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“South Korean exports, seen as a bellwether for global trade, fell nearly 5%in the first 20 days of March…

“Exports to China and Japan fell by more than 10%. Shipments of microchips, oil products, and telecoms devices were all down.

“These data bode ill for [the first quarter],” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics. She says the decline suggests an annualized plunge of 27.6% for the full month, a far sharper contraction than the 9.7% fall in the fourth quarter of 2018.

“The nation’s 20-day exports shrunk 11.7% in February, and there could be worse to come. “Leading indicators suggest the floor is not yet in sight,” Beamish said.

“South Korea’s export data is one of the first major economic indicators released each month… The latest downswing will fan fears of slowing growth in China and recession in Japan.”

https://www.sfgate.com/technology/businessinsider/article/A-data-point-seen-as-the-bellweather-for-global-13706055.php


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“In 2009, China launched a $600 billion (€528 billion) stimulus program in an attempt to shield itself from the worst effects of the global financial crisis. Through its system of regional banks, the government offered cheap loans to thousands of state-run industrial enterprises, including steel, aluminum, cement and coal producers…

“A decade on, many of the estimated 10,000 zombie companies — including more than 2,000 funded by the central government — are losing money hand over fist, partly as a result of their own massive excess capacity.”

https://www.dw.com/en/frayed-nerves-as-china-kills-off-its-zombie-companies/a-48013707


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“Let’s be very clear what Wednesday’s full-frontal capitulation by the Fed means: It’s coming. The next recession that is. It’s just a matter of the how and the when… the Fed will never, ever overtly tell you a recession is coming.

“They can’t. Their underlying primary mission is to keep confidence up. A Fed predicting a recession would cause all kinds of havoc in capital markets and almost certainly bring about a recession. So they won’t tell you, but their actions speak loud and clear.”

https://www.marketwatch.com/story/the-feds-total-capitulation-is-a-bad-omen-for-the-stock-market-2019-03-21


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“Federal Reserve Chairman Jerome Powell’s assertion this week that the U.S. economy remains strong is facing a stern test from the bond market.

“In fact, government fixed income yields are delivering, by one measure, a possible recession indication that hasn’t happened since 2007.

“The spread, or yield curve, between the 3-month and 10-year Treasury notes just broke the longest streak ever of being above 10 basis points…”

https://www.cnbc.com/2019/03/21/a-key-recession-indicator-just-did-something-that-hasnt-happened-in-12-years.html


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“The six-month outlook for manufacturing in America’s mid-Atlantic region slumped to a three-year low, another sign that expectations for weaker global growth may be weighing on producers.

“The Federal Reserve Bank of Philadelphia’s index for future activity fell 9.5 points to 21.8 in March, dragged down by lower readings for expectations for shipments and new orders…”

https://www.bloomberg.com/news/articles/2019-03-21/philadelphia-fed-s-factory-outlook-is-weakest-in-three-years


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“Ten years into a bull market, Americans are getting jittery about when the music will stop and the next recession will tear through the economy… last month it was a spike in auto delinquencies that spooked market participants.

“The Federal Reserve reported the number of borrowers with auto loans more than 90-days delinquent shot up by 1.5 million in the fourth quarter, reaching a total of 7 million — the highest mark ever in absolute numbers.”

https://www.businessinsider.com/why-american-auto-delinquencies-are-piling-up-2019-3?r=US&IR=T


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“The pound had its worst day in two months as traders suddenly awoke to the prospect of a no-deal Brexit. Sterling plunged as much 1.5 percent against the dollar Thursday as U.K. Prime Minister Theresa May gambled on getting her plan over the line with just over a week to go before the exit.

“Cable crumbled after the European Union told May that she can only have a short extension to delay Brexit if Parliament ratifies the divorce deal in a vote she wants to hold next week.”

https://www.bloomberg.com/news/articles/2019-03-21/no-deal-brexit-possibility-suddenly-comes-alive-for-the-markets


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“Uh oh, are the wheels starting to come off again?

“The prints here are rather poor as they all fall into contraction territory (below 50.0). Markit notes that French business recovery is running out of steam in the face of deteriorating demand and that “there is definitely a risk of renewed downturn in France”.”

https://www.forexlive.com/news/!/france-march-flash-manufacturing-pmi-vs-514-expected-20190322


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“Germany’s manufacturing slump deepened this month amid tensions in global trade. IHS Markit’s Purchasing Managers’ Index for the sector fell to 44.7, the lowest since 2012 and well below economists’ expectation of 48.

!That’s the third consecutive reading below 50, which indicates contraction. Gauges for new orders and employment declined.”

https://www.bloomberg.com/news/articles/2019-03-22/german-manufacturing-sinks-deeper-into-contraction-in-march


“Mexico’s deputy finance minister said on Thursday the government was considering using part of a $15.4 billion public income stabilization fund to pay some debt obligations for heavily leveraged state oil company Pemex… Pemex has some $16 billion of debt payments due by the end of next year.”

https://www.reuters.com/article/us-mexico-oil/mexico-could-pay-pemex-debt-from-15-billion-stabilization-fund-idUSKCN1R303B


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“Argentina’s economy sharply contracted in the fourth quarter while unemployment rose, potentially hurting President Mauricio Macri’s approval ratings as he seeks re-election later this year.

“Gross domestic product fell 6.2 percent from a year ago, the country’s statistics institute said on Thursday. It was the worst quarterly performance since 2009 after the global financial crisis, although Argentine economic data was considered unreliable until 2016. Analysts had forecast a 6.4 percent contraction.”

https://www.bloomberg.com/news/articles/2019-03-21/argentine-economy-shrinks-the-most-since-global-financial-crisis


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“The Palestinian Authority faces a suffocating financial crisis after deep US aid cuts and an Israeli move to withhold tax transfers, sparking fears for the stability of the West Bank.

“The authority, headed by President Mahmud Abbas, announced a package of emergency measures on March 10, including halving the salaries of many civil servants.”

https://www.france24.com/en/20190322-palestinians-financial-crisis-after-israel-us-moves


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“The stakes in Turkish elections this month could hardly be higher, if the behavior of local investors is anything to go by. Households and businesses scooped up another $4 billion of hard currency last week, the most since 2012, driving their holdings to a fresh record.

“Fueling the rush for foreign tender is inflation, which is eating away at their lira savings, and concern the government will double down on policies geared toward priming growth rather than reining in prices after municipal elections on March 31.”

https://www.bloomberg.com/news/articles/2019-03-21/shock-of-lira-crash-pushes-turks-to-cushion-savings-with-dollars


Too much debt; too few tools
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“The IMF, central banks and politicians have warned about the proliferation of collateralized loan obligations (CLOs) and the threat they pose to the global financial system.

“Currency markets may be battered by breakneck volatility if a slowdown in global economic growth triggers a collapse in this fragile market.”

https://www.dailyfx.com/forex/fundamental/article/special_report/2019/03/22/Currencies-May-See-Wild-Swings-if-Slow-Growth-Breaks-CLO-Market.html


Read the previous ‘Economy’ thread here and visit my Patreon page here.