“A toxic trifecta of growing political instability, escalating trade tensions and slowing global growth will confront world leaders at the G20′s annual meeting later this week in Osaka, Japan. That alone would present the group its biggest collective challenge since it first met in November 2008 in the jaws of the last financial crisis.
“However, beyond that the 19 leaders of the world’s largest economies and the European Union gather as history’s tectonic plates shift underneath them.”
“Global trade stumbled in April as the tariff war between the United States and China showed few signs of ending, figures released June 25 showed.
““An array of more timely country data on manufacturing and production reflect the impact of the trade slump and suggest that activity has yet to bottom out and that world trade volumes are on track to decline through the remainder of the second quarter,” Mickey Levy, chief U.S. and Asia economist at Berenberg Capital Markets, said in an e-mail note after the CPB report was released.”
“Intensifying trade war fears and an inventory overhang are weighing on the [US] manufacturing sector. Regional surveys suggest the national ISM manufacturing index will fall below the breakeven 50 level on Monday, which will only heighten fears of recession for the sector.”
“U.S. consumer confidence fell in June to the lowest level since September 2017 as Americans became less upbeat about the economy and labor market amid trade tensions with China and Mexico.
“The Conference Board’s index declined to 121.5, lower than all forecasts in a Bloomberg survey, data from the New York-based group showed Tuesday.”
“The nation’s federal debt is projected to reach “unprecedented levels” over the next 30 years if lawmakers do not change current laws… Currently, the nation’s level of debt is the highest level since shortly after World War II, according to the CBO. The federal debt is projected to equal 78% of the gross domestic product by the end of the year. At the end of 2007, federal debt stood at 35% of GDP.”
“Donald Trump has claimed he has no “exit strategy” if the US goes to war with Iran, the latest sabre-rattling from the US president as tensions between the two countries continues to grow…
“…he also suggested that military conflict between the two countries was a genuine possibility.”
“In the past, the [Chinese] government has told state banks to rescue trust investors.
“But this year, regulators are expected to allow more of such companies to default on bank loans, bonds and credit from the country’s 61.3 trillion yuan ($8.9 trillion) shadow lending business, which includes trusts and wealth management products, say experts.”
“There was a time, when [India’s] state-owned Bharat Sanchar Nigam Limited (BSNL), was among the few telecom operators in India earning profits in excess.
“The operator was earning profits in excess of Rs 10,000 crores per year. Fast forward to 2019 and BSNL is in serious financial trouble – with an excess debt of Rs 13,000 crore. In fact, it’s in such a grave threat that BSNL may soon shut shops.”
“The tide is turning for H2O Asset Management, the London-based investment firm…
“After almost a decade of near-constant inflows, clients last week started to yank money from some of its funds over concerns about illiquid holdings tied to a controversial German businessman. The carnage worsened on Friday, the latest day for which figures are available, with assets in six of its funds down more than 3 billion euros ($3.4 billion) over just three days to less than 19 billion euros.”
“Britain’s next prime minister will take charge of an economy beginning to falter, as Brexit uncertainty and the mounting risk of a no deal scenario serve as a brake on growth, according to a Guardian analysis.
“As the Conservative leadership race reaches an acrimonious finale, the sugar hit for the economy from the stockpiling rush before the original Brexit deadline has run its course, with warning signs emerging that growth will flatline.”
“U.K. retail sales fell at their fastest pace since the financial crisis in the year to June… The volume of goods sold slumped by the most since March 2009, with almost one-in-six stores saying they sold less than the same time a year ago.
“Motor traders reported the fastest sales shrinkage in 7 1/2 years…”
“France’s public auditor on Tuesday warned that the country’s debt level, which is hovering at close to 100 percent, was “worrying” and urged the government to control spending.
“France’s debt-to-GDP ratio is set to reach 98.9 percent this year, bucking the downward trend seen in most other eurozone countries after President Emmanuel Macron loosened the country’s purse strings to try end months of often violent “yellow vest” protests.”
“Italian banks must be ready for when the current economic slowdown translates into a bigger proportion of loans turning sour, a senior Bank of Italy official said on Tuesday. Deputy Governor Luigi Federico Signorini said in the text of a speech that the economic cycle was bound to have an impact on credit quality sooner or later.
““The reduction in the inflows of new soured loans cannot go on indefinitely,” he said, adding banks would not be able to continue to rely on falling loan-loss provisions to drive an improvement in profits.”
“Last week’s stock optimism may be short-lived as investors head into an earnings season that looks set to deliver more bad news than good. The pace of profit downgrades [EU] is exceeding upgrades…
“Sanford C. Bernstein strategists said on Monday that although global earnings recession isn’t their base-case scenario, there’s a “real” possibility of one in Europe amid trade-war and policy uncertainty.”
“Ten months ago, I warned that storm clouds were brewing over the global technology industry. The situation today is much worse.
“Back then, a U.S.-China trade war was more risk than reality, Apple Inc.’s pending iPhone update held promise, and central banks were still in tightening mode. Yet inventories at the end of June 2018 had climbed to the highest since the financial crisis a decade earlier and a sector-wide slowdown was looming.”
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