“Global economic growth may be slowing more than forecast only a month ago, underscoring the urgency for countries to pull back from a damaging trade war, the International Monetary Fund warned.
“The IMF downgraded its forecast for world growth last month, and recent data suggest the outlook has gotten worse since then, the fund said Wednesday in report ahead of the Group of 20 leaders’ summit this week in Buenos Aires.
“Financial conditions have tightened, especially in emerging markets, while trade tensions have increased, said the Washington-based fund. Since the IMF’s latest World Economic Update on Oct. 9, global stocks have slumped on concerns that rising interest rates and the U.S.-China trade war could undermine growth.”
“A [Trade War] ceasefire (or at least the indication that one could come) would no doubt buoy global markets and fortify Chinese equities and its currency, the renminbi. But whatever gains Chinese assets garner are likely to be shortlived. Undercutting a more sustained rally and the shoring up of the country’s slowing economy is the persistent weakening of credit growth in recent months.
“Despite a kitchen sink of stimulus this year, which has included four slashes to banks’ reserve requirements, tax cuts and increased construction spending, lending remains tight and money supply now sits near record lows.”
“Growth in China’s vast manufacturing sector stalled for the first time in over two years in November as new orders shrank…
“…adding pressure on Beijing ahead of high-stakes trade talks between presidents Xi Jinping and Donald Trump this weekend.”
China’s record year for bond defaults might feature one more superlative before the calendar turns: the first delinquency on an offshore security sold directly by a Chinese company…”
“The man who led the UK’s post-financial crisis banking reform drive says that UK lenders, ten years after the crash, are still not safe enough.
“Sir John Vickers, who chaired the Independent Commission on Banking which reported in 2011, says the Bank of England is still being too lax on banks’ capital requirements, making lenders overly fragile in the event of another crisis.”
“Detailing a long list of risks in a regular stability review, the ECB warned that Italy’s high spending, the possible end of the U.S. growth cycle and signs of over-valuation in the euro zone’s property market were among its concerns. Critics have long warned the ECB itself has sown the seeds of a new crisis by driving down bond yields, inflating asset bubbles and giving banks cheap and nearly unlimited liquidity.”
“Sweden’s economy contracted for the first time in half a decade in the last quarter, data published on Thursday showed. The 0.2 percent contraction in seasonally adjusted terms from the second quarter came as a surprise for analysts…”
“Pakistan’s currency has plunged further as the country is mired in a financial crisis and seeking an $8 billion bailout package from the International Monetary Fund. The Pakistani rupee was trading at 142 to the dollar on Friday, a decline from 133.90 rupees to $1 at close of business the previous day. Analyst Mohammad Suhail says it’s a clear indication the government has no option but to accept IMF conditions for the bailout.”
“Concerned over Zimbabwe’s economic collapse, people are taking the matter to the street.
“Thousands of anti-government protesters marched through the capital city, Harare, on Thursday under close surveillance by armed police in the first rally since a deadly crackdown on an election protest in August.”
“One of Saudi Arabia’s major contractors defaulted on almost $2 billion after a falling out among its owners and delays in payments from the government, according to people with knowledge of the matter…
“The defaults are largely the result of problems getting paid by the Ministry of Interior, the people said.”
“Oil fell on Thursday, bringing losses for the month so far to 23 per cent, marking its largest one-month fall since the depths of the financial crisis in 2008.
“A seemingly relentless rise in US crude supply, together with Saudi Arabia’s insistence that it will not cut output on its own to stabilise the market, wiped out overnight gains in oil futures.”
“Falling grain prices (as the charts below show) since their peak in 2012/2013 caused farm revenues to drop by approximately 50%, making it harder for farmers to cover their debt payments.
“The situation was exacerbated by the recent trade war that led to China slashing their imports of American soybeans, which has resulted in a soybean glut.”
“Investors, financial regulators, and now the Federal Reserve are voicing concerns about the U.S. corporate bond market.
“Recalling the 2008 crisis, worriers say excessive leverage is building among U.S. firms, many of whom took advantage of low interest rates after the financial crisis to load up on cheap debt. But with the Federal Reserve still forecast to raise rates three times next year, according to central bank’s so-called dot-plot forecast, and the global economy showing signs of losing steam, there are fears the once-favorable forces propping up corporate balance sheets are now on the wane.”
“At some point global government debt grows so large that merely rolling it over becomes a problem. The government will hit a debt wall and probably drag private debt down, too. That will lead to what I think of as a worldwide debt default I call The Great Reset…
“I will admit that I have trouble imagining that whatever happens will be less than painful, no matter which theory you adhere to.
“Dealing with too much debt, even debt of the “merely” promised kind, always involves some kind of pain to someone, and more likely to everyone, leaving nobody happy.”
“If you thought that 2008 was a bad year for finance, that’s nothing compared to what’s coming next. A team of Polish researchers have performed a statistical analysis on the S&P 500 stock market index and their conclusions are – well – not good. They believe we’ve got about 12 years or so before a cataclysmic financial meltdown will crash all markets around the globe.”
[We don’t have nearly that long IMO].