For a given definition of winter*, naturally.
From Willem Buiter and team at Citi on why the risk of a global growth recession is high and rising, with our emphasis:
The growing threat to the global outlook rests on poor fundamentals, which include the pre-existing fragilities related to the structural and cyclical slowdowns in China and its unsustainable currency regime, broken EM growth models, excessive leverage across many countries and sectors, and rising regional risks (Brexit) and geopolitical risks (including in Russia, Turkey and Syria, the South China Sea, and North Korea).
With all the doom and gloom in the air, you would be forgiven for getting a bit down about the prospects for growth.
Indeed it is interesting just quite how quickly market expectations have been upended, with Goldman Sachs abandoning five of its six “top trades” for 2016 barely a month into the year. Read more
From Credit Suisse’s James Sweeney and team: Read more
Kevin Rudd 2.0 has been quick to highlight the dangers posed by slowing Chinese growth since he was returned as Australia’s prime minister.
For example: Read more
Another day, another Aussie GDP downgrade.
From BofA Merrill Lynch: Read more
A pretty interesting paper, and conclusion, from the Bank of England’s External MPC unit on Friday — or at least one that should keep the debate going over the art/science of GDP revisions… Read more
The third quarter was bad, but it was a revision of Q2 GDP data — from 0.1 to -0.1 per cent, seasonally adjusted and annualised — that puts Japan in official recession:
As the festive season draws nearer, Albert Edwards brings us good cheer:
Expect the New Year to bring nothing but disappointment.
Yes, our favourite bear argues that even though we’re getting relatively decent US economic data, it’s falling corporate profits to come we should be concerned about. In short, he argues the US is already entering another recession. Read more
Germany business sentiment fell again in September, from 102.3 to 101.4, marking its fifth succesive month of contraction. The roughly 7,000 companies surveyed by the Ifo institute were also increasingly pessimistic about their futures… which doesn’t bode well for everyone else’s.
Forecasts had been for a slight increase in the index but, with typically sharp turnaround speed, our inboxes now expect a recession. Capital Economics said the expectations index in particular, down from 94.2 to 93.2, indicates an annual fall in GDP of nearly 1 per cent: Read more
During a recession, people stay at home more rather than going out. It’s cheaper. Either that, or they are guarding the cash they stashed under the mattress.
The Economist has treated us to a couple of examples of companies that do particularly well from the two tendencies of stashing cash and staying in: money printers, and online dating agencies. Read more
Italian business confidence has taken a serous hit, falling to its lowest level in two years in April.
According to the wires: Read more
This cheery note is from the Office for National Statistics (our emphasis):
GDP contracted by 0.2 per cent in the first quarter of 2012, the second successive period of negative economic growth. The fall in real GDP was driven primarily by weakness in the construction sector, where output is estimated to have fallen by 3 per cent between the two latestquarters. But the dominant services sector of the economy grew only slowly while industrial production fell slightly. Read more
Citi analysts have attempted to explain the Portugal enigma, which they note now has the country’s 10-year bonds trading at some 1,000 basis points above Bunds.
The reason, Jurgen Michels and team say, is simply that the country is not on a sustainable fiscal path: Read more
Festive cheer seems to be in short supply at Capital Economics:
– We don’t have high hopes for 2012. In fact, we continue to think that the UK will re-enter recession. Output could already be contracting and is likely to continue to fall throughout most of next year.
It must be nearly Christmas, for the last Deutsche Bank Early Morning Reid of 2011 was today.
Luckily, strategist Jim Reid and his team left us with a note on their thoughts for what the new year will hold, and reiterated their theory about how shorter business cycles will become the norm. Read more
Whatever is decided at the Save the Euro summit, it seems certain the eurozone is heading into recession.
But not just any recession, this will be a protracted one reckons Citigroup. Read more
Dividends or earnings? Where should equity investors put their hope if Europe slides into a recession?
The former will likely outperform the latter, according to Morgan Stanley analyst Ronan Carr. He gives four reasons for this: Read more
From stress test to recession.
Merrill Lynch has on Tuesday made some savage revisions to its forecasts for UK banks to reflect a more bearish economic outlook. Read more
This looks a bit like how 2012 will turn out, doesn’t it?
European countries are at present locked into a severe recession. As things stand, particularly as the economies of the USA and Japan are also faltering, it is very unclear when any significant recovery will take place. The political implications of this are becoming frightening. Yet the interdependence of the European economies is already so great that no individual country, with the theoretical exception of Germany, feels able to pursue expansionary policies on its own, because any country that did try to expand on its own would soon encounter a balance-of-payments constraint. The present situation is screaming aloud for co-ordinated reflation, but there exist neither the institutions nor an agreed framework of thought which will bring about this obviously desirable result. It should be frankly recognised that if the depression really were to take a serious turn for the worse – for instance, if the unemployment rate went back permanently to the 20-25 per cent characteristic of the Thirties – individual countries would sooner or later exercise their sovereign right to declare the entire movement towards integration a disaster and resort to exchange controls and protection – a siege economy if you will. This would amount to a re-run of the inter-war period.
Interesting chart from Ruslan Bikbov at BofA Merrill Lynch.
It’s like putting your foot on the accelerator but because the transmission mechanism isn’t working properly, the car wheels don’t respond.
Actually George, that might be because the car is on fire, and the wheels have blown off. Read more
Yup, it really has come to this. Rather than debating if there will be a recession in Europe, economists are now trying to figure what it will look like and how long it will last.
RBS has already given us its view, and now comes JPMorgan. Read more
Here it is in full, from Jacques Cailloux and team at RBS:
Despite some early signs of a slightly firmer Q3 GDP (our GDP Tracker is at 0.2% q/q vs 0.1% q/q last month) on account of strong German industrial production (boosted by favourable working day effects), we are revising down again our economic forecasts thereafter and now expect a full blown recession. The September composite PMI fell to 49.2, its weakest since July 2009 (and first sub-50 reading since then too). At this level, the PMI is consistent with a 0.1% contraction in GDP on a 3m/3m basis and both forward looking elements of the survey and ongoing financial market developments imply further weakening ahead. The manufacturing PMI was 48.4 – the weakest since August 2009 – while the services PMI was 49.1 – the weakest since July 2009. Read more
Title of the IMF’s World Economic Outlook, September 2010:
Recovery, Risk & Rebalancing
Or: do wide high yield spreads over US Treasuries predict a recession?
We ask because this is an interpretation we’ve seen a fair bit in the media over the last few weeks. Read more
Consumer confidence in the United States has fallen to its lowest since April 2009, in the depths of the previos recession, Reuters reports. An index of consumer attitudes fell to 44.5 from 59.2 a month before, which was also the sharpest drop since October 2008. Economists had forecast 52, Bloomberg says. Business and consumer confidence in the eurozone also fell the hardest since December 2008. The consumer portion of the European Commission’s index saw its biggest drop in twenty years, says the FT. A particular worry was Germany’s poor performance in the survey, with business confidence in the eurozone’s largest economy plummeting from 112.7 to 107 points.
Sometimes, existing words just don’t cut it and you have to come up with some new ones. Or get your readers to do it for you.
In the current economic climate FT Alphaville has been running out of imaginative ways to convey a sense of imminent destruction. (See “climate”, above.) Read more
Or, earnings recession risk, and still not getting it in equities.
Interesting spot from Morgan Stanley’s European equities analysts, following the bank’s major downgrade of global growth forecasts and its belief that Europe in particular is “dangerously close” to recession. Read more