On 5 November, a unit of China’s debt-plagued Evergrande Group property development company made a last-minute, $83.5-million bond payment a day before a grace period was to expire. We detailed the beginnings of the crisis in “China’s Real Estate Market Teeters on Evergrande Debt” (21 Sep 2021) and “Will Evergrande Dive Crash Chinese Markets?” (5...
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OPEC+ REJECTS WORLD’S PLEA FOR MORE OIL
On 4 November, the Organization of Petroleum Exporting Countries and its affiliates (OPEC+) approved a 400,000-barrel-per-day increase in oil production to take place in December as planned. The group also denied requests from major consuming countries that it raise its output by as much as double that amount to ensure enough supplies to sustain the...
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SUPPLY CHAIN CRISIS WORSENING
The number of ships anchored outside the ports of Long Beach and Los Angeles has risen from about 60 in early October to nearly 80 now and there is no clear end to the pile-up in sight, Soren Skou, CEO of shipping giant Moller-Maersk said in a Financial Times interview last week. (See “Backlogged Ships...
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EMERGING MARKETS SUBMERGING
Stock prices in emerging nations have remained flat through 2021, in contrast to soaring markets in the developed world, which have added about 20 percent in value, U.S. finance company MSCI reported. (See “Emerging Nations’ Recovery Lagging,” 13 Apr 2021). The performance gap between equity markets of developed and emerging countries is the widest since...
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SERVICE SECTOR EXPANDS AT RECORD PACE
In October, the U.S. economy’s service sector reported its strongest growth ever, according to the Institute for Supply Management’s most recent survey. The survey’s rating of the service economy, which includes airlines, gyms, restaurants, trucking companies, and similar businesses, jumped to 66.7 in October from September’s 61.9. Ratings above 50 indicate expansion; the higher the...
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CAN’T PAY THE RENT? IT’S GETTING HIGHER
U.S. households paying the nation’s median monthly rent of $1,179 in August needed 30.3 percent of their incomes to cover the cost, up from 29.4 percent a year earlier, according to real estate website Zillow after it studied data from 50 of the nation’s biggest cities. Housing is affordable when rent absorbs no more than...
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U.S. LOST TRADE WAR. DEFICIT HITS NEW HIGH
Go back to the Trump years, when the word on The Street, nearly every time stock prices moved lower, they would blame it on the “Trade War,” which we kept noting had zero to do with the market moves because it was all talk and no action. Bingo! The U.S. trade deficit reached $80.9 billion...
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531,000 NET NEW JOBS ADDED IN OCTOBER, BUT UNEMPLOYMENT STILL HIGH
The U.S. unemployment rate dropped to 4.6 percent in October as the economy added 604,000 new private-sector jobs, bringing the net monthly gain to 531,000, far beyond analysts’ expectations. The two previous months’ totals were revised upward, adding another 235,000 net new jobs. The unemployment rate has dropped from 5.9 percent to 4.6 in five...
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BOND TRADERS BETTING INTEREST RATES WILL RISE SOONER
Bond traders largely had accepted central banks’ assurances that high inflation is “temporary” or “transitory” and bought and sold bonds at prices and yields reflecting that view. However, with this autumn’s spike in energy prices, combined with unrelieved supply-line clogs, bond markets are setting yields higher in the expectation the U.S. Federal Reserve will be...
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FED WINDING DOWN BOND PURCHASE PROGRAM: JOKERS WILD
The U.S. Federal Reserve has announced plans to begin closing down its program, begun in March 2020, of buying $80 billion a month in U.S. bonds and $40 billion in mortgage bonds, the Fed’s Open Market Committee announced last week. The Fed will cut purchases by $15 billion in each of November and December, the...