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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: FJB who wrote (1158456)	8/22/2019 8:39:35 AM
From: sylvester80	Respond to of 1583507

OOPS! TrumpRecession Risk ‘High and Rising’ As Global Slowdown Broadens: Morgan Stanley BY MATTHEW JOHNSTON Updated Aug 22, 2019 investopedia.com A global economic growth slowdown is well underway as corporate sentiment and investment, as well as global trade and manufacturing, have fallen to multiyear lows. But continuing uncertainty stemming from the U.S.–China trade war now appears to be spilling over and infecting the non-manufacturing sector, labor markets and consumers. The combination of these trends are an indication that the risk of a global recession is both “high and rising,” according to Morgan Stanley. “While we don’t know the exact tipping point, the fact that trade tensions have persisted with no clear signs of progress towards a near-term resolution makes us concerned that the risks of a non-linear impact are rising,” wrote Morgan Stanley’s analysts in their Global Macro Briefing report issued yesterday. “Consequently, heightened recession risks remain in place.” What It Means Annual real GDP growth for the global economy is expected to fall to a six-year low of 2.9% for the current third quarter. Then in the fourth quarter, it is expected to drop another 10 bps points to 2.8% and is expected to remain below 3.0% for the first two quarters of 2020, as an extended period of stagnation sets in. Up until now the worst of the slowdown has largely been borne by the manufacturing sector, corporate sentiment, capital expenditures ( CapEx), and trade activity. Global Manufacturing PMIs—indexes based on surveys that attempt to capture the perspective of senior executives on new orders, inventory levels, production, supplier deliveries, and employment—have been contracting for two consecutive months and are currently sitting at seven-year lows. Global capital goods imports—a proxy for the CapEx cycle—have been contracting for five consecutive months and have fallen to three-year lows. Global trade activity continues to weaken, having contracted for the fourth consecutive month, and global trade volume has reached its lowest point since 2012. Despite news that trade negotiations between the U.S. and China are taking place and the Trump administration’s announcement to delay tariffs on a select set of goods from China, the lingering uncertainty will continue to weigh on global growth. With no clear resolution to the conflict in sight, other parts of the economy that have held up relatively well thus far are now starting to crack under the force of that weight. The global slowdown is now broadening to the non-manufacturing sector and signs of weakness are starting to show in labor markets and consumer spending. The services PMI for the major economies of the G4 and BRIC has been slowing since at least February 2019, while the employment sub-component of the manufacturing PMIs has been contracting since April 2019, and global retail sales growth is now closing in on lows for the current cycle. The U.S., with an unemployment rate near 50-year lows and a relatively healthy consumer, is not immune to the effects of a global slowdown. The fiscal tailwinds that supported economic growth in 2018 have already begun to fade. Similar to the global economy, a manufacturing slowdown is now spreading to other parts of the economy. Payroll additions are losing momentum and the aggregate number of hours worked is starting to fall, a sign that employers are still hanging onto their employees, but are starting to cut their hours. Looking Ahead Prompted by the slowdown, global central banks have already begun applying their monetary medicine, cutting interest rates or, at the very least, signalling that future easing is coming. While further easing will be necessary to dampen the negative effects of the slowdown, Morgan Stanley’s analysts don’t believe it will be enough to stimulate a full recovery. Only a full resolution of the trade conflict will be enough to revive corporate sentiment and put growth back on track.