“Global trade disputes and potential for Brexit- related disruptions continue to affect manufacturing exporters.
“March data signaled further global declines in new export orders in the manufacturing sector, taking the current trend of declining orders to seven months and reaching the lowest level in almost three years, according to the J.P. Morgan Global Manufacturing Index.”
“Eurozone economies received a double dose of bad news yesterday as inflation fell further from the European Central Bank’s target and a survey showed the crucial manufacturing sector shrinking at its fastest rate in six years.
“The developments suggest that Europe is struggling to cope with global trade tensions and the uncertainty of Brexit, among other things. They are also likely to cause concern at the ECB.”
“Factories across Germany, France and Italy are suffering an industrial recession as eurozone manufacturing output sank at its fastest pace for almost six years in March.
“Slumping global demand is leaving factories with growing piles of unsold stock, threatening to force firms to cut back production and lay off workers in the months ahead.”
“Brexit day may have been delayed by two weeks, but British factories are taking no chances with the risks to supply chains that would result from a messy divorce between the UK and European Union.
“In the latest purchasing managers’ index of the UK’s manufacturing industry, released today, data showed a massive increase in stockpiling.”
“U.S. retail sales unexpectedly eased in February on declines in grocery stores and building materials, which could potentially reflect cooler weather, though also may signal further headwinds for the economy in the first quarter.”
Americans are finally tapping the brakes when it comes to buying new vehicles… Depending on the final numbers reported by automakers later this week, the pace of sales during the first quarter could be lowest since the fourth quarter of 2014.”
“Manhattan real estate had its worst first quarter since the financial crisis, capping the longest losing streak for sales in over 30 years, according to a new report…
“The drop stems from an over-supply of high-end and highly priced apartments, a lack of foreign buyers and the new federal tax law that has hit real estate in high-tax states”
“Life isn’t getting any easier for Federal Reserve Chairman Jerome Powell. The central bank chief, fresh off a year of intense criticism from President Donald Trump and a sharp rebuke from financial markets, now faces a landscape full of mines that could detonate in any direction.”
“Dozens of cities in China are spending big on construction projects, despite having shrinking populations, a South China Morning Post analysis has found.
“On paper, these debt-fuelled projects are major contributors to economic growth, but in reality, they do not bring real productivity, raising further questions about the efficiency and foresight of China’s urban planning.”
“The global economy is “highly likely” to fall into a recession if the U.S. and China don’t reach a trade deal within three months, according to Moody’s Analytics Chief Economist Mark Zandi.
“His prediction was based on current “extraordinarily fragile” business sentiment that was a result of a protracted tariff fight between the two largest economies in the world that started last year.”
“With the growth rate in the US economy slowing as the impact of the Trump tax cuts wears off, the global economy needs China to achieve something close to the upper end of its targeted range of 6 per cent to 6.5 per cent GDP growth to help stave off the threat of a global recession.
“More than a decade after the financial crisis, the key governments and their central banks lack monetary and fiscal policy firepower and flexibility to respond meaningfully to any material synchronised global slowdown. This week’s trade talks in Washington could be critical, and not just for China.”
“By 2016, it seemed that governments and central banks were “out of ammunition,” monetary or fiscal, and economists debated whether any policies could avoid secular stagnation when interest rates were already zero and public debt levels were already high…
“Just two years after the gloomy 2016 nadir, however, the skies seemed dramatically clearer. By 2018, forecasts of global growth and inflation had risen significantly, and central banks and markets were again focused on the long anticipated “exit” from unorthodox policies. It is vital to understand what drove this sudden improvement.
“The answer is simple: Massive fiscal expansion, which in two major economies was partly or wholly financed by central bank money. The U.S. fiscal deficit rose from 3.9 percent of GDP in 2015 to 4.7 percent in 2018 and a projected 5.0 percent in 2019. China’s grew from below 1 percent in 2014 to over 4 percent and Japan’s remained around 4 percent, abandoning previous plans for a reduction to zero by 2020. And while the U.S. fiscal expansion was financed by bond sales to the private sector, in China the central bank indirectly financed large bond purchases by commercial banks, while in Japan, the entire net increase in public debt is financed by central bank purchases of government bonds. The global economy recovered because the world’s three largest economies rejected the idea that high public debt burdens made further fiscal expansion impossible.
“But the impact of that stimulus has faded… So we are back to facing the same question as in 2016: What to do if stagnation threatens when interest rates are already close to zero? …In Japan, permanent monetary finance is already occurring, even though the central bank denies it.”
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