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Economy 18 Dec 2018 Recession Looming in 2019

“Judging by activity measures like retail sales, industrial production and employment, the U.S. economy does not seem to be on the brink of slowing down. But it is a perverse fact that such measures have been at their highest points, and even at record levels, just before falling a few months later under the weight of an economic downturn. Studies show that forecasters are generally blindsided by recessions, precisely because they tend to be preceded by economic strength. There is little reason to believe that it is different this time…

“Household wealth has doubled in the last nine years, fueled by the quadrupling of stock prices and the full recovery of home values since the depths of the financial crisis. On the other hand, median household income barely rose in those nine years at a dismal 7% rate – an annual increase of less than 1% after inflation. The main driver of financial well-being of U.S. households today is wealth, not income.

“The problem with this is that wealth depends on the ups and downs of asset prices, and therefore a bear market can deliver a hard blow to household wealth. Since income is not strong enough to soften the impact, a market decline may well lead to households feeling poorer, which in turn will likely lead to spending less. This can deepen a cyclical slowdown and increase the chances of a recession…”


“The US stock market sank deeper into the red following sluggish economic reports on Monday and bad news from a couple of blue chip giants… A weaker reading from the New York Federal Reserve about manufacturing in the Empire State and a drop in confidence from the nation’s homebuilders weighed on the markets.

“”Investors are zeroing in on this idea of slower growth for 2019,” said Michael Arone, chief investment strategist at State Street Global Advisors. “More people are worried about a recession in late 2019 or 2020.””


“U.S. student loan debt outstanding reached a record $1.465 trillion last month and one particular set of borrowers is having a hard time paying back their loans, according to a Bloomberg analysis of student loan securitization data.

“This debt is raising fiscal risks.”


“More Americans are predicting an economic downturn in the coming year, a shift that could affect President Donald Trump as he seeks re-election. Only 28 percent of Americans think the economy will get better in the next 12 months, according to an NBC News/Wall Street Journal poll released Sunday. Meanwhile, 33 percent expect it will get worse and 37 percent believe it will stay about the same, the survey found.”


“With fears about the next economic downturn looming, banks are taking a step back from risky lending… According to a survey out this month from the Federal Reserve Bank of New York, nearly half of applicants with low credit scores were rejected in the four months ending in October.

“The credit rejection rate was 21.2% that month, well above its reading of 15.7% at the same time a year earlier.”


“The Cabinet will accelerate preparations for a no-deal Brexit today with just 101 days to Britain’s planned departure from the European Union. The Chancellor Philip Hammond is to begin allocating a further £2bn to emergency planning for an abrupt departure from the EU. Brussels will release its latest contingency no-deal planning tomorrow as it seeks to cushion the impact of a scenario which Britain and the EU have both said they want to avoid.”


“Fresh fears are emerging that the British economy is beginning to wilt under Brexit uncertainty after the fashion retailer Asos issued a shock profit warning, causing a plunge in retail shares in the City… Retailers have started to offer steeper discounts than usual in the pivotal pre-Christmas shopping period, amid fears that waning levels of consumer confidence could affect their sales as Brexit draws nearer. A report by accounting firm Deloitte claimed that retailers had launched a record discounting spree in the run-up to Christmas…”


“A slump in Turkey’s industrial production gathered pace in October, prompting warnings that the country is headed for a recession….

“Retail sales suffer worst drop on record.”


“China is staring at a bigger-than-expected slowdown next year as credit shrinks, said an analyst who made her name warning about the dangers of the nation’s credit binge. Total credit in the country, including lending to companies, has “absolutely collapsed” in 2018, according to Charlene Chu, a senior partner at Autonomous Research in Hong Kong. The estimate is a calculation by Chu, who adjusts official figures with elements she didn’t share.”


“Japan’s output gap in the third quarter turned negative for the first time in almost two years, in a sign the Bank of Japan’s 2 percent inflation target will become even more distant due to waning price pressure. A negative output gap occurs when actual output is less than the economy’s full capacity and is considered a sign of weakening demand.”


“It’s been the most radical cash injection in history — a staggering $3.5 trillion, pumped into Japan’s economy over more than five years to slay deflation and kick growth into higher gear. That’s still not enough to save Tomoaki Nagai’s metal parts factory near Osaka and it’s a similar story throughout the world’s third-largest economy.”


“Australian home prices fell sharply again last week, led by continued declines in Melbourne, Sydney and Perth…

“Coupled with prior declines in late November, the falls left home prices in Australia’s largest and most expensive housing markets down a whopping 1.6% over the past month.”



“That’s how much the total value of companies listed on the world’s stock markets has declined since peaking at $87,289,962,917,450 on Jan 28. In other words, almost $15 trillion has been wiped off the global equity market this year.”


“A number of strategists have underscored the recent spate of death crosses materializing—a death cross appeared in the S&P 500 index about 10 days ago and another formed in the small-capitalization oriented Russell 2000 index RUT, -2.32% in mid November. The barrage of pessimistic death crosses isn’t the only worrying sign in markets. MarketWatch columnist Philip van Doorn says more than half of the S&P 500’s constituents are in bear market…”


“Corporate bonds and stocks are to set hand out annual losses on both sides of the Atlantic for the first time since the global financial crisis a decade ago…

“It will be the first time since 2008 that buyers of stocks and credit both get negative returns, and only the second time since at least 1998, data compiled by Bloomberg show.”


“Oil prices are on track for a third straight monthly decline despite efforts by OPEC, Russia and other major exporters to halt the slide. Crude had slunk near $50 in recent weeks but always rebounded. Crossing the threshold was “significant,” said Michael Loewen, a commodities strategist at Scotiabank in Toronto.”


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Economy 17 Dec 2018 The ‘Everything Bubble’ is Deflating

“The “everything bubble” is deflating. The fact that it’s happening relatively slowly shouldn’t blind us to the real threat: The world is dangerously underestimating how hard it’ll be to deal with the fallout once it pops.

“Frothy markets can’t disguise the warning signs. The shift to tighter monetary policies in the West is putting pressure on global equity and real estate values. Even more critically, it’s weakening credit markets. Over-indebted emerging markets face headwinds from rising borrowing costs and dollar shortages.

“At the same time, investors are underestimating how disruptive trade conflicts and sanctions could turn out to be. That’s not to mention rising non-financial risks — from the legal difficulties of the US administration, to the UK’s Brexit debacle, to political instability in France, Germany, Italy and even Saudi Arabia. Uncertainty will impact the real economy, primarily through the wealth effect of declining asset values and a reduced supply of credit.

“Investors need to start focusing on how best to respond to a new crisis. The choices are more limited than many realize. Historically, central banks have needed to slash official rates as much as 4-5% in order to offset the effects of a financial crisis or an economic slowdown. That’s why former US Federal Reserve Chair Janet Yellen talked about the need to raise rates in good times — to provide room to cut when necessary.

“Yet, even after recent US interest rate hikes, the Fed has nowhere near enough room to cut rates that much without going negative. In Europe and Japan, where rates are already less than zero, easing would require substantially negative levels, which would likely be politically impossible. Even current levels are controversial. Negative rates are a disguised way of writing down debt; they penalize savers and weaken the banking system…

“Ultimately, central banks might have to resort to QE variations such as “helicopter money.” Originally a thought experiment of Milton Friedman, the government would print money and distribute it to the public to stimulate the economy. To make it palatable, the measure could be packaged as a way to rationalize welfare systems by reducing frictions and administration costs.

“Direct intervention, such as lending to or investing in businesses, or taking over banks and large parts of the economy to restart activity, are also possible. Those would be awfully desperate measures, however, which points to the real problem. Since 2008, governments and central banks have stabilized the situation without fundamentally addressing high debt levels, weak banking systems and excessive financialization…

“In any new crisis, then, policymakers are likely to be badly exposed. Central bank purchases of real estate and equities, helicopter money and more direct intervention could well fail to boost economic activity. That would contribute to a collapse in confidence in authorities, as the sight of governments forced to print money and throw it out of the window or take over markets increases people’s anxiety about the future.

“There is already a crisis of trust – a democracy deficit – in many advanced economies, accompanied by rising political tensions. A loss of faith in the supposed technocratic abilities of policymakers to manage economies will compound these pressures.

“The political economy could then accelerate towards the critical point identified by John Maynard Keynes in 1933, where “we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what ultimate outcome we cannot predict.””


“European stocks traded lower Monday morning, amid escalating concerns of a sharp slowdown in global growth.

“Market focus is largely attuned to concerns surrounding cooling global growth after soft economic data from China and Europe in the last week added further concerns.”


“Sir Richard Branson has warned that the UK will be left “near bankrupt” in the event of a hard Brexit. “From our Virgin companies’ point of view, a hard Brexit would torpedo some of our companies,” he said, adding that Virgin Holidays would be hit as the pound would drop to parity with the dollar and fewer people would be able to afford to go abroad. “If British business suffers, British people will suffer, and it’s really really important that people realise that.””


“China’s consumers and businesses are losing confidence. Car sales have plunged. The housing market is stumbling. Some factories are letting workers off for the Chinese New Year holiday two months early. China’s economy has slowed sharply in recent months, presenting perhaps the biggest challenge to President Xi Jinping in his six years of rule. Gauging the magnitude of the slowdown is difficult, given the unreliability of China’s economic data. But there are signs that the country’s problems are deepening.”


“As the risks to the global economy rises, the Bank of Japan is expected to join a chorus of warnings from other policy-makers of the threat to growth from protectionism and signal its resolve to keep the money spigot open.

“At this week’s policy review, the BOJ is seen maintaining its ultra-easy monetary settings even as years of heavy bond buying dries up market liquidity and hurts bank profits.”


“A prolonged period of low interest rates since the financial crisis a decade ago has seen companies binge on cheap debt.”


“Unlike the banking crisis of 2007-08, this downturn may be driven by over-levered corporates, unprepared for slowing economic growth…”


“Shares in US retailers are on course for their biggest quarterly sell-off since the financial crisis.”


“We are fast approaching that critical time of the year when investors must place their bets for 2019. It will be no easy task as investors face a battery of negative forces, adverse headwinds and a sense that the world is sinking into complete confusion. As if investors have not already been through enough hell and high water in the past decade, there is a prevailing sense that things are about to go pear-shaped again.”


“The pillars of the global financial system are fundamentally unstable and could lead to a frightening chain -reaction in the next crisis, the world’s top watchdog has warned.

“Giant central counterparties (CCPs) that clear much of the $540 trillion ($795 trillion) of derivatives are themselves vulnerable to failure in times of extreme stress.

“This is a worry looming ever larger as rising US interest rates expose the weak links in global debt markets.

“The Bank for International Settlements said in its quarterly report that the CCPs could cause “a destabilising feedback loop, amplifying stress”.”


“Ray Dalio, the billionaire founder of investment management firm Bridgewater Associates, said a gauge that measures conflicts around the world is at its highest level in more than 70 years.

““We created a conflict gauge — various ways of measuring different conflicts — and the conflict gauge now is the highest, really, since the war years,” Dalio said in an interview with CNN’s Fareed Zakaria that will air on Sunday. “There is more polarity, more conflict internally, of a sort.”

“Investors and business leaders are watching the rise in populism and protectionism to assess their impact on global economic activity. In 2017, Dalio warned that populism will be a more powerful force than monetary or fiscal policies, with politics affecting markets as happened in 1937.”


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Economy 14 Dec 2018 Global Debt = $86,000 Per Person

“Global debt hit a record $184 trillion last year, equivalent to more than $86,000 per person — more than double the average per-capita income. Borrowing is led by the U.S., China, and Japan, the three biggest economies, the International Monetary Fund said Thursday, highlighting potential risks to global expansion given that their share of debt exceeds that of output.

“Overall, the amount of worldwide public and private debt is equal to about 225 percent of gross domestic product.”


“Once again, British Prime Minister Theresa May has returned from Brussels empty-handed.

“An EU diplomat told CNN before the meeting that the other 27 EU nations were looking to May to “convince” them she can get the withdrawal agreement through the UK Parliament, something she appears to have failed to do.

“”We’ve seen what happened (on Wednesday). Convince us that what you ask will make a difference. If she pulls that off then we can talk… in the end they are politicians and they will want to help her. We are ready to be convinced,” the diplomat said.

“The diplomat added that the “most likely scenario is stumbling into a no deal.”


“French business activity plunged unexpectedly into contraction this month, retreating at the fastest pace in over four years in the face of violent anti-government protests, a monthly survey showed on Friday…

“Companies have seen business drop after nearly a month of nationwide demonstrations that have triggered the most violent street protests seen in decades.”


“European carmakers couldn’t shake the slump that’s shadowed them since September as new car registrations declined for the third month in a row — adding fresh worries to an industry already facing declines in its largest market.”

Registrations fell 8.1% yoy.


“Since March 2015, the ECB commanded purchases of €2.6 trillion ($3 trillion) of debt, mostly sovereign, from across the euro zone. Today (Dec. 13) marks the end of an era of unprecedented monetary stimulus in the region’s economy.

“It finally puts Europe on the same path as the US, which for the past few years has been unwinding its own stimulus from the 2008 financial crisis.”


“Wall Street banks are offloading leveraged loans at discounted prices and demanding that borrowers accept less advantageous terms, as they move to protect themselves from rapidly weakening demand.”


“The risk of a U.S. recession in the next two years has risen to 40 percent, according to a Reuters poll of economists who also found a significant shift in expectations toward fewer Federal Reserve interest rate rises next year.”


“Between 2012 and 2015 — a period when the recovery seemed to be gaining speed — nearly half of all counties nationwide saw flat or declining growth, according to new government data. More broadly, the Commerce Department figures highlight a stark and worrisome reality: While a handful of places around the U.S. are thriving, most regions are barely trudging ahead.”


“The national housing slowdown is spreading to markets like Las Vegas and Phoenix, where prices still haven’t reclaimed their pre-crisis peaks. After home values rose sharply this year, the market has shifted in recent weeks.

“Prices fell slightly in November while the inventory of unsold homes in the Las Vegas region has roughly doubled compared with a year earlier, according to the Greater Las Vegas Association of Realtors. Existing home sales slowed nearly 12% in November compared with a year earlier.”


“Beijing had high hopes that tax cuts for individuals would lift consumer spending and boost an economy which is showing the effects of the trade war, but overall retail sales in November proved disappointing.

“Even record spend on Singles’ Day’ on November 11 could not prevent retail sales from posting their weakest growth rate in 15 years.”


“A synchronised, global fiscal expansion may be able to moderate the pace of an eventual slowdown by some degree, or put it off longer than otherwise would have been the case.

“But with a trade war between the US and China unresolved (and starting to bite), Brexit chaos, riots in France and an Italian debt crisis, there’s certainly no shortage of strife weighing on global sentiment.

“In the words of top IMF official David Lipton, “storm clouds” are gathering. Time to grab that umbrella.”


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Economy 13th Dec 2018 Firms Stockpile for No Deal Brexit

“Companies and industry groups in Britain issued strident warnings against further political turmoil Wednesday after a challenge to Prime Minister Theresa May’s leadership underscored the strength of opposition in her own party to her government’s plan for Brexit.

“Underscoring the high stakes for business, a major UK manufacturing firm confirmed it has activated contingency plans. Airplane engine maker Rolls-Royce said that it has begun stockpiling parts to help minimize the damage from a disorderly Brexit.

“There are only 107 days to go before Britain is scheduled to leave the European Union, but parliament remains deeply divided on how to break with Britain’s biggest trading partner.

“Our firms are worried, investors around the world are baffled and disappointed, and markets are showing serious strain as this political saga goes on and on,” he added.

“Companies across the country have already taken steps to prepare for Brexit…

“The most worrying scenario for business is one where Britain crashes out of the European Union without a deal, leading to new trade barriers.

“Aerospace giant Airbus has said it could be forced to quit the country if there’s no deal on EU trading arrangements. Carmakers such as Nissan, BMW and Jaguar Land Rover are also heavily exposed.

“Mike Cherry, chairman of the Federation of Small Businesses, said that confidence among the group’s members has fallen to its lowest level since the financial crisis.

“”We don’t know what economic environment we’ll be operating within in only 100 days’ time … that makes planning ahead impossible,” he said, adding that firms are “crying out for some certainty about the future.”

“The deepening confusion over Brexit comes at a terrible time for the British economy.

“Data from the Office for National Statistics show the UK economy grew just 0.1% in October compared to the previous month. Industrial production fell 0.6% and manufacturing slumped 0.9%.

“The UK government says its Brexit deal will hurt the economy

The UK government says its Brexit deal will hurt the economy

Trading conditions are likely to worsen when Britain leaves the European Union on March 29.”


“Brexit is battering the UK property market, pushing it to its weakest level in more than six years, with almost half of surveyors reporting that sellers and buyers are sitting tight because of political uncertainty.

“The Royal Institution of Chartered Surveyors (Rics) said its monthly indicators for demand, supply and prices fell to multiyear lows in November.”


“Bonmarche’s chief executive Helen Connolly said: “The current trading conditions are unprecedented in our experience and are significantly worse even than during the recession of 2008/9.

“I hope that in the fullness of time, our cut to the forecast may prove to have been overdone, but in the current market, this seems the appropriate stance to adopt.”


“It seems that in Italy misery loves company. In the midst of their own budget travails, Luigi di Maio and Matteo Salvini, Italy’s two powerful deputy prime ministers, now seem to be rejoicing in France’s budget problems. Before doing so, they might want to consider that far from reducing the chances that Italy will suffer another round of its sovereign debt crisis, recent French political developments heighten the chances that such an Italian debt crisis might occur sooner rather than later.”


“The European Central Bank is fully expected on Thursday to affirm its plan to end its bond-buying program at year-end. But investors expect less clarity when it comes to signaling when Mario Draghi and fellow policy makers will move to nudge up ultra-low interest rates… The ECB’s key lending rate, known as the refi rate, stands at 0%, while the rate on deposits held overnight at the central bank is at negative 0.4%.”


“Citi economist Dana Peterson detailed the shocking rise of global debt in a report called “Global Debt Clock – Are We Headed for a Global Debt Crisis?” “In 1999, global debt tallied to US$79 trillion, but has since swollen to US$247 trillion as of 1Q 2018 – a more than three-fold increase in level terms or by 211 percent… Ms. Peterson included Canada among nations most at risk of a credit crisis… the report concludes that households and corporations, not the banking system, are most at risk of credit upheaval in the next 3 years.”


“Chief financial officers at companies are pessimistic heading into 2019, with nearly half expecting a recession by the end of that year, according to a survey released Wednesday. Duke University’s look at where 212 CFOs stand showed that 48.6 percent think the next negative growth period is less than 12 months away. If the U.S. manages to make it through the year without a recession, 82 percent figure one will start by the end of 2020.”


“U.S. government debt is on track this year to rise at the fastest pace since 2012, as a stronger economy fails to keep pace with the wave of red ink that’s rising under the Trump administration. Total public debt outstanding has jumped by $1.36 trillion, or 6.6 percent, since the start of 2018, and by $1.9 trillion since President Donald Trump took office, according to the latest Treasury Department figures. The latter figure is roughly the size of Brazil’s gross domestic product.”


“Default risk for Chinese companies has climbed to the highest in 13 years as Beijing seeks to rein in its post-crisis construction boom, according to Moody’s Analytics…

“China has already seen a record pace of bond defaults this year, a consequence in part of policy makers’ efforts to reduce leverage in the financial system.”


““A cooling of the global economy will reduce demand for oil…” said former Lebanese Minister of economy and trade Nasser Saidi. More than 80 per cent of the revenue of the six nations – Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates of the Gulf Cooperation Council (GCC) – comes from energy trade…

“World Bank senior vice-president Mahmoud Mohieldin said that the unemployment rate among Arab youths is 30 per cent.”


“The obsession with US shale oil is leading the world into an energy crisis. The world’s leading forecasting agencies have hailed shale’s tremendous growth as key to meeting oil demand in the coming decades.

“But by focusing on volume rather than quality, they are missing the point.”


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

Economy 12 Dec 2018 Brexit Descends into Chaos (More So)

“Conservative MPs have triggered a vote of no confidence in Theresa May, plunging the Brexit process into chaos as Tory colleagues indicated they no longer had faith in the prime minister to deliver the deal.

“Sir Graham Brady, the chair of the 1922 Committee, has received at least 48 letters from Conservative MPs calling for a vote of no confidence in May. Under party rules, a contest is triggered if 15% of Conservative MPs write to the chair of the committee of Tory backbenchers.

“A ballot will be held on Wednesday evening between 6pm and 8pm, Brady said, with votes counted “immediately afterwards and an announcement will be made as soon as possible”.”


“UK officials have been warning EU27 nations that a “no-deal” Brexit places a high risk of financial disruption to their banks, Sky News understands. It forms part of a move seen by some close observers as a perceived form of attempted leverage over the Brexit negotiation.

“Dozens of banks, including some of Europe’s biggest in Germany and France, have complex outstanding financial contracts, known as derivatives, notionally worth tens of trillions of pounds, operated through the City of London. The bulk of them will mature after March 2019.”


“The litany of risks for global investors in the euro area keeps growing as France joined Italy in putting its spending interests ahead of the European Union’s budget rules.

“The extra yield traders seek to hold French 10-year notes over those of Germany increased Tuesday to the widest since the 2017 election…”


“Turkey is almost certainly experiencing its first economic recession in almost a decade, posing a significant challenge to President Recep Tayyip Erdoğan as he seeks to solidify his power base at local elections in March.

“The economy contracted by a quarterly 1.1 percent in the three months to September as private consumption and investment slumped…”


“Mexican President Andres Manuel Lopez Obrador’s declaration of war on “neo-liberal” economics has shaken investors holding Petroleos Mexicanos bonds, fueling concern about the future of the highly-indebted state oil company he has pledged to revive…

“Fitch and Moody’s have in recent weeks flagged concerns about Pemex’s $106 billion of financial debt – the highest of any state oil company in Latin America.”


“Goodyear employees in Venezuela are each to be given 10 tyres as part of their severance payment, as the US firm halts operations in the country.

“Quality tyres are valuable on the black market, in a country where there is a chronic shortage of all sorts of goods. A number of foreign firms have pulled out of Venezuela, citing a growing economic crisis and US sanctions.”


“Nigerian lenders are in retreat.

“Rising costs and declining appetite to lend are prompting banks to repay dollar borrowings. Brent crude prices near their lowest levels in a year have slashed earnings from Nigeria’s main source of foreign income, reducing the amount of foreign exchange banks need to fund deals.”


“Australia’s tumbling property prices could shave up to 1.2 percentage points from economic growth in 2019 as the decline hits housing construction and consumer spending, according to AMP Capital Investors Ltd. Sydney and Melbourne prices will drop a further 10 percent next year, taking their peak-to-trough fall to 20 percent as a “perfect storm” smacks housing, AMP Chief Economist Shane Oliver said in a research report Wednesday.”


“Car sales in China continued to decline in November, placing them on course to mark their first annual decline in 28 years as homegrown brands from state-owned manufacturers struggle to compete with foreign rivals.”

Which would seem to give lie to the suggestion that the trade war is having a direct impact on sales.




Given that Yellen said this last summer:


“Gundlach noted that consumer confidence readings lately versus economists’ expectations are falling short by a magnitude and consistency last seen prior to the recession in 2007.

“This continued disappointment could be a sign of economic weakness ahead… The Fed seems to be on a “suicide mission,” raising rates while the government deficit increases as a share of GDP, Gundlach said.”


“American farmers have been forced to warehouse a bumper crop of soybeans, or sell at a loss, while a Midwest medical supply company is considering shipping production overseas amid growing uncertainty…

“We have been told by some local Chinese manufacturers that it ‘feels’ like they’re entering a slowdown and that they are being hurt already due to higher export costs and overcapacity.”

“Signs the US expansion may have peaked shook global stock markets in recent weeks and Wall Street’s main indices have erased all the gains posted this year.

“The US recovery will soon become the longest in recorded history but the boost provided from last year’s tax cuts is dwindling. Rising interest rates and a shortage of workers are crimping the housing market.

“Meanwhile, Europe faces political and economic upheaval and Japan remains in a long-term funk.

“The global economy may be hit by a hangover in 2019 that will last well beyond New Year’s day.”


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Economy 11 Dec 2018 Financial Crisis of 2019?

“For moneyed Americans, most of the past year has felt like 1929 all over again — the fun, bathtub-gin-quaffing, rich-white-people-doing-the-Charleston early part of 1929, not the grim couple of months after the stock market crashed.

“After a decade-long stock market party, which saw the stocks of the S. & P. 500 index create some $17 trillion in new wealth, the rich indulged in $1,210 cocktails at the Four Seasons hotel’s Ty Bar in New York, in $325,000 Rolls-Royce Cullinan sport-utility vehicles in S.U.V.-loving Houston and in nine-figure crash pads like Aaron Spelling’s 56,000-square-foot mansion in Los Angeles (currently on the market for $175 million, more than double what it fetched just five years ago).

“Will it last? Who knows. But in recent months, the anxiety that we could be in for a replay of 1929 — or 1987, or 2000, or 2008 — has become palpable not just for the Aspen set, but for any American with a 401(k).

“Overall, stocks are down 1.5 percent this year, after hitting dizzying heights in early October. Hedge funds are having their worst year since the 2008 crisis. And household debt recently hit another record high of $13.5 trillion — up $837 billion from the previous peak, which preceded the Great Recession…”


“As the average American household’s credit card debt soars and interest rates rise, a debt problem appears closer than ever. In its study of American debt load in the third quarter, personal finance site WalletHub found that the average U.S. household now has $8,284 in credit card debt… According to WalletHub, which analyzed debt against average income, the current debt load is just $177 away from being “unsustainable,” suggesting a debt crunch could be in the offing.”


“Former Federal Reserve Chair Janet Yellen is worried about excessive leveraged lending and the level of corporate debt across Wall Street. “Corporate indebtedness is now quite high and I think it’s a danger that if there’s something else that causes a downturn, that high levels of corporate leverage could prolong the downturn and lead to lots of bankruptcies in the non-financial corporate sector,” Yellen said.”


“Global equity markets could struggle to come to terms with a dramatic slowdown from the world’s largest economy next year, one Goldman Sachs strategist told CNBC on Monday, with trade tensions elevating the risk of near-term volatility.

“Fresh signs of slowing global growth, and emerging pockets of weakness in the U.S., rattled financial markets last week.”


“U.S. government debt yields fell on Monday while the so-called yield curve continued to flatten amid projections of slowing economic growth and weaker inflation…

“Investors are increasingly concerned about a possible economic slowdown…”


“Toronto’s cooling real-estate market is on track to cost its municipal government nearly $100-million in tax revenue…

“…something critics of Mayor John Tory warn could force the city to choose between higher property-tax hikes or cuts to services in next year’s city budget.”


“Property price declines in Sydney and Melbourne are no longer confined to expensive dwellings, with the price falls spreading to middle and lower segments of the market.

“Bureau of Statistics figures show property prices in Australia’s eight capital cities fell 1.5% on average in the September quarter, marking nine consecutive months of price declines.”


“UK economic growth slowed in October as car sales went into reverse, while factory output stalled amid heightened uncertainty over Brexit. According to the Office for National Statistics, GDP growth cooled to 0.4% during the three months to October… In a sign of the continuing woes on the British high street and the worst period for car sales since the financial crisis, the retail and wholesale sector also recorded a drop in growth of 0.02%.”


“According to the November PMI, Italian private sector output declined at the sharpest pace in five years. 

“Our survey data suggest the Italian economy will decline once again in the fourth quarter following a 0.1% quarterly contraction in GDP in the third quarter, meaning the country will enter a technical recession for the first time since 2013.”


“China’s automobile sales fell about 14 percent in November from a year earlier, the country’s top auto industry association said, marking the steepest such drop in nearly seven years in the world’s largest auto market. The drop in sales to 2.55 million vehicles, a fifth straight decline in monthly numbers, comes against a backdrop of slowing economic growth and a crippling China-U.S. trade war…

“The November drop comes on the heels of almost 12 percent declines in each of the past two months, putting China on track for an annual sales contraction not seen since at least 1990.”


“The global growth drivers that produced the [Asia-Pacific] regional upturn have started to fade. And with that, the economic picture has darkened in recent months with expectations building for a sharper slowdown in 2019, according to a report by S&P Global Ratings titled, “Asia-Pacific Crystal Ball–Mild Economic Slowdown Should Extend Through 2019″. Further, the report does not expect global growth drivers to pick up in 2019 and so growth should keep slowing…”


“Oil prices dived on Monday, erasing Friday’s gains following an output cut deal between OPEC and its allies, as further global stock markets weakness spurred concerns over slowing global economic growth… Analysts cautioned that the stock market slump would turn to undermine oil market, as the negative status quo stoked fears of a slower-than-expected global economy and a worsening demand outlook.”


“One of the International Monetary Fund’s top officials warned on Tuesday that storm clouds were gathering over the global economy and that governments and central banks might not be well equipped to cope.”


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