Yemen’s Houthi rebels have attempted to use a submersible drone for the first time, but it was destroyed in yet another wave of US-led coalition attacks over the weekend, the US Central Command has claimed.
The US Navy conducted a series of five strikes, hitting three Houthi cruise missiles, an unmanned surface vessel (USV), and one unmanned underwater vessel (UUV) on Saturday, CENTCOM announced on X (formerly Twitter) on Sunday. “This is the first observed Houthi employment of a UUV since attacks began in Oct. 23,” the US military wrote, claiming it presented an “imminent threat” to US Navy ships and commercial vessels in the area. Since the beginning of the Israeli military operation in Gaza, the Houthi militants, who are in control of a large portion of Yemen, have harassed multiple vessels sailing the Red Sea. In solidarity with the Palestinians in Gaza, the Houthis vowed to attack any ships they find to be linked to Israel until the siege of Gaza stops. In response, the US launched an international maritime coalition to patrol the Red Sea called ‘Prosperity Guardian’, with the stated goal of protecting shipping lanes. Since mid-January, the US and UK have carried out air- and sea-launched attacks against “multiple underground storage facilities, command and control, missile systems, UAV storage and operations sites, radars, and helicopters” in Yemen in an attempt to “degrade Houthi capabilities” to attack military vessels and merchant ships. The Houthis vowed to “meet escalation with escalation” and expanded their list of potential targets to include US- and UK-owned merchant vessels. While no Houthi missiles have hit a US Navy vessel thus far, the group has launched scores of missiles and drones against the US-led coalition ships in the Red Sea. The attacks on Suez Canal freight – a route which normally accounts for around 15% of the world’s commercial shipping – have forced major companies to avoid the Red Sea altogether and sail around the coast of Africa, facing increased costs and spiking insurance premiums. On Sunday, another vessel sailing off the coast of Yemen was hit, according to the United Kingdom Maritime Trade Operations. The master of the ship reported an “explosion in close proximity of the vessel resulting in damage,” adding that all crew members were safe.
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Daily life became 3.2 percent more expensive in January compared to the same month last year, Statistics Netherlands (CBS) reported based on an initial estimate.
According to CBS, it calculated the estimate based on incomplete source data. In December, inflation was still 1.2 percent. The increase was mainly because the influence of energy price developments on inflation decreased in January. The drop in energy prices was much less sharp in January than in December. Energy and fuel together became almost a quarter cheaper, on average, in the last month of 2023 than a year earlier. In January, energy and fuels became only 2 percent cheaper. Excluding energy, inflation was 3.5 percent in January and 3.4 percent in December. The prices of energy like gas, electricity, and district heating strongly influenced inflation for some time. Energy prices increased in 2022 due to the war in Ukraine, and inflation skyrocketed. From January 2023, the government’s energy price cap led to lower energy prices, and partly as a result, inflation was lower in 2023. Because the price cap was introduced exactly one year ago in January, the influence of energy prices on inflation decreased in January 2024. Food, drinks, and tobacco prices increased by over 4 percent in January. In December, that increase was still over 5 percent. Services were 4.8 percent more expensive than a year earlier. According to the European measuring method, which is slightly different from CBS’s, prices rose by 3.1 percent annually in January. In December, that was 1 percent. The method agreed upon within the European Union to measure inflation does not take account of the costs of living in your own home. The inflation rate for the entire eurozone will be announced later in the day. A senior official of the Iranian-backed Houthi terrorist group says Chinese and Russian vessels will have safe passage through the Red Sea.
Mohammed al-Bukhaiti, a member of the Houthi political leadership, said in an interview with the Russian outlet Izvestia that the shipping lanes around Yemen are safe to ships from China and Russia as long as vessels are not connected with Israel, Agence France-Presse reported Friday, citing Izvestia. The Houthis have said they are acting in solidarity with Palestinians amid Israel’s war against Hamas militants in Gaza and have carried out more than 30 attacks in the Red Sea. However, the Houthis have launched attacks on ships with no apparent connection with Israel, resulting in some shipping firms avoiding the shipping lanes where the Houthis have launched attacks. Major shipping companies have responded by rerouting vessels on the longer and more expensive route around Africa. The Red Sea route is a vital shipping link between Europe and Asia, carrying about 15% of the world’s maritime traffic. The Houthi rebels launched two anti-ship ballistic missiles at a U.S.-owned ship in the Gulf of Aden, the U.S. Central Command said in a statement late Thursday. The statement said the crew saw the missiles land in the water near the ship. There were no reported injuries or damage to the ship, the M/V Chem Ranger, a Marshall Island-flagged, U.S.-owned, Greek-operated tanker ship, U.S. Central Command said. Yemen’s Houthi rebels said they had carried out the attack, claiming “direct hits,” a statement on the group’s social media said. On Thursday, U.S. forces carried out more strikes against targets inside Iranian-backed, Houthi-controlled territory in Yemen, as concerns grow that the Israel-Hamas conflict could expand into a full-blown war across the Middle East. The disruption of cargo ships in the Red Sea due to attacks by Houthi militants from Yemen is causing global shippers to redirect vessels, potentially leading to increased prices for goods.
Swedish furniture giant IKEA announced this week that it was exploring options to secure the availability of its products that are mainly delivered through the Red Sea and the Suez Canal from Asian factories to Western markets. “The situation in the Suez Canal will result in delays and may cause availability constraints for certain Ikea products,” Oscar Ljunggren, a spokesperson for Inter IKEA Group, told Bloomberg. Meanwhile, Abercrombie & Fitch is planning to shift from sea freight to air transport whenever possible to mitigate disruptions, as reported in an email to suppliers. Earlier this week, Danish shipping group Maersk said it had rerouted vessels around Africa via the Cape of Good Hope due to the heightened risk of attacks, reducing the effective capacity of an Asia-Europe trip by 25%. German transport company Hapag-Lloyd followed suit. However, sending vessels around Africa increases a round-trip journey by nearly two and a half weeks, inevitably lowering shipping capacity and raising costs. The Suez Canal is a vital transport artery that handles about 15% of the world’s shipping activity, including nearly 30% of global container trade. The recent attacks, occurring amid the Israel-Hamas war, have triggered a new trade and shipping emergency, reminiscent of the 2021 incident where one of the largest container ships blocked the canal for six days, resulting in a daily cost of $9.6 billion to global trade. Eurozone inflation surged to 7% in April in the first increase in the last five months, data released by the European Union’s statistics office Eurostat on Tuesday showed. Consumer prices rose from 6.9% in March, driven by food prices that soared 13.6% year-on-year last month. Food, alcohol and tobacco are expected to have the highest annual rate in April, followed by non-energy industrial goods, which picked up 6.2%.
Services climbed by 5.2% in April, compared with 5.1% the previous month. Energy prices were up again by 2.5% after a slight decline by 0.9% in March, according to the report. Core inflation – excluding food and energy prices – declined from 5.7% in March to 5.6% in April. The figures are closely watched by European Central Bank policymakers, who will decide whether to continue raising interest rates to curb inflation when they meet on Thursday. Latvia continues to struggle with the highest inflation at 15%, followed by Slovakia, Lithuania and Ireland — all dealing with a double-digit surge in consumer prices among the 20-member eurozone. Inflation in Germany, the EU's biggest economy, declined to 7.6% in April from 7.8% in March. In France, however, consumer prices rose 6.9% last month up from 6.7% in March, Eurostat said. While the ECB has not committed to a new rate hike, the latest figures make it more likely, economists warn. The key deposit rate in the eurozone stands at 3%. The International Monetary Fund (IMF) recently said that taming inflation while avoiding a recession was the biggest challenge the EU will face in the months to come. The global economy had a rocky year in 2022. As the worst of COVID-19’s effects on public health receded, the war in Ukraine and China’s tough “zero COVID” curbs injected new chaos into global supply chains. Food and energy prices soared as inflation in many economies hit four-decade highs. After a tumultuous year, the global economy heads into 2023 in choppy waters. Russian President Vladimir Putin’s war in Ukraine continues to roil food and energy markets, while rising interest rates threaten to smother the still-fragile post-pandemic recovery. On the positive side of the ledger, China’s reopening after three years of strict pandemic curbs offers a confidence boost for the global recovery — albeit tempered by fears that the rampant spread of the virus among the country’s 1.4 billion people could give rise to more lethal variants.
Inflation and interest rates Inflation is expected to decline globally in 2023 but nonetheless remain painfully high. The International Monetary Fund (IMF) has predicted global inflation will hit 6.5 percent next year, down from 8.8 percent in 2022. Developing economies are expected to have less relief, with inflation projected to only ease to 8.1 percent in 2023. “It’s likely that inflation will remain stubbornly higher than the 2 percent that most Western central banks have set as their benchmark,” Alexander Tziamalis, a senior economics lecturer at Sheffield Hallam University. “Energy and raw materials will remain expensive for some time. The partial reversal of globalisation means more expensive imports, shortages of labour in many Western countries leads to more expensive production, and green transition measures to combat the greatest threat our species faces are all leading to higher inflation than we’ve been used to through the 2010s.” Slowing growth and recession While price growth is expected to ease in 2023, economic growth is certain to slow sharply alongside rising interest rates, too. The IMF has estimated that the global economy will grow just 2.7 percent in 2023, down from 3.2 percent in 2022. The OECD has projected a less lofty performance this year of 2.2 percent growth, compared with 3.1 percent in 2022. Many economists are more pessimistic and believe a global recession is likely in 2023, barely three years after the downturn caused by the pandemic. In a column last month, Zanny Minton Beddoes, editor-in-chief of The Economist, painted a grim picture that was summed up by the article’s unequivocal title: “Why a global recession is inevitable in 2023”. Even if the global economy does not technically fall into recession — broadly defined as two consecutive quarters of negative growth — the IMF’s chief economist recently warned that 2023 may still feel like one for many people due to the combination of slowing growth, high prices and rising interest rates. “The three largest economies, the US, China and the euro area, will continue to stall,” Pierre-Olivier Gourinchas said in October. “In s Verdi union said workers walked out in all major German North Sea ports, with the action set to last until Saturday. At 6am on Thursday employees on the early shift in Bremen and Bremerhaven stopped work, Verdi district manager of Bremen-Nordniedersachsen, Markus Westermann, said. The work stoppages are planned until 6am on Saturday. A strike has also begun at the port of Hamburg, said Stephan Gastmeier, trade union secretary in the transport and maritime department at Verdi Hamburg. The industrial action is because no agreement over pay has been reached with the Central Association of German Seaport Operators (ZDS) following the latest meeting on Wednesday, union bosses said. Negotiations are currently suspended. The union is negotiating for about 12,000 workers in 58 companies in Hamburg, Lower Saxony and Bremen who are covered by collective agreements. Dockworkers have already left ship and cargo handling at a standstill twice in June, most recently for 24 hours on June 23rd. According to Verdi negotiator Maya Schwiegershausen-Güth, the latest 48-hour ‘warning strikes’ will affect Emden, Wilhelmshaven and Brake, as well as Hamburg, which is the largest seaport in Germany and third largest in Europe. Like many unions across Europe, they are fighting for wage increases amid extreme inflation rises. Verdi is demanding an increase in wages of €1.20 per hour for employees as well as compensation for inflation amounting to 7.4 percent for the duration of the collective agreement which is 12 months. The union also wants to push through an increase in the annual allowance for container operations by €1,200.
Container congestion likely to worsen The impact of the strike on the handling of container and cargo ships is likely to be considerable and bring the loading and unloading of ships largely to a standstill. This will further aggravate the already tense situation with ship congestion on the North Sea, and the processes at the quaysides are likely to get even more out of step. Container ships have been piling up in the North Sea, while ports are becoming storage areas. ZDS negotiator Ulrike Riedel called the strike “irresponsible” in view of the disrupted supply chains and said it was to the detriment of consumers and businesses. Due to the Covid pandemic, the global traffic of container and cargo ships has been in chaos for several months. According to recent calculations by the Kiel Institute for the World Economy, more than two percent of global freight capacity is stuck in the North Sea. There are currently around 20 cargo shops waiting in the German bay area for clearance, most of them bound for Hamburg. Zimbabwe is set to introduce gold coins that will enable investors to store value within the country as inflation spirals out of control and the local currency continues to rapidly devalue against major currencies. The move comes after inflation for June jumped to 191.6% from 132% in May. In a statement on Monday, the southern African country’s central bank chief John Mangudya announced the new gold coins would be available through normal banking institutions.
“The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) resolved to introduce gold coins into the market as an instrument that will enable investors to store value,” Mangudya said. “The gold coins will be minted by Fidelity Gold Refineries (Private) Limited and will be sold to the public through normal banking channels.” Fidelity Gold Refineries (Private) Limited is the sole gold buying entity and refining entity in the country and is owned by the central bank. The central bank’s monetary policy committee expressed “great concern on the recent rise in inflation”, which increased by 30.7% on a month-on-month basis for June 2022. Authorities are struggling to pull Zimbabwe from the grips of an economic crisis characterised by high inflation, a rapidly devaluing local currency, 90 percent unemployment and declining manufacturing output. The country’s inflation has been on an upward trend in the past three months as inflation pressures rise, driven by the continued weakening of the Zimbabwean dollar which is trading at $1:650 on the black market. The printing of new money by the central bank has also worsened the situation, reversing gains made in the past two years that saw inflation decrease from a peak of 800 percent in 2020 to 60 percent in January this year. As part of measures to stabilise the economy, the central bank will more than triple the lending rate from 80 percent to 200 percent per annum and raise the interest rate from 50 percent to 100 percent per annum. Turkey's yearly inflation climbed by the fastest pace in 19 years, jumping to 36.08% in December, official data showed on Monday. The Turkish Statistical Institute said the consumer price index increased by 13.58% in December from the previous month, further eroding peoples' purchasing power. The yearly increase in food prices was 43.8%, the data showed.
The yearly inflation rate was the highest since September 2002. Inflation has been rising in the country while the Turkish lira has been slumping to record lows after the country's central bank _ under pressure from President Recep Tayyip Erdogan _ cut a key interest rate by 5 percentage points in September. The weakened lira has made imports, fuel and everyday items more expensive and has left many in the country of some 84 million struggling to buy food and other basic goods. Many have been purchasing foreign currencies and gold to protect their savings. Last month, Erdogan announced measures to safeguard lira deposits against volatility after the Turkish currency hit an all-time low of 18.36 against the dollar. The lira rebounded following the announcement but has since lost some of those gains. The lira depreciated by around 44% against the dollar last year. Erdogan insists on lowering borrowing costs to boost growth, even though economists argue that higher interest rates is the way to tame soaring prices. Also on Monday, Erdogan announced that Turkey's exports increased by 32.9% in 2021, to reach ''a record'' $225.4 billion. Addressing a group of exporters in a televised speech, Erdogan said the figure amounted to a 7.8% narrowing of Turkey's trade deficit. Turkey would revise its export target for 2022 to $250 billion, he added. Meanwhile, the independent Inflation Research Group, made up of academics and former government officials, put the yearly inflation rate at a much higher 83%. It said consumer prices rose by 19.35% in December compared with November. For the world’s financial markets which have become literally dependent on the pronouncements of central banks, this week is lining up to be one of the most important in a long time. Because this week no less than 4 of the world’s most powerful central banks are each meeting to discuss quantitative easing (debt buying by central banks) and interest rate decisions, and to then ‘inform’ financial markets to what extent they will be kept on life-support stimulus.
First up is the operator of the world’s most influential fiat currency, the US Federal Reserve, whose Federal Open Market Committee (FOMC) meets over two days between Tuesday 14 and Wednesday 15 December, and then tells markets whether it will taper (decelerate it’s interventions) while engaging in Management of Perception Economics (MOPE) about future interest rate hikes (hint: they can’t raise rates). Following this, the Governing Council of the European Central Bank (ECB) meets on Thursday 16 December, and will also then pronounce about if and when it will scale back it’s trillions of interventional asset purchases, the leading two of which the ECB calls an ‘Asset Purchase Programme (APP)’ and a ‘Pandemic Emergency Purchase Programme (PEEP). Also expect ECB jawboning about interest rate increases but no rate move. On the same day, Thursday 16 December, the Bank of England’s Monetary Policy Committee (MPC) meets to also discuss interest rate increases. But the MPC will most likely use the convenient Omicron propaganda (rampant across mainstream UK media) as an excuse to leave UK interest rates unchanged. The same day on Thursday 16 December, the perennial interventionalist Bank of Japan (BoJ) begins a 2-day Monetary Policy Meeting (MPM), and in the same vein will chit-chat about decelerating asset purchases and raising interest rates, but in the end, as usual, the BoJ will do nothing. If you think about it, it’s ludicrous that the world’s so called ‘free market’ financial markets are hanging on the every word of a private banking cartel (the US Federal Reserve) for a signal about whether this same US Fed will scale back (taper) it’s massive interventions (asset purchases) into these so-called ‘free markets’. The same is true of the Fed’s colleagues at the ECB, Bank of England and BoJ. This is literally like a bunch of drug addicts (the markets) waiting to see if a drug cartel has enough drugs to sell to them all, or will the cartel dealers need to ‘taper’ the supply. The question that the mainstream financial media should be asking (but never asks), is why central banks need to intervene in bond and equity markets at all. The answer of course is clear, that without central bank interventions, the entire debt based financial system would implode. Each of these central bank decision making bodies also knows that they are now in unchartered territory and that they have painted themselves into corners with unprecedented asset purchases and historically low interest rates which they cannot reverse without imploding the system, as all the while inflation continues to accelerate across the board. So expect a lot of jawboning from the Fed, ECB, BoE and BoJ, as well as a lot of MOPE. But don't expect anything concrete or any change in direction from these central banks. For in the words of Max Keiser, “You can’t taper a Ponzi”. One hundred trillion dollars—that’s 100,000,000,000,000—is the largest denomination of currency ever issued. 1 The Zimbabwean government issued the Z$100 trillion bill in early 2009, among the last in a series of ever higher denominations distributed as inflation eroded purchasing power. When Zimbabwe attained independence in 1980, Z$2, Z$5, Z$10 and Z$20 denominations circulated, replaced three decades later by bills in the thousands and ultimately in the millions and trillions as the government sought to prop up a weakening economy amid spiralling inflation. Shortly after the Z$100 trillion note began circulating, the Zimbabwean dollar was officially abandoned in favour of foreign currencies. From 2007 to 2008, the local legal tender lost more than 99.9 percent of its value (Hanke 2008). This marked a reversal of fortune from independence, when the value of one Zimbabwe dollar equalled US$1.54. Zimbabwe’s extreme and uncontrollable inflation made it the first—and so far only—country in the 21st century to experience a hyperinflationary episode. Hyperinflation devastates people and countries. Zimbabwe, once considered the breadbasket of Africa, was reduced to the continent’s beggar within a few years; its citizens were pushed into poverty and often forced to emigrate. The country’s experience shows how a relatively self-sustaining nation at independence fell victim to out-of-control inflation and the severe erosion of wealth. The causes of Zimbabwe’s hyperinflation, its effects and how it was stopped are particularly instructive. In his seminal work, Phillip Cagan defined hyperinflation as beginning when monthly inflation rates initially exceed 50 percent. It ends in the month before the rate declines below 50 percent, where it must remain for at least a year (Cagan 1956). Zimbabwe entered the hyperinflationary era in March 2007; the period ended when the nation abandoned its currency in 2009 (Chart 1). Bouts of hyperinflation are mostly accompanied by rapidly increasing money supply needed to finance large fiscal deficits arising from war, revolution, the end of empires and the establishment of new states. Hyperinflation, as Cagan defined it, initially appeared during the French Revolution, when the monthly rate peaked at 143 percent in December 1795. More than a century elapsed before hyperinflation appeared again. During the 20th century, hyperinflation occurred 28 times, often associated with the monetary chaos involving two world wars and the collapse of communism (Bernholz 2003). Zimbabwe’s hyperinflation of 2007–09 represents the world’s 30th occurrence as well as the continent’s second bout (after a 1991–94 episode in the Congo).
It is widely expected that a further cut of 100 basis points to 14 percent will follow this week. The policy differs from all economic textbooks. Normally, policymakers try to curb inflation with interest rate hikes. The inflation rate in Turkey is already above 20 percent. Turks took to the streets last weekend to protest the rising cost of living.
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