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China says that wrong actions from the US has escalated trade frictions greatly

  
Analysis, Economy

Comments by China’s commerce ministry

  • Says that US actions have increased chances of a global economic recession
  • Urges US to stop abusing domestic laws to sanction Chinese firms
  • Says that China will adopt necessary measures to safeguard its firms’ interests
Fighting words like these won’t really help ease the risk mood we’re seeing so far today. US equity futures have slipped to fresh lows, down by 0.7% now as risk-off sentiment starts to gain further momentum on the session.

OECD cuts 2019 global economic growth forecast to 3.2% from 3.3% in March

  
Analysis, Economy

OECD releases its latest economic outlook on the global economy

  • 2020 global economic growth seen at 3.4% (unchanged)
  • Says that global growth is to remain sub-par due to trade tensions
  • 2019 US economic growth seen at 2.8% (0.2% higher)
  • 2020 US economic growth seen at 2.3% (0.1% higher)
  • 2019 China economic growth seen at 6.2% (-)
  • 2020 China economic growth seen at 6.2% (-)
  • 2019 Eurozone economic growth seen at 1.2% (0.2% higher)
  • 2020 Eurozone economic growth seen at 1.4% (0.2% higher)
  • 2019 Japan economic growth seen at 0.7% (0.1% lower)
  • 2020 Japan economic growth seen at 0.6% (0.1% lower)
  • 2019 UK economic growth seen at 1.2% (0.4% higher)
  • 2020 UK economic growth seen at 1.0% (0.1% higher)
Despite a slightly improved outlook to more major/developed nations, OECD notes that trade disruptions and higher tariffs on US-China trade is likely to hit global growth further resulting in a sharp slowdown in investment and confidence faltering.
The slight downgrade to global growth forecast comes alongside a softer touch among more developing nations, particularly in Asia. It’s not much of a surprise as trade tensions are likely to hit the likes of South Korea first before other nations start feeling the pinch.
As far as bad news goes for risk sentiment today, this is very much bearable as the downgrade to the global growth forecast is rather minimal.

“Preparing for the next recession: 9 things you need to know”

  
Analysis, Economy

Doing a bit of a scan about and found this, might be of interest.

I am not familiar with Capital Ideas (the piece is on their blog) but its this is an interesting read.
  • With the U.S. expansion nearly 10 years old, investors may be wondering whether the next one is just around the corner.
  • In our view, we don’t believe a recession is imminent in 2019. Our research indicates it is much more likely that the next recession will be in 2020 or 2021. 
  • But economic cycles are notoriously hard to predict, and it’s never too early to be prepared for the next downturn.

Japan GDP (preliminary) Q1 2019: 0.5% q/q (vs. expected -0.1%)

  
Analysis, Economy

First reading for first quarter 2019 economic growth in Japan. These numbers seem rather bizarre ….

GDP (seasonally adjusted) for Q1, preliminary, 0.5% q/q: BEAT
  • expected -0.1%, prior +0.4%, revised from +0.5%
GDP Annualized (seasonally adjusted) for Q1, preliminary 2.1% y/y: HUGE BEAT
  • expected -0.2%, prior +1.6%, revised from +1.9%
GDP Nominal (seasonally adjusted) for Q1, preliminary 0.8% q/q:
  • expected 0.1%, prior 0.4%
GDP Deflator y/y for Q1, preliminary 0.2%:
  • expected 0.2%, prior -0.3% (deflator is an inflation indicator)
GDP Consumer Spending y/y for Q1, preliminary -0.1% q/q,  – Miss
  • expected -0.2%, prior was 0.2%, revised from 0.4%
GDP Business Spending y/y for Q1, preliminary -0.3% q/q – Miss
  • expected -1.9%, prior was 2.5%, revised from 2.7%
The consumer is a miss, as is capex. Positives from trade(!!!):
  • net exports positive (first time in a year) despite exports -2.4% q/q … biggest fall for these since Q2 2015
  • Imports shrunk rapidly, -4.6% q/q, biggest fall since Q1 of 2009
As far as good GDP results go these are pretty bad is my take.
Mustn’t complain though, if the focus is the headline its a ripper!

IMF Lagarde: We expect world economic outlook will bounce back at the end of 2019

  
Analysis, Economy

For what it is worth…

Under the category, “For what it’s worth”, the IMFs Lagarde expects world economic outlook will bounce back at the end of 2019 and in 2020.  In addition, Lagarde says trade tensions between the US and China are a downside risk if not resolved.
For what it is worth, the second part will certainly impact the first part.
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