“President Donald Trump’s trade war is chilling business investment, confidence and trade flows across the world, a development that foreign leaders and business executives say is worsening a global economic slowdown that was already underway.
“Recent softening in Europe, Australia and other parts of the world coincides with Trump’s intensified trade fight with China and other partners. Economists warn that further escalation by Trump — like tariffs on more Chinese goods or levies on foreign autos — could slow global growth to a crawl.
““With these trade tensions, the global economy, in a sense, is getting close to a crossroads,” said Ayhan Kose, the director of the World Bank’s Prospects Group.
“Weakness in China, driven in part by fallout from the trade war, has spread to Germany, Australia and other nations, raising supply chain costs, chilling exports and worrying political and economic leaders.
“On Tuesday, Mario Draghi, the president of the European Central Bank, said the bank was prepared to inject more stimulus into the eurozone economy to combat the economic slowdown.”
“China’s central bank has acknowledged its monetary tools are insufficient… The country’s money markets have been shuddering since regulators took over Baoshang Bank Co. last month, despite initial assurances from the central bank and other authorities that they would maintain ample liquidity… the seizure of the small commercial lender has hurt confidence.
“Funding costs for companies have shot up as large banks flinch from lending to some counterparties in the interbank market.”
“Confidence among Asian companies in the June quarter fell to its lowest since the 2008-2009 financial crisis, as a United States-China trade war disrupts global supply chains and shows little sign of easing soon, a Thomson Reuters/INSEAD survey found.”
“The Bank of Japan kept monetary policy steady on Thursday, preferring to save its dwindling ammunition as a darkening global growth outlook prompts other major central banks to drop hints of additional stimulus…
“But the BOJ stressed anew that global risks were increasing as trade tensions and uncertainty over U.S. economic policies jolt financial markets, signaling that it, too, is leaning more toward ramping up – not whittling down – monetary support.”
“Car dealerships in Delhi wear a deserted look as there’s no end to India’s auto blues… Nitin Kumar, a young automobile salesman in South Delhi’s Lajpat Nagar, isn’t having the best of days at work.
““The situation has worsened in the past six months,” Kumar said. “Earlier, 60-70% of customers who made enquiries through phone calls and other channels, used to visit the showroom. This has now gone down to 10-20%.””
““They want to see a Turkey like before, a Turkey that went cap in hand to the IMF,” Erdoğan said, according to local media, including news website Gazete Duvar.
“Some investors in Turkey say the country should apply for a new loan accord with the IMF after a currency crisis last year sent shock-waves through its economy.”
“South Africa’s state-owned electricity company is groaning under more than $30 billion of debt, and doesn’t generate enough cash to service it. Investors can’t get enough of it.
“Eskom Holdings SOC Ltd.’s 2028 dollar securities have handed bondholders a whopping 22.3% return this year, more than the debt of any other emerging-market utility and almost three times the average for developing-nation hard-currency bonds.”
“Peru is seeking investors to improve some of the worst infrastructure in South America and at the same time provide a boost to its weakening economy.
“The country will present next month a five-year plan to develop 60 projects requiring investment of 90 billion soles ($27 billion), according to Finance Minister Carlos Oliva.”
“Venezuelan women arrived in unprecedented numbers at Peru’s border this past weekend, according to the UN Refugee Agency UNHCR – part of a rush across South America by tens of thousands of Venezuelan migrants after Peru announced it would tighten entry requirements in June.”
“Ben Mohr, senior research analyst of fixed income at investment consultant Marquette Associates, calculated that total U.S. consumer debt hit $14 trillion in the first quarter of 2019…
“…surpassing the roughly $13 trillion of leverage accumulated in credit cards, auto loans and mortgages and other debt back in 2008, when those souring loans and securities pegged to them helped to send global markets into a tailspin.”
“Amid Hillary Clinton rants and renewed promises to build his border wall, Trump heralded what could be his most important weapon in his bid to stay in the White House for another four years.
““Our economy is the envy of the world,” he boasted. “It’s soaring to incredible new heights. Perhaps the greatest economy we’ve had in the history of our country.””
“Christian Sewing has one more shot to reverse Deutsche Bank AG’s free fall as he prepares to announce “tough” cuts to the investment bank.
“It’s a daunting task.
“The chief executive officer is zeroing in on reductions to the trading unit that may result in the shuttering of U.S. equities trading, the creation of a non-core unit to wind down as much as 50 billion euros ($56 billion) in unwanted assets, and cuts to the rates business, people familiar with the matter have said.”
“Brexit risks are not priced in by bond markets and Britain’s exit from the European Union could turn more bitter than expected, Anthony Linehan deputy director at Ireland’s debt management agency warned on Wednesday.
“”To me (Brexit) is an area that isn’t priced into markets and it can’t be because no one knows what it looks like, even a hard Brexit,” he said, speaking at a conference in London.”
“Manufacturing output in the UK ground to a halt in the three months to June as the pre-Brexit stockpiling boost faded, according to the latest survey from the Confederation of British Industry… The CBI said the slowdown was driven primarily by the sharpest contraction in motor vehicle manufacturing since March 2009…”
Gudrun Asta Gunnarsdottir found herself at ground zero of Iceland’s latest crisis. Four months into her second pregnancy, the 33-year-old check-in desk operator was told she was one of 315 workers being laid off at Reykjavik’s international airport.“
“The news came as “a shock” and “caused a lot of sadness for everyone, especially because a lot of people are now looking for work at the same time,” said Gunnarsdottir…”
“HSBC said that the airline market is growing at its slowest rate since the financial crisis, leading it to conclude that the underlying problem was a collapse in demand… The cautionary note follows a profit warning from Frankfurt-listed Lufthansa on Tuesday.”
“Global oil consumption rose last year at the slowest rate since 2014, as higher prices and broad deceleration in manufacturing activity and freight movements took their toll on fuel use and petrochemicals.
“Consumption is likely to rise even more slowly in 2019, given the further weakening of most manufacturing and freight indicators since the start of the year.”
“Companies are taking a much more cautious view on mergers and acquisitions this year, particularly when it comes to transactions involving the United States and China, as the world’s two biggest economies square off in an escalating trade war, according to deal advisers.
“Transaction volumes – and the value of deals – are down, driven by fewer mega deals and increased uncertainty about the global economic outlook, advisers said.”
“If reading financial markets is usually as inscrutable as reading tea leaves, bond investors have decided now is the time to send a message in big, bold letters.
“They want central banks to know they are concerned. Concerned about the strength of the global economy.
“Concerned about the US-China trade war. Concerned about geopolitics, particularly in the Middle East. Concerned about persistently low inflation. Investors are rushing to get their hands on the safest assets available, such as government bonds. So much so, that the amount of bonds with negative yields—meaning investors know they will get back less than what they paid if they hold the debt to maturity—has ballooned.”