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Archive for 16. August 2019

Markets are braced for a global downturn

Posted by hkarner - 16. August 2019

Date: 15-08-2019
Source: The Economist

The signals from bonds, currencies and commodities are increasingly alarming

Looking for meaning in financial markets is like looking for patterns in a violent sea. The information that emerges is the product of buying and selling by people, with all their contradictions. Prices reflect a mix of emotion, biases and cold-eyed calculation. Yet taken together markets express something about both the mood of investors and the temper of the times. The most commonly ascribed signal is complacency. Dangers are often ignored until too late. However, the dominant mood in markets today, as it has been for much of the past decade, is not complacency but anxiety. And it is deepening by the day.

It is most evident in the astounding appetite for the safest of assets: government bonds. In Germany, where figures this week showed that the economy is shrinking, interest rates are negative all the way from overnight deposits to 30-year bonds. Investors who buy and hold bonds to maturity will make a guaranteed cash loss. In Switzerland negative yields extend all the way to 50-year bonds. Even in indebted and crisis-prone Italy, a ten-year bond gets you only 1.5%. In America, meanwhile, the curve is inverted—interest rates on ten-year bonds are lower than on three-month bills—a peculiar situation that is a harbinger of recession. Angst is evident elsewhere, too. The safe-haven dollar is up against many other currencies. Gold is at a six-year high. Copper prices, a proxy for industrial health, are down sharply. Despite Iran’s seizure of oil tankers in the Gulf, oil prices have sunk to $60 a barrel. Den Rest des Beitrags lesen »

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Warning Signs Point to a Global Slowdown

Posted by hkarner - 16. August 2019

Date: 15-08-2019
Source: The Wall Street Journal

Weakness in Germany, China, puts pressure on record U.S. expansion as recession risks rise; U.S. stocks tumble

Warning signs pointing to a deepening global economic slowdown—and the risk of recession—are flashing more brightly.

Many of the biggest troubles are showing up overseas. But stock and bond markets are signaling that the threat of a downturn is spreading to the U.S., the world’s largest economy, now in its longest expansion on record.

Economic output in Germany, the world’s fourth-largest economy, contracted in the second quarter, according to a report Wednesday, while a report on factory output in China, the second-largest economy, came in lower than expected.

“It’s almost like we’re starting to see a textbook version of a pre-recessionary period,” Nicholas Akins, chief executive of Ohio-based American Electric Power Co. , said in an interview Wednesday. The company provides electricity to industrial, commercial and residential customers in 11 states. Den Rest des Beitrags lesen »

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Party Man: Xi Jinping’s Quest to Dominate China

Posted by hkarner - 16. August 2019

Date: 15-08-2019
Source: Foreign Affairs By Richard McGregor

China’s President Xi Jinping.

When Joe Biden met Xi Jinping in 2011, China’s leader in waiting hit the U.S. vice president with a volley of questions about U.S. politics. How did the system work? What was the relationship between the White House and Congress? How should Beijing interpret the political signals coming out of Washington? For Biden and his advisers, these were welcome questions after nearly a decade of frustration in dealing with Xi’s predecessor, the colorless, impenetrable Hu Jintao.

But over meetings and meals in Beijing and Chengdu, the capital of Sichuan Province, the American visitors were struck by Xi’s animation on another topic. Chinese leaders are generally cautious about straying too deeply into their own biographies. Recounting their personal stories in front of Chinese officials, let alone foreigners, involves traversing recent Chinese political history, a minefield of purges, betrayals, and ideological about-faces.

Xi, however, talked unprompted about his father, Xi Zhongxun, a revolutionary from the early days of the Chinese Communist Party (CCP), and about Mao Zedong, the founder of modern China, who had turned the country upside down to keep his rivals at bay. Xi’s father, once seen as a loyal party member, had risen to be vice premier in the late 1950s but was purged from the leadership by Mao in 1962, after he backed leadership rivals. Soon thereafter, he was jailed and left to suffer public humiliation at the hands of the Red Guards in the Cultural Revolution. Radicals harassed his son and banished him to the countryside. The father was not rehabilitated until the late 1970s, after Mao had died. But as Xi made clear to his visitors, he would not repudiate Mao. He revered him. Den Rest des Beitrags lesen »

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