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Key Events This Extremely Busy Week: Central Bank Meetings Galore, Congress Chaos, Elections And More

Key Events This Extremely Busy Week: Central Bank Meetings Galore, Congress Chaos, Elections And More

Besides the "sudden" emergence of Evergrande contagion – which nobody could have possibly predicted – we are facing an extremely busy week..

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Key Events This Extremely Busy Week: Central Bank Meetings Galore, Congress Chaos, Elections And More

Besides the "sudden" emergence of Evergrande contagion - which nobody could have possibly predicted - we are facing an extremely busy week chock-full of central bank announcements and two closely-watched elections in Canad and Germany.

The most important event this week will be the Fed’s decision on Wednesday, and this meeting is also significant as we’ll get the FOMC’s latest economic projections (SEP) and the dot plot too. In terms of what to expect, DB economists write in their preview that they expect the statement to adopt Chair Powell’s language that a reduction in the pace of asset purchases is appropriate “this year” as long as the economy remains on track. Although they see Powell maintaining optionality about the exact timing of that announcement, their view is that the effective message will be that in the absence of any material downside surprises, the bar to pushing the announcement beyond November is relatively high. For the dot plot, they expect there’ll be an upward drift in the dots that raises the number of rate hikes in 2023 to 3, followed by another 3 increases in 2024.

Of course, as Deutsche Bank's Jim Reid notes, it’s difficult for monetary policy to operate in isolation and the fiscal path may become a little clearer or muddier this week with events in Congress in full swing. In short without a continuing resolution or the Democrats passing through their FY 2022 reconciliation package, the federal government will go into a partial shutdown on October 1st. The Dems plan to hold a vote on the $1.2trn bi-partisan infrastructure package (already passed by the Senate in August) on September 27 and simultaneously hold a vote on a short-term continuing resolution (CR) to fund the government through the October 1 deadline for the start of the new fiscal year. House majority leader Hoyer implied that one of the two planned votes would include legislation to address the debt ceiling, which will most likely need to be dealt with by the second half of October in order to avoid the possibility of a technical default. So a pretty complex picture and one full of brinkmanship on both sides. Senate Minority Leader McConnell has vowed not to vote to suspend the debt ceiling but may accept a short-term one which may force the Democrats to raise the debt ceiling through a party-line vote via their FY 2022 reconciliation package. However, the progressive wing of the Democrat Party in the House might vote against the bi-partisan package if it is not firmly tied to the more expansive reconciliation bill. So a couple of weeks of high intrigue in Washington.

Back to the week ahead where we also get meetings from the BoJ and BoE, although neither are expected to do too much with the BoE a little more interesting in terms of forward guidance in terms of possible tightening needed next year.

Today’s curiosity will be the Canadian election. Incumbent Prime Minister Justin Trudeau called an early election seeking to regain the majority in the Canadian House of Commons that his party lost in the 2019 election. However, since he did, the polls have narrowed substantially, with CBC News’ polling average putting Trudeau’s Liberals on 31.5%, just narrowly ahead of the opposition Conservatives on 31.0%. According to their model, the Liberals have only a 17% chance of regaining a majority, with the most likely outcome (given a 57% probability) that they’re still the largest party but falling short of the 170 seats needed.

The other main election in focus will be Germany’s, which has important implications for not just domestic but also EU policy. That’s not taking place until Sunday but we’re heading into the last full week of the campaign, with the candidates from the Bundestag parties set to take part in a final TV debate on Thursday. The polls have actually been remarkably stable over the last couple of weeks, having gone through some big shifts over recent months, and Politico’s Poll of Polls puts the centre-left SPD in the lead with 26%, ahead of Chancellor Merkel’s CDU/CSU bloc on 21%, and the Greens trailing on 16%.

Elsewhere on the political scene, there’s an important Quad Summit taking place at the White House on Friday, featuring President Biden along with the Prime Ministers of Australia, India and Japan. The statement from the White House said that the leaders would focus “on deepening our ties and advancing practical cooperation on areas such as combatting COVID-19, addressing the climate crisis, partnering on emerging technologies and cyberspace, and promoting a free and open Indo-Pacific.” That summit follows the announcement this week of a new security partnership between the US, UK and Australia, named AUKUS, which will see Australia obtain a nuclear-powered submarine fleet. On Friday night the implications of this reverberated with France recalling It’s ambassadors from the US and Australia over the Australian cancellation of a submarine contract with the French that was associated with this deal.

Finally on the data front, this Thursday will see the release of the flash PMIs for September, which will offer an indication of how the global economy has fared towards the end of Q3. Back in August, the composite PMIs showed a deterioration from their July levels across the key economies, including the Euro Area, US, UK and Japan, so it’ll be interesting to see if that deceleration in growth momentum continues. Alongside those, the Ifo’s business climate indicator from Germany will be released on Friday.

Courtesy of DB, gere is a day-by-day calendar of the week's events

Monday September 20

  • Data: German August PPI, US September NAHB housing market index
  • Central Banks: ECB’s Schnabel speaks
  • Politics: Federal election in Canada

Tuesday September 21

  • Data: UK August public sector net borrowing, US August housing starts, building permits Q2 current account balance
  • Central Banks: ECB Vice President de Guindos speaks, Bank Indonesia monetary policy decision
  • Politics: General Debate begins at the UN General Assembly
  • Other: OECD publishes Interim Economic Outlook

Wednesday September 22

  • Data: US August existing home sales, Euro Area advance September consumer confidence
  • Central Banks: Monetary policy decisions from the Federal Reserve, Bank of Japan and Brazilian central bank

Thursday September 23

  • Data: Flash September manufacturing, services and composite PMIs from Australia, France, Germany, Euro Area, UK and US, US weekly initial jobless claims, August Chicago Fed national activity index, September Kansas City Fed manufacturing activity, August leading index
  • Central Banks: Monetary policy decisions from the Bank of England, Central Bank of Turkey and South African Reserve Bank, ECB publishes Economic Bulletin
  • Politics: German election debate with the lead candidates of all Bundestag parties

Friday September 24

  • Data: UK September GfK consumer confidence, Japan August nationwide CPI, September flash manufacturing, services and composite PMIs, Germany September Ifo business climate indicator, US August new home sales
  • Central Banks: Fed Chair Powell, Vice Chair Clarida, and Fed’s Mester, Bowman and George speak
  • Politics: Quad Leaders summit at the White House, featuring US President Biden, and the Prime Ministers of Australia, India and Japan

Finally, focusing on just the US, Goldman writes the key economic data release this week is the jobless claims report on Thursday. The September FOMC meeting is this week, with the release of the statement at 2:00 PM ET on Wednesday, followed by Chair Powell’s press conference at 2:30 PM. There are no other major speaking engagements from Fed officials this week, reflecting the FOMC blackout period.

Monday, September 20

  • 10:00 AM NAHB housing market index, September (consensus 74, last 75)

Tuesday, September 21

  • 08:30 AM Housing starts, August (GS +2.5%, consensus +1.0%, last -7.0%); Building permits, August (consensus -1.8%, last +2.6%): We estimate housing starts increased by +2.5% in August, reflecting higher permits in July.
  • 08:30 AM Current account balance, Q2 (consensus -$191.0bn, last -$195.7bn)

Wednesday, September 22

  • 10:00 AM Existing home sales, August (GS -1.0%, consensus -2.0%, last +2.0%): We estimate that existing home sales declined by 1.0% in August after increasing by 2.0% in July. Existing home sales are an input into the brokers' commissions component of residential investment in the GDP report.
  • 02:00 PM FOMC statement, September 21-22 meeting: As discussed in our FOMC preview, we expect that the FOMC will provide the promised “advance notice” that tapering is coming at its September meeting, paving the way to announce the start of tapering at its November meeting. We expect the median dot to show no hikes in 2022, 2 hikes in 2023, and 3 hikes in 2024, though the means will rise and we expect many participants to show 4 hikes in 2024.

Thursday, September 23

  • 08:30 AM Initial jobless claims, week ended September 18 (GS 305k, consensus 320k, last 332k); Continuing jobless claims, week ended September 11 (consensus 2,660k, last 2,665k): We estimate initial jobless claims decreased to 305k in the week ended September 18.
  • 09:45 AM Markit Flash US manufacturing PMI, September preliminary (consensus 60.5, last 61.1); Markit Flash US services PMI, September preliminary (consensus 55.0, last 55.1)
  • 11:00 AM Kansas City Fed manufacturing index, September (consensus +25, last +29)

Friday, September 24

  • 10:00 AM New home sales, August (GS +1.0%, consensus +0.2%, last +1.0%); We estimate that new home sales increased by 1.0% in August, reflecting mean-reversion.

Source: Deutsche Bank, Goldman, BofA

Tyler Durden Mon, 09/20/2021 - 09:05

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Huge Dock Worker Protests In Italy, Fears Of Disruption, As Covid ‘Green Pass’ Takes Effect

Huge Dock Worker Protests In Italy, Fears Of Disruption, As Covid ‘Green Pass’ Takes Effect

Following Israel across the Mediterranean being the first country in the world to implement an internal Covid passport allowing only vaccinated citize

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Huge Dock Worker Protests In Italy, Fears Of Disruption, As Covid 'Green Pass' Takes Effect

Following Israel across the Mediterranean being the first country in the world to implement an internal Covid passport allowing only vaccinated citizens to engage in all public activity, Italy on Friday implemented its own 'Green Pass' in the strictest and first such move for Europe

The fully mandatory for every Italian citizen health pass "allows" entry into work spaces or activities like going to restaurants and bars, based on one of the following three conditions that must be met: 

  • proof of at least one dose of Covid-19 vaccine

  • or proof of recent recovery from an infection

  • or a negative test within the past 48 hours

Via AFP

It's already being recognized in multiple media reports as among "the world's strictest anti-COVID measures" for workers. First approved by Italian Prime Minister Mario Draghi's cabinet a month ago, it has now become mandatory on Oct.15.

Protests have been quick to pop up across various parts of the country, particularly as workers who don't comply can be fined 1,500 euros ($1,760); and alternately workers can be forced to take unpaid leave for refusing the jab. CNN notes that it triggered "protests at key ports and fears of disruption" on Friday, detailing further:

The largest demonstrations were at the major northeastern port of Trieste, where labor groups had threatened to block operations and around 6,000 protesters, some chanting and carrying flares, gathered outside the gates.

    Around 40% of Trieste's port workers are not vaccinated, said Stefano Puzzer, a local trade union official, a far higher proportion than in the general Italian population.

    Workers at the large port of Trieste have effectively blocked access to the key transport hub...

    As The Hill notes, anyone wishing to travel to Italy anytime soon will have to obtain the green pass: "The pass is already required in Italy for both tourists and nationals to enter museums, theatres, gyms and indoor restaurants, as well as to board trains, buses and domestic flights."

    The prime minister had earlier promoted the pass as a way to ensure no more lockdowns in already hard hit Italy, which has had an estimated 130,000 Covid-related deaths since the start of the pandemic.

    Meanwhile, the requirement of what's essentially a domestic Covid passport is practically catching on in other parts of Europe as well, with it already being required to enter certain hospitality settings in German and Greece, for example. Some towns in Germany have reportedly begun requiring vaccination proof just to enter stores. So likely the Italy model will soon be enacted in Western Europe as well.

    Tyler Durden Sat, 10/16/2021 - 07:35

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    Tracking Global Hunger & Food Insecurity

    Tracking Global Hunger & Food Insecurity

    Hunger is still one the biggest – and most solvable – problems in the world.

    Every day, as Visual Capitalist’s Bruno Venditti notes, more than 700 million people (8.8% of the world’s population)..

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    Tracking Global Hunger & Food Insecurity

    Hunger is still one the biggest - and most solvable - problems in the world.

    Every day, as Visual Capitalist's Bruno Venditti notes, more than 700 million people (8.8% of the world’s population) go to bed on an empty stomach, according to the UN World Food Programme (WFP).

    The WFP’s HungerMap LIVE displayed here tracks core indicators of acute hunger like household food consumption, livelihoods, child nutritional status, mortality, and access to clean water in order to rank countries.

    After sitting closer to 600 million from 2014 to 2019, the number of people in the world affected by hunger increased during the COVID-19 pandemic.

    In 2020, 155 million people (2% of the world’s population) experienced acute hunger, requiring urgent assistance.

    The Fight to Feed the World

    The problem of global hunger isn’t new, and attempts to solve it have making headlines for decades.

    On July 13, 1985, at Wembley Stadium in London, Prince Charles and Princess Diana officially opened Live Aid, a worldwide rock concert organized to raise money for the relief of famine-stricken Africans.

    The event was followed by similar concerts at other arenas around the world, globally linked by satellite to more than a billion viewers in 110 nations, raising more than $125 million ($309 million in today’s dollars) in famine relief for Africa.

    But 35+ years later, the continent still struggles. According to the UN, from 12 countries with the highest prevalence of insufficient food consumption in the world, nine are in Africa.

     

    Approximately 30 million people in Africa face the effects of severe food insecurity, including malnutrition, starvation, and poverty.

     

    Wasted Leftovers

    Although many of the reasons for the food crisis around the globe involve conflicts or environmental challenges, one of the big contributors is food waste.

    According to the United Nations, one-third of food produced for human consumption is lost or wasted globally. This amounts to about 1.3 billion tons of wasted food per year, worth approximately $1 trillion.

    All the food produced but never eaten would be sufficient to feed two billion people. That’s more than twice the number of undernourished people across the globe. Consumers in rich countries waste almost as much food as the entire net food production of sub-Saharan Africa each year.

    Solving Global Hunger

    While many people may not be “hungry” in the sense that they are suffering physical discomfort, they may still be food insecure, lacking regular access to enough safe and nutritious food for normal growth and development.

    Estimates of how much money it would take to end world hunger range from $7 billion to $265 billion per year.

    But to tackle the problem, investments must be utilized in the right places. Specialists say that governments and organizations need to provide food and humanitarian relief to the most at-risk regions, increase agricultural productivity, and invest in more efficient supply chains.

    Tyler Durden Fri, 10/15/2021 - 23:30

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    China Coal Prices Soar To Record As Winter Freeze Spreads Cross The Country

    China Coal Prices Soar To Record As Winter Freeze Spreads Cross The Country

    One week ago we discussed why the "worst case" scenario for China’s property crisis is gradually emerging; to this we can now add that China’s worst case energy crisi

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    China Coal Prices Soar To Record As Winter Freeze Spreads Cross The Country

    One week ago we discussed why the "worst case" scenario for China's property crisis is gradually emerging; to this we can now add that China's worst case energy crisis scenario is also about to be unleashed as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs.

    Electricity demand to heat homes and offices is expected to soar this week as strong cold winds move down from northern China, according to Reuters with forecasters predicting average temperatures in some central and eastern regions could fall by as much as 16 degrees Celsius in the next 2-3 days.

    Shortages of coal, high fuel prices and booming post-pandemic industrial demand have sparked widespread power shortages in the world's second-largest economy. Rationing has already been in place in at least 17 of mainland China's more than 30 regions since September, forcing some factories to suspend production and further disrupting already broken supply chains.

    On Friday, the most-active January Zhengzhou thermal coal futures closed at a record high of 2,226 per tonne early. The contract has risen almost 200% year to date.

    China's three northeastern provinces of Jilin, Heilongjiang and Liaoning - also among the worst hit by the power shortages last month - as well as several regions in northern China including Inner Mongolia and Gansu have started winter heating, which is mainly fuelled by coal, to cope with the colder-than-normal weather.

    Meanwhile, even though Beijing has taken a slew of measures to contain coal price rises including raising domestic coal output and cutting power to power-hungry industries and some factories during periods of peak demand, so far all measures have failed with coal surging by 40% in just the past three days. Beijing has also repeatedly assured users that energy supplies will be secured for the winter heating season, and went so far as to order energy firms to "secure supplies at all costs." Well, the energy firms heard it, because on that day, thermal coal closed at 1,436 yuan. Two weeks later it is some 800 yuan higher.

    Unfortunately for Beijing, the power shortages are expected to continue into early next year, with analysts and traders forecasting a 12% drop in industrial power consumption in the fourth quarter as coal supplies fall short and local governments give priority to residential users.

    Earlier this week, we reported that China undertook its boldest step in a decades-long power sector reform when it allowed coal-fired power prices to fluctuate by up to 20% from base levels from Oct. 15, enabling power plants to pass on more of the high costs of generation to commercial and industrial end-users. read more

    Steel, aluminium, cement and chemical producers are expected to face higher and more volatile power costs under the new policy, pressuring profit margins.

    Meanwhile, the latest Chinese "data" on Thursday showed factory-gate inflation in September hit a record high; but since thermal coal is the one commodity that correlates the closest to PPI, absent a sharp drop in coal prices in the next few weeks, expect the next PPI print to be far higher. Meanwhile as the power crisis leads to further shutdowns in domestic production, some banks - such as Nomura - have gone so far to predict that China's GDP is set to shrink in coming quarters.

    China, which laughably aims to be "carbon neutral" by 2060 even as its president announced he will skip the COP26 UN Climate Change Conference in Glasgow, has been "trying" to reduce its reliance on polluting coal power in favor of cleaner wind, solar and hydro. But coal remains the source for some 70% of China's electricity needs.

    Of course, China is not the only nation struggling with power supplies, which has led to fuel shortages and blackouts in many European countries. and threatens to send US heating bills up as much as 50% this winter. he crisis has highlighted the difficulty in cutting the global economy's dependency on fossil fuels as world leaders seek to revive efforts to tackle climate change at talks next month in Glasgow.

    China will strive to achieve carbon peaks by 2030, Vice Premier Han Zheng said in a video message at the Russian Energy Week International Forum, according to state-run news agency Xinhua late on Thursday. He also said that China and Russia are important forces leading the energy transition and they should cooperate and ensure smooth progress of major oil and gas pipeline and nuclear power projects.

    Translation: Russia better save that nat gas and not ship it to Europe as China will soon be needed even BCF Russia an provide. As for China

     

    Tyler Durden Fri, 10/15/2021 - 22:50

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