“Beyond the US, the fragility of growth in debt-ridden China and some other emerging markets remains a concern, as do economic, policy, financial, and political risks in Europe. Worse, across the advanced economies, the policy toolbox for responding to a crisis remains limited. The monetary and fiscal interventions and private-sector backstops used after the 2008 financial crisis simply cannot be deployed to the same effect today…
“While trade wars and potential oil spikes constitute a supply-side risk, they also threaten aggregate demand and thus consumption growth, because tariffs and higher fuel prices reduce disposable income. With so much uncertainty, companies will likely opt to reduce capital spending and investment.
“Under these conditions, a severe enough shock could usher in a global recession, even if central banks respond rapidly. After all, in 2007-2009, the Fed and other central banks reacted aggressively to the shocks that triggered the global financial crisis, but they did not avert the “Great Recession”.
“British companies look set to cut their investment by the most in 10 years in 2019 as the Brexit crisis drags on, weighing on future economic growth prospects, a survey showed on Monday.
“Business investment – key for productivity and pay growth – was forecast to fall by 1.3% this year…”
“Deutsche Bank has drawn up plans for a radical restructuring which will involve the creation of a “bad bank” to hold tens of billions of euros of toxic assets and a round of severe cuts to its investment banking operations, according to reports.
“The bad bank would house or sell assets valued at up to €50bn (£45bn) comprising mainly of long-term trades that have been a major drag on the struggling bank’s balance sheet, the Financial Times reported, citing four people briefed on the plan.”
“The recent European elections were a great victory for Matteo Salvini, the leader of the League, one of the two partners in the governing coalition.
“No doubt emboldened by this result, he has called for tax cuts that would, if implemented, surely cause Italy to break the EU’s borrowing limits.”
“Bleak’ market signs for global economy, warns ECB hopeful.
“A leading contender to head the European Central Bank has warned of “bleak” indications about the health of the global economy and said a breakdown in co-operation was paralysing officials’ ability to fight the next crisis.”
“Just as India’s banks emerge from under a pile of bad loans to large energy, steel and other industrial companies, they are facing a new reckoning from the accelerating crisis in the country’s shadow banking sector…
“Among the most vulnerable is Yes Bank Ltd., which has seen its shares plunge 65 percent in the past year amid wider worries about its lending policies.”
“Chinese leaders argue their citizens can outlast Americans in a trade war because they can endure hardship better. But, as China’s economic slowdown deepens, there’s a growing sense of restlessness.
“Not only does the next rung of the ladder look increasingly out of reach for many Chinese, they’re starting to question whether government decrees can fix the situation.”
“The swine fever epidemic has been described by scientists as the biggest animal disease outbreak we’ve ever had on the planet. Given that scale it seems a bit of an understatement to talk about the butterfly effect.
“That’s the idea that a small event somewhere can have implications that ripple far and wide – i.e. a butterfly’s wings cause a tiny atmospheric disturbance which snowballs to result in a hurricane on the other side of the world.”
“Singapore’s non-oil domestic exports (NODX) fell by 15.9 per cent in May, data from trade agency Enterprise Singapore showed on Monday (Jun 17)…
“Electronic exports plunged 31.4 per cent in May year-on-year, on the back of the 16.3 per cent contraction in the previous month. Integrated circuits (ICs), disk media products and parts of ICs contracted by 39.8 per cent, 42.4 per cent and 54.2 per cent respectively, contributing the most to the decline in electronic NODX.”
“Argentina’s grid “collapsed” around 7 a.m. (1100 GMT), leaving the entire country without power, Argentina’s Energy Secretariat said.
“The outage also cut electricity to much of neighboring Uruguay and swaths of Paraguay…
“The blackout comes amid a deepening economic crisis in Argentina that has plunged nearly a third of the country into poverty, pushed interest rates skyward and sent the peso tumbling against the dollar, prompting mass protests throughout the country.”
“The head of Brazil’s powerful state development bank quit on Sunday, a day after far-right President Jair Bolsonaro threatened to sack him, fueling a political crisis engulfing the government…
“Levy’s sudden departure follows a tumultuous week for a troubled government less than six months into its term, in which Bolsonaro fired his third minister, retired general Carlos Alberto dos Santos Cruz, who had clashed with Bolsonaro’s sons, and then sacked the head of Brazil’s postal service.”
“Thousands of Venezuelans have rushed to Peru’s northern border on Friday in hopes of entering the Andean country before the introduction of tough immigration requirements at midnight.
“Venezuela’s economic collapse under President Nicolas Maduro has unleashed the biggest migratory crisis in recent Latin American history, forcing countries like Peru – a developing nation of 32 million people –
“…to grapple with an unprecedented surge in immigration.”
“A record seven million people – more than half of the country’s population – in South Sudan are facing severe hunger, according to a report by its government and three United Nations agencies.
“A lack of rain, ongoing economic crisis and years of civil war are being blamed for the worsening situation.”
““I think it’s unlikely the Fed is going to actually make a cut in the near term unless we get worse data,” he said. “But here’s a quick data point for you: usually, the market does very well — up double digits — after the first rate cut, but the last two times, it hasn’t.
“But those were also the only times the Fed actually cut and then we went into recession afterwards. So, in 2001, 2007, the Fed tried to save the market, but they did so too late. So that’s what we want to be looking at.””
“A decade of ultra-low interest rates ought to have delivered a humdinger of a recovery but it has failed to do so. Central banks keep looking for inflationary pressure that simply isn’t there.
“As was the case in the late 1970s, there is a sense of fragility… At times like this policy errors can be extremely costly, which is why Donald Trump’s stance on Iran is fraught with economic as well as geopolitical risk.”