A Precarious Global Growth Setup

Takeaway: U.S. GDP sliding toward zero, Europe struggling with deflation, Japan still flailing as China releases phony (but declining) growth numbers.

 A Precarious Global Growth Setup - stop sign

 

in case you missed it, We'll say it again ... Global growth IS slowing

 

The evidence is obvious to even casual observers by now. U.S. GDP continues its slow slide toward zero, Europe is struggling to beat back deflation, Japan is desperately flailing just to stay afloat, while the Chinese politburo releases phony, albeit still declining, growth numbers.

 

As a result... surprise > global equity markets are getting hammered.

 

Below is equity market analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers this morning:

 

"Buckle in Europe and Japan, that is… most European stock markets signaling immediate-term oversold but Euro not obeying overlord Draghi up at $1.149 this am; European Equities remain in crash mode from last year’s Global Equity Bubble highs; Spain now -26.3%  since this time last year w/ an election (for socialism) pending June 26."

 

 

Heading over to China... 

 

A spate of new reports shines light on the complicated situation evolving in everyone's favorite Communist country.

 

 

In related news, the China Securities Journal noted this morning, "Bad loan ratios rising at majority of Chinese banks in Q1." Meanwhile, Reuters noted the obvious, "Investors to remain wary of China for now."

 

Here's how all of this manifested in Chinese equities today. Spoiler Alert: It's not good.

 

 

it raises serious alarm bells For growth.

 

It also partly explains why Dr. Copper is down yet again this morning despite the recent reflation rally. (Incidentally, we've been warnings subscribers about global #GrowthSlowing for about a year and a half now.)

 

 

The slowdown in China is also handicapping the Australian economy, hence the Reserve Bank of Australia’s decision to cut interest rates to a record low 1.75%.

 

Nice.

 

(Yes, we're highly skeptical the Aussie central bank's efforts will yield fruit.)

 

 

A final rhetorical question... 

 

When global growth slows, what do you own?

 

That's simple... Long Bonds (TLT)

 


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