Taiwan’s earthquake preparedness saved a lot of lives as well as the global tech economy

2024-Taiwan-Earthquake

Important Takeaways:

  • From Taiwan to South Korea to Silicon Valley, some of the most important nodes in the global tech economy are in disaster-prone places
  • Considering that Wednesday’s quake was the strongest in Taiwan in 25 years — and that earthquakes of similar strength have killed tens of thousands of people or more in other countries — this could have been much worse.
  • There was one other way in which Taiwan — and the world — avoided a worse outcome from the earthquake: the island’s all-important semiconductor manufacturing industry seemed to emerge largely intact.
  • To say that Taiwan is important to the global tech industry is like saying oxygen is important to breathing. Taiwan as a whole is responsible for making 80 to 90 percent of the world’s most advanced computer chips — ones for which there is no current substitute.
  • While earthquakes and volcanoes are just one threat to Taiwan’s semiconductor foundries, the better-known one is the People’s Republic of China.
  • Should Taiwan’s chip foundries be destroyed in such a conflict, the damage to the global economy could be on par with the Great Depression.

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Global Economic Storm; $500 billion in corporate debt

Revelations 13:16-18 “Also it causes all, both small and great, both rich and poor, both free and slave, to be marked on the right hand or the forehead, so that no one can buy or sell unless he has the mark, that is, the name of the beast or the number of its name. This calls for wisdom: let the one who has understanding calculate the number of the beast, for it is the number of a man, and his number is 666.”

Important Takeaways:

  • A $500 Billion Corporate-Debt Storm Builds Over Global Economy
  • Richard Cooper’s phone is something of an early alarm bell for the global economy. Lately, it’s been ringing a lot.
  • A partner at Cleary Gottlieb, a top law firm for corporate bankruptcies, he’s advised businesses worldwide for decades on what to do when they’re drowning in debt. He did it through the global financial crisis, the oil bust in 2016 and Covid-19. And he’s doing it again now, in a year when big corporate bankruptcies are piling up at the second-fastest pace since 2008, eclipsed only by the early days of the pandemic.
  • “It feels different than prior cycles,” Cooper said. “You’re going to see a lot of defaults.”
  • His perch has given him a preview of the more than $500 billion storm of corporate-debt distress that’s already starting to make landfall across the globe, according to data compiled by Bloomberg. The tally is all but certain to grow. And that’s deepening worries on Wall Street by threatening to slow economic growth and strain credit markets just emerging from the deepest losses in decades.
  • The rising tide of distress is, of course, to a certain degree by design. Caught by surprise as inflation surged, monetary policymakers have been aggressively draining cash from the world’s financial system, intentionally seeking to slow their economies by stanching the flow of credit to businesses. Inevitably, that means some will fail.

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Fed Ex warns of Worldwide Recession after shares fell saying: “We are a reflection of everybody else’s business…”

Revelations 18:23 ‘For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • FedEx CEO says he expects the economy to enter a ‘worldwide recession’
  • FedEx CEO Raj Subramaniam…he believes a recession is impending for the global economy.
  • The CEO’s pessimism came after FedEx missed estimates on revenue and earnings in its first quarter. The company also withdrew its full year guidance.
  • Shares of FedEx fell 15% in extended trading on Thursday.
  • The chief executive, who assumed the position earlier this year, said that weakening global shipment volumes drove FedEx’s disappointing results.
  • “We are a reflection of everybody else’s business, especially the high-value economy in the world”

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Price pinch: global economy caught in perfect storm

By Guy Faulconbridge, Andrew MacAskill, Daniel Leussink and Leika Kihara

LONDON/TOKYO (Reuters) -From beef bowls in Tokyo to fried chicken in London, consumers are beginning to feel the pinch from the surge in costs coursing through the global economy.

The rebound in economic activity as coronavirus restrictions are eased has exposed shortages across supply chains, with companies scrambling to find workers, ships and even fuel to power factories, threatening the recovery.

Britain’s biggest chicken producer warned that the country’s 20-year cheap food binge is coming to an end and said food price inflation could hit double digits.

“The days when you could feed a family of four with a 3 pound ($4) chicken are coming to an end,” Ranjit Singh Boparan, owner of the 2 Sisters Group, said.

An acute shortage of warehouse workers, truckers and butchers as the world’s fifth-largest economy deals with Brexit as well as COVID-19 is exacerbating strains which are being felt globally by international business.

IKEA is leasing more ships, buying containers and re-routing goods between warehouses as the world’s largest furniture brand seeks to mitigate a “perfect storm” of global supply chain disruptions.

Jon Abrahamsson, chief executive at Inter IKEA, told Reuters he expects the crisis to extend into 2022, with the biggest challenge getting goods out of China, where around a quarter of IKEA products are made.

IKEA said stores in North America have been hardest hit by product shortages, followed by Europe.

In the United States, President Joe Biden on Wednesday urged the private sector to help ease supply chain blockages that are threatening to disrupt the U.S. holiday season.

Biden said the Port of Los Angeles would join the Port of Long Beach in working round-the-clock to unload about 500,000 containers, while Walmart, Target and other big retailers would expand overnight operations to help out.

Even in Japan, where weak growth has meant that prices of many things – as well as wages – haven’t risen much in decades, consumers and businesses are facing a price shock for basics such as coffee and beef bowls.

Japan’s core consumer inflation only stopped falling in August, snapping a 12-month deflationary spell. Economists and policymakers expect to see recent price rises reflected in official data in the coming months.

With central bankers on high alert and inflation in Spain, Ireland and Sweden hitting 13-year highs, European Central Bank President Christine Lagarde repeated that the upswing in Europe is seen as temporary and said there were no signs that the recent surge is becoming embedded in wages.

“The impact of these factors should fade out … in the course of next year, dampening annual inflation,” Lagarde said.

Euro zone inflation is expected to hit 4% before the end of the year, twice the ECB’s target, and a growing number of economists see it remaining above target throughout 2022.

COLD FRONT

Dwindling power supplies suggest a bleak winter outlook in some parts of the world.

As northern China chills, coal prices held near record highs, with power plants stocking up to ease an energy crunch that sent factory gate inflation in the world’s second-largest economy to an at-least 25 year high in September.

Meanwhile, Coal India, the world’s biggest coal miner, said it had temporarily stopped supplying non-power users as India battles one of its worst ever power supply deficits.

China’s power crisis, caused by shortages of coal, high fuel prices and booming post-pandemic industrial demand has halted production at numerous factories, including many supplying big brands such as Apple.

Weak demand is capping consumer inflation, however, forcing policymakers to walk a tightrope between supporting the economy and further stoking producer prices.

There are few signs of any reprieve in energy costs, with Brent crude oil futures above $84 a barrel on expectations that soaring natural gas prices will drive a switch to oil to meet winter heating needs.

The International Energy Agency said the crunch could boost oil demand by half a million barrels per day (bpd).

“Higher energy prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery,” the IEA said in its monthly oil report.

Top economic institutes cut their joint forecast for 2021 growth in Germany, Europe’s largest economy, to 2.4% from 3.7% as supply bottlenecks hamper output, confirming a Reuters story.

In response to the crisis, the White House has been speaking with U.S. oil and gas producers about helping to bring down fuel costs, two sources familiar with the matter said.

The average U.S. retail cost of a gallon of gasoline is at a seven-year high, and the U.S. Energy Department expects winter fuel costs to surge. Oil and gas production remains below the nation’s peak reached in 2019.

CHIPS STILL DOWN

Dutch navigation and digital mapping company TomTom warned that supply chain problems in the auto sector could last well into 2022.

“Collectively we have underestimated how big the supply chain issues, and especially for semiconductor shortages, have been or have become”, TomTom Chief Financial Officer Taco Titulaer told Reuters.

A global semiconductor chip shortage has forced carmakers still recovering from coronavirus disruptions to halt production again.

Italian-American vehicle maker CNH Industrial said on Wednesday it will temporarily shut several European agricultural, commercial vehicle and powertrain manufacturing plants because of problems procuring components.

Soaring demand is, however, proving a boon for some.

Taiwan’s TSMC, the world’s largest contract chipmaker, reported a nearly 14% jump in third quarter profit.

TSMC and Taiwan have become central to efforts to resolve the global chip shortage, which has also hit manufacturers of smartphones, laptops and consumer appliances.

Some companies, such as Toyota Motor Corp are intensifying efforts to restart production. The Japanese carmaker hopes to do so in December with a rebound in shipments from pandemic-hit suppliers, three sources told Reuters.

(Additional reporting by Muyu Xu, Shivani Singh, David Stanway, Noah Browning, James Davey, Liangping Gao, Stella Qiu and Ryan Woo; Writing by Alexander Smith; Editing by Carmel Crimmins and Catherine Evans)

Global supply disruptions could still get worse, central bankers warn

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) – Supply constraints thwarting global economic growth could still get worse, keeping inflation elevated longer, even if the current spike in prices is still likely to remain temporary, the world’s top central bankers warned on Wednesday.

The disruptions to the global economy during the pandemic have upset supply chains across continents, leaving the world short of a plethora of goods and services from car parts and microchips to container vessels that transport goods across the seas.

“It’s … frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margin apparently getting a little bit worse,” Federal Reserve Chair Jerome Powell told a conference.

“We see that continuing into next year probably and holding inflation up longer than we had thought,” Powell told the European Central Bank’s Forum on Central Banking.

Speaking alongside Powell, ECB chief Christine Lagarde voiced similar concerns, arguing that the end of these bottlenecks, once thought by economists to be just weeks away, is uncertain.

“The supply bottlenecks and the disruption of supply chains, which we have been experiencing for a few months … seem to be continuing and in some sectors accelerating,” Lagarde said. “I’m thinking here about shipping, cargo handling and things like that.”

VERY ATTENTIVE

Global inflation has spiked in recent months on a surge in energy prices, and the production bottlenecks are pushing prices even higher, raising fears that the runup, if it lasts long enough, could seep into expectations and raise the overall profile of inflation.

Indeed, Lagarde said the ECB would be “very attentive” to these second-round effects while Bank of England Governor Andrew Bailey, another speaker at the forum, said he would keep a “very close watch” on inflation expectations.

“If this period of higher inflation, even though it ultimately is very likely to prove temporary, if it lasts long enough, will it start affecting, changing the way people think about inflation? We monitor this very carefully,” Powell added.

The problem is that central banks, the main authority for controlling prices, have no influence over short-term supply disruptions, so they are likely to be bystanders, waiting for economic anomalies to self-correct without lasting damage.

“Monetary policy cannot solve supply side shocks. Monetary policy cannot produce computer chips, it cannot produce wind, it cannot produce truck drivers,” Bailey said.

Still, even as policymakers called for heightened attention to inflation, all maintained their long standing view that the spike in inflation would be temporary and price rises would moderate next year, moving back to or below central bank targets.

Concerns about “sticky” inflation have fueled a debate about the need to unwind crisis-era stimulus measures, and comments from Wednesday’s panel reinforced expectations for the world’s biggest central banks to move on vastly different schedules, staying out of sync for years to come.

The Fed, the BoE and the Bank of Canada have openly discussed policy tightening while central banks in such countries as South Korea, Norway and Hungary have already raised interest rates, beginning a long road to policy normalization.

The ECB and the Bank of Japan are meanwhile likely to be the last movers, exercising extreme caution after undershooting their inflation targets for years.

The ECB even refuses to discuss tapering and already signaled its tolerance for overshooting its inflation target as it would rather move too late than too early.

This sort of patience was only reinforced by Lagarde and Bank of Japan Governor Haruhiko Kuroda, even as both provided a relatively upbeat outlook on growth, arguing that their economies could be back at their pre pandemic levels in the coming months.

(Additional reporting by Leika Kihara, Howard Schneider, Dan Burns, David Milliken and Andy Bruce; Editing by Hugh Lawson)

Oil firms as demand hopes outweigh rise of COVID-19 variant

By Noah Browning

LONDON (Reuters) – Oil prices rose on Tuesday as broad hopes for a demand recovery persisted despite new outbreaks of the highly contagious Delta variant of the coronavirus prompting fresh mobility curbs worldwide.

Brent crude futures were up 50 cents, or 0.7%, at $75.18 a barrel by 1400 GMT, having slumped by 2% on Monday.

U.S. West Texas Intermediate (WTI) crude futures rose 55 cents, or 0.8%, to $73.46 after a 1.5% retreat on Monday.

“From a global perspective, there are seemingly growing concerns over the increase in the COVID-19 Delta variant,” said StoneX analyst Kevin Solomon.

“The market has grown relatively immune to COVID-19 developments, but if lockdowns occur in larger demand centers in Asia, we may see the market’s nonchalance abate.”

Spain and Portugal, favorite summer holiday destinations for Europeans, imposed new restrictions on unvaccinated Britons on Monday, while Australians also faced tighter curbs owing to flare-ups of the virus across the country.

However, the market still expects the rollout of vaccination programs to brighten the demand outlook, analysts said.

“The narrative of the past few months has not changed: the war against the virus is being gradually won, the global economy and oil demand are recovering,” said PVM Oil analyst Tamas Varga.

“Oil supply is being effectively managed. Therefore dips are probably viewed by ardent bulls as attractive buying opportunities.”

The virus flare-up comes as the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together known as OPEC+, are set to meet on July 1 to discuss easing their supply curbs.

OPEC’s demand forecasts show that in the fourth quarter global oil supply will fall short of demand by 2.2 million barrels per day (bpd), giving the producers some room to agree to add output.

Analysts expect OPEC+ to step up supply in August because the market has tightened on strong growth in fuel demand in the United States and China, the world’s two biggest oil consumers.

Investors will be looking to the latest U.S. inventory data for cues on the demand outlook. Crude stocks are likely to have extended their fall for a sixth straight week while gasoline stocks are also expected to have declined, a preliminary Reuters poll showed.

(Additional reporting by Sonali Paul; Editing by David Evans and David Goodman)

Global officials urge rich countries to donate excess COVID-19 vaccine doses, money

By Stephanie Nebehay and Michelle Nichols

GENEVA/NEW YORK (Reuters) -Top U.N., financial and vaccine officials on Thursday urged rich countries to donate excess COVID-19 vaccine doses to an international effort to supply low and middle income countries in a bid to get the global economy back on track.

At a virtual event by the Gavi Vaccine Alliance to boost support for the COVAX equitable vaccine sharing initiative, the officials also appealed for another $2 billion by June for the program, which is aiming to buy up to 1.8 billion doses in 2021. So far, COVAX has shipped more than 38 million vaccine doses to 111 countries.

“Global supply is incredibly tight right now. But we also know that many high income countries have ordered more vaccines than they need,” said Gavi Chief Executive Seth Berkley.

He urged them to share excess doses “as soon as possible to cover the high risk populations during this supply constrained period.”

New Zealand Prime Minister Jacinda Ardern announced a donation of enough vaccine doses for more than 800,000 people to COVAX, which is run by the Coalition for Epidemic Preparedness Innovations (CEPI), the Vaccine Alliance Gavi, the World Health Organization (WHO) and U.N. Children’s Fund (UNICEF).

Denmark, the Netherlands, Norway and Sweden all pledged new funds to COVAX on Thursday.

“Many countries now have dollars available to spend on doses, but rapid deliveries aren’t available. I would like to underline here the importance for countries that have the prospect of excess vaccine supplies to release them as soon as possible,” said World Bank President David Malpass.

World Health Organization (WHO) chief Tedros Adhanom Ghebreyesus said some countries who had signed up to COVAX had not received any doses, none had received enough and some were not receiving their second-round vaccine allocations on time.

“There remains a shocking and expanding disparity in the global distribution of vaccines,” he warned at the Gavi event.

UNICEF Executive Director Henrietta Fore called on wealthier countries to invest generously in COVAX and donate surplus doses because it was the only way to end the pandemic and get “the global economy back on track.”

Norwegian Prime Minister Erna Solberg said another $22 billion was needed for the Access to COVID-19 Tools (ACT) Accelerator, which includes COVAX and also supports treatments and testing.

“These numbers may seem high, but they are small compared to the global economic loss if this crisis continues. The new virus strains make it clear that we need to move faster,” she said.

(Reporting by Stephanie Nebehay in Geneva and Michelle Nichols in New York; Editing by Bill Berkrot)

Oil steady near $70/bbl on hopes of recovering demand

By Laura Sanicola

NEW YORK (Reuters) – Oil hovered near $70 a barrel on Friday, supported by production cuts by major oil producers and optimism about a demand recovery in the second half of the year.

Benchmark Brent fell 22 cents, or 0.3%, to $69.41 a barrel by 1:25 p.m. EST (1825 GMT) while U.S. West Texas Intermediate crude was at $65.85 a barrel, fell 17 cents, or 0.3%.

Brent is on track to end the week flat after prices touched a 13-month high on Monday, following seven straight weeks of gains.

“Demand for risky assets such as oil continues to be buoyed by the White House relief package and an almost daily flow of optimistic vaccine headlines,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

The Organization of the Petroleum Exporting Countries forecast a stronger oil demand recovery this year, weighted to the second half. OPEC, Russia and its allies decided last week to maintain its output curbs almost unchanged.

U.S. drillers are also holding back, cutting the number of oil and natural gas rigs operating for the first time since November, according to data from energy services firm Baker Hughes Co.

“The stronger-than-expected rebound in the second half of this year implies that the global economy and hence oil demand outlook is close to shaking off its COVID woes,” PVM analysts said.

RBC Capital analysts said the fundamentals for summer gasoline was the most bullish in nearly a decade.

The United States, world’s largest oil consumer, saw a big draw on U.S. gasoline stocks last week as the winter storm in Texas disrupted refining output.

Sustained higher oil prices are expected to encourage U.S. producers to increase output, which could eventually weigh on prices, JPMorgan analysts wrote.

JPMorgan expects U.S. oil output to average 11.36 million barrels per day this year compared with 11.32 million bpd in 2020.

Earlier this week, the government revised down 2021’s decline expected in U.S. crude production. Output is seen falling 160,000 bpd to 11.15 million bpd, a smaller decrease than its previous monthly forecast for a 290,000-bpd drop.

(Additional reporting by Shadia Nasalla, Florence Tan; Editing by Marguerita Choy and David Gregorio)

G20 to show united front on support for global economic recovery, cash for IMF

By Michael Nienaber and Andrea Shalal

BERLIN/WASHINGTON/ROME (Reuters) – The world’s financial leaders are expected on Friday to agree to continue supportive measures for the global economy and look to boost the International Monetary Fund’s resources so it can help poorer countries fight off the effects of the pandemic.

Finance ministers and central bank governors of the world’s top 20 economies, called the G20, held a video-conference on Friday. The global response to the economic havoc wreaked by the coronavirus was at top of the agenda.

In the first comments by a participating policymaker, the European Union’s economics commissioner Paolo Gentiloni said the meeting had been “good,” with consensus on the need for a common effort on global COVID vaccinations.

“Avoid premature withdrawal of supportive fiscal policy” and “progress towards agreement on digital and minimal taxation” he said in a Tweet, signaling other areas of apparent accord.

A news conference by Italy, which holds the annual G20 presidency, is scheduled for 17.15  (1615 GMT).

The meeting comes as the United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies going despite COVID-19 lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new variants of the coronavirus mean the future of the recovery remains uncertain.

German Finance Minister Olaf Scholz warned earlier on Friday that recovery was taking longer than expected and it was too early to roll back support.

“Contrary to what had been hoped for, we cannot speak of a full recovery yet. For us in the G20 talks, the central task remains to lead our countries through the severe crisis,” Scholz told reporters ahead of the virtual meeting.

“We must not scale back the support programs too early and too quickly. That’s what I’m also going to campaign for among my G20 colleagues today,” he said.

BIDEN DEBUT

Hopes for constructive discussions at the meeting are high among G20 countries because it is the first since Joe Biden, who vowed to rebuild cooperation in international bodies, became U.S. president.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too – factory activity in China grew at the slowest pace in five months in January, hit by a wave of domestic coronavirus infections, and in Japan fourth quarter growth slowed from the previous quarter with new lockdowns clouding the outlook.

“The initially hoped-for V-shaped recovery is now increasingly looking rather more like a long U-shaped recovery. That is why the stabilization measures in almost all G20 states have to be maintained in order to continue supporting the economy,” a G20 official said.

But while the richest economies can afford to stimulate an economic recovery by borrowing more on the market, poorer ones would benefit from being able to tap credit lines from the IMF — the global lender of last resort.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by then U.S. President Donald Trump.

Scholz said the change of administration in Washington on Jan. 20 improved the prospects for more IMF resources. He pointed to a letter sent by U.S. Treasury Secretary Janet Yellen to G20 colleagues on Thursday, which he described as a positive sign also for efforts to reform global tax rules.

Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation of IMF resources, of $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.

The G20 may also agree to extend a suspension of debt servicing for poorest countries by another six months.

($1 = 0.8254 euros)

(Reporting by Michael Nienaber in Berlin, Jan Strupczewski in Brussels and Gavin Jones in Rome; Andrea Shalal and David Lawder in Washington; Editing by Daniel Wallis, Susan Fenton and Crispian Balmer)

Biden to press for $1.9 trillion COVID relief plan with governors, mayors

By Andrea Shalal

WASHINGTON (Reuters) – U.S. President Joe Biden will meet with a bipartisan group of mayors and governors on Friday as he continues to push for approval of a $1.9 trillion coronavirus relief plan to bolster economic growth and help millions of unemployed workers.

Biden and Vice President Kamala Harris will also receive an economic briefing from Treasury Secretary Janet Yellen, shortly after she takes part in the first meeting of the Group of Seven rich economies since the new U.S. administration took office.

Biden’s proposed spending package, coming on top of $4 trillion enacted by his predecessor Donald Trump, will have important consequences for the global economy which is slowly recovering – but very unevenly – after last year suffering its worst downturn since the Great Depression in the 1930s.

Taking part in the Oval Office meeting will be Republican and Democratic elected officials whose states and cities have been hammered by the coronavirus pandemic and its economic fallout. Many have seen tax revenues fall and costs soar as they race to vaccinate their citizens.

The group includes four governors, including New York Governor Andrew Cuomo, a Democrat, and Maryland Governor Larry Hogan, a Republican, and five mayors, including Jeff Williams of Arlington, Texas, a Republican.

Williams, who met with Yellen virtually last week, said his city urgently needed the federal aid earmarked for state and local governments in Biden’s rescue plan. He said cities were crushed when Congress removed similar aid from a previous relief bill that passed in December.

“We’ve been crippled. We haven’t gotten help,” Williams told Reuters. “Our property taxes are down and costs are way up. It doesn’t matter if you’re a Democrat or a Republican, this is the right solution so we can achieve economic growth much faster.”

Arlington, which is home to the largest General Motors plant in the world, is bracing for a 10% drop in the appraised value of its commercial properties, which would cut revenues by some $30 million after an $18 million loss last year, Williams said.

More than 400 mayors wrote to leaders in Congress earlier this month to urge them to pass Biden’s relief package, but Republicans are backing a far less ambitious plan.

Biden on Thursday said the U.S. coronavirus death toll was likely to reach 500,000 next month, but said the United States was on track to have enough vaccine for 300 million Americans by the end of July.

Yellen, a former Federal Reserve Board Chair, will have a mixed message when she briefs Biden on the economy. While economic growth is picking up, unemployment remains high and many communities of color are not expected to recover for years.

(Reporting by Andrea Shalal; Editing by Lincoln Feast.)