“Europe’s largest economy [Germany] may be in recession for the first time since the region’s debt crisis.
“A shock plunge in industrial output in November suggests Germany may have suffered a second consecutive quarter of economic contraction at the end of 2018.
“Industrial production in Germany plummeted 1.9% compared to the previous month, according to data published Tuesday. That’s much worse than the 0.3% uptick economists polled by Reuters had expected…
“”The big picture is that the German economy — and the eurozone more generally — has clearly shifted down a gear,” said Jack Allen, senior European economist at Capital Economics.
“A recession in Germany would be another major worry for investors who have been unnerved by the prospect of weaker economic growth this year in the United States and China…
“The slowdown could create a major headache for the European Central Bank, which completed a huge stimulus program in December and was planning to start raising interest rates later this year.
“If growth slows further, it will have to reconsider.”
“Italy’s populist government has offered to shore up an ailing bank with public money, in a sharp U-turn after attacking mainstream politicians for years for bailing out banks with taxpayers’ money.
“The country’s embattled banking sector will provide a delicate test for the new government, as Italian lenders—whose bondholders include many ordinary savers—struggle to digest billions in bad loans accumulated during the financial crisis and shore up their fragile finances.”
“A smiling construction worker, a grinning farmer and a jolly pensioner: these are the cartoon faces the government is using to try to reassure Britons that the country can cope with a no-deal Brexit.
“A cheery illustrated banner on a new government website sits atop links to information on how to prepare for a no-deal Brexit that critics have said could cause food and medicine shortages, long border delays and widespread economic disruption.
“On Tuesday, the government launched the eu exit campaign site with a low-key public information campaign consisting of adverts on commercial radio stations and tweets from some government departments.”
“Vincent is one of 44 million Americans burdened with student loans. Together, they owe a total of $1.5 trillion, a record sum only exceeded by mortgages.
“Student loans make up almost 7 percent of the United States’ aggregate debt. Add to this the $64.2 billion in private student loans, issued by banks and other institutions.”
“On average, the six largest U.S. banks have less than $7 in equity for each $100 in assets. That’s more than they had before the 2008 crisis, but probably not enough to avoid distress in a similar situation.
“Economists at the Minneapolis Fed, for example, have estimated that banks need more than twice as much equity to make the probability of government bailouts as low as it should be… If the central bank’s rules prevent [Fed officials] from acting, they should change them. By the time investors are sure the system has a problem, it will be too late.”
“What will crash the market again this month? It’s not President Trump and Nancy Pelosi in their made-for-TV tug of war over government funding. BlackRock knows what it is: If it’s not the Fed, it will be flawed China trade talks this week and market fears of a semi-hard landing there. The Fed and China are the biggest things on Wall Street’s mind.”
“It is becoming ever clearer that the smartphone market is in a recession.
“The contraction trend first became apparent in November… According to the state-run China Academy of Information and Communications Technology (CAICT), 2018’s smartphone shipments in the country were down by a worrisome 15.5%. As reported by Reuters, shipments were down 17% year-on-year.”
“As China’s household debt continues to build up despite government-led deleveraging efforts, experts are warning against an accumulation of risks similar to the 2008 subprime mortgage crisis in the U.S. that led to the Great Recession…
“Research by Industrial Securities also found a correlation between consumer loan growth and housing sales. Despite tightening controls on mortgage loans to rein in a property price surge, down payments made by Chinese home buyers increased by 70% in 2017 from the previous year. During the same period, consumer borrowing nearly quadrupled to 3.9 trillion yuan, the research found.”
“Sixty-five million apartments, one in five, lie empty in China’s cities…
“The development of a housing glut, driven by a slowdown in speculative purchasing, a slowdown in rural-to-urban transition, and the continuing construction of massive apartment complexes therefore has serious practical implications for the Chinese people and the general Chinese economy. The stagnation and in many cases decline of property values has devastated consumer confidence in China.”
“South Korea saw the highest number of jobless last year since statistics guidelines were revised in 2000 with job additions being the lowest since the aftermath of 2008-2009 global financial crisis…
“Thinning working population, listless manufacturing sector and streamlining in services area led to the poor job data, the office said.”
“The outlook for the global economy in 2019 has darkened… advanced-economy central banks will continue to remove the accommodative policies that supported the protracted recovery from the global financial crisis ten years ago. Also, simmering trade disputes could escalate. Higher debt levels have made some economies, particularly poorer countries, more vulnerable to rising global interest rates, shifts in investor sentiment, or exchange rate fluctuations.
“In addition, more frequent weather events raise the possibility of large swings in food prices, which could deepen poverty.
““At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier in the year ahead,” said World Bank Chief Executive Officer Kristalina Georgieva.”