The year 2019 isn’t going to be like 2018. The fear of a recession, the drop in confidence as shown in global PMIs, political stalemate/government shutdown, the threat of a bear market all play out, writes Bob Savage. He's presenting at TradersExpo New York March 11.
There is a fear about China growth that permeates the markets today as the PMI there shows more weakness and the usual year-end boom to spend didn’t happen. There is also a fear about China debt as its growth rate is necessary to support employment and the servicing of corporate leverage.
The quicksand fears about debt are rising with the ongoing doubts about the Fed pausing. Perversely, better U.S. data won’t make any of this better.
Reuters: Wall Street falls at open Wednesday on fears of global slowdown.
There is some relief today as many see the ongoing U.S. government closure are hurting real growth and driving the yield curve flatter if not inverting as ugly politics leave little confidence in quick fixes.
Thrashing about in quicksand makes it worse and the U.S. debt story isn’t getting any better either. Growth outlooks are the focus for today and the servicing of debt fears puts any carry trade into reverse.
Risk off in Asia followed through to Europe but to a much less panicky start which maybe the best we can get for the moment. Slowing growth makes the soft patch of 4Q seem likely to extend to 1Q but just how much and how bad markets can be remains in the hands of central bankers and politicians.
The risk barometer of choice, the Japanese yen/U.S. dollar (JPY/USD) is telling us to act slowly to buy any dip and to beware of bulls offering a fast fix to the present quicksand. This makes the holiday there and the absence of the BOJ even more problematic and opens 108.40 then 106.75 into the rest of the week.
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