Daily Briefing - Cascades galore
The due for stupidity is coming.
Good night. After the last two posts, and plenty of frustration from the growing malfunctions of the supply chain, I decided to celebrate my mom's birthday and spend time with someone special. Aaaaaand everything started cascading.
Per the first article, the irony should not escape any of the readers here, since for months, and some experts have been telling for years, Eueope’s current problems are all self-inflicted wounds. Ironic politicians are digging a bigger hole for their nations whole posing as saviors, this is merely trying to delay the inevitable. There are signs things are changing, but change takes too long and now as I previously outlined, the energy woes might last half a decade… if things go right.
The second story is a tell for something bigger and the reader, be it analyst or normal joe should pay a lot of attention. There is already a shadow war for resources going on, and arguably Russia wants Ukraine for it's water access, so… there will be waters wars in this decade.
Third one is easy to tell. The entire system and global economy is cracking but China is getting benefits from it. As if… they are playing a long, hybrid game.
As also per the last few posts, Omicron is ripping through the entire global workforce, and the system won't feel the impact of this tipping point for a couple of weeks, this cemented a horrible, disruptive quarter already. And to make matters a little more “contagious”, other ports in China are now experiencing delays and congestion, before Omicron inevitably hits them too. You can also see how China’s stupid 0 COVID policy is directly impacting the production of factories.
With this maritime logistical disruption barely starting you can't expect recover till mid to end of Q3. And you should hedge accordingly.
You should buy any electronics or electronic parts you need RIGHT NOW. Plus anything else you might need. And for last. The disruption comes home, and it's systemic bad.
Europe’s Governments Face a Reckoning as Energy Prices Surge
Politicians are stepping in to help consumers with soaring bills, but the stopgap measures won’t be enough.
Europe is gripped by one of the worst energy crunches in history, forcing politicians to step in as soaring prices threaten to leave millions of households unable to pay their bills.
But with market forces signaling that the crisis will last way beyond the winter, the dilemma facing leaderships is that their stopgap measures are unlikely to be enough. The cost of electricity and gas across the continent already looks like one of the biggest challenges facing nations as they navigate their way out of the pandemic. 1
China Is Running Out of Water and That’s Scary for Asia
Of all Bejing’s problems — demographic decline, a stifling political climate, the stalling or reversal of economic reforms — dwindling natural resources may be the most urgent.
Nature and geopolitics can interact in nasty ways. The historian Geoffrey Parker has argued that changing weather patterns drove war, revolution and upheaval during a long global crisis in the 17th century. More recently, climate change has opened new trade routes, resources and rivalries in the Arctic. And now China, a great power that often appears bent on reordering the international system, is running out of water in ways that are likely to stoke conflict at home and abroad.
Natural resources have always been critical to economic and global power. In the 19th century, a small country — the U.K. — raced ahead of the pack because its abundant coal reserves allowed it to drive the Industrial Revolution. Britain was eventually surpassed by the U.S., which exploited its huge tracts of arable land, massive oil reserves and other resources to become an economic titan. 2
China Bonds Stand Out in Emerging-Market Real-Rate Conundrum
Slowing inflation boosts China’s allure to global investors
Negative real rates pervasive across developing economies
China has emerged as the biggest winner in the first set of inflation reports from emerging markets this year, as its bonds lure investors with positive inflation-adjusted returns in a group beset with deepening negative real rates. 3
Target CEO Sees Fewer Store Trips as Shoppers Confront Inflation
Target Corp.’s top executive said U.S. consumers will drive less and consolidate their shopping into fewer trips as they adjust to pricier gasoline and the highest inflation rate in almost four decades. Shoppers are also likely to eat more at home and seek cheaper generic-brand goods in an effort to ease the blow from rising prices, Chief Executive Officer Brian Cornell said Sunday at a National. 4
Shipping Congestion Is Growing at World’s Biggest Port
Ships re-route from Ningbo port to avoid trucker snarl
Congestion grows at ports as ships divert to Shanghai, Xiamen
Shipping firms are making the switch to avoid delays at nearby Ningbo, which suspended some trucking services near that port after an outbreak of Covid-19, according to freight forwarders and experts. Ships are also re-routing to Xiamen in the south, Bloomberg shipping data showed
Those diversions are adding to the new wave of congestion facing China's ports as an increasing number of cities deal with virus outbreaks. The strict testing of workers and truckers ahead of the Lunar New Year holiday at the end of this month is further stressing already strained supply chains as the pandemic heads into its third year.
In the country's technology hub of Shenzhen in the south, testing of residents and truckers to contain an outbreak means a queue of ships has formed at the port. That's caused the Shekou terminal to start restricting the acceptance of goods, meaning that from Friday full containers can only be trucked in three days before vessels are due to arrive, the terminal operator said Tuesday.
Meanwhile, the northern Chinese city of Tianjin ordered workers to take a half-day break for Covid testing as officials try to contain the spread of the omicron variant. Trucking capacity is estimated to be half of normal levels, and drivers are required to be tested daily before entering the port, said Alex Hersham, CEO of digital freight-forwarder Zencargo
The port congestion issue will continue to impact restocking cycles this quarter, alongside the omicron breakout and the impending Chinese New Year closures in China5
China Finds Omicron in Another Port City, Further Threatening Supply Chains
Dalian is the third known city with fresh omicron case
Unclear whether officials will introduce new restrictionss6
Gas Crunch Pushes Anxious Buyers to Pay More for Contracts
Limited uncontracted supply available through 2025: WoodMac
Contracting activity rose to highest in five years in 2021
Worries that the current shortage of liquefied natural gas will persist through the middle of the decade are triggering a rush to sign long-term deals, pushing up the price of contracts for the super-chilled fuel. 7
https://www.bloomberg.com/news/articles/2022-01-16/europe-s-energy-crisis-how-governments-are-trying-to-curb-soaring-bills?sref=d39KtWbu&utm_content=energy&utm_source=twitter&utm_campaign=socialflow-organic&cmpid%3D=socialflow-twitter-energy&utm_medium=social
https://www.bloomberg.com/opinion/articles/2021-12-29/china-s-water-shortage-is-scary-for-india-thailand-vietnam?utm_medium=cpc_social&utm_source=twitter&utm_campaign=BLOM_ENG_OFFEDIT_Y0469_TW_SO_WTRF_BROADPROSX_KEYCO_00XXXXCPC_2PTW_XXXX_BUSFINLUXREAD_X1854_Y0469_XXXEN_TWITOA_WATE_C3_EN_PG_NFLINKS&twclid=11482114074469191691
https://www.bloomberg.com/news/articles/2022-01-14/china-is-the-standout-in-emerging-market-real-rate-conundrum?utm_content=business&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid=socialflow-twitter-business
https://www.bloombergquint.com/business/target-ceo-sees-fewer-store-trips-as-shoppers-confront-inflation
https://www.ndtv.com/world-news/shanghai-port-shipping-congestion-is-growing-at-worlds-biggest-port-2707445
https://www.bloomberg.com/news/articles/2022-01-13/omicron-spreads-to-second-chinese-port-city-companies-affected?utm_content=business&utm_medium=social&cmpid=socialflow-twitter-business&utm_source=twitter&utm_campaign=socialflow-organic
https://www.bloomberg.com/news/articles/2022-01-12/anxious-buyers-paying-up-for-long-term-lng-contracts-amid-crunch
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