to corruption.

“But worsening economic conditions and government inaction to address the issues facing people will likely trigger more protests.”


A pandemic mystery: The rise in Asian-American unemployment

“Asian Americans were bumped during the pandemic from a historical perch —having the lowest unemployment rate of any major ethnic group…

“…experts say it’s unclear why.”


Regulators around the world monitor collapse of US hedge fund

“Financial regulators across the world are monitoring the collapse of the New York-based billionaire Bill Hwang’s personal hedge fund.”


Tourist slump sees Paris region lose €15.5 billion:

“Travel restrictions during the coronavirus pandemic have left Paris with only a fraction of its usual tourists. The slump has cost the French capital and its surrounding region over €15 billion in losses.”


As The Eurozone Fails To Prepare, The Global Economy Prepares For It To Fail: EU policymakers and Eurozone central bankers are externalizing the threat from within and the associated blame.

“The EU and the ECB may have failed the global policymaking test. The obscured Eurozone banking crisis obscures a potential financial crisis and a potentially associated systemic fraud.”


Japan’s Economy Is Again Struggling:

“…Japan, the world’s third-largest economy is highly dependent on exports and the reality that it is still struggling even after a great deal of America’s stimulus money leaked into buying imported goods speaks volumes.”


China’s housing crash exposes a growing regional economic divide:

“The contrasting experience of the country’s thriving coastal cities and struggling inland centres provides a glimpse into China’s growing regional divide, which threatens to undermine the post-coronavirus recovery of the world’s second-largest economy.”


China, Long a Source of Deflation, Starts Raising Prices for the World:

“Pressured by supply-chain woes and commodities costs, Chinese manufacturers are increasing prices, adding to inflation fears.”


China’s Military Could Turn Small Clashes Into Major Conflicts – It’s not clear who’s in command when things go wrong…

“Relations between the United States and China are fraught, with escalating rhetoric and risk of miscalculation on both sides. Military affairs aren’t the only aspect of the bilateral relationship—but they’re the most dangerous one.”


Report: Chinese loan terms hamper post-virus debt talks: A new report says China’s loans to poor countries in Africa and Asia impose unusual secrecy and repayment terms that are hurting their ability to renegotiate debts after the coronavirus pandemic.”


Prepare for emerging markets debt crisis, warns IMF head – Georgieva says global recovery and rising rates will draw capital from vulnerable countries…

“Kristalina Georgieva said on Tuesday that a tightening of financial conditions could trigger “significant” capital outflows.”


Argentina’s Buenos Aires province said on Monday it would extend the deadline for its $7 billion foreign debt restructuring until April 23, amid rising tensions with creditors after a year of negotiations that have failed to reach an agreement…

“The province, led by hard-line governor Axel Kicillof who clashed before with creditors when he was Argentina’s Economy Minister from 2013 to 2015, has repeatedly pushed the deadline for the debt revamp…”


“The bad news is that markets are jittery about Brazil’s debt, which, at over 90 percent of GDP, is the largest in the emerging world (excluding small island states) after Egypt and Angola, surpassing even neighboring Argentina.

“Brazil is heavily indebted even when compared to advanced economies, exceeding the United Kingdom and the European Union average…”


Venezuelan President Nicolas Maduro on Sunday proposed paying for vaccines against the novel coronavirus with oil…

“The crisis-stricken OPEC nation’s crude exports have plummeted to their lowest levels in decades since Washington sanctioned state oil company Petroleos de Venezuela in 2019…”


High noon for efforts to save [South Africa’s] Land Bank from collapse:

“The century-old state-owned bank faces the threat of being wound up if a plan to restructure its more than R40bn debt load is not concluded by its lenders and the National Treasury by 31 March.”


How crisis in Lebanon is fuelling drug dependency: Substance use is soaring as the country teeters on the edge of political and economic collapse.

“”Do you think I want to be microdosing Ketamine every day?”, asks Nadim Haroush*, a local living in Beirut, Lebanon’s capital city.”


Social collapse in Syria will trigger a large refugee wave to EU, warns Moscow:

“A social and economic meltdown in Syria will lead to irreversible ramifications and a new wave of refugees heading towards the EU in particular, Russia’s Deputy Foreign Minister Sergei Vershinin said Tuesday.”


Suez Canal ship freed, but the pressure points in supply chain, global trade persist… it’s another wake-up call for companies that have set up their business to rely on supply chains with little room for error, said William Lee, chief economist at the Milken Institute.

““This is a warning about how vulnerable our supply chains are and how the just-in-time inventory techniques that have been so popular have to be rethought,” he said.”


The Global non-financial sector’s debt to GDP ratio jumped from 138 percent to 152 percent over the decade leading up to the end of 2019, the International Monetary Fund (IMF) unveiled on Monday

“In chapter two of its global financial stability report, the IMF revealed that the non-financial corporate sector’s debt to GDP ratio increased in both advanced and emerging market economies, reaching a historical high of 91 percent at the end of 2019.”


The International Monetary Fund has raised concerns over commercial property and the risk it could pose to financial stability, as the sector faces a series of challenges on the back of the coronavirus crisis…

“It remains to be seen how many businesses have been forced to close as a result of the pandemic, including shops, hotels and restaurants. But, ultimately, the sector’s future could become an issue for financial stability.”


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29th March 2021 Today’s Round-Up of Economic News

How China is prepping for global financial meltdown

“…With interest rates still near the lowest levels in history and stock market valuations at all-time record highs, according to some indicators, it’s understandable why there are such high levels of concern in China that it may all come crashing down one day.”


Multiple-whammy: China’s looming crises… Since when did China start acknowledging its challenges? Something serious is afoot

“Reputed experts estimate China’s debt to be over USD 40 trillion, three times its GDP.”


China Moves Forward on Credit Rating Rules as Defaults Climb… China’s ratings firms have long been criticized for issuing inflated grades…

“About 96% of onshore credit scores are the equivalent of investment grade. What’s more, a recent report by industry watchdogs showed that a higher proportion of higher-quality borrowers defaulted compared to lower-rated firms.”


China’s daily yuan fixing is once again drawing attention.

“The currency is set for its biggest monthly slide since last March, spurring traders to look closely at the reference rate again to scour for policy signals.”


Biden suggests creating initiative to rival China’s Belt and Road:

“US President Joe Biden says he suggested that democratic countries band together to fund infrastructure in less developed countries during a call with British Prime Minister Boris Johnson.”


M1 [money supply] has been soaring but is not having any effect on short-term interest rates because they are zero percent. It is making the current economic and financial environment more fragile than in the past

“Business and consumers respond to the price of money. What they see is rising interest rates. This perception and reality are a form of tightening because it discourages borrowing.

“The Fed cannot do anything about it.”


Investors are fretting over inflation. Scores of US companies are saying they are right to. A growing list of businesses are warning that supply-chain bottlenecks, increasing raw material costs and higher labour expenses are beginning to bite.”


UK ministers have turned down a plea from metals tycoon Sanjeev Gupta for an emergency loan to prevent his group from collapsing as it searches for rescue financing

Unions have urged the government to consider all options to help protect the 5,000 jobs at risk in the UK.”


Greensill turned a mundane finance practice into an ultra-lucrative business in part because it was able to shuffle around the risk, pushing some of it onto insurance companies and other financial firms.

“It has echoes of the asset-backed securitization that was at the heart of the 2008 financial crisis.”


The Bank of England has urged banks to keep credit flowing to businesses once the government-backed Covid-19 loan schemes end this month over fears of a cliff-edge fall in lending that could choke the economy.”


Dozens of anti-lockdown protesters have been arrested in cities across the UK after clashing with police.

“A total of 41 people were arrested in Bristol, Bradford and Manchester as protest groups took to the streets to campaign against lockdown and a new police bill.”


European tourism: ‘With another lost summer, many businesses will disappear’… southern Europe’s tourist industry — a large part of the region’s economy — has been left in limbo as the slow rollout of vaccinations and the latest rise in cases make a second lost summer increasingly likely.”..

…the sector accounts for 11 per cent of southern European economic output and one in six jobs in southern European nations, including France.”


Italy’s economy suffers as tourist gems are becoming ‘dead cities’

“The collapse in the number of tourists to Italy was jaw-dropping last year, with only 25.5 million foreign visitors spending at least one night in the peninsula, versus 65 million in 2019 – a drop of more than 60 percent…

““The situation is really dramatic and everything must be done to revive a sector so vital for our country,” said the president of the Italian Union of Chambers of Commerce, Carlo Sangalli.”


Australia on Sunday ended a pandemic wage subsidy scheme despite official warnings that up to 150,000 people could lose their jobs as a result

Treasurer Josh Frydenberg said the programme had been an “economic lifeline” that has achieved the aim “of saving lives and saving livelihoods” over the past year.”


In the last quarter of 2020, Australia exported nearly $14bn less than it had a year earlier – a 12% fall… there really is one thing that is keeping our trade surplus going – iron ore. Over the past year, iron ore made up 41% of our total goods exports.

While everything – including coal and gas exports – fell, the demand for iron ore kept on keeping on… it means Australia’s economic base has become very narrow – we are incredibly reliant upon iron ore exports to power growth.”


UN chief warns of coming debt crisis for developing world:

“The world faces severe problems of debt sustainability in the wake of the coronavirus crisis that have not been properly understood or addressed, and which threaten to tip developing countries into a rising wave of hunger, poverty, social unrest and conflict, António Guterres, secretary-general of the UN, has warned.”


Four-fifths of Sudan’s £861m debt to UK is interest:

“Sudan, ruled by an unelected military-led transitional government after longtime ruler Omar al-Bashir was deposed in 2019, owes the UK almost £900m. But the Observer can reveal that almost 80% of that was accrued from interest, leading to calls for an unconditional debt amnesty.”


Thousands of the Hirak movement returned to the streets of the Algerian capital on Friday as they demanded significant changes to the country’s government and political system — chanting slogans such as “let the system fall.””


Tensions on the border between Colombia and Venezuela continued to escalate on Thursday, amid military operations that sent thousands of Venezuelans fleeing to Colombia from their homes located along the border.

“Thousands of Venezuelans have fled to Colombia from the province of Apure in the wake of continuing military operations…”


At least 114 people have been killed across Myanmar after security forces opened fire on protesters, according to local media reports

“The shootings came as people took to the streets again to protest against the 1 February coup, in defiance of a warning that they could be shot “in the head and back”, as the junta celebrated Armed Forces Day.”


Violent protests spread in Bangladesh after Modi visit… Five people had died on Friday, and another six on Saturday, after police shot at demonstrators in several major districts across the Muslim-majority nation of 168 million people.

“The protesters – mostly from the Hefazat-e-Islam group – were angry at the visit of Indian Prime Minister Narendra Modi…”


Killing of youths sparks protests in northwest Pakistan:

“Thousands of protesters broke through a police blockade in northwestern Pakistan on Sunday as they tried to march on the city of Bannu and then on to Islamabad to demand a government probe into the deaths of four young men who they allege were tortured and killed by security forces.”


Hundreds of Lebanese demonstrated in the capital Beirut on Sunday over deteriorating economic and living conditions in the country.

“The protest was organized by the Lebanese Communist Party with demonstrators carrying banners demanding housing services, education and healthcare services.”


Huge ship blocking Suez Canal partially refloated, more work needed:

“A massive container ship blocking Egypt’s Suez Canal for nearly a week has been partially refloated, the Suez Canal Authority (SCA) said on Monday, raising hopes the busy waterway will soon be reopened for a huge backlog of ships.”


Global shipping was in chaos even before the Suez blockage. Shortages and higher prices loom… disruptions are adding billions of dollars to supply chain costs…

These expenses could soon mean higher prices for consumers, adding upward pressure to rising inflation — a nightmare scenario for Wall Street, which is already fearful that a spike in prices could force the Federal Reserve to hike interest rates sooner than expected.”


Up to $4 Trillion in Revenue May Have Evaporated in Supply Chain Disruptions.”


With a drop to less than 78 million units sold, the global auto sector faced “its worst crisis ever,” the president of the International Organization of Motor Vehicle Manufacturers, Fu Bingfeng, said…

The full-year figure was “equivalent to 2010’s sales levels,” it added while Fu said: “The 2020 results wipes off all the growth made over the last 10 years.””


A global food crisis is brewing:

““Acute hunger is set to soar in over 20 countries in the coming months… Yemen, South Sudan and northern Nigeria top the list and face catastrophic levels of acute hunger, with families in pockets of South Sudan and Yemen already in the grip of or at risk of starvation and death according to the Hunger Hotspots report”.”


A global population crash is coming – global depopulation is the looming existential threat that no one is talking about:

“Some East Asian countries have fertility rates near or even below 1.0, while much of the core population of Europe is shrinking. In the U.S., fertility rates have fallen below replacement rates, hitting a historic low of 1.7 in 2019, and will likely fall even further in 2020 in part due to Covid. Many of the world’s poorer countries are seeing their birth rates plunge at unprecedented rates.”


“The global pandemic which led to a total shutdown of the global economy in the year 2020 has compounded this debt-based economy that has been in place since 1971 with the world’s total debt stock reaching the sum of two hundred and eighty-one trillion United States Dollars ($281,000,000,000,000.00) as at 31st December 2020 according to Bloomberg News.

The sustainability of these debt levels globally is seriously in doubt.”


Will a collapse trigger global meltdown?

“In ways remarkably analogous to the unfolding global financial crisis of today, world credit had been built after 1919 on a pyramid of increasingly dubious debts, with the house of Morgan and Wall Street financial firms sitting at the peak of the pyramid.”


Credit Suisse and Nomura have warned of large losses after a fire sale of about $20bn of Chinese and US stocks, as their client Archegos Capital Management was forced into a huge unwinding of assets

Bankers in Tokyo familiar with the circumstances surrounding the heavy sell-off of Archegos assets described the event as a possible “Lehman moment” that would force multiple lenders to recognise that leverage extended to the fund had created excessive risk.


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

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26th March 2021 Today’s Round-Up of Economic News

With stock markets decoupled from economic reality, the only way may be down:

“Central bankers may continue to insist that things are fine, but the markets will eventually conclude that if bonds continue to fall, inflation continues to rise, and defaults continue to increase, then equities will reach a critical point.

“At which time, the authorities will have very little left in the tank to fight a really big recession.”


Powell Says Now Is Not the Time to Focus on Reducing Federal Debt:

“Federal Reserve Chairman Jerome Powell said that the federal government can manage its debt at current levels but that fiscal-policy makers should seek to slow its growth once the economy is stronger.”


UK hopes of clinching a trade deal with the US — seen as one of the biggest prizes of Brexit — are facing a further setback as negotiators are set to miss a critical deadline for securing swift passage through Congress…

“Chances of catching ‘fast-track’ through Congress fade as Biden focuses on Airbus-Boeing dispute.”


The number of people in the UK living in poverty hit a record high just before the coronavirus pandemic began, figures show.

“A total of 14.5 million individuals were estimated to be in relative low income – below 60% of average household income – in the year to March 2020.”


The risk of firms defaulting on France’s state guaranteed loans is rising as the Covid-19 crisis drags on with renewed restrictions on activity, the public investment bank Bpifrance said.

The lender now expects between 5.5% and 7.5% of all France’s Covid loans to default…”


With Negative Rates, Homeowners in Europe Are Paid to Borrow: “Covid-19 pushes benchmarks deeper into negative territory, widening the pool of mortgage holders who receive interest…

As economic pain in Europe drags on, the negative rates remain—and they are getting lower. As a result, more borrowers in Portugal as well as in Denmark, where interest rates turned negative in 2012, are finding themselves in the unusual position of receiving interest on their loans.”


Chinese sanctions threaten EU investment pact:

“China’s decision to impose sanctions on several European lawmakers has dealt a potentially fatal blow to an investment deal that was seven years in the making.”


Winemakers and grape growers are bracing for China to imminently announce an increase and extension to tariffs on Australian wine, paving the way for a potential World Trade Organization dispute

“China last year introduced interim tariffs of up to 200 per cent, claiming Australian winemakers sold wine below the cost of production and had been subsidised.”


There’s growing alarm in Canberra over what’s expected to be Australia’s inevitable increased dependence on foreign petroleum amid a major influx of cheaper refined oil products from China.

“It comes as China’s crude oil refinery capacity is rapidly expanding and simultaneously Australia is about to see its last four refineries cut down by two…”


The Asian Development Bank warned that rising U.S. yields could trigger currency and debt crises across Asia like past shocks that rocked emerging markets.”


The Bank of Thailand kept its benchmark interest rate unchanged at an all-time low and cut its growth forecast as it lets fiscal measures take the lead in reviving the economy from its sharpest fall in more than two decades.”


The Philippine central bank kept key interest rates steady on Thursday, balancing the need to support an economy facing renewed challenges from fresh coronavirus curbs with concerns about quickening inflation.”


Indonesia aims to kickstart President Joko Widodo’s ambitious plan to relocate the capital city to the island of Borneo by offering property contracts to investors this year and starting construction work on a state palace…

National Development Planning Minister Suharso Monoarfa said accelerating the project now should help a post-crisis recovery of Southeast Asia’s biggest economy.”


Emerging-Market Stocks Are Close to Wiping Out This Year’s Gains:

The surge in U.S. yields and a wave of monetary tightening in nations from Brazil to Russia this month is raising concern the rally in emerging stocks can’t be sustained.”


The Banking Association of South Africa has warned that land expropriation without compensation could pose a significant risk to the banking sector

“The current exposure banks have in relation to land-based property is approximately R1.613 trillion in the form of mortgages.”


Turkish banks have $88.7 billion in short term, foreign currency, external debts maturing in the next year… “In past years, banks have been able to roll over those loans to the future, but the shake-up in confidence has some worried that institutions will want repayment and not push back loans.

This is a kind of event that can be the trigger of a balance of payments crisis because now the credibility to me seems to be lost,” said Nikolay Markov, a senior economist at Pictet Asset Management.”


Mexico’s central bank unanimously voted to hold its key interest rate at its lowest in almost five years amid surging inflation, though analysts are split on whether its easing cycle is over…

““In a highly uncertain environment, the risks for inflation, economic activity and financial markets pose major challenges for monetary policy,” the bank’s board wrote in a statement.”


COVID-19 deaths and infections have reached record levels in Brazil, leading to a humanitarian crisis and major impacts on the economy

Carmakers such as Volkswagen, Volvo and Scania halted production temporarily because of supply chain instability, mainly affecting semiconductors, and to avoid infections among the labor force…

“State oil company Petrobras has temporarily reduced output at the Marlin Sul field in the Campos basin amid a coronavirus outbreak…”


Argentina is unable to repay its $45 billion debt with the International Monetary Fund under current negotiating conditions, influential Vice President Cristina Fernandez de Kirchner said Wednesday, diminishing the possibility of an agreement with the country’s largest creditor.

We can’t pay because we don’t have the money to pay,” Fernandez de Kirchner said, adding that the terms and conditions are “unacceptable.””


Hyperinflation has hit Venezuela so hard that even the street drug trade is collapsing

Due to spiralling poverty in Venezuela, those with addictions are struggling more than ever to come up with the money to buy drugs.”


Jordanian riot police on Wednesday broke up protests in Amman and other cities called to mark the 10th anniversary of Arab Spring pro-democracy demonstrations, and authorities detained tens of activists, witnesses said.

“Police in Amman handcuffed several people who defied a government ban on protests and rounded up others…”


Lebanon has been listed by UN agencies among the countries at risk of catastrophic famine… according to reports on Thursday.

“Lebanon’s food crisis is the result of a financial and political crisis that began in August 2019, sinking the country’s currency to a new low, although the UN believes things could get worse.”


A surge in factory output is testing already strained global supply chains, raising prices of raw materials and other inputs at the fastest pace in a decade as manufacturers and their customers are forced to wait longer for their goods to arrive…

“manufacturers in most countries report lengthening delivery times for raw materials and other inputs, as well as increasing backlogs of work.”


What’s causing the current global shortage of semiconductor chips? Since the shortage was first flagged at the beginning of the year, a roll-call of the world’s biggest carmakers have come out and said that they will be forced to delay or cut production due to a shortage of these chips.

“Now, with the situation no better than it was before, firms are beginning to put numbers on the damage the shortfall will do…”


Texas petrochemical plants hit by last month’s Arctic blast have still not returned to full capacity, threatening months of disruptions to the global supply chain for chemical raw materials critical to everything from cars to medical equipment to nappies.”


Suez Canal block could hit product supply chains: …When it comes to shipping goods from Asia to Europe, there are virtually no alternatives such as rail or truck transportation, said Sharat Ganapati, an economics professor at Georgetown University.

The blockage will delay a range of parts and raw materials for European products such as cotton from India for clothes, petroleum from the Middle East for plastics, and auto parts from China, he said.”


The devastating impact of Covid-19 on Ireland’s hospitality sector has been mirrored across the world, with almost €4 trillion lost in 2020 as a direct result of the pandemic, according to research published today.

“The World Travel & Tourism Council’s annual Economic Impact Report says global travel and tourism’s contribution to GDP almost halved…”


The return of the inflation spectre: …an inflationary overshoot will trigger a disinflationary response from central banks. That will mean much higher policy rates.

“That could lead to waves of default far more pervasive than in the early 1980s, when the big story was the debt crisis in developing countries.

This time, the debt crises could be almost everywhere, because there is so much more debt.”


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

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24th March 2021 Today’s Round-Up of Economic News

The entire US economy is about $22 trillion a year. The amount of money, as measured by M1, in the economy has …gone from $4 trillion to $16 trillion in the last year and is still rising fast

“The numbers have gotten so out of control in the M1 data that the Fed says they’re not going to publish this data set anymore…

Is The Entire U.S. Dollar Global Economic System At Risk Of Collapse?

…Yes, as always and maybe more imminently than most people think… I hate to quote Lenin, but…

““There are decades where nothing happens; and there are weeks where decades happen.””


President Joe Biden will be briefed by advisers this week on infrastructure, climate and jobs proposals being considered by the White House that could collectively cost as much as $4 trillion, according to people familiar with discussions.”


The stock market bubble will burst and inflation will follow: the stock market is assuming that the damage the Biden administration and the Federal Reserve are beginning to inflict on the recovering economy will be limited… that happy assumption will explode.

The Fed is underestimating the massive amount of money printing it will have to do to finance the largest peacetime spending the U.S. has ever engaged in.”


Inflation Fears Continue To Mount… One reason behind rising interest rate fears is that import prices continue to riseOverall, import prices have risen 3% in the past 12 months, so inflationary pressures continue to build.”


Canadian real estate prices are once again the focus of an international agency. An IMF annual staff audit cites home prices as one of the biggest threats to the country’s economy…

They… recommend mitigating leverage build up, and taxing speculators…”


New Zealand on Tuesday (March 23) introduced a raft of measures to cool its red-hot housing market, slugging investors with new taxes and promising to boost supply after housing affordability fell to its lowest ever.”


China’s property price declines in lower-tier cities take heavy toll on middle class

“Weakened real estate market in smaller Chinese cities is weighing on people’s ability to spend, impeding government’s goal of driving economic growth.”


China: More signs of slowdown… After a strong recovery in 2020, growth has slowed in early 2021…

CPI is still in deflation territory as consumer prices fell 0.2% y/y in February… The yuan appreciation vs. the USD has come to a halt as the relative economic strength is shifting back towards the US.”


China warns regional banks to brace for tidal wave of bad debt:

“China’s small regional banks are fast approaching a surge of nonperforming debt that threatens to undermine the financial health of the vulnerable lenders.”


India’s government is considering resuming fresh bankruptcy filings after the current suspension expires on March 25, people with knowledge of the matter said.

“The lifting of the halt would come even as a resurgence in virus cases threatens the nascent economic recovery. It could spark a wave of new insolvencies…”


Argentina posted a 4.3% year-on-year contraction in the final quarter, the official INDEC statistics agency said on Tuesday, while the economy plunged 9.9% for the full-year, both in line with analyst forecasts.

Argentina’s economy has been in crisis since 2018 when it turned to the International Monetary Fund for a $57 billion loan. The country defaulted to private creditors last year.”


Consumer confidence in Brazil registered its third largest monthly fall on record, a survey indicated on Tuesday, hammered by a deadly second wave of the COVID-19 pandemic and near collapse of the public health system in several cities

“There have been only two steeper monthly declines since the data series began in 2005: October 2008, at the height of the global financial crisis, and April last year in the first wave of the global pandemic…”


Turkey’s money markets face ‘liquidity squeeze’ after lira tumble… Turkey’s money market showed signs of stress on Tuesday, a day after the president’s firing of a respected central bank chief rattled investors and sparked heavy selling in the country’s assets.

“Conditions make it more challenging to unwind positions or bet against the lira, analysts say…”


Lebanon crisis escalates as last-ditch cabinet talks fail to form new govt

“Lebanon’s prime minister-designate Saad Hariri and President Michel Aoun failed Monday to agree on a new government line-up after months of deadlock, as the country sinks deeper into economic crisis. “


With low interest rates for most of the past decade, it was clear from the start of the COVID-19 crisis that central banks had little room for maneuver with conventional policy tools. They would have to lean even more heavily on unconventional measures, including initiating or extending corporate asset-purchase programs…

“…the longer their market support continues, the riskier the search for yield may become. Monetary policymakers and credit investors alike are facing an unenviable dilemma.


Beware the aftershocks of the Covid-19 recessionHistory shows that recovery from a crisis is never smooth sailing…

“The economic crisis caused by the Covid-19 pandemic… will… have aftershocks affecting companies, workers and governments.”


The global chip shortage is continuing to pummel global business, with Samsung, Honda and Volkswagen among the latest major companies to warn of sustained disruption.

“On Wednesday, Samsung co-CEO Koh Dong-jin told investors that the South Korean tech giant was having trouble with its supply chain… Meanwhile, the auto industry… is pointing to worsening conditions.”


Why the semiconductor shortage won’t end soon… these chips are highly specialized, and that limits the ability to pool supply to mitigate this crisis…

“Will we see price increases soon?

…We’ve seen shortage allocations. If you want to buy a car today, you’ll probably have to wait to get what you want. This is also true for a lot of other products. Some prices will go up and there will be more delays.”


Coffee supplies in the United States are shrinking and wholesale prices are surging, with the hard-hit market bracing itself for further fallout from a global shortage of shipping containers that has upended the food trade

“”Everybody is feeling the pinch,” said Mr Christian Wolthers, the president of Wolthers Douque, an importer in Florida, who estimates that shipping costs have more than doubled from Latin America. “These bottlenecks are turning into a container nightmare.”


A vast container ship has run aground in the Suez canal after being blown off course by a “gust of wind”, causing a huge traffic jam of vessels at either end of the vital international trade artery.

“The 220,000-tonne, 400 metre-long Ever Given – a so-called “mega ship” – became stuck near the southern end of the canal on Tuesday. Several attempts to refloat it have failed.”


Why humanity is at risk of losing the war against the coronavirus

” With “vaccine nationalism” intensifying by the day, the global effort to end the COVID-19 pandemic is at risk of faltering… the pandemic still has a very long way to go.”


Over 30 million people ‘one step away from starvation’, UN warns: The pandemic, climate crisis and conflict combining to drive ‘alarming’ levels of global hunger, says report…

“An estimated 34 million people are struggling with emergency levels of acute hunger known as IPC (Integrated food security Phase Classification) 4, meaning they are ‘one step away from starvation’.”


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

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

22nd March Today’s Round-Up of Economic News

The pandemic has skewed economic statistics around the world, leaving governments and economists struggling to determine policy and performance at a crucial point in the crisis.

“Just when policymakers have to make some of the most important decisions on the economic effects of Covid-19 vaccines, and on lifting restrictions and stimulus to fuel recovery, official and unofficial data are giving inconsistent and potentially misleading signals.

“Problems in data collection, the effects of coronavirus support policies themselves and a breakdown in previously cast-iron relationships between data and business performance are making accurate assessments elusive.”


Inflation risks are mounting in the U.S. after unprecedented monetary and fiscal stimulus, according to economists who are also growing increasingly concerned about a corresponding surge in government debt

“Earlier this month lawmakers effectively added to the U.S. budget deficit when they enacted a new $1.9 trillion economic stimulus measure.”


To help Venezuelans, Biden can go beyond granting temporary immigration status

“According to the United Nations, 5.4 million Venezuelans have fled their country for political and economic reasons. Most have crossed borders to Colombia and Brazil… but many have come to the US as well.”


Cubans are embarking on treacherous sea journeys as the economic crisis worsens… a worsening economic climate could push more Cubans to make the desperate voyage to the US, despite having lost their preferential status.

In 2020, the economy shrank by 11%, according to Cuban government figures…”


The Biden administration is reportedly considering sending migrants to states near the Canadian border for processing amid a rush of attempted crossings at the southern border.

“U.S. Customs and Border Protection (CBP) is requesting planes that would allow it to transport the migrants to the northern states, The Washington Post reported Friday.”


The Calgary Police Service says it strongly condemns racism and hate, releasing a statement Sunday after more anti-lockdown protests over the weekend.

“Police said there was a “verbal and physical confrontation” between two groups away from a protest on an unidentified date.”


Each day of lockdown is costing the UK economy more than £500million, according to research for the Daily Mail.

“The Centre for Economics and Business Research found that output is £521million a day lower than it was before the pandemic. One in four businesses remains closed and six million workers are on furlough.”


Almost one in 10 Londoners are set to be unemployed by the end of the year as the pandemic continues to wreak havoc on the economy, grim new figures have revealed…

“… a worst case scenario could result in unemployment hitting 11.8 per cent.”


UK Police came under attack from demonstrators as a rally in Bristol against plans to increase powers for dealing with peaceful protests spilled over into violence.

“The “Kill the Bill” event in Bristol saw a police station attacked, officers suffer broken bones and a number of police vehicles set alight.”


Protests continued across France on Sunday against Islamophobia and a controversial bill that has been criticized for targeting Muslims.

“Demonstrators took to streets in the capital Paris, Marseille, Lille, Strasbourg, Bordeaux and Lyon.”


Demonstrators took to the streets in several European cities on Saturday to protest Covid-19 lockdown restrictions, with clashes between demonstrators and police erupting in the German city of Kassel while in London, police arrested dozens of people for breaching pandemic restrictions.

Protests also erupted in Austria, Belgium, Britain, Croatia, Finland, Poland, Romania, Sweden and Switzerland as European authorities confront a third coronavirus wave.”


Outlook darkens for Europe’s virus-stricken economy

“Economists are cutting growth forecasts for the eurozone economy as a third wave of Covid-19 infections and vaccination delays spur tighter restrictions in several countries including France, Italy and Germany.”


European Banks Urged to Recognize Loan Losses Following Covid… EBA’s Campa expects ‘significant’ increase in bad loan ratios

“Campa’s position and recent warnings from the European Central Bank show that European authorities are preparing for the full effect of the pandemic to reverberate across the economy once temporary relief measures expire. The EBA is also resuming stress tests of banks this year.”


The ECB’s Financial Self-Destruction… At a time of emerging lockdowns in the rest of the world, the EU is badly behind in its vaccination programme and is unlikely to fully emerge from its lockdowns before next winter, and possibly beyond…

The only thing that holds the Commission together is the magic money tree that is the ECB… It really is a horror show in the making.”


Thousands of protesters took to the streets of Istanbul on Saturday after Turkey pulled out of an international agreement designed to protect women from domestic violence. The move has sparked outrage both in Turkey and around the world.

“Demonstrators voiced their anger at the U-turn by President Recep Tayyip Erdogan after originally Turkey ratified the treaty in 2011.”


Turkey’s currency has tumbled as much as 14% after President Recep Tayyip Erdogan sacked the country’s central bank governor over the weekend.

“Naci Agbal had been credited as a key force in pulling the lira back from historic lows… Erdogan replaced him in a surprise move on Saturday, the third central bank governor exit in under two years.”


Emerging markets may be about to enter a fresh period of volatility as central banks struggle to hold inflation in check while keeping the growth fires burning

“…hikes in borrowing costs in Russia, Turkey and Brazil underscored the dilemma. Policy makers in Thailand, South Africa and Mexico are among those meeting to decide rates this week.”


China’s Crusade Against Risk Is Tormenting Financial Markets… Divining the targets of Beijing’s latest de-risking campaign is becoming an essential trading strategy.

“Those who failed to take heed of warnings about asset bubbles by officials were steamrolled by a $1.3 trillion rout in Chinese equities, with the most popular stocks bearing the brunt of the selloff.”


Saudi Aramco, the world’s largest oil exporter, is no longer the world’s most profitable company.

“After a pandemic year that slashed fossil fuel prices—and drove up demand for consumer technology—that distinction now falls to Apple.”


Risky US oil companies snap up $20bn in junk bond record

“Lowly rated US energy companies that struggled for survival last year are finding renewed optimism among investors after a surge in oil prices, helping them raise a record amount of debt to fend off bankruptcy.”


The world’s largest airlines have built up a mountain of more than $300bn in net debt, a sign the pandemic will hamper recovery for years as carriers face paying back huge bills from rescue financing and state support…

“Recovery may take years as industry grapples with rescue finance and state loan bills.”


Unvaccinated sailors risk deepening global supply chain crisis

“Of the world’s 1.7m seafarers, 900,000 are from developing nations, where vaccines might not be available for all until 2024, according to the International Chamber of Shipping, a trade association.”


Renesas Electronics, one of the world’s largest makers of chips for the automotive industry, has warned that a fire at one of its factories could have “a massive impact” on global semiconductor supplies and halt production for at least a month.

The timing of Friday’s fire at the advanced chip facility in Japan could not be worse for carmakers, which were already wrestling with widespread disruption to supply chains caused by the Covid-19 pandemic as well as the US cold snap that led to mass blackouts in Texas [and the drought in Taiwan].”


Central banks’ contest with the markets: Investors are betting that loose monetary policy cannot lastthe policy dilemma of markets front-running the economy is sharpening. Other central banks are facing it too.”


Amid the rash of Covid-19 anniversaries, it was easy to miss that the pandemic’s scariest financial moment just turned one. On March 19 last year… the market looked to have broken down. For some reason there had been massive selling of Treasuries at a time of extreme high risk, which would normally be exactly when investors would be expected to buy.

Getting to the bottom of that accident is proving maddeningly difficult.”


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

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