I think it is noteworthy that a major UK newspaper with some very astute financial journalists is now running a ‘Global Recession Watch’:
“The era of rising interest rates is over almost before it began as the world’s leading central banks prepare to hold or even cut rates this year and next in a bid to stave off a new economic slump.
“Central banks in every G7 nation will take no chances with higher rates, according to new forecasts from HSBC.
“But analysts fear that, with interest rates already very low, there is little central bankers can do to avert a future crash.
“It comes amid growing fears of a recession, with economists chopping growth forecasts for the globe.”
“The European Central Bank has reached the end of the road. It no longer has the monetary levers or the political authority to launch another ‘shock and awe’ rescue if the eurozone tips into recession. Mario Draghi tried valiantly to bluff his way through the ECB Watchers conference on Wednesday, laying out his surgical toolkit should the worst happen. “We are not short on instruments to deliver our mandate,” he said.
““What instruments?,” asked Ashoka Mody, the former deputy-director of the International Monetary Fund in Europe. “Aside from its jumble of words, the ECB has nothing else to offer.”
“The eurozone’s 5-year/5-year forward inflation ‘swaps’ have collapsed over the last five trading days…”
“European initial public offerings slumped to their lowest since the aftermath of the 2008 financial crisis in the first quarter of 2019, as uncertainty over Brexit and the U.S.- China trade dispute leaves companies not wanting to take their chances.”
“Car production in the UK slumped by more than 15 per cent in February, according to new figures…
“Year-to-date, overall output decreased 16.8 per cent and while home demand fell 8 per cent, the majority of the decline came from the fall in manufacturing for export, down by -18.9 per cent.”
“UK retail sales volumes fell sharply in March, seeing the fastest contraction in 17 months and marking a four-month run in which sales have not grown, a leading business group said today.”
“MPs have failed to break the Brexit impasse after they were unable to find a Commons majority for any Brexit plan, despite voting on eight different options.
“Under the indicative vote process, MPs did not reach a consensus after they dramatically seized control of the agenda in the House of Commons from the executive.”
“The single most worrying issue in the European economy right now is the ongoing collapse of German manufacturing. Last week, another raft of factory sentiment data came out and the charts look ugly:
“Analysts are saying things like “grim,” “misery,” “horrific,” and “this is a serious recession warning in the German economy.””
“Italy’s Economy Minister Giovanni Tria said on Wednesday he feared the ongoing economic slowdown at a global level could trigger a new financial crisis.
““Everybody fears a financial crisis can translate into a global economic crisis […] My opinion is …
“…that the economic slowdown, especially if it were to worsen, could lead to a global financial crisis,” Tria said at an event in China.”
“The battle waged by Turkey’s Recep Tayyip Erdoğan against currency speculators is a classic pyrrhic victory. The show of resolve by the self-styled strongman on Wednesday stopped investors from dumping the lira but at enormous cost in both the short and long term. That Turkey will be damaged is beyond question.
“All that’s in doubt is how severe that damage will be and whether the fallout will be felt elsewhere. Looking at the fragile state of the global economy, there’s every chance it will be.”
“Dubai’s economy grew 1.94 percent in 2018, the government said on Wednesday, hitting its slowest pace since a contraction in 2009 when the economy was hobbled by a debt crisis.
“Dubai, which has a diversified economy that focuses on tourism and international business services, has been hurt by a rough patch amid a downturn in its real estate market.”
“China’s growth — and the investment that keeps its current account and trade surplus down — rests on a fragile base. When China’s financial regulators start to worry about the pace of this debt accumulation and try to scale it back, the economy tends to slow. We have now been through three cycles of leverage and restraint in the last 10 years…
“Now China’s leaders again faces the risk that that their last round of tightening has led to a bigger slowdown than they really want.”
“Canada’s merchandise trade deficit narrowed as oil prices rebounded at the start of the year, though the gap remains the second-largest ever.
“The nation posted a C$4.3 billion ($3.2 billion) shortfall in January, down from December’s record high gap of C$4.8 billion, Statistics Canada said Wednesday from Ottawa. Until December, Canadian deficits had never exceeded C$4 billion. The monthly trade gap has averaged about C$2 billion over the past four years.”
“Across the world’s financial markets, bond yields have been sliding as investors jump into sovereign debt and the expectations are growing from New York to Sydney that central banks will be cutting interest rates before they ever raise them again. The Fed’s action collided with mounting concerns about Europe’s economic health…”
“…there are numerous… storm clouds on the horizon: global trade wars, Brexit, weaker growth in China (around 6 to 6.5 per cent, compared to 14 per cent in 2007) and rising volatility in financial markets across the world.
“Then there are the unexpected “black swan events”, which we cannot, by definition, anticipate. Yet the real cause for concern – and indeed the reason that QE was necessary in the first place – is the debt mountain that looms over the global economy.”
“Global markets are more complex and interconnected than ever. Since the 2008 financial crisis, it’s become increasingly difficult to predict how the behaviour of market participants will affect the broader financial system. Meanwhile, increased automation and the use of high-frequency trading have contributed to flash crashes. We struggle to manage the rapid market movements that rest in the hands of fast-moving black boxes working at nanosecond speeds.
“With this in mind, traditional risk modelling, which historically relies on forecasts, is no longer capable of capturing the dynamics of electronic markets. As such, it is no longer suitable for mitigating risk.”