And so it goes, via Bloomberg: Italy announced a nationwide closing of its schools until March 15 as it redoubles efforts to curb the worst outbreak of the coronavirus epidemic in Europe. The shutdown of schools and universities, set to start Thursday, will further hit an economy that’s expected to contract sharply in coming months.
Primary Section
Morgan Stanley on virus scenarios
Via Morgan Stanley: Disruption, Dislocations and Delayed Recovery With economic activity disrupted and capital markets dislocated, investors are debating if Covid-19 will derail the global cycle. In times of sharp drops in asset markets, pessimistic prognoses are easy to make, but it is at times like this when some perspective is warranted. Coming into the year,
Fake left Guardian demands more low-wage migrants
With UK wage growth recently hitting an 11-year high: The Johnson Government last week announced that it would drop the salary threshold for “skilled” migrants by £4,400 to £25,600: Those earning less than £25,600, but more than £20,480, could still apply for visas if they had a job in a “specific shortage occupation” or a
Japanese PMIs plunge on supply chain shock
Down they go: Here is why, via Ambrose Evans-Pritchard: Container shipping from Chinese ports has collapsed since the outbreak of coronavirus and has yet to show any sign of recovery, threatening weeks of chaos for manufacturing supply lines and the structure of global trade. Almost half of the planned sailings on the route from Asia to north
ECB wants housing included in CPI
The ECB is considering counting owner-occupied housing in its calculation of the consumer price index (CPI): Consumer-price indices are meant to reflect the cost of typical baskets of goods and services. The euro area’s have a big omission. They capture rents paid by tenants, but not the costs of buying and owning property—even though two-thirds
UK “Labour” Party demands migrant slave wages
With UK wage growth recently hitting an 11-year high: The Johnson Government has dropped the salary threshold for “skilled” migrants by £4,400 to £25,600, which has been attacked by the Labour Party as still being too high: Following recommendations from the Migration Advisory Committee (MAC), the salary threshold for skilled workers wanting to come to
It sure looks like Asia is in recession
We won’t have the data for weeks but this kind of stuff speaks for itself: Singapore Airlines Ltd said on Tuesday it will temporarily cut flights across its global network in March, April and May due to weaker demand as a result of the coronavirus epidemic. Destinations that are among those with services reduced include
Coronavirus and global depression
Here’s one to make your hair stand on end. From GNS Economics in Finland: Coronavirus and the world economy The outbreak of the coronavirus epidemic in China has shaken the global asset markets—and with good reason. The coronavirus has the potential of being the ‘trigger’ which will push the world into a global depression. Here,
Aussie consumers among least confident in the world
From Roy Morgan Research: A special Roy Morgan survey conducted in Australia in conjunction with the Gallup International Association survey in 47 countries world-wide finds that Australia is one of the least confident countries in the world about 2020. Only 12% of Australians (down 32% points on a year ago) expect 2020 will be a
UK mulls wave of low-paid “skilled” migrants to crush wages
With UK wage growth recently hitting an 11-year high: The Migration Advisory Committee (MAC) has recommended the Johnson Government drop the salary threshold for “skilled” migrants by more than £4,000: Skilled migrants from outside the EU currently need to have a job offer with a minimum salary of £30,000. But the Migration Advisory Committee (MAC)
Coronavirus is a clear global recession threat
And Australia will get the absolute worst of it. Let’s begin with latest update virus update: Plus: The mortality rate is still hovering around 3%. The virus has an incubation period anywhere from 1-14 days. It is more contagious than SARS. It is often asymptomatic with no fever. 5m people escaped the Wuhan blockade before
Australia is about to become coronavirus ground zero
There are two angles to examine as coronavirus spreads in China and South East Asia. The first is health related. The second is economic. Australia is about see a wave of new Chinese tourists and students just as coronavius slips the CCP noose. Some 350k Chinese toursists arrive through the January/February period, a large swath
Is coronavirus an economic threat?
Unleash the panic, at News: International airports are screening passengers for a mysterious SARS-like disease that has been confirmed as passing from human-to-human and has also jumped China’s borders. The number of cases of the new coronavirus “2019-nCoV”, which causes a type of pneumonia, has surpassed 220 and authorities are concerned it could spread quickly.
IMF downgrades global growth, hoses Australia
Via the IMF: Tentative Stabilization, Sluggish Recovery? Global growth is projected to rise from an estimated 2.9 percent in 2019 to 3.3 percent in 2020 and 3.4 percent for 2021—a downward revision of 0.1 percentage point for 2019 and 2020 and 0.2 for 2021 compared to those in the October World Economic Outlook (WEO). The
Iran hits back and attacks US base in Iraq
by Chris Becker And so it begins. Via AP: Iranian state TV says Tehran has launched “tens” of surface-to-surface missiles at Iraq’s Ain Assad air base housing U.S. troops in response to the killing of top Iranian military commander Qassem Soleimani. It was not immediately clear whether the purported missile strikes struck the base or whether any
Druckenmiller: Long in 2020
Via Bloomie: A nice interview with Stanley which, with MB’s four horsemen of the apocalypse vanquished by policymakers, makes a good base case for some kind of global bounce in 2020. We still don’t think it will be a glowing recovery even if the fiscal spending helps, largly because China will keep slowing. We agree
UK to copy Australia’s faux ‘skilled’ visa system
The United Kingdom’s Conservative Party is looking to copy Australia’s points-based migration system, which has been met with condemnation from employers wanting low and semi-skilled migrant workers: Boris Johnson’s proposed “Australian-style” points system to reduce immigration has been criticised for failing to understand how vital low and medium-skilled jobs are to the UK economy and
Aussies drowning in household debt
The Bank for International Settlements (BIS) has released its global household debt data for the June quarter, which again ranks Australians as the second most indebted in the world. The next table summarises the ratios of household debt to GDP: As you can see, Switzerland (131%) takes the gold medal in the global household debt
As deal hope rises, world trade keeps falling
Hope at Bloomie: Asian stocks gained Tuesday amid optimism over U.S.-China trade talks and a fresh wave of merger and acquisition activity. The yen slipped. Reality at the FT: World trade contracted sharply in September, dashing hopes that the global downturn that has been weighing on exporters had bottomed out. The volume of global trade
Stiglitz: It’s time to dump GDP
Nobel Prize winning economist, Joseph Stiglitz, has called on governments to dump GDP as the key economic measure of progress and instead focus on better measures of societal wellbeing: The way we assess economic performance and social progress is fundamentally wrong, and the climate crisis has brought these concerns to the fore… The standard measure
Dr Doom: As stocks party, economies get worse
Nouriel Roubini at Project Syndicate: This past May and August, escalations in the trade and technology conflict between the United States and China rattled stock markets and pushed bond yields to historic lows. But that was then: since then, financial markets have once again become giddy. US and other equities are trending toward new highs,
Vancouver house prices rebounding
The Teranet-National Bank House Price Index for October has been released, which shows that Canadian house prices fell by 0.1% across the 11 major markets, with annual growth improving to 1.0%: However, prices in Vancouver rebounded, rising by 0.2% in October to be down 6.2% since peaking in July 2018. The Real Estate Board of
UBS: 2020 global growth to be weak again
Via UBS: We expect a recovery in 2020 but a much weaker one than consensus Things will get worse before they get better. Assuming any Phase One US-China deal is limited (no tariff roll-back), the existing tariffs should continue to work their way into the data and create an air-pocket in US growth in H1-20`
CS: The everything bubble will also burst
Via the excellent Damein Boey at Credit Suisse: Another day, another set of US President Trump and China headlines. Overnight, we heard reports from Chinese officials that US officials were prepared to rollback existing tariffs as each phase of trade negotiations progressed. We later heard US officials confirm these reports from their perspective, although there
Dalio: Fix wealth inequality or face “violent revolution”
Via the Hartford Courant: Two hedge fund founders on Tuesday called for the reform of capitalism to combat economic inequality and stem political upheaval. Before a crowd of about 200 at the Greenwich Economic Forum, a two-day alternative investment industry conference, Ray Dalio, founder of Bridgewater Associates, and Paul Tudor Jones, founder of Tudor Investment
How far can the risk rally get?
Via the excellent Damien Boey at Credit Suisse: Overnight, US equities rallied to new highs, bonds weakened and the yield curve steepened on positive trade headlines: US officials suggested that a deal with China is “almost there”. Chinese officials expressed doubt as to where phase I of the trade deal will be signed, questioned how