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US inflation crisis deepens as wholesale prices soar
9 Nov, 2021 20:33
© Reuters / Lucy Nicholson
US wholesale prices continued to balloon at the fastest rate on record in October, portending further pressure on household budgets as rising costs ripple through the world’s largest economy.
The producer price index (PPI) last month climbed 8.6% from a year earlier as energy costs jumped, the US Bureau of Labor Statistics said on Tuesday. Excluding food, energy and trade, the index climbed 6.2% on year.
PPI is a key measure of US inflation, as increases in the prices that producers pay for goods and services tend to be passed on to consumers – at least to the extent that the market will bear. Consumer prices rose at an annual pace of 5.4% in September, the highest rate in 13 years.
October’s 8.6% jump in PPI on an annual basis matched the all-time high set in September. Prices increased by 0.6% from the previous month, following a 0.5% advance in September, the government said. Energy costs surged 4.8% on month, rising at eight times the rate of the overall index.
After rising at an annual rate of less than 1% in each of the final three months of 2020, PPI began to accelerate. The index rose 1.6% in January, the month that President Joe Biden took office, then nearly doubled in February and continued to gain steam throughout the year, exceeding 7% from May through October.
Biden has tried to downplay the inflation crisis as a “transitory” phenomenon amid the US economic recovery from the Covid-19 pandemic. Left-wing media outlet MSNBC on Monday argued that the current inflationary trend is being overblown and is actually a “good thing” because it reflects a strong economy.
Biden’s Treasury secretary, Janet Yellen, has said that prices will stabilize by the end of this year, but Goldman Sachs economists warned on Sunday that “the inflation overshoot will likely get worse before it gets better.” Inflation metrics will remain “quite high” for much of 2022, the bank said after previously predicting a quick end to the crisis.
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China overtakes US in global wealth race
15 Nov, 2021 17:58
China has overtaken the US as the nation which has amassed the biggest net worth as global wealth surges, a fresh report by McKinsey & Co suggests.
China’s wealth skyrocketed over the past two decades, the consulting company said according to Bloomberg, explaining that its net worth increased by a whopping 17 times from $7 trillion in 2000 to $120 trillion in 2020.
The nation accounted for about one third of the global net worth increase over that period. In 2000, China joined the World Trade Organization, which sped up its economic ascent.
The US saw its wealth double over the same time period. Washington had to give way to Beijing on the list of top 10 wealthiest nations since its net worth only amounted to $90 trillion in 2020, McKinsey says.
In both countries, more than two thirds of the amassed wealth sits in the pockets of the richest 10% of households, the report said, adding that this share has been increasing.
In total, global wealth reached $514 trillion in 2020, up from $156 trillion in 2000.
Some 68% of this wealth is stored in real estate, McKinsey said, adding that its fast growth surpassed the increase of the world’s GDP over the same period. The global wealth increase has been prompted by ballooning property prices, the company said, warning that surging real estate values might be unsustainable.
High prices might make it unaffordable for many people to buy residential property, McKinsey said, adding that such a situation could lead to a fresh financial crisis similar to that of 2008, which was triggered by the US housing bubble burst. This time, it could affect China as well due to the debt owed by its property developers.
A collapse of asset prices could make as much as one third of the global wealth disappear, the consultancy company said.
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Oil price eases on move from world’s largest importer
18 Nov, 2021 09:56
The world’s biggest oil importer, China, is working on a release of crude from strategic storages, Beijing’s reserve bureau said on Thursday – a day after Washington’s suggested they jointly tap reserves to ease prices.
“We are carrying out the work of releasing crude oil reserves. And for any details related to the releasing, we will put out a statement on our website,” China’s National Food and Strategic Reserves Administration stated. The regulator did not comment on the connection between this decision and Wednesday’s suggestion from US President Joe Biden regarding the joint release of crude to rein in prices.
Nice to see these two countries showing what can be done when they cooperate!
Beijing held a public auction of state crude reserves with a group of refiners in September, but did so in order to ease energy prices at home. In addition to China, the United States asked a number of other major crude consumers to make a coordinated release of reserves, including Japan, India, and South Korea. Officials in Tokyo and Seoul signaled that their respective countries were not legally allowed to tap reserves to lower prices, however.
Oil prices further slipped on China’s upcoming crude release and Washington’s proposal to near six-week lows on Thursday morning, easing further after reaching seven-year-highs in mid-October. Global benchmark Brent crude lost 41 cents, or 0.5%, to $79.87 a barrel by 07:12 GMT, after earlier plunging to $79.60 – its lowest price since October 7. US benchmark West Texas Intermediate dropped 70 cents, or 0.9%, to $77.66 a barrel, earlier falling to $77.40 – also a figure not seen since early last month.
The International Energy Agency and the Organization of the Petroleum Exporting Countries (OPEC) recently said the oil supply was starting to catch up with the demand, as OPEC and allied producers were sticking to the plan to boost output by 400,000 barrels per day every month. Washington has repeatedly asked OPEC to pump more, but the group refused, so as not to flood the market with supply.
Or, lower the price!
Chip shortages take major toll on European car industry
18 Nov, 2021 19:38
Car sales across Europe plunged to their lowest level on record in October, the European Automobile Manufacturers’ Association (ACEA) said on Thursday.
Registrations of new vehicles dropped 29% to 798,693 cars, with total sales for the first ten months of 2021 a mere 2.7% higher than for the same period in 2020.
The drop comes amid lingering semiconductor supply shortages, triggered by renewed outbreaks of Covid-19 in Southeast Asia and resulting in manufacturing delays, as well as port closures. Despite the recent drawbacks, carmakers say the chip crunch is finally showing signs of easing, but it will continue to some extent well into next year.
“We’re getting by. We’re trying to deal with it. I hope we’re through the worst,” Herbert Diess, CEO of Volkswagen – the EU’s biggest car manufacturer – said at a conference in Berlin earlier this week.
Volkswagen saw a 42% decline in deliveries in October compared to the same time last year, the worst among European manufacturers, while Fiat and Peugeot producer automaker Stellantis saw a 32% drop.
Given the current figures, market researchers suggest annual European car sales for 2021 are likely to miss even last year’s pandemic-affected levels, when global sales plunged nearly 15 percent.
IMHO - crypto should be illegal. This is just one of the reasons why:
‘Billions’ lost through hacks of crypto lending platforms
18 Nov, 2021 15:00
New research by blockchain analytics firm Elliptic showed that fraud and theft at decentralized finance platforms have led to $10.5 billion in losses so far this year.
According to the report, published on Thursday, cash has been pouring into the so-called DeFi platforms, reflecting the explosive interest in cryptocurrencies. DeFi platforms allow users to lend, borrow and save (usually in crypto) while bypassing traditional gatekeepers of finance such as banks. The technology offers cheaper and more efficient access to financial services, supporters say.
Data by sector tracker DeFi Pulse shows that cryptocurrency worth $86 billion is currently stored on DeFi platforms, compared with some $12 billion a year ago.
However, the explosive DeFi growth came along with booming crime in the mostly unregulated sector, Elliptic said. Users have suffered over $12 billion in losses through crime at DeFi apps, lending platforms and exchanges since 2020, with the majority of losses coming in 2021 alone.
Those losses were mainly attributed to bug and code flaws, as well as a hacking technique that involves exploiting loopholes in how the DeFi service operates.
“Decentralized apps are designed to be trustless in that they eliminate any third-party control of users’ funds,” said Tom Robinson, chief scientist at Elliptic. “But you must still trust that the creators of the protocol have not made a coding or design mistake that could lead to a loss of funds,” he added.
Major DeFi platforms say they take measures to bolster security that range from hiring external firms to audit code for vulnerabilities to maintaining keys and passwords needed to access user wallets in secure environments.
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