“The global economy’s sharp loss of speed through 2018 has left the pace of expansion the weakest since the global financial crisis a decade ago, according to Bloomberg Economics.
“Its new GDP tracker puts world growth at 2.1 per cent on a quarter-on-quarter annualised basis, down from about 4 per cent in the middle of last year. While there’s a chance that the economy may find a foothold and arrest the slowdown, “the risk is that downward momentum will be self-sustaining,” say economists Dan Hanson and Tom Orlik…
“In their report, Hanson and Orlik admitted the pace of the slowdown has been a surprise.
“”The cyclical upswing that took hold of the global economy in mid-2017 was never going to last. Even so, the extent of the slowdown since late last year has surprised many economists, including us.””
“China’s top statistics official on Tuesday sought to allay concerns over the health of the world’s second-largest economy, and defended the integrity of its data.
“The comments came days ahead of China’s release of key readings on industrial output, retail sales and investment, which are being closely watched by global investors for clues on the extent of the country’s economic slowdown.”
“Japan’s biggest manufacturers say current business conditions are at the worst in nearly three years, the latest indication the nation’s export-dependent economy is taking a battering in the current quarter.
“The Finance Ministry’s quarterly business survey, released Tuesday, showed a reading of minus 7.3 for conditions among Japan’s largest manufacturers, the worst result since the second quarter of 2016.”
“Dubai’s non-oil trade was worth AED1.3 trillion ($354bn) last year, according to figures released over the weekend.
“That was down very slightly on the year before but, more importantly, it also marked the sixth consecutive year of slow or no growth. Indeed, the emirate’s international trade is now worth slightly less than it was in 2013 and 2014.”
“Australia’s economic slowdown is likely to become more entrenched with business conditions and confidence falling further last month. The sharp decline in business conditions and confidence late last year continues into 2019.
“Forward looking indicators such as orders and capacity utilisation continue to weaken Retail, and in particular household goods and car sales, are the weakest sectors overall…”
“The value of new mortgages slipped another 2.1 per cent in January, marking Australia’s largest annual decline since the global financial crisis. The value of dwelling commitments excluding refinancing slipped to $17.12 billion in January, according to seasonally adjusted figures released on Tuesday by the Australian Bureau of Statistics.”
“Monday morning [UK] government blues have been replaced by Tuesday morning nervous hopes.
“The government does not suddenly expect its Brexit deal to be ushered through at speed, cheered on by well-wishers. It does, however, believe that Monday night’s double act in Strasbourg by Theresa May and Jean Claude Juncker puts it, to quote one cabinet minister, “back in the races”.”
“New findings from the New York Federal Reserve reveal that millennials have now racked up over US$1 trillion of debt.
“This troubling amount of debt, an increase of over 22% in just five years, is more than any other generation in history. This situation may leave you wondering how millennials ended up in such a sorry state.”
“The whole world went on a corporate debt spree. What with low interest rates it was a no-brainer. In the U.S., much of that cheap money went to buying back stock to leverage earnings; a move that will look stupid when companies most need cash to survive the greatest shake-out of our lifetimes during the next several years…
“…consumer credit – cards and car loans – are up 53% [since 2009]. And a subprime auto credit crisis is rearing its ugly head, with defaults a major – and growing – concern.”
Two key bond trends are nearing levels last seen during the financial crisis, signalling a recession could be on the cards.
“The spread between the 2-year and 10-year US treasury bonds, known as the yield curve, has narrowed to just 17 basis points, its lowest level since June 2007. Further declines would result in an inverted yield curve, with the 2-year bond trading higher than the 10-year bond. An inverted yield curve has preceded every recession in the past 60 years.”
“Quantitative easing does not work and central banks should be prohibited from using it, Raghuram Rajan, a former chief economist at the International Monetary Fund, has said.
“Mr Rajan, seen as a potential successor to Mark Carney as governor of the Bank of England, said it was his “strong conjecture” that QE “works by depreciating the exchange rate [and] stealing demand from other countries”. In doing so, it inflames international tensions without generating growth. “I think this should be off the table,” Mr Rajan said.”
“The primary source of systemic risk outlined in the Cambridge report stems from rising global temperatures and untenable losses to insurers as a result. For example, the authors warn that if climate change is left unchecked, the world will witness the tripling of catastrophic losses on property investments over the next 30 years.
“While this is a shocking and extremely disturbing finding, there are other equally troubling ways that the intersection of insurance and climate change could produce global financial systemic risk. That’s due to the transformation of risk into securities which are then sold to capital market investors.”