Author : Rachel Poole
Date : May 31, 2022
Global equities make gains
Global equities broke a seven-week losing streak and made gains. The S&P 500 and Dow Jones closed the week up 6.58% and 6.24% respectively, while the Nasdaq rose 6.84%. The yield on the US 10-year Treasury decreased to 2.58%. The price of a barrel of West Texas Intermediate crude oil continued increasing, closing Friday at $115.07. Volatility, as measured by the CBOE Volatility Index, ended the week at 25.7.
World Bank warns of global recession
World Bank President David Malpass says Russia’s military invasion of Ukraine may lead to a global recession. At a US Chamber of Commerce event, President Malpass said “As we look at the global GDP … it’s hard right now to see how we avoid a recession… The idea of energy prices doubling is enough to trigger a recession by itself.” Food and energy prices have spiraled out of control as the war in Ukraine continues. Last month, the World Bank cut its global forecast for 2022 by nearly a full percentage point due to the pandemic, inflation, and policy uncertainties. Malpass also added that the lockdowns in China’s key industrial cities have added to the global uncertainty and have reduced growth expectations for China.
Covid-19 by the numbers
Global Confirmed Covid-19 cases: 531,054,000 Global Covid-19 deaths: 6,309,900
US Confirmed Covid-19 cases: 85,699,800 US Covid-19 deaths: 1,031,200
*As of Friday evening
Shanghai nears end of lockdown
Shanghai is finally nearing an end to its Covid-19 lockdown which was imposed in early April and was supposed to have lasted one week. Now that the number of new Covid-19 infections has dropped sharply, the mega-city of 25 million people will begin to reopen on June 1st. While Beijing is not under an official Covid-19 lockdown, the government has tightened pandemic restrictions, keeping only supermarkets and convenience stores open. Many private-sector economists expect China’s GDP to contract in the second quarter from a year earlier as China’s “zero-Covid” policy has significantly suppressed economic growth.
Ukraine updates: Russia advances in Donbas region, Ukraine refuses territorial concessions, Russian at risk of foreign default
Russia has focused its military efforts on the Donbas region of Ukraine, shelling several towns and encircling the cities of Syevyerodonetsk and Lysychansk. As the fighting continues, the two sides do not seem to be any closer to a ceasefire agreement. Earlier this week, Ukrainian President Volodymyr Zelenskyy said his country would not cede any territory for a ceasefire deal and demanded that the war end with full restoration of Ukrainian territory. Meanwhile, the US is pushing Russia into a foreign debt default by refusing to renew a license that allows Russia to pay its debtholders through American banks. The European Union is still negotiating a Russian oil ban and additional sanctions.
Turkey’s Erdogan ceases communications with Greek prime minister
Turkish President Recep Tayyip Erdogan announced at a cabinet meeting this week that he would cease communications with Greece’s Prime Minister Kyriakos Mitsotakis. President Erdogan alleges that Prime Minister Mitsotakis recommended that Washington not sell Ankara F-16 fighter jets. In response to the move, a Greek government spokesman said Athens “will not get into a confrontation of statements with Turkey’s leadership.” Greek-Turkish relations have been strained over several issues, including competing maritime boundary claims that affect energy exploration rights in the eastern Mediterranean and the extension of Greece’s bilateral military agreement with the US which grants US military access to three bases in mainland Greece and the island of Crete.
Uvalde school shooting reignites gun control debate
An 18-year-old gunman opened fire at Robb Elementary School in Uvalde, Texas on Tuesday, killing 19 children and 2 teachers, after also killing his grandmother. The devastating incident has reignited the gun control debate, an issue that has been hotly contested particularly since the Sandy Hook school shooting nearly a decade ago. Democrats have repeatedly tried to enact new gun-control measures, such as universal background checks and a renewed assault weapons ban, but proposed legislation has been shot down by Republicans who argue the laws would do little to prevent most of these tragedies and would compromise the Constitutional right of Americans to bear arms. The US has had 214 mass shootings so far this year, 27 of which were school shootings with injuries or deaths.
Washington calls Beijing “most serious long-term threat to international order”
In a speech on Thursday, US Secretary of State Antony Blinken called Beijing the “most serious long-term threat to international order”. During his speech, Blinken also reiterated that Washington was determined to avoid conflict and would cooperate with China where possible, such as on climate change. Earlier this week, US President Joe Biden traveled to Asia and unveiled the Indo-Pacific Economic Framework, which is the administration’s strategy to strengthen relations among countries in the region. 12 Asian nations have signed onto the framework. On the heels of President Biden’s trip, Chinese Foreign Minister Wang Yi kicked off a ten-day tour of Pacific Island countries. He has reportedly proposed a deal to increase security cooperation with Pacific Island nations.
UK introduces windfall tax on oil and gas
The United Kingdom (UK) announced a 25% windfall oil and gas tax, arguing that the energy industry has profited too much from the surge in commodity prices. While the details of the final piece of legislation remain vague, the British government believes the tax could raise 5 billion pounds which will be contributed to a proposed 15-billion-pound support package aimed at assisting the country’s poorest families with soaring energy costs.
Crypto falls further on warnings from ECB
Cryptocurrencies continued their slide this week as the European Central Bank (ECB) ramped up its warnings about crypto markets. In an interview earlier this week, ECB President Christine Lagarde said crypto-assets were “worth nothing, based on nothing, and there is no underlying asset to act as an anchor of safety.” A recent ECB report says unbacked crypto assets are a risk to financial stability and that their regulation and supervision is a matter of urgency. The world’s most popular cryptocurrency, Bitcoin, has dropped below the $29,000 mark, plummeting almost 60% from its peak last November.
Airbnb shuts down listings in China
Airbnb will shut down its listings in China as Covid-19 lockdowns in the country continue. The company says “costly and complex” operation constraints made worse by the pandemic and the government’s zero-Covid policy have made it too difficult to continue listing rentals in China. Airbnb will not shut down its operations in China completely as it will continue to have an office in Beijing where hundreds of its employees will focus on global projects and outbound travelers.
Putin’s Powerful Orthodox Church Ally Helps Cement Russian Support for War
Japan Inc suddenly sees the downside of tumbling yen
Turkey blocks an early NATO effort to fast-track Sweden’s and Finland’s applications
What the CIA thinks: William Burns on the new world disorder
It’s Africa’s Century—for Better or Worse
U.S. Aims to Constrain China by Shaping Its Environment, Blinken Says
Downturn: Monetary Regimes, Disintermediation, and Financial Markets – John E. Charalambakis
Geopolitical Challenges and Statecraft – The BlackSummit Team
Food Insecurity Fears Build as Global Crop Prices Soar
Source: Bloomberg