Yes, there is a global economic slowdown underway, led by Europe and China.
(Bloomberg) — The euro-area economy is closing out 2018 on a gloomy note, echoing a trend of weaker global growth from China to the U.S.
A gauge of manufacturing and services in the euro region unexpectedly dropped to its lowest in just over four years in December. While the drop was driven mainly by France where the “Yellow Vests” movement led to a contraction, there’s also signs that underlying momentum is dropping off.
But political turmoil alone can’t account for the weakness that has characterized the euro-area economy since early this year, with trade tensions posing a headwind to investments across the globe. In China, figures on Friday showed slowing production growth and retail sales.
Only Macron would increase taxes on fuel as the French economy is slowing. The reaction in France was pretty clear.
What’s the matter Macron? Chicken?
While the US economy is humming along nicely, there is trouble brewing in River Cities (that is, the Yangtze River in China and The Rhine River in Europe).
Both the Eurozone GDP forecast and China Manufacturing PMI are falling like a paralyzed falcon.
Yes, we got trouble in River Cities … overseas.
The large Central Bank monsters are fighting. Instead of Godzilla versus Mothra, it is it The Fed versus European Central Bank (ECB).
As the US Federal Reserve continues to “nornalization” interest rates with increasing Fed Fund rate and balance sheet tightening (QT), Europe (or EMEA to be precise) is going in the opposite direction. There were 16 nations with negative 2 year soverign yields a short while ago, but now the number has grown to 18 (including France and Germany).
While on this side of the pond, tech-heavy NASDAQ has dumped 13% since its recent peak.
With a growing economy in the USA, and worries in Europe over Brexit and Italy’s budget fight with the EU (Greece’s GDP growth YoY is higher than France, Germany, UK and Italy).
the ECB is going in the opposite direction of the US Fed.
Here is a photo of Fed Chair Jerome Powell announcing a Fed rate hike in December.