After ten weeks of protests that have moved from the center of Hong Kong through the transit system and into the international airport, suddenly there are dozens of international firms that are raising red flags about the future of the global economy. And this comes on the back of global economies showing signs of fatigue triggered by concerns in global trade. Currently economic weakness is being reported in the US with GDP falling to 2.1% in Q2 and expectations of 2.0% in Q4 for 2019.
Germany reported weaker economic expansion while the Hong Kong protestors have become more violent, triggering a shut-down on the international airport. The key factors that are responsible for weakening economic growth seem to multiply each week while confirmations are ever present in scheduled government reports.
Our Views: With the US-China trade war only accelerating in intensity there will be more pressure on global growth and in the coming months, followed more central bank action. Keep in mind that former Fed Chair Janet Yellen has said that historically too much pressure has been placed on central banks implying that governments must use other tools to adjust economic cycles. The 2020 campaign will be full of economic stress and political tensions.
For those who are interested in specific ideas, keep reading…..
I have continued to focus on the S&P 500, fading rallies from 2,970 to 3,000 and for the Nikkei 225 fading from 21,700 and higher. Global equity markets should continue lower in the coming weeks. I will follow-up with tech lists and USDJPY views in the coming comments……