“A combination of the US-China trade war and Brexit [this is the conventional view] has dragged global manufacturing into recession, according to market analysts…
“The data showed the downturn in Germany’s critical manufacturing sector deepened dramatically in September.
“The country’s factory output is now the weakest since the global financial crisis, with the sector effectively enduring recession-like conditions.
“It followed news that manufacturing output across the OECD’s 36 member states contracted in June…”
“The figures for the German economy as a whole showed contraction for the first time in six and a half years. The reading was 49.1 in September, down from 51.7 in August. Manufacturing delivered the worst performance, but services also suffered a slowdown…”
“The eurozone economy struggled in September as demand for both goods and services fell at the fastest rate in more than six years, data showed on Monday.”
“The Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) has dropped to 48.9 in September, the lowest level since June 2016.
“The PMI stood at 49.3 in June.
“A reading below 50 indicates contraction.”
“Few of us are investing directly into China. But what happens there, in that second largest global economy, does matter. Not just for businesses that export there directly either, nor is it all about trade tariffs and such arguments.
“A significant slowdown in China would mean a significant slowdown in the entire global economy. And the thing is, we are seeing that slowdown.”
“The US is no more immune from a slowdown in China and the Eurozone today than China was immune from a slowdown in the US and the Eurozone in 2007.
“Decoupling theory is silly. The US will not decouple. Either the Eurozone and Chinese economies pick up, or the US slides with them.”
“…the Fed is back where it was roughly a decade ago, effectively buying U.S. Treasuries from banks on an indefinite basis. But the difference this time? There’s no financial crisis in sight, just the uncomfortable fact that private capital markets once again need public support. “For all intents and purposes, this will be equivalent to QE, with scheduled purchases of securities…” the Bank of America wrote in a research note.”
“The extraordinary amount of nothing short of cheating by the US Federal Reserve, US Treasury and lawmakers – swiftly followed by the European Union, Japan, Canada and Australia during the dark days of the “credit crunch” that expanded into the global financial crisis – has left big scars.
“This level of wholesale cheating by printing money, purposely manipulating fixed income return profiles and pushing repurchase facilities in ways unconducive to supposedly free and liberal open markets was nothing short of shaking the devil’s hand and accepting a Faustian pact…
“…the problem with such a Faustian pact is that it can only lead to more manipulation. This in turn distorts already-askew market mechanisms, which then encourages repression and more cheating under the guise of unconventional monetary policies.”
“Growing acceptance of negative interest rates has reached “vaguely troubling” levels, the Bank for International Settlements (BIS) has said.
“Recent switches back into economic support mode by central banks including the European Central Bank and Federal Reserve has led to a record $17 trillion (£13.7 trillion) of bonds trading at negative rates. This is equivalent to roughly 20 per cent of the world’s GDP, BIS noted in a new report.”
“In 2016, back when the monetary union was on the brink of deflation, European Central Bank President Mario Draghi called Friedman’s ‘Helicopter Money’ theory “interesting.”
“Three years later, the question is whether the ECB’s new monetary policy measures will have a significant impact on economic activity. If they don’t, then the idea dropping banknotes from a helicopter (or more likely, sending an ECB check to every household in the eurozone) could make a comeback.”
“Investors are increasingly fearful of a global recession, according to a survey of many of the world’s biggest asset managers. The likelihood of a downturn in the next year — driven by concerns over geopolitical uncertainty and trade tensions — stands at 52 per cent, according to the findings from Absolute Strategy Research.”
““There’s more caution and fear of the public equity markets among ultra-high-net-worth investors,” said Timothy O’Hara, president of Rockefeller Global Family Office. “That has more people thinking about private investments, alternative investments or cash.””
“Gold prices rose after weak economic data from Europe raised new fears of a slowdown in global growth and pushed some investors toward assets considered safer.
“Front-month gold futures climbed 1.1% to $1,523.70 a troy ounce Monday after downbeat economic figures from Europe sparked fresh worries among investors.”