This thread is about what is, and what the current policies are leading to. Not what should be.
The world set a new daily record yesterday.
2/6
Leading this record is the parabolic spike by Europe.
7-day quarantines are mandatory for positive cases.
3/6
And leading Europe to new records is the UK, Italy and Spain.
4/6
Many pointing to South Africa peaking. Remember this was after a 100x increase in 30 days. Maybe they hit testing limits after this massive rise? Consider:
The last two days SA cases are heading up again.
The rest of Africa is going vertical and also setting new records.
5/6
Asia, and especially China, has zero COVID, one case and everything closes.
Xi'an, a city of 13 million (>than NYC) is closed, because of 127 cases over one week!
6/6
Positive tests
US 10-day quarantine
Euro 7-days quarantine
Asia, zero policy (lockdowns!)
You think the global supply chain is "challenged" now, let's remove billions and billions of workdays from global production in the coming weeks and see what happens to it?
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Ten seafarers have now been killed in 13 attacks on merchant vessels since the Iran conflict erupted on February 28 — more than the 7 U.S. servicemen killed in the war.
The focal point is shifting: can the Strait of Hormuz be reopened? Is the Administration pivoting to that mission?
Every day without a visible path to reopening, the market will price in more risk.
A 10% increase in energy prices that persists for a year would push global inflation up by 40 basis points and slow economic growth by 0.1-0.2%, International Monetary Fund Managing Director Kristalina Georgieva said.
So, what price measures "persists for a year?"
🧵
2/5
As the table below shows, crude oil futures prices for delivery into 2027 are trading in extreme backwardation.
3/5
Below is the calendar spread between the first contract (now April) and the 6th contract (now September).
As the bottom panel shows, this spread is -25%, a record since the mid-1990s when the contract specifications were last changed.
Thoughts on market reaction to the Venezuela news.
tl:dr
The spigot in Venezuela waiting to be opened to flood the world with crude oil and lower its price has been broken for a while.
It will take several years to fix it.
2/5
Venezuela is a founding member of OPEC their official statistics show its production (blue) is down 71% from its 1998 peak.
Its sustainable capacity (max output in within 90 days and held for a year) is 1M barrels/day (orange).
Venezuela is at its maximum now.
3/5
Why the big production decline?
Socialist Hugo Chávez was elected in December 1998. He turned out to be a brutal dictator. Only to be replaced by an even more brutal dictator, Nicolás Maduro, when Chávez died in March 2013.