Morgan Stanley sees global recession

3 June, 2019

Investors are overlooking the threat posed by the U.S.-China trade war, which could send the global economy into recession in less than a year, according to a research note published Sunday by Morgan Stanley. “Investors are generally of the view that the trade dispute could drag on for longer, but they appear to be overlooking its potential impact on the global macro outlook,” wrote Chetan Ahya, the investment bank’s chief economist.

President Donald Trump last month raised the tariffs on $200 billion worth of Chinese goods from 10% to 25%. U.S. officials have also threatened to impose tariffs on $300 billion in remaining Chinese imports.

Ahya noted that the outcome of the trade war at the moment “is highly uncertain” but warned that if the U.S. follows through with 25% tariffs on the additional Chinese imports, “We could end up in a recession in three quarters.”An economic slowdown in early 2020 could hamstring Trump’s electoral chances. Trump has campaigned on boosting growth and lowering unemployment, and made his deal-making abilities a signature aspect of his 2016 campaign. American voters head the the polls in November of next year.

Markets have tanked amid the trade uncertainty, with the S&P 500 down more than 6% last month and the Dow, as of Friday, marking losses for six straight weeks, the longest such streak in eight years.  The hit to equities was compounded last week by Trump’s threat of new tariffs on Mexico if it does not take new action to prevent unlawful immigration into the U.S. Trump has said the U.S. will impose escalating tariffs on Mexican imports starting at 5% on June 10.


Source  
Dollar is searching for its price ceiling

The dollar index has been growing almost daily in February, adding 2.5% from the beginning of the month to its peaks from May 2017. The dollar...

Gold sets records in euro and strives higher

Apple has returned to the market fear of the coronavirus' impact on the economy. The company said that the recovery of supply and sales might be delayed...

Dollar growth possible targets and timing

The dollar index closed last week above 99.0, in the three-years peaks area. After touching these levels in September-October last year...


Inflation threat vs Asian virus

The markets have returned to a cautious mood associated with a jump in the number of cases of coronavirus infection. New methods of disease...

Gold could reach $2000 this year

The liquidity injections by the PBC and other market support measures resulted in an impressive growth of so-called risk assets. American S&P 500...

BoE could cut interest rates

Bank of England Governor Mark Carney dropped a clear hint on Thursday that the central bank could cut interest rates if it looks like weakness...


The start of 2020 may repeat January 2018

Financial markets end the year on a high note, supported on the one hand by improved macroeconomic indicators, and, on the other, by hopes for an early...

OPEC considers production cuts

Saudi Arabia, Russia and their oil-producing allies are considering a range of options to maintain stability in the oil market just weeks ahead...

More Brexit votes, pound volatility?

At the start of trading on Monday, the British pound fell 0.6%, as a crucial Saturday vote on the new Brexit plan was postponed. Prime Minister...