“…credit spreads have widened considerably, commodity prices have softened and investors have started demanding higher yields for short-term US bonds than for those with longer terms. Unlike equity markets, “yield curve inversions” have not historically tended to produce false recession predictions. The overall judgement of financial markets is that recession is significantly more likely than not in the next two years.
“Real economic indicators for the world’s largest economies, China and the US, also suggest considerable cause for concern. Almost every Chinese indicator in the last few months has come in below expectations.
“Perhaps the US economy will enjoy a soft landing… But… given that we are starting from very high debt levels and low unemployment, a recession is the more likely outcome.
“It is almost inconceivable that the global economy will remain healthy in the face of serious economic problems in both China and the US, even leaving aside their conflicts over trade and technology. Europe lacks economic energy and the uncertainties associated with Brexit, French protests, German political transition and Italian populism mean the continent is more likely to be a source of problems than a solution.
“The Fed should signal that it is determined to avoid a downturn that would assure another decade of below target inflation. The People’s Bank of China and other central banks should also make clear that they recognise that avoiding another recession is the most important thing they can contribute to financial stability.
“Fiscal policymakers should realise the very low real yield on government bonds is a signal that more debt can be absorbed. It is not too soon to begin plans to launch large-scale infrastructure projects if a downturn comes. The largest economies should try to limit trade frictions and signal that they are committed to co-operating to support global growth by assuring adequate capital flows to emerging markets and avoiding a cycle of protectionism.
“Even if my recession fears are excessive, a shift towards emphasising growth will contribute to bringing inflation up to target levels and can be reversed. If I am proved right, the costs of delay in the policy response could be catastrophic. It is the irony of our moment that prudence requires the rejection of austerity.”
“As we limp into 2019, about the most upbeat line the pros can spin is that, hey, the recession probably won’t hit until next year.”
“In developing our forecast for the industry for 2019, the outlook appears grim. Economic indicators are pointing to contraction for the entire auto industry, which can be magnified if trade conditions worsen.
“The question will be less about how the industry will perform, but rather how automakers should respond to market conditions.”
“Home purchase contracts in the U.S. fell 7.7 per cent in November, according to a National Association of Realtors index. Consumer confidence dropped in December.
“And a gauge of U.S. manufacturing plunged by the most since 2008, only a day after Apple cut its sales outlook, prompting investor worries about a global growth slowdown.”
“Brexit hasn’t happened yet but it’s already shrinking the United Kingdom’s financial services industry. Banks and other financial companies have shifted at least £800 billion ($1 trillion) worth of assets out of the country and into the European Union because of Brexit, EY said in a report published Monday. Many banks have set up new offices elsewhere in the European Union to safeguard their regional operations after Brexit, which means they also have to move substantial assets there to satisfy EU regulators.”
“The two leaders of Italy’s ruling populist coalition on Monday threw their support behind the “yellow vest” protesters roiling neighbouring France.
“Yellow vests, do not weaken!” Deputy Prime Minister Luigi Di Maio, who heads the anti-establishment Five Star Movement (M5S), wrote on his party’s blog.
“He denounced the French government for protecting the elite and the privileged, saying “a new Europe is being born. Of the ‘yellow vests’, of movements, of direct democracy” ahead of European parliamentary elections in May.
“Matteo Salvini, his counterpart from the far-right, the anti-immigrant League, also backed the “yellow vest” protesters.”
“Turkey’s economic growth under the AKP relied on foreign funds, mainly external borrowing of some $460 billion, with the funds used mostly for domestic consumption.
“When the inflow of funds decreased before grinding to a halt in 2018, the crisis became inevitable.”
“Millions are set to walk out across India tomorrow as a two-day national strike begins against the neoliberal policies of Prime Minister Narendra Modi’s right-wing regime…
“Farmers and agricultural workers promised to block roads across the country, bringing India to a standstill amid growing anger over poverty and rising prices.”
“China’s market is facing a slowdown, as car sales have declined at the fastest rate in seven years. This has been attributed to the economic slowdown and the trade war… Auto sales fell fourteen percent in November year-on-year, following two months of twelve percent declines. Many car manufacturers’ production and sales data in November was not optimistic.”
“If China is indeed entering an economic winter, then the chill will spread around the globe.”
“A public transport employee who doesn’t earn enough to feed himself, a doctor who watches his patients die for lack of medicines, a lawmaker without a legislature, three generations of one family emigrating – the list of victims of Venezuela’s crisis is long.
“They come from all walks of life and dread the prospect of another six years under the man who has overseen it, President Nicolas Maduro.”
“Investors are dumping stocks and corporate bonds at the fastest pace ever. Mutual funds invested in equity and bonds lost a record $152 billion in December, while U.S. equity exchange-traded funds just had their first back-to-back weekly outflows since July 2018, shedding $7.1 billion in the last two weeks, according to TrimTabs Investment Research.”
“We live in a highly integrated world – people talk about food value chains, and they are chains, because when you break a link in the chain, the whole thing falls apart, and that could be very disruptive for food supplies.”