Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports

January 13, 2022
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Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports
Image by CEphoto, Uwe Aranas

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Over the past month, as Wall Street turned increasingly optimistic on US growth alongside the Fed, with consensus (shaped by the Fed's leaks and jawboning) now virtually certain of a March rate hike, we have been repeatedly warning that after a huge policy error in 2021 when the Fed erroneously said that inflation is "transitory" (it wasn't), the central bank is on pace to make another just as big policy mistake in 2022 by hiking as many as 4 times and also running off its massive balance sheet... right into a global growth slowdown.

And, as we have also discussed in recent weeks, one place where this growth slowdown is emerging - besides the upcoming deterioration in US consumption where spending is now being funded to record rates by credit cards before it encounters a troubling air pocket - is China and its "covid-zero" policy in general, and its covid-locked down ports in particular.

But what until recently was a minority view confined to our modest website, has since expanded and as Bloomberg writes overnight, the effects of restrictions in China as the country maintains its Covid-zero policy "are starting to hit supply chains in the region." As a result of the slow movement of goods through some of the country’s busiest and most important ports means shippers are now diverting to Shanghai, causing the types of knock-on delays at the world’s biggest container port that led to massive congestion bottlnecks last summer that eventually translated into a record number of container ships waiting off the coast of California, a glut that hasn't been cleared to this day...

To read more visit Zero Hedge.

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