“The number of political and economic germs that are flitting around the world has increased and there are mounting fears that these are becoming resistant to the fiscal and monetary pills, powders and injections.
“The recession word is popping up with increasing frequency. Global trade is in the doldrums, industrial production is hit hard, debts have reached record highs and growth is slowing in most places…
“…I fear that any monetary ammunition that is still available has partly become wet whereas the fiscal clout of many countries is limited due to high indebtedness.
“Gold as well as the bond markets are already anticipating less-than-good times ahead. Equities still seem uncertain, but with the upcoming recession in the month it is obvious that the global economy has become more liable to failure.”
It looks to me like China is not manipulating its currency but rather struggling to prevent its devaluation:
“China’s yuan slipped to a fresh 11-year low against the dollar on Thursday, despite support from major state-owned banks in both the spot and forwards markets. Traders said sentiment was fragile, with recent news headlines offering little hope of a U.S-China trade deal anytime soon and new U.S. levies on Chinese goods set to go into effect on Sept. 1.”
“After a sell-off erased more than $600 billion from the city’s equities, attractive valuations stood as a potential bright spot. But those multiples don’t look so good when analysts keep slashing their profit forecasts for 2019.
“Their call for an average 19% slump in operating income would be the biggest contraction for Hang Seng Index companies since the global financial crisis, data compiled by Bloomberg show.”
“The 36-year-old peg between the Hong Kong and US dollars, a major pillar of financial investor confidence in the city, could turn into a weak link if financial markets were to turn sour, causing a “double hit” to the city’s economy, a Chinese scholar has warned…
“…the system is now too rigid, becoming the “Achilles’ heel” of the Hong Kong economy, making the city extremely vulnerable to large declines in its stock market or property prices.”
“Bank of East Asia (BEA), which is based in Hong Kong, reported a 75 per cent drop in net profits during the first six months of 2019 after writing down property loans in mainland China.”
“[UK] savers are finding it harder to earn good returns due to a double whammy of banks offering less generous deals and higher inflation eroding the power of their money.
“Banks are cutting the interest on dozens of deals or withdrawing them from sale due to fears that their own finances will be squeezed by a coming economic storm.”
“Output in Germany’s struggling manufacturing sector contracted sharply in August, according to survey data released today… A preliminary reading of the closely-watched manufacturing purchasing managers’ index (PMI) for August gave a score of 43.6… well below 50, however, which indicates contraction.”
“Deutsche Bank is tightening its procedures for new hires as it undergoes a major restructuring and headcount reductions. According to an internal memo seen by news agency Reuters, any new hires would need specific approval from the bank’s chief executive Christian Sewing, his deputy Karl von Rohr and finance boss James von Moltke.”
“Investors balked at an attempt by Berlin to sell 30-year bonds at negative rates.
“The debt auction, the first for such-long dated debt at negative yields, saw investors purchase just €824.0m of the €2.0m targeted, leaving the country’s monetary authority, the Bundesbank, holding the rest.”
“For the first time since the financial crisis, yields at the very shortest end of Denmark’s $500 billion covered-bond market are higher than on longer-dated notes…
“But investors are cooling to the shortest bonds, according to Lise Bergmann, chief analyst at the Danish mortgage unit of Nordea in Copenhagen.”
“All eyes are on the president now.
“After Italy’s coalition government collapsed on Tuesday, 78-year-old head of state Sergio Mattarella is embarking on a crucial round of consultations with political leaders to see if he can carve out a new majority.”
“If the last financial crisis was about a housing bubble that went haywire, the next crisis is shaping up to be a bond implosion. It’s not enough to say the bond market is in a bubble; rather, the bond market is full of bubbles…
“For many investors, the writing is already on the wall, and that largely explains why gold has become one of the best-performing asset classes of 2019.”
“Donald Trump doth protest too much. The louder he insists that everything is fine in the economy, the more we’re convinced that maybe it isn’t.
“The economy is “strong,” “incredible” and “terrific,” according to President Trump. The best in the world. All the other presidents are envious of Trump’s beautiful economy, he says…”
“Signs of an impending global recession are piling up. The inverted U.S. Treasury yield curve. Dangerously high debt. Industrial slowdowns. Volatile stock markets and trade wars. A world map littered with potential economic and geopolitical crises.
“Ocean shipping is inordinately exposed to global recessions, given how worldwide slowdowns curb seaborne trade. The events of 2008-09 crippled ship owners and were felt for years thereafter (some would say they’re still felt today).”
Read the previous ‘Economic’ thread here and visit my Patreon page here.