Holy crap:
As if the farmers of America haven’t been hit hard enough by the Orange Shitgibbon, their suffering is about to get a whole lot worse, and I mean a whole lot.
China is apparently devaluing the yuan and the U.S. response, for the first time since 1994, is this:
The consequences could be horrific:
The Dow dropped 760 points today and a 480 point drop on Tuesday now looks very possible.
Of course, the stock market is not a reliable indicator. Actually, the situation is much, much worse. From David Rosenberg:
Meanwhile, two of our major macro themes for 2019 are gaining more credence with each passing day — these being the inevitable unwind of the unsustainable corporate debt bubble and the commensurate pullback in business capital spending. The global market for leveraged loans is now a massive US$2.2 trillion and Moody’s estimates that 80 per cent of this debt is ranked as “covenant lite,” which makes a mockery of the 25 per cent share prior to the 2008 financial crisis… [Emphasis added]
At the same time, Morgan Stanley’s index of U.S. capital spending plans just dropped to a two-year low and S&P Global now estimates that capex growth is poised to weaken this year to three per cent from 11 per cent in 2018.
From CNN Business:
President Donald Trump's escalating trade war against China threatens to inflict a powerful shock to the American economy that not even the Federal Reserve can fully absorb.
The new front in the trade war will only add to the downturn in manufacturing
spanning the globe. It will further dent shaky business confidence and could even puncture the optimism among consumers. In short, little good can come from these new tariffs — and the
ensuing retaliation from Beijing."It could be incredibly damaging to the global economy. The risk of a recession has gone up because of the ratcheting up of the trade war," said Kristina Hooper…
The inversion of the US yield curve, a measure investors view as the surest predictor of an impending recession, on Monday became deeper than at any point since the onset of the financial crisis a decade ago, as the US-China trade war spread to the currency markets.
The difference between the yield on three-month Treasury bills and the benchmark 10-year bond, which has turned negative or “inverted” before every US recession of the past 50 years, widened to minus 32 basis points at its worst, after Beijing allowed its currency to weaken against the dollar past the symbolic Rmb7 level.
Batten down the hatches, brothers and sisters: the storm is descending on us.
