Trade Recession

Recession fears have trickled up the wealth classes (1) with the continuing decline of rates in Indonesia (2), India (3), and China (4). South Korean exports continue to drop (5) amidst falling inflation (6), stirring fears of a coming deflation. Air cargo rates hit a 4-year low (7) while auto-manufacturing continues to drop along with rail volume (8).

American big banks seem to be shifting their balance sheet holdings in anticipation of coming turbulence (9). Speculators warn stocks have reached their peak and a downturn is pending (10) as corporate profits no longer justify high valuations. The spread between corporate profits and index valuations has reached 1999 levels indicating there might be a wild ride ahead for 2020 (11).

The IMF had their very own Captain Obvious moment with their belated warning that global growth is coming “close to a standstill” (12). Monetary easing has become ineffective as ever lower rates lead inevitably to reversing effects (13) as more nations join the zero-or-less rate club (14). Not even a temporary truce in the trade war has been able to turn the tide of the economic slowdown (15) as the Chinese industrial sector had its worst collapse to-date (16).

The ever-feared inverted yield curve seems to have reverted slightly (17), leading some to hope this time the recession has been averted, however the evidence suggests they should not be celebrating just yet (18).

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References

1. World’s Ultra-Rich Preparing For Market Crash, UBS Warns Investieren - Wegen Rezessionsangst: Reichste Familien der Welt horten ihr Geld

2. Indonesia cuts key interest rate for 3rd month in row

3. India Slashes Interest Rate, Growth Forecast as Slump Stretches On

4. China Cuts 7-Day Repo Rate For First Time Since 2015

5. New Week Starts With More Dour Data As South Korea Exports Plunge Again

6. South Korean Consumer Prices Just Did Something They’ve Never Done Before

7. “Darkening Outlook For Trade” - Global Air Cargo Rates Continue To Plummet, Hit 4-Year Low

8. Rail Recession: U.S. Carloads Continue Collapse As Manufacturing Slows

9. JPMorgan pours $130bn of excess cash into bonds in major shift

10. Gundlach: «US equities will lose the most»

11. Corporate Profits Are Worse Than You Think

12. “Close To A Standstill”: IMF Warns Global Growth Will Be Cut To Lowest Since Lehman

13. Ever lower interest rates is the answer. Nobody seems to know, or care, what the question is.

14. Chinese Media Stunner: China Will Be The Next Country To Cut Rates To Zero

15. U.S.-China trade reprieve makes no dent on recession chances: Reuters poll

16. Chinese Industrial Profits Collapse By Most On Record

17. America’s yield curve is no longer inverted

18. Yield Curve Steepest In 14 Months: What Happens Next