17th July 2019 Today’s Round-Up of Economic News

“Get ready for a humdinger of an economic shock. That in any case is what policymakers at the Bank of England and the Treasury are doing.

“The chances of a no-deal Brexit have increased markedly over the past couple of weeks.

“In the course of the Tory leadership race, positions have hardened; Boris Johnson, who is virtually certain to win, has left himself no ladder down which to climb. Come Oct 31, it’s “do or die”. Unequivocally, he is committed to a no-deal exit should agreement on new terms prove impossible…

“…the short-term impact of a sudden death rupture with Europe is completely unknowable… it is virtually impossible to believe, as some Brexiteers still seem to, that you can fundamentally upend 45 years of progressively more integrated trade with no economic harm at all…

“Large scale closures and layoffs would undermine consumption, potentially triggering a self-reinforcing spiral of economic contraction…”

https://www.telegraph.co.uk/business/2019/07/16/britain-braces-economic-shock-no-deal-brexit-draws-closer/


“Britain’s weak wage growth and rising prices have delivered a hit to living standards of a severity normally only seen during a deep recession, a leading thinktank has said…

“In the past 40 years, the thinktank said, only the recession of the early 1980s and the slump during and after the financial crisis had brought a weaker performance.”

https://www.theguardian.com/business/2019/jul/17/uk-living-standards-hit-by-rising-prices-and-weak-wage-growth


“Deutsche Bank clients… have been pulling about $1 billion of funds per day and going elsewhere, placing pressure on them to complete a deal soon, said the people, who requested anonymity as the talks aren’t public.”

https://www.bloomberg.com/news/articles/2019-07-16/deutsche-bank-bnp-face-reality-of-168-billion-hedge-fund-deal


“A tide of weak reports are casting doubt on the Russian government’s optimistic economic forecasts for the second half.”

https://www.bloomberg.com/news/articles/2019-07-17/kremlin-s-growth-hopes-face-new-headwinds-as-economy-sputters


“How much are sanctions hurting Kim Jong Un? North Korea’s economy hasn’t been in such bad shape since his father was battling floods, droughts and a famine that some estimates say killed as much as 10% of the population.”

[They are currently battling an historic drought, which can’t be helping matters.]

https://www.bloomberg.com/news/articles/2019-07-16/north-korea-likely-suffering-worst-downturn-since-1990s-famine


“China’s efforts to shore up sagging economic growth are leading to a resurgence in indebtedness, underlining the challenge President Xi Jinping’s government faces in curbing financial risk.

“The nation’s total stock of corporate, household and government debt now exceeds 303% of gross domestic product and makes up about 15% of all global debt, according to a report published by the Institute of International Finance. That’s up from just under 297% in the first quarter of 2018.”

https://www.bloomberg.com/news/articles/2019-07-16/china-s-debt-growth-keeps-marching-on-as-economy-loses-pace


“India’s state governments also run their own fiscal deficits and need to borrow money in order to make up for the difference. Then there are state-owned companies which also borrow heavily.

“Meanwhile, the household savings – bank deposits, insurance funds, mutual funds, currency – which finance these borrowings have been declining over the years.”

https://www.bbc.co.uk/news/world-asia-india-48960315


“The grim trade numbers add to a slew of weak economic data and reinforce economists’ expectations the central bank could ease monetary policy at its October meeting. Non-oil domestic exports in June fell 17.3%, the fourth month of year-on-year decline, data from the trade agency Enterprise Singapore showed on Wednesday, slowing from the revised 16.3% decline the month before.”

https://www.reuters.com/article/us-singapore-economy-tradefigures/singapore-exports-drop-most-in-six-years-as-electronics-slump-idUSKCN1UC03Q


“Trade-war casualties are looking more like global slowdown victims.”

https://www.bloomberg.com/news/articles/2019-07-16/trade-war-latest-trump-asia-exports-india-china-slowdown


“Oxford Economics said “Momentum cooled precipitously in the first half of the year.” “Looking ahead, we expect manufacturing activity and overall industrial production to remain under pressure from these headwinds.”

“Oxford expects the Fed to produce “three ‘insurance’ rate cuts over the next nine months.””

https://www.france24.com/en/20190716-us-manufacturing-sinks-recession-amid-trade-wars


“The US government hasn’t been able to borrow since March, when a congressional cap on debt went back into force. Congress and President Donald Trump need to reach a deal before September, when the Treasury Department says it will run out of money.

“There are only seven legislative days left before the House leaves for its August recess, so the urgency is real, on both sides.”

https://edition.cnn.com/2019/07/16/politics/pelosi-mnuchin-debt-crisis-deal/index.html


Read the previous ‘Economic’ thread here and visit my Patreon page here.

16th July 2019 Today’s Round-Up of Economic News

“Economists went into 2019 forecasting a slowdown in global growth. That slowdown has come faster than expected. Alarmed by the speed of the downturn, the US Federal Reserve and European Central Bank have switched from tightening monetary policy to easing.

“The combination of slower growth and easier policy have elicited very different responses from business and financial markets.

“Business confidence has fallen from last year’s peaks across most of the West. Companies have become more cautious.

“Faced with the prospect of still-lower interest rates, equities have soared, hitting new highs in the US. The calculation for markets is that with inflationary pressures subdued there is nothing to prevent central banks from boosting growth with more cheap money…

“So can easier monetary policy offset all these risks?

“The short answer is no. Easier policy would reduce, but not eliminate, the risk of a hard landing for the global economy. Looser policy anyway comes too late to prevent a slowdown in global growth this year…

“Last week a survey of global fund managers by Absolute Strategy Research found that on average respondents see a 45% probability of a global recession occurring in the next 12 months…”

https://reaction.life/a-slowdown-in-global-growth-this-year-seems-inevitable/


“Bosses were increasingly anxious about US trade tensions with China, Mexico and the European Union, as well as the possible reelection of President Donald Trump in 2020 and Brexit.

“The net balance of global firms predicting output to rise over the coming year compared to those expecting a fall dropped from 24 in February to 18 in June…”

https://www.cityam.com/global-businesses-at-their-gloomiest-since-2009/


“Cass concludes with this bottom line assessment:

“”More and more data are indicating that this is the beginning of an economic contraction.

“If a contraction occurs, then the Cass Shipments Index will have been one of the first early indicators once again.””

https://moneymaven.io/mishtalk/economics/recession-looms-cass-freight-index-negative-for-7th-month-uZztn4xxWEC0cBH8rFm7EA/


“The weakening economy is a new challenge for Mexican President Andrés Manuel López Obrador, following last week’s resignation of his finance minister, Carlos Urzúa, who abruptly quit and blamed the administration for putting political goals above economic considerations.

“Mexico’s National Statistics Institute reported Friday July 12 that industrial output fell 2.1% between April and May of this year, its sharpest monthly decline in over a decade.”

https://www.theyucatantimes.com/2019/07/mexico-is-slipping-toward-a-recession-wsj/


“Donald Trump has claimed that his tariff battle with China is working after official data from Beijing showed growth in the world’s second biggest economy dropping to its slowest pace since 1992.

“The US president said the impact of his protectionist measures had been to cause an exodus of companies from China…”

https://www.theguardian.com/business/2019/jul/15/chinese-economic-growth-falls-to-62-as-global-slowdown-bites


“China’s hog herds, the world’s biggest, shrank the most in June in at least a year with farmers reluctant to replenish numbers while African swine fever rages, according to the Ministry of Agriculture and Rural Affairs.

“Hog inventory plunged 26% from a year earlier, the largest contraction since the country first reported an outbreak of the deadly virus in August, data from a survey of pig farms in 400 counties showed.”

https://www.bloomberg.com/news/articles/2019-07-15/china-s-hog-population-slumps-by-a-quarter-as-virus-wreaks-havoc


“Tokyo and Seoul have long had political disagreements stemming from Japan’s conduct during the second World War.

“The dispute between the neighbors spilled into the economic arena when Japan earlier this month restricted exports of materials critical to South Korea’s high-tech industry, citing national security concerns.”

https://www.cnbc.com/2019/07/16/japan-south-korea-dispute-disturbing-and-unhelpful-for-economy-dbs.html


“The world has descended into global growth anaemia. It has become pandemic: you can see it at the national level among the major economies and it is sweeping into regional spheres through trade transmission effects. Global economic confidence is becoming increasingly unresponsive and needs a major reboot as soon as possible…

“The Fed must press ahead with rate cuts not only for its own sake, but also to help jump-start the rest of the global economy.”

https://www.scmp.com/comment/opinion/article/3018587/economic-slowdowns-spread-asia-highlights-need-global-policy


“India’s policy makers are hailed for slaying the inflation dragon. But there’s a dark side to that success. After posting double-digit inflation rates at the start of the decade, consumer-price growth has steadily declined over time to hover around 3% now.

“While much of the recent slowdown was due to a slump in food prices, businesses are starting to worry that the data is signaling a worsening in the economy’s growth outlook.”

https://www.bloomberg.com/news/articles/2019-07-15/low-inflation-in-india-may-be-a-sign-of-something-far-worse


“[India’s] merchandise exports shrank 9.7% year-on-year in June to $25 billion, the first contraction in nine months and the worst since January 2016…

“…[underlining] the strong external headwinds the country faces due to a worsening global trade war, growing tussle between Washington and New Delhi over the latter’s “high tariff” and the recent US withdrawal of the zero-duty trade benefits for annual Indian exports of around $5.6 billion under the so-called generalised system of preference.”

https://www.financialexpress.com/economy/indias-export-contract-9-7-in-june-worst-since-january-2016/1645251/


“Minutes of the Reserve Bank of Australia’s (RBA) July policy meeting showed its board decided that cutting rates by another quarter-point, together with a similar move the previous month, would help speed up the economy.

“While the door is ajar for further policy easing, the RBA is tightlipped about the timing, as opposed to the past two months when it was more explicit.”

https://uk.reuters.com/article/us-australia-rba-minutes/australias-central-bank-ready-to-cut-rates-again-if-needed-idUKKCN1UB047


“Global central bankers are again in the driving seat when it comes to propping up the world economy, but many are demanding governments join them in the rescue effort. Amid slowing global growth, the Federal Reserve, European Central Bank and perhaps even the Bank of Japan are all set to ease monetary policy in coming months.

“But with less room to act than in the past, their leaders are telling politicians they will need to act if a downturn takes hold.”

https://www.bloomberg.com/news/articles/2019-07-16/central-bankers-are-sick-of-rescuing-the-world-economy-alone


“Global debt levels jumped in the first quarter of 2019, outpacing the world economy and closing in on last year’s record, the Institute of International Finance said.

“Debt rose by $3 trillion in the period to $246.5 trillion, almost 320% of global economic output, the Washington-based IIF said in a report published on Tuesday. That’s the second-highest dollar number on record after the first three months of 2018…”

https://www.bloomberg.com/news/articles/2019-07-15/global-debt-accelerated-in-1st-quarter-outpacing-world-economy


Read the previous ‘Economic’ thread here and visit my Patreon page here.

15th July 2019 Today’s Round-Up of Economic News

The [freight] slowdown within the United States is part of a broader global downturn in freight which has spread across Europe and Asia.

At Hong Kong’s International Airport, the busiest air cargo hub in the world, reported volumes shrank by 8% in the second quarter compared with 2018.

London Heathrow’s cargo was down by 6% in the second quarter, the worst performance since the recession in 2009.

California’s Port of Long Beach, one of the major entry points for trans-Pacific cargo, reported container volumes down almost 11% year-on-year in April-June…

More recent data for individual ports and airports suggests growth will slow further and turn negative in May and June…

The slowdown in global trade and manufacturing is weighing on oil consumption growth, especially for middle distillates such as diesel.

In a sign of how concerned investors are about the outlook, trade and manufacturing proxies remain under pressure even though markets are now factoring in a very high probability the Federal Reserve will cut interest rates.

The slackening global economy is now rebounding on the United States through a combination of weak export growth, heightened competition from cheap imports, and a strong dollar…”

https://www.hellenicshippingnews.com/freight-volumes-shrink-as-world-economy-stalls/


China’s economic situation is very hard to get a handle on but I think we can safely say that their real GDP is well below 6.2%.

“China released second-quarter figures on Monday showing that its economy slowed to 6.2% — the weakest rate in at least 27 years, as the country’s trade war with the U.S. took its toll…

“The second quarter economic growth was the country’s slowest pace since the first quarter of 1992 — the earliest quarterly data on record, according to Reuters.”

https://www.cnbc.com/2019/07/15/china-economy-beijing-posts-q2-gdp-amid-trade-war-with-us.html


“Shanghai-listed Fushun Special Steel, a “penny stock” company controlled by Dongbei Special Steel, was found to have fabricated its financial numbers on multiple fronts including its inventory, earnings and fixed-asset investments between 2010 and the first three quarters of 2017.”

https://www.scmp.com/economy/china-economy/article/3018534/chinese-steelmaker-cooked-books-shows-struggle-revive-rust


“With pig stocks still tumbling from an outbreak of African swine fever, pork inflation has risen to a three-year high in China and could soon accelerate to the fastest pace in a decade…

“…driving the country’s consumer price index above the central bank’s target rate in the process.”

https://www.ft.com/content/1d561e32-a3b2-11e9-a282-2df48f366f7d


“Hot-rolled steel coil, used in cars and industrial machinery, now hovers at $550 per ton for East Asia-bound shipments, down 10% over a year.

“The price declined sharply last fall as the trade war intensified. ABS plastic, used in exteriors for consumer electronics, has fared even worse, dropping nearly 30% from a year earlier.”

https://asia.nikkei.com/Business/Markets/Commodities/Asia-s-steel-and-plastic-prices-slump-as-trade-war-takes-toll


Japanese-style interest rate caps are drawing interest from global central bankers worried about a downturn, including U.S. Federal Reserve officials grappling with how to bolster their options as prospects for the global economy darken.”

https://uk.reuters.com/article/uk-usa-fed-ycc/groping-for-new-tools-central-banks-look-at-japans-yield-controls-idUKKCN1UA0DS


“Consumer staples and automobiles — the two sectors [of the Indian economy] worst hit by the slowdown — are unlikely to do well in the first quarter of the current fiscal. Analysts expect a muted performance from both these industries.”

https://www.telegraphindia.com/business/slowdown-cloud-darkens/cid/1694494


“Dewan Housing Finance Ltd. plunged after the Indian shadow lender posted a quarterly loss and flagged doubt about its ability to continue as a going concern amid a funding crunch in the country’s credit market… The embattled lender seen its market value erode 75% this year…”

https://www.bloomberg.com/news/articles/2019-07-15/dewan-shares-slump-to-six-year-low-as-lending-grinds-to-a-halt


“…a new report that describes the central Asian hermit state [of Turkmenistan] as “a country teetering on the edge of catastrophe”. Turkmenistan, second only to North Korea in the scale of its isolation and leadership cult, has long been courted by western governments eager to tap into its gas reserves and associated wealth. The country is thought to possess about 10% of the proven global reserves of natural gas, but is currently in the midst of an economic crisis.

““Hunger and hyperinflation are being managed by further increasing the scale of human rights abuse and the level of intrusion into people’s lives,” says the report by the British thinktank the Foreign Policy Centre, which will be launched in parliament on Monday evening.”

https://www.theguardian.com/world/2019/jul/14/edge-of-catastrophe-report-warns-firms-and-governments-off-turkmenistan


“Manufacturing in the 19-nation [Eurozone] currency bloc has been on a downward trajectory since the start of last year. The sector hasn’t contracted this long and deeply without a recession since at least the 1960s, according to an ING analysis of European Central Bank data. ING cites weakening global demand and trade uncertainty as significant causes of the slide, but noted a critical bright spot.”

https://finance.yahoo.com/news/euro-zone-factory-jobs-might-050010465.html


“Britain is facing the highest risk of a recession since the financial crisis and needs urgent plans to combat the next downturn, according to an alarming assessment of the nation’s economic health.

“Preparations need to be made to reduce the impact, the study by the Resolution Foundation thinktank warns. It states that both uncertainty around Brexit and the global economic slowdown have led to the highest recession risk since 2007.”

https://www.theguardian.com/business/2019/jul/13/urgent-planning-needed-to-combat-looming-downturn


“Central bankers readying to fight another economic downturn are tossing hand grenades rather than firing bazookas.

“Federal Reserve Chairman Jerome Powell and European Central Bank President Mario Draghi stand ready alongside many of their counterparts to cut interest rates to bolster the weakest growth in a decade and lackluster inflation.

“Yet they have little to work with and, perhaps more worryingly, what they do have lacks potency.”

https://www.bloomberg.com/news/articles/2019-07-14/central-banks-launch-growth-mission-with-arsenals-questioned


Read the previous ‘Economic’ thread here and visit my Patreon page here.

12th July 2019 Today’s Round-Up of Economic News

“Global recession risks are on the rise and we could see a “really sharp correction” within the next 18 months, according to Ian Harnett, chief investment strategist at Absolute Strategy Research…

He suggested that price-to-earnings (P/E) ratios, an important metric used by traders to gauge the value of stocks, pointed toward a substantial downturn…

This is a huge recipe for a really sharp correction in global equity markets at some stage in the next 18 months,” he concluded.

And I mean really large, because we are looking at these recession risk models rising, credit impulse numbers in the states are weak, that tends to bring unemployment up and tends to bring equity markets down.”

“…Meanwhile, Shard Capital strategist Bill Blain suggested on Thursday that investors might want to have their “hard hat handy.” He suggested Chinese growth could slow to as low as 4% as its economy continues to mature.

““If China is 4%, the shocking global reality is global growth is much, much lower than the central bank geniuses expected,” Blain said in a note on Thursday.

““They’ve been juicing asset markets for the last 8 years with lower-for-longer rates and QE (quantitative easing) — with the effect of creating massive asset bubbles in both.”

“Blain suggested central bankers had been hoping that Chinese-fueled rising growth would justify the levels financial assets have reached, with stock and bond markets pushing records.

““But it won’t — global growth is slowing because China is maturing, which means financial assets are, and will remain, a bubble,” he argued.

““When the market finally grasps the fact lower interest rates are not going to be supported by growth, that’s when you really want your hard hat handy.””

https://www.cnbc.com/2019/07/11/sharp-correction-brewing-for-next-18-months-strategist-says.html


“Economic forecaster Lakshman Achuthan has a warning for investors: Brace for earnings to go negative. According to the Economic Cycle Research Institute co-founder, the global slowdown is unleashing major challenges for U.S. corporations.”

https://www.cnbc.com/2019/07/11/chart-suggests-earnings-arent-just-slowing-theyre-going-negative.html


“We may be in the longest economic expansion in American history, but there are already plenty of warning signs that the next recession may be on its way…

“According to a Reuters report in May, factory activity dropped to near 10-year lows, sparking fresh concern. In fact, both JP Morgan and Morgan Stanley cut 2nd quarter GDP estimates to 1% from 2.25% and 1.9% from 2.2% respectively.”

https://fortune.com/2019/07/11/next-recession-warning-signs-yield-curve-confidence-manufacturing/


“The [US] trucking industry is officially in a recession, according to data tracked by ACT Research. After months of suggesting a pullback was possible, ACT President Kenny Vieth told FreightWaves on Thursday, July 11 that all metrics his firm tracks meet the technical definition of a recession – two consecutive quarters of negative growth.

““Every freight metric we look at has been negative for at least six months,” he said.”

https://www.freightwaves.com/news/act-research-says-trucking-sector-is-in-a-recession


““We are awash in debt – whether it’s auto loans, mortgages, corporate debt, credit card debt or student loans,” Cohan said. “Why? Because the Fed has decided that interest rates are going to be low for an extended period of time, and you get rewarded to borrow money. There’s going to be a colossal reckoning, in my opinion.”

“Cohan points out that at the time of the financial crisis there was about $5 trillion in corporate debt. Today, we’re getting closer to $10 trillion on corporate issuance, with a good portion of it sitting in junk territory.”

https://uk.finance.yahoo.com/news/why-low-interest-rates-could-cause-a-colossal-reckoning-151351867.html


“Lower-income U.S. consumers are showing signs of weakness despite the strong market, and if the economy enters a recession, any possible credit crunch could be “material,” according to UBS.

“Strategists led by Matthew Mish and Eric Wasserstrom wrote in a note Thursday that they’re worried about lower-income consumers who have seen little net worth improvement since the financial crisis. Debt burdens for many of those households have grown…”

https://www.bloomberg.com/news/articles/2019-07-11/bottom-50-of-consumers-are-showing-signs-of-weakness-ubs-says


“Mexico’s economy is showing signs of a greater slowdown than anticipated, the Central Bank of Mexico (Banxico) said on Thursday…

“Banxico blamed the slowdown mainly on a dip in domestic consumption and “weak” investment, but added external factors were also in play.

“One key uncertainty weighing down the economy is that the United States and Canada have yet to ratify the United States-Mexico-Canada Agreement…”

http://www.xinhuanet.com/english/2019-07/12/c_138219056.htm


“As Beijing considers how to cushion the blow from trade, it’ll also have to weigh the country’s other major challenge: debt. China’s total debt surged to 271% of gross domestic product last year, from 164% before the global financial crisis, according to estimates by Bloomberg Economics.

“That’s left officials wary of rolling out any broad-based stimulus.”

https://economictimes.indiatimes.com/news/international/business/china-was-already-in-trouble-trump-just-made-it-worse/articleshow/70186944.cms


“The case for Chinese policy makers to ramp up stimulus grew stronger, as tepid domestic demand and falling commodity prices increase the risk of a return to factory deflation. Growth in China’s producer price index slowed to zero in June from a year earlier, the weakest reading in almost three years. Prices fell 0.3% from May.

“The downward trend accentuates fears of a return of deflation for manufacturing, which would erode company profits and increase debt repayment pressures.”

https://www.hellenicshippingnews.com/chinas-looming-deflation-fears-strengthen-policy-easing-case/


“Central China Securities claims borrower falsified documents Case adds to a string of frauds as defaults surge in China Central China Securities Co. said two asset management products totaling 240 million yuan ($35 million) are in danger of defaulting after the borrower falsified documents.

“The brokerage said Thursday that it conducted follow-up checks on the products following missed payments to investors in April and May and found that documents used to obtain financing had been fabricated.”

https://www.bloomberg.com/news/articles/2019-07-12/china-broker-says-35-million-of-investment-products-may-default


“Auto suppliers Johnson Electric Holdings and Sensirion slashed their earnings forecasts on Thursday, blaming a slowdown in car sales and pessimism about the prospects of a Chinese car sector recovery.

“The news is the latest to signal weaker global industrial activity and ripples from a trade war that has already forced China’s Geely Swiss engineering company ABB Germany’s Aumann and chemicals giant, to warn of turbulence ahead.”

https://www.reuters.com/article/us-autos-suppliers-warnings/bleak-china-autos-outlook-triggers-raft-of-profit-warnings-idUSKCN1U6194?il=0


“An unexpected contraction in Singapore’s economy sent a warning shot to the world economy as simmering trade tensions wilt business confidence and activity.

“Gross domestic product in the export-reliant city state shrank an annualized 3.4% in the second quarter from the previous three months, the biggest decline since 2012.

“That was worse than the 0.5% expansion forecast in a Bloomberg survey of economists…”

https://www.bloomberg.com/news/articles/2019-07-12/singapore-s-economy-contracts-sharply-as-manufacturing-slumps


“Against the backdrop of a rising threat of a no-deal Brexit, the central bank used its twice yearly financial stability report to say that UK, EU and international banks operating in London had made progress planning for a disorderly departure.

“However, it warned that about half of EU companies using banks registered in Britain could be cut off from their banking services after the Halloween Brexit date, as they had yet to fully prepare.”

https://www.theguardian.com/business/2019/jul/11/bank-of-england-warns-of-lending-crisis-for-eu-firms-after-no-deal-brexit


“The birth of a baby in the small town of Acquaviva Platani, in inland Sicily, is such a rare event that the village bells toll to celebrate the arrival.

“With just 800 inhabitants Acquaviva is among thousands of Italian towns risking extinction in the coming decades, as the country faces an unprecedented crisis of population decline.”

https://www.theguardian.com/world/2019/jul/12/battle-with-time-italian-towns-face-demise-by-depopulation


“…there’s a real danger that more QE would not be as effective as it was the first time during the financial crisis.

“There’s also doubts as to how effective negative interest rates are with the evidence so far from Japan and the euro area pointing to only limited success in lifting inflation…

“This raises the question of how central banks would respond to an actual recession or even a new global economic crisis.”

https://www.xm.com/as-central-banks-move-to-cut-rates-again-how-much-lower-can-they-go-special-report-105140


Read the previous ‘Economic’ thread here and visit my Patreon page here.

11th July 2019 Today’s Round-Up of Economic News

“China’s exports likely fell in June as weakening global demand and a sharp hike in U.S. tariffs took a heavier toll on the world’s largest trading nation, a Reuters poll showed.

“Imports are expected to have fallen for a second straight month, pointing to continued weakness in domestic demand and highlighting the need for Beijing to roll out more economic support measures.

“If Friday’s trade data are in line with the downbeat forecasts or worse, it could spark concerns about a sharper-than-expected slowdown in China and the risk of a global recession.

“Neighbouring South Korea last week slashed its export forecasts and cut this year’s economic growth target to what would be a seven-year low as the U.S.-China trade war drags on, weighing on global demand.”

https://uk.reuters.com/article/uk-china-economy-trade-poll/china-june-exports-seen-falling-adding-to-fears-of-global-slowdown-reuters-poll-idUKKCN1U50W2


“The Chinese government injected some 4 trillion yuan (US$580 billion) into the economy in the months following the Lehman Brothers bankruptcy in 2008, as the world faced the biggest economic crash since the Great Depression in the 1930s.

“The stimulus helped China avoid a recession and helped it recover more quickly than other major economies.

“Now, with the trade war between China and the United States passing its first anniversary last week, the Chinese economy is under growing pressure.”

https://www.scmp.com/economy/china-economy/article/3018063/china-will-not-turn-global-financial-crisis-stimulus-playbook


““Chinese officials have been exercising a strikingly high degree of caution over trade negotiations with the US, appearing reluctant to rush into a new round of talks with US officials, given the latter’s lack of sincerity and continued aggressive approach toward China on multiple fronts…

“Some suggested that US officials are only showing they are working to resolve their costly trade war with China to boost the US stock markets and reassure the increasingly concerned US business community and voters ahead of what could be a heated election season.””

https://www.fxstreet.com/news/china-cautious-over-trade-talks-with-the-us-global-times-201907110312


“The bilateral trade between India and China has declined by 3.59% year on year, totalling $36.87 billion in the first five months of this year, denting optimism that the total trade volume may cross $100 billion mark in 2019.”

https://asia.nikkei.com/Business/Business-trends/India-passenger-vehicle-sales-slump-17-in-June-sparking-job-cut-fears


“Passenger vehicles sales in India slumped 17% in June, underscoring a deepening slowdown that sparks concerns about production cuts and layoffs.

“Automotive demand in Asia’s third-biggest economy has been cooling for more than a year amid a credit crunch and distress in rural markets.”

https://asia.nikkei.com/Business/Business-trends/India-passenger-vehicle-sales-slump-17-in-June-sparking-job-cut-fears


“The research from the Reserve Bank of Australia (RBA) is of concern as the country’s household debt to disposable income ratio has skyrocketed to an all-time peak of 190%, easily among the highest in the developed world.

“Most of that is home loans, and the paper found it was this type of debt that has the largest impact on spending, even when taking into account rising incomes and house prices.”

https://uk.reuters.com/article/us-australia-economy-housing/australias-mortgage-mountain-a-deadweight-on-spending-central-bank-research-idUKKCN1U60KB


“Last year’s European Union bank stress test did not appropriately reflect systemic risks, EU auditors said on Wednesday, a shortfall that may have produced misleading results for some lenders, especially those in weaker states.”

https://www.reuters.com/article/us-eu-banks-auditors/eus-2018-bank-stress-test-too-mild-spared-weaker-states-auditors-idUSKCN1U510S


“The number of German corporations going insolvent is expected to rise for the first time since the 2009 economic crisis. In the latest sign that Europe’s biggest economy could be on the verge of recession, German credit rating agency Creditreform says the trend for company closures is hitting a turning point.

“The rate of corporate insolvencies sank by just 0.4% in the first half of the year — 9,900 corporations have already become insolvent — and a total of 20,000 are expected by the end of 2019.”

https://www.bloomberg.com/news/articles/2019-07-10/german-corporate-insolvencies-to-rise-for-first-time-in-a-decade


“Britain’s ambassador to Washington, Sir Kim Darroch, has resigned after a leak earlier this week of diplomatic memos that described the U.S. President Donald Trump’s administration as dysfunctional, clumsy, faction-riven and inept.

“Welcome to the midsummer madness that is Britain, 2019, with just over three months to go before the U.K. is scheduled to leave the European Union. Again.”

https://www.cbc.ca/news/world/darroch-trump-boris-evans-1.5206853


““Britain has failed to make meaningful progress towards a free trade deal with the United States. Amid “chronic” staffing shortages and communication breakdowns in Whitehall.

“Details of meetings spanning two years show how overstretched departments have been working “at cross purposes” as transatlantic talks have repeatedly stumbled over politically sensitive topics such as rules on health, farming and the finance industry.””

https://www.fxstreet.com/news/leaked-document-uk-has-failed-to-make-meaningful-progress-towards-a-free-trade-deal-with-us-the-telegraph-201907110206


“Senators are growing anxious that they might have to vote to raise the nation’s debt ceiling in a matter of weeks given new estimates that the government could hit its borrowing limit earlier than expected.

“The debt limit was exceeded earlier this year, and the Treasury Department is now taking steps known as “extraordinary measures” to prevent the government from going over its borrowing limit.”

https://thehill.com/homenews/senate/452315-high-anxiety-hits-senate-over-raising-debt-ceiling


“The Federal Reserve chair, Jerome H. Powell, signaled on Wednesday that the Fed could soon cut interest rates, sending stocks higher as the benchmark S&P 500 stock index briefly traded above 3,000 for the first time.

“Mr. Powell, testifying before the House Financial Services Committee, highlighted ongoing risks to the United States economy from President Trump’s trade war and a global economic slowdown…

“…suggesting a cut may be likely when the Fed meets again later this month.”

https://www.nytimes.com/2019/07/10/business/economy/jerome-powell-rate-cut.html


“Be very careful not to assume that ‘easy money’ means ‘rising market.’

“Easy money amplifies speculation, provided that investors are already inclined to speculate. But if investors are inclined toward risk-aversion, safe, low-interest rate liquidity isn’t an ‘inferior’ asset at all; it’s a preferred one. As a result, creating more of the stuff simply doesn’t promote speculation…

“The misplaced exuberance of investors is something my friend Danielle DiMartino Booth calls a “Recession Party.” We doubt this party will end well.”

https://moneymaven.io/mishtalk/economics/one-heck-of-a-recession-party-vpUB8vusmkOHdFlVe5e3uw/


Read the previous ‘Economic’ thread here and visit my Patreon page here.

10th July 2019 Today’s Round-Up of Economic News

“The yield on short-term Treasurys has been higher than on long-term notes for more than 30 consecutive trading sessions, a sign that investors are concerned about the durability of the decade-long economic expansion.

“The yield on three-month bills has exceeded that of the benchmark 10-year Treasury note by as much as 0.259 percentage point, the most since May 2007, before the financial crisis.”

https://www.wsj.com/articles/government-bond-market-measure-says-recession-risk-growing-11562690652


“A key recession tracker just hit its highest level since 2009, sending a signal that an economic downturn may be looming on the horizon. The New York Federal Reserve’s probability model, which predicts the probability of a US recession in the next 12 months, delivered a reading of 32.9% for June.

“That’s could mean tough times ahead, considering the measure has breached the 30% threshold before every recession since 1960.”

https://markets.businessinsider.com/news/stocks/next-recession-forecast-new-york-fed-model-highest-since-2009-2019-7-1028338398


There’s an art to knowing when to leave the party,” said the director of fixed income for Europe. “In fact it’s over — people are desperate and they’re hunting down the after-party. We probably only have a few hours left.”

“Rallying corporate debt is defying growth fears sounded by government bonds and warnings that risky assets are priced for perfection.”

https://www.livemint.com/news/world/a-lehman-survivor-is-prepping-for-the-next-financial-crisis-1562728812566.html


“Sterling had fallen 0.5 per cent by 4.30pm UK time to buy $1.246, a price not traded at since mid-2017. Against the euro it had dropped 0.4 per cent, reaching €1.112.

“The impact of a likely Boris Johnson premiership – with attached no-deal Brexit risks – continued to weigh on the pound, while weak retail sales figures for June exacerbated the fall.”

https://www.cityam.com/sterling-trades-at-two-year-lows-as-recession-worries-mount/


“”Moreover, output of intermediate goods fell further, an ominous sign given that this sector often is a leading indicator for production of finished capital and consumer goods,” the economists said…

“”We’re starting to fear a Q2 GDP crash in Germany,” they warned.”

https://markets.businessinsider.com/news/stocks/german-hit-a-brick-wall-in-q2-pantheon-macroeconomics-says-2019-7-1028338986#


“The vast majority of Italy’s debt is held by banks, the majority within its own borders. But a significant chunk is held by banks in other part of Europe.

“Concerns about Italy’s financial position have already driven up the government’s cost of borrowing.

“A full-blown crisis of confidence among investors over Italy’s credibility could hit the fortunes of all those banks, as well as their ability to lend to businesses and households across the region.”

https://www.bbc.co.uk/news/business-48884517


“India is in the grip of a consumption slowdown.

“From home and auto sales to lifestyle products, latest data testifies to the slowdown…

“…but the Centre has denied the slump, stating that a few sectors were booming with demand.”

https://www.deccanherald.com/business/economy-business/a-consumption-slowdown-is-afoot-but-govt-denies-it-746137.html


“The historic slump in China’s car demand is set to persist, with dealers showing no signs of boosting orders from manufacturers as economic woes and stricter emissions rules keep consumers away.

“Wholesales of passenger vehicles fell 7.8% to 1.73 million units in June and have now slid for 12 consecutive months, the China Association of Automobile Manufacturers said Wednesday.”

https://www.bloomberg.com/news/articles/2019-07-10/gloom-in-china-s-car-market-to-persist-as-wholesales-plummet?utm_source=google&utm_medium=bd&cmpId=google


“China’s producer prices flat-lined in June on lower oil prices and weak global demand, fueling concerns that a slowdown in manufacturing from a bruising trade war will further drag on growth in the world’s second-biggest economy.

“The producer price index (PPI) showed no growth in June from a year earlier…”

https://www.cnbc.com/2019/07/10/chinas-june-producer-prices-and-consumer-price-index.html


“The world’s largest supplier of consumer goods says China’s factories are getting “urgent and desperate” as worried U.S. retailers accelerate a move out of the country amid heightened trade tensions.”

https://www.bloomberg.com/news/articles/2019-07-09/trade-war-threatens-chinese-factories-existence-li-fung-says


“Cramer called the dim outlook “a very big deal.”

““Now we’ve got real concern, real reason to be worried. While the Federal Reserve believes business is strong because we just got a terrific labor report last Friday,” the “Mad Money” host said, “the weak forecast from chemical giant BASF suggests that the global economy might be in rougher shape than that employment number might indicate.””

https://www.cnbc.com/2019/07/09/cramer-we-have-real-reason-to-be-worried-about-the-global-economy.html


“Faltering trade growth in certain parts of the world amid increasing trade barriers and decline in investments are extremely worrying, the OECD’s chief economist Laurence Boone told CNBC Tuesday.

““I have been, and I continue to be, very very worried about what’s happening on the trade side.”

https://www.cnbc.com/2019/07/09/global-trade-uncertainty-is-a-big-concern-for-the-oecd.html


Read the previous ‘Economy’ thread here and visit my Patreon page here.