“Almost every major rich-world economy is slowing down in a fresh sign that the risk of a global recession is rising.
“The United States, Japan, the eurozone, UK, Canada and Russia are all losing momentum, according to leading indicators compiled by the OECD that seek to predict the path of growth over the next six to nine months.
“Its composite leading indicator points to the worst economic outlook since 2009, when the world faced the depths of the financial crisis.
“At the same time Germany’s exports slowed and confidence in the Japanese economy fell.
“The figures come after a series of other warning signs, including the inversion of the US yield curve that has in the past indicated a recession…”
“Global air freight demand hit a three-year low in February, down 4.7 percent from last February, according to data released by the International Air Transport Association (IATA)… “Cargo is in the doldrums with smaller volumes being shipped over the last four months than a year ago. And with order books weakening, consumer confidence deteriorating and trade tensions hanging over the industry, it is difficult to see an early turnaround.””
“The drumbeat of warnings about a looming worldwide recession is growing ever louder.
“According to the latest Brookings-Financial Times TIGER indexes, which track the global economic recovery, growth momentum is declining in virtually all of the world’s major economies. And what this portends in the longer term is ominous, especially given the limited macroeconomic policy options for stimulating growth.”
“An array of data has pointed to worrying signs of a slowdown in the euro zone with further signs last week that Europe’s largest economy Germany is weakening. And more bad news could be on the way.
“Euro zone industrial production data for February is due Friday and economists polled by Reuters expect it to have declined by 0.6 percent month-on-month.”
“Swedish motor vehicle factory orders dropped sharply in February, according to data released on Monday that highlight the slowdown early this year in Europe’s manufacturing sector.
“New orders within the Swedish auto industry fell by 12.7 per cent from January to February, data released by Statistics Sweden show.”
“Gen Haftar, who leads the Libyan National Army (LNA), declared an offensive to take control of Tripoli from Libya’s UN-backed government last week.
“Prime Minister Fayez al-Serraj has accused him of attempting to carry out a coup. At least 2,800 people have so far fled fighting around Tripoli, the UN says. The UN also warns that those who remain risk being cut off from vital services because of the clashes.”
“Soldiers came to the rescue of protesters in Khartoum on Monday when a section of the security forces fired tear gas to break up a three-day rolling sit-in by protesters.
“Starting Saturday (April 6) thousands of protesters have camped outside an area in the capital housing the army headquarters and close to the presidential palace. They are demanding that the army joins their call to force embattled president Omar Al-Bashir out of office.”
“The commodity price slump of 2015 cut short a decade of rapid growth for Nigeria, and the bank said growth would take longer to recover as a decline in industrial production and a trade dispute between China and the United States take their toll.
“The bank’s 2019 forecast means economic growth will lag population growth for the fourth year in a row and it will remain stuck below three per cent, which it slipped to in 2015.”
“Renewed market volatility in Argentina could spark another currency crisis, analysts have told CNBC, as the recession-hit country prepares for presidential elections toward the end of the year.
“The popularity of President Mauricio Macri has taken a substantial hit in recent months, with rampant inflation, austerity measures and rising poverty rates all threatening to derail the pro-market candidate’s re-election campaign.”
“No matter which way you look at it – be it from an historical perspective locally or compared to declines seen offshore during the global financial crisis — there’s now little doubt that the downturn in Australian home prices is getting pretty big.
“It’s now one of the largest on record in Australia, only surpassed by a handful of periods in the late 1800s and the first half of the 20th century.”
“If [Japan’s] domestic growth crumbles, Prime Minister Shinzo Abe could postpone yet again a scheduled sales tax hike in October or offer a modest increase in fiscal spending, some analysts say.
“The Bank of Japan, too, may be forced to ramp up monetary support, though many analysts say the central bank is left with few effective tools to prop up growth.”
“The Federal Reserve on Monday put forward two proposals to modify regulations put in place after the 2008 financial crisis that the banking industry complained were too restrictive.
“The proposed regulatory changes were approved on a 4-1 vote with Fed board member Lael Brainard opposing the changes.
“She said they “would weaken important safeguards” put in place after the crisis.”
“Four top Federal Reserve officials speaking since the March meeting suggested the central bank could hold more short-term bonds than it does now… But two policymakers also noted a downside: Ditching long-term bonds could tighten financial conditions. To offset that problem the Fed might have to lower interest rates. That would make it more likely that rates would hit zero and then force the Fed to do more quantitative easing later.”
“Around the world the banks bought nearly 90 tonnes of gold in January and February, up from 56 tonnes year-on-year, the World Gold Council reported. It is the highest level of growth in the first two months of the year since the financial crisis…
““Despite a decade passing since the global financial crisis, times seem no less certain. Central banks reacted to rising macroeconomic and geopolitical pressures by bolstering their gold reserves,” the council said.”
“Russia is buying gold. A lot of gold. Within the span of a decade, the country quadrupled its reserves… Are the Russian authorities preparing for a renewed clash with the United States and are they attempting to reduce their vulnerability to financial sanctions? Or do they fear a homegrown financial crisis?
“…The sheer size of the purchases might reveal bolder motives, with Moscow preparing its first salvo in the coming battle for a monetary reset. What makes the recent moves especially significant is the fact they are being replicated in Beijing.”
“Since the last recession, nonfinancial corporate debt has ballooned to more than $9 trillion as of November 2018, which is nearly half of U.S. GDP.
“As you can see below, each recession going back to the mid-1980s coincided with elevated debt-to-GDP levels—most notably the 2007-2008 financial crisis, the 2000 dot-com bubble and the early ’90s slowdown.”
“What is really alarming is that there is a high-percentage of covenant lite loans. If the share of covenant-lite loans in 2006 was around 10%, this became 80% in 2018. Another source of worry is that the ratio of debt to EBIDTA has risen, and that means that companies have taken on more debt than they should have…
“It is important to understand that companies have concentrated on financial engineering to boost stock prices by implementing share buyback programs that have been financed by debt. The capital has not been invested in R & D (Research and Development) or in Capex (Capital Expenditure) in order to strengthen the company and make it more resistant to a crisis or recession.
“Capital has been grossly misallocated, and the economy is basically weaker than it should be and therefore more prone to suffer disastrously when there is an economic downturn. What is more is that the share buyback programs have taken place when the market is extremely overvalued and share prices are very high.”
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