“Global trade has taken a sharp turn down, reinforcing the view that the world economy is in its worst state since since the financial crisis a decade ago.
“Figures published Monday show trade fell 1.8 percent in the three months through January compared with the previous period.
“That’s the biggest drop since May 2009. On a year-on-year basis, trade posted its first decline in nine years in the three-month period.”
“Factory activity in the eurozone contracted at the fastest pace in nearly six years… The bloc’s aggregate PMI fell to 47.6 in March from 49.3, well below the 50 threshold that is the baseline for whether the sector is expanding or contracting…
“Japan’s manufacturing PMI also has fallen into contraction territory, following China’s weakening readings that started falling below 50 late last year… The market will likely be on pins and needles for the rest of this week awaiting readings on the U.S. economy.”
“China’s economy will flirt with deflation this year, with producer prices likely contracting in the second half, according to economists.
“Factory-gate prices will grow by just 0.3 per cent in 2019, according to the median estimate of 15 economists in a Bloomberg survey. That’s down from the forecast of 0.8 per cent seen last month.
“Some said prices could begin contracting as soon as July, with negative price growth remaining until early 2020.”
“South Korean President Moon Jae-in must boost government spending by about 10.5 trillion won ($9.3 billion) more than originally planned this year if he wants to meet his economic growth forecast.
“That’s the average estimate from a Bloomberg survey of 10 economists on the size of an extra budget needed for gross domestic product to expand in line with the government’s projection…”
“There is no doubt that there is an unemployment crisis in the Indian economy. This crisis has been brewing over the past five years during the regime of the National Democratic Alliance.
“The government, however, is in denial, claiming that employment has risen in India with high rates of growth of gross domestic product.
“Indeed, in trying to deny the existence of an economic problem, the government has seriously jeopardized the international credibility of Indian official statistics.”
“A second major power cut in just a few hours has plunged the Venezuelan capital Caracas into darkness again, with other regions also affected. It came after a four-hour blackout on Monday which the government sought to blame on opposition sabotage.
“A nationwide power cut earlier this month prompted looting and desperation in many parts of the country.”
“The stockpile of global bonds with below-zero yields just hit $10 trillion — intensifying the conundrum for investors hungry for returns while fretting the brewing economic slowdown.
“A Bloomberg index tracking negative-yielding debt has reached the highest level since September 2017 as 10-year bunds trade in negative territory and the U.S. yield curve flashes recession warnings.”
“The bond market doubled down on scary warnings Monday, signaling both a possible recession is looming and that the Fed could have to cut interest rates this year to stop it.
““People are starting to get fearful,” said Andrew Brenner of National Alliance.”
“The United States’ central bank may have to dust off some of the tools that helped steer the economy through the global financial crisis a decade ago should another recession hit, Boston Federal Reserve Bank president Eric Rosengren said on Tuesday.
“With interest rates already low leaving limited room for cuts, the US Federal Reserve would likely have to turn to quantitative easing and other balance sheet tools to stimulate its economy, in the case of a downturn.”
“The emergency tool kit that helped to pull the global economy out of the Great Financial Crisis might not work a second time, the world’s lender of last resort has warned. David Lipton, deputy director of the Washington-based International Monetary Fund, delivered a stark warning about the depleted power of central banks and governments to combat another sharp economic shock.”
“The world is wealthier now than it’s ever been – but only on paper. Much of this prosperity may prove illusory as a global shift toward less liquid investments undermines the basis of valuation.
“Private equity, infrastructure and private credit have become a bigger share of investment portfolios, making mark-to-market values increasingly uncertain. The standard method of valuing assets assumes prices are available and that there is adequate trading liquidity to be able to sell at those levels. This may hold for traditional investments such as stocks and bonds. But assets such as private equity are rarely traded or not tradeable at all, necessitating the use of models or proxies instead.”
“Climate change is becoming increasingly relevant to central bankers because losses from natural disasters that are magnified by higher temperatures and elevated sea levels could spark a financial crisis, a Federal Reserve Bank of San Francisco researcher found.
““Climate-related financial risks could affect the economy through elevated credit spreads, greater precautionary saving, and, in the extreme, a financial crisis,’’ Glenn Rudebusch, the San Francisco Fed’s executive vice president for research, wrote in a paper published Monday.”
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