“Inflation expectations for the eurozone have plunged to a record low. Investors and traders are worried its economy is slipping into “Japanification”, an inescapable period of stagnant growth and ultra-low interest rates.
“The decline in a closely-watched inflation gauge – the five-year forward rate – has accelerated as global growth stutters, tumbling to an all-time low of just above 1.10pc yesterday.
“The drop indicates investors believe the European Central Bank (ECB) might be incapable of stopping the region sliding into deflation if the world economy suffers a downturn…
“Interest rate swaps indicate investors are starting to brace for the ECB to cut rates deeper into negative territory. However, Bank of America Merrill Lynch has warned further cuts risk the eurozone reaching the so-called “reversal rate” – the point at which ultraloose monetary policy “reverses and becomes contractionary for lending”.
“”The ECB does not have many bullets left when it comes to cuts and it certainly has fewer than other central banks,” it said.”
“At a time of rising U.S.-China trade tensions and a marked slowdown in the European economy, the last thing that the world economy now needs is a deepening in the U.K.’s Brexit crisis.
“Yet, it is difficult to see how the U.K. economic and political situation will not worsen meaningfully as the world’s fifth-largest economy approaches its Oct. 31 Brexit deadline.”
https://thehill.com/opinion/finance/448886-the-uk-economy-is-sailing-toward-dire-straits
“We are faced with a pile of s***,” an activist investor said during the nine-hour event, while another shouted: “If even Pope Benedict XVI can resign, why not [Deutsche Bank chairman] Paul Achleitner?”
“It is no surprise that investors are angry (tempers were described as “boiling over” in the Frankfurt concert hall where the annual meeting was held).
“Once a symbol of German economic might, Deutsche’s downfall has been dramatic…”
https://www.telegraph.co.uk/business/2019/06/17/has-deutsche-bank-left-years-late-turnaround/
“Lesetja Kganyago, then the top official at South Africa’s Treasury, was taking a break at Sugarloaf Mountain in Rio de Janeiro between two G-20 meetings in November 2008 when he got the bad news.
Barely three years after his country had managed to get its highest-ever investment-grade ratings from two of the three main credit-rating companies, the global financial crisis was threatening to reverse that progress.”
“Zimbabwe’s year-on-year inflation reached 97,85% in May, latest statistics from the Zimbabwe Statistical Agency (Zimstat) revealed on Monday.
“The annual inflation rate jumped steeply from 75,86% the previous month, showing how the country’s economic meltdown continues to escalate.”
“Brazil’s central bank will leave its benchmark interest rate on hold this week, according to a Reuters poll of economists, but increasingly weak economic growth and inflationary pressures suggest it may not be long before it eases policy.”
“Macri has seen his popularity ratings plunge during a crisis where he has struggled to tame one of the world’s highest inflation rates and poverty has reached about one-third of the population.
“Argentines are also frustrated with high utility costs and the blackout could trigger more protests against Macri’s government just as he seeks re-election in October.”
“According to data released by the Ecuadorian Central Bank on June 17, Ecuador’s economy is expected to contract by 0.2 percent in 2019, which would place it into recession, El Comercio reported.
“The Ecuadorian economy continues to face significant headwinds — mainly in the form of its over-reliance on oil exports, slow growth in non-oil exports, and the country’s use of the U.S. dollar…”
https://worldview.stratfor.com/situation-report/ecuador-economy-expected-enter-recession-2019
“A lift in the number of Australians behind on their mortgages is a sign of a slowdown in the economy and the problems caused by slow wages growth, the Reserve Bank of Australia has admitted.
“The head of the bank’s financial stability department, Jonathan Kearns, used an address to a property summit in Canberra on Tuesday to release data showing the number of people in arrears on their home loans had now reached the level recorded during the global financial crisis.”
“The U.S. government reported that China’s holdings of Treasuries fell to a two-year low, a slump that’s coincided with an escalation in tensions between the world’s two largest economies…
“The issue is a sensitive one, as China watchers discuss the potential tools of retaliation the country has in the continuing trade war with Washington.”
https://finance.yahoo.com/news/china-cuts-treasury-holdings-two-203032077.html
“…a recession is nearing. It’s closer than it has ever been in the past 10 years and Trump is under extreme pressure to get the FED to lower rates and close a deal with the Chinese, before his approval ratings dwindle and his re-election hopes look slim…
” in 2010, U.S. corporations owed $6T and now they owe $10T, while total profits have risen from $1.7T to $2.2T. Thus, in 9 years, businesses borrowed $4T and generated $0.5T. That’s horrible. The reason the markets are up this much, despite this crazy statistic, is because (1) there is no viable alternative for your cash when interest rates are so meaningless, and (2) because CEOs spent (get ready for it) $5.7T on share buybacks and only $2.2T on capital expenditures since 2010.”
https://www.kitco.com/commentaries/2019-06-17/Sirens-Going-Off-We-re-Out-Of-Time.html
“Fears over economic growth are spreading, and investors are pricing in the Federal Reserve cutting interest rates three times this year, beginning next month. And yet, various measures of market volatility are surprisingly subdued…
“It is not just a vague sense of unease that is increasing.
“The global version of Citi’s Economic Surprise index — which reflects how data comes in, compared with expectations — is locked in its longest run in negative territory on record. In other words, economic data has been disappointing for an unnervingly long stretch.”
https://www.ozy.com/fast-forward/are-global-markets-somehow-broken/95013
“If there were no trade conflict between the U.S. and China, would it be necessary to invent one?
“In other words, would it be possible to explain what is going on in markets without making reference to the deteriorating U.S.-China trade relations? I am beginning to suspect that it would.
“Bond markets may be behaving as though they are bracing for something terrible to happen because traders are, indeed, scared that something terrible is going to happen.”
“The global slowdown will extend into next year as mounting trade war uncertainty forces businesses to rein in spending and Chinese consumers turn cautious, Fitch Ratings has warned.”
https://www.telegraph.co.uk/business/2019/06/17/fitch-sounds-latest-warning-outlook-global-economy/
“The latest report from The World Bank crushingly delivers its weakest global growth forecast in three years and the worst predicted global trade growth since the 2008 financial crisis.”
“Ten years after the subprime mortgage crisis sparked the 2008 financial crash, global real estate markets are showing signs of a slowdown.”
https://www.ft.com/content/22765d40-8c57-11e9-a1c1-51bf8f989972
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