Oil prices fell nearly 4% as concerns over aggressive Fed rate hikes squeezed demand
[Federal Reserve Bullard: Even under “dovish” policy assumptions, interest rates need to be further raised to around 5%]
St. Louis Fed President Bullard said that even using “dovish” assumptions, the Fed’s policy rate target range would need to rise to at least 5.00%-5.25% to be restrictive enough to curb inflation, while more stringent assumptions would require interest rates rose above 7% as the Fed’s tightening policy has so far had only a limited impact on inflation.
[Crude oil fell sharply, hitting a new low in more than two months]
West Texas Intermediate crude December futures on the New York Mercantile Exchange fell $3.95, or 4.6%, to $81.64 a barrel. Dow Jones market data showed that New York crude oil hit its lowest closing price since September 30 for the most active contract. The price of January Brent crude oil futures on the European Intercontinental Exchange fell $3.08 to $89.78 a barrel, a drop of 3.3%, the lowest closing price since October 3.
[The United States will issue more guidance on Russian oil price caps in the coming days]
The U.S. government plans to issue guidance in the coming days on a Russian oil price cap that will take effect on December 5 and is prepared to deal with some “hiccups” in implementation, a State Department official said on Thursday. Jim Mullinax, director of the Office of Sanctions Policy and Enforcement, said at a panel discussion hosted by Thomson Reuters that the government is in close contact with industry and international partners on the Russian oil price cap and will implement this mechanism in a “spirit of flexibility.”
[The U.S. economy will experience a mild recession next year]
JPMorgan economists predict the U.S. economy will experience a “mild recession” in the second half of next year amid expectations the Federal Reserve will further tighten monetary policy. JPMorgan Chase believes that the economy is expected to shrink by 0.5% in the fourth quarter of next year, and the contraction may extend into 2024. JPMorgan Chase predicts that the Federal Reserve will raise interest rates by 100 basis points by March 2023.
Overall, concerns about the epidemic and the strengthening of the US dollar have suppressed oil prices. The United States will issue opinions on the upper limit of Russian oil prices in the next few days, further increasing the downside risk of oil prices. Oil prices are expected to fall back to the 80 mark. Pay attention to the speeches of Federal Reserve officials during the day.
The epidemic has broken the chain, and Guangzhou’s textile industry has suffered an unbearable burden
Textile industry, Guangzhou’s characteristic traditional basic industry
Guangzhou is one of the largest clothing commodity distribution centers in the country. It has more than 130 professional clothing wholesale markets, including the Zhongda Fabric Wholesale Market, with an annual transaction volume exceeding one trillion yuan. It is also home to a large number of small and medium-sized clothing factories and clothing brands. Guangzhou has smooth international trade channels and developed wholesale and retail industries, leaving ample room for small and medium-sized enterprises to survive. In terms of sales alone, Guangzhou’s textile and apparel industry is dominated by trade, with design and production as supplements.
From the perspective of industrial planning, Guangzhou has initially formed a production (Huadu District)-design (Baiyun District)-trade (Haizhu District) textile and clothing industry chain.
However, the Guangzhou epidemic started in October, and almost all companies in the industry chain were affected. Haizhu District alone has become the “hardest hit area” affected by the epidemic. The Kanglu area of Fengyang Street in Haizhu District, the most serious area, has more than 5,200 garment factories and warehousing companies, most of which are upstream and downstream labor-intensive industries such as textiles, garments, and accessories. Among them, the Zhongda Textile Business District has officially notified all wholesale markets and logistics to suspend production and operation activities during the epidemic control period; the garment factories in Haizhu District have been completely shut down.
Today is November 18, 2022. Guangzhou reported 255 new local confirmed cases and 8,989 new local asymptomatic infections. The good news is that the proportion of new social positive cases in Guangzhou has dropped by about 70% in the past five days. From 0:00 on November 17, 2022, Panyu District, Guangzhou, except for high-risk areas and temporary control areas, will resume normal social movements in the entire district in an orderly manner. However, Guangzhou Haizhu District will continue to strengthen epidemic prevention and control measures until 24:00 on November 19, 2022.
Under the impact of the epidemic, small and medium-sized enterprises were the most affected, but the mentality of the bosses was relatively peaceful. Many bosses said they were “numb”. Overall, Q4 was basically in vain.
The “cold winter” of the textile and garment industry
Since the outbreak of the epidemic, the textile and apparel industry has been tested. According to data from the China Textile Federation Circulation Branch, the total turnover of the 46 textile and apparel professional markets monitored in the first half of this year was 544.797 billion yuan, a year-on-year decrease of 8.70%.
For textile and clothing productsAs far as the chain is concerned, although there is a saying of the “Golden Nine and Silver Ten” peak seasons, in fact the peak season in 2022 is basically equivalent to the off-season. Gone are the massive orders. Not only large companies, but also the entire industry chain has experienced the previous period. After weak market growth in the third quarter, there is a serious lack of confidence in the fourth quarter. The current “cold winter” is far from over due to the slowdown in logistics caused by epidemic control in various places and the downward pressure on economic downturn in consumption.
In short, life may be more difficult in 2023. We must be mentally prepared, try our best to increase revenue and reduce expenditure, avoid all kinds of debts, do a good job in epidemic prevention, and combine online and offline. Under the tide of the economic cycle, no one is Bystanders, counter-cyclical trends should be followed.