“There’s been a lot of talk about inverted yield curves over the past few days.
“Specifically, last week’s inversion of the two-year and 10-year U.S. Treasury notes has raised the spectre of recession, sending tremors through U.S. stock markets.
“Financial market analysts are poring over their historical data for clues as to how likely and how severe a global contraction might be.
“Those who follow the copper market, however, will know that “Doctor Copper” with his honorary degree in economics got there first.
“London Metal Exchange (LME) three-month copper has slumped from above $6,600 per tonne in April to a current $5,800.
“Global economic weakness is being led by the manufacturing sector with activity contracting or slowing just about everywhere. That includes China, the powerhouse of industrial metals demand…
“The financial part of the copper market is betting there’s worse to come…”
“The US central bank should consider cutting interest rates by one percentage point and introduce “some quantitative easing” stimulus measures, president Donald Trump has said…
“The remarks came hours after the president said the US economy is not falling into a recession.
“The economy is doing “tremendously well”, he said.”
“Stocks tanked last week amid signs of a worsening slowdown in Germany and China, and bond investors flashed the clearest signal yet that the U.S. is courting a self-inflicted recession.
“Hopefully these cries of alarm from financial markets will cause President Trump and his advisers to stop and think. If not, steel yourself for worse to come.”
“The US economy appears poised to enter a recession within the next two years, a new survey out Monday found. More than 70% of economists surveyed by the National Association for Business Economics said they think a recession will occur before the end of 2021.”
“RV shipments have come in below 2018 levels during each month of 2019 thus far, according to data from the RV Industry Association, totaling a 20% drop compared to last year, and experts say the decline could be a harbinger of more damning economic data to follow.
“”The RV industry is better at calling recessions than economists are…””
“After years pouring funds into the shale boom, bond buyers are getting increasingly selective as defaults rise and many explorers continue to burn more cash than they make.
“While Exxon Mobil Corp. and Occidental Petroleum Corp. have recently sold a combined $20 billion of investment-grade debt, junk rated issuers are getting a far different market reception.”
“A government report on Operation Yellowhammer was leaked on Sunday, revealing the probable consequences of the UK leaving the EU without a withdrawal agreement, which is due to happen on 31 October.
“Here are the key points…”
“UK households have cut back on big purchases such as holidays as fears of a possible recession continue to loom, a survey suggests. Confidence among UK households has fallen to its lowest in three months, according to the latest IHS Markit household finance index, dropping to 43.7 in August from 44.3 [below 50 denotes contraction] the previous month.”
“Europe’s largest economy Germany could be in the middle of a recession, its central bank has said, pointing to persistent weakness in industry.
“German GDP dropped 0.1 per cent in the second quarter as demand for its exports was sapped by a global slowdown, as well as by stockpiling ahead of the original Brexit deadline in March.”
“Deutsche’s push [for more business] also comes as Germany, which is Europe’s biggest economy, risks sliding into recession for the first time since 2013 after years of punishingly low interest rates.
“On Friday, shares in Deutsche Bank hit a record low below 6 euros. In 2007, before the global financial crisis took hold, the shares peaked at above 90 euros.”
“It’s been a decade since the global financial crisis, and despite years of zero or even negative interest rates and trillions of dollars pumped into the world’s financial system through bond and other asset purchases, central banks are now talking about having to double down.
“That’s even after the collective balance-sheet assets of the Federal Reserve, European Central Bank, Bank of Japan and Bank of England have expanded to 35.3% of their countries’ total GDP from about 10% in 2008, according to data compiled by Bloomberg.”
China attempting the delicate balancing act of lowering rates without weakening its currency:
“China lowered its lending reference rate through a new market-oriented pricing mechanism on Tuesday, providing a modest easing of monetary conditions to help support the world’s second largest economy.”
“Former RBI Governor Raghuram Rajan has called slowdown in the economy “very worrisome” and said the government needs to fix the immediate problems in power and non-bank financial sectors and come out with a new set of reforms to energise private sector to invest.”