The global growth slowdown began in the second half of 2011. I flagged it as a trend last May. At that time, I was saying reduce risk to deal with the slowdown. But that was about it. For the most part, markets have shrugged off this slowing growth with commodities, equities and bonds all doing reasonably well. Only precious metals, emerging markets and European periphery stocks have seen a major correction. When I updated my view in December, my concerns were Europe, China, India and Australia. And this is still the case.
I have written a decent amount about Europe. So I won’t go into detail here except to note that Europe is in a double dip and that economic policy is slowly moving away from austerity toward growth. It’s not clear how much movement we will see and whether it will matter from a global economy perspective. On China, Hugh Hendry has a great piece out questioning whether the Chinese economic miracle can continue unabated. He is China bear and continues to see negatives there. I may review this piece at some point in the future, but I thought I’d flag it.
What I wanted to point here in the links are the downside moves in Australian housing and in the Indian economy. Steve Keen notes that Australian house prices peaked in June 2010 and they are down 10% from that peak according to the ABS data. I see Australia as a canary in the coalmine on commodity prices and the global growth slowdown because that economy has avoided recession for so long. yet the housing situation is worrying. My thinking has been that if the incipient fragility in housing turns into something more serious, then it is a harbinger for problems stored up in inflated asset and commodity prices. Note Delta Airlines buying a refinery could be a contrary indicator. I expect India to slow more abruptly than China and this seems to be occurring. Watch these two situations because Europe and China get all the headlines, but these two are important too.
That’s it. Here are the links.
- Marine Le Pen, qui votera blanc, ne donne pas de consigne à ses électeurs
- Putting Toronto’s housing boom in perspective | Economy | News | Financial Post
- Paul Krugman and Ron Paul discuss economics – as it happened | World news | guardian.co.uk
- Tea Party Congressmen Accept Cash From Bailed-Out Bankers – Bloomberg
- Solar panel demand down nearly 90% following subsidy cut | Environment | guardian.co.uk
- Sarkozy : "Il y a trop d’immigrés en France"
- India’s exports fall for the first time since 2009 | Reuters
- BBC News – Australia cuts rates by more than forecast to 3.75%
- Banco malo vs. rescate de los bancos españoles – CincoDías.com
- Greek 2011 deficit at 9.1 pct of GDP | Reuters
- Sarkozy: "Los españoles tienen que hacer las reformas que no han hecho hasta ahora" – ABC.es
- Juncker: Germany must not suggest it pays for euro zone | Reuters
- The Economist fails the Turing Test again – Crooked Timber
- China April official PMI at 53.3 vs 53.1 in March | Reuters
- Consumer Credit Standards Ease – WSJ.com
- Laissez-faire with strip-searches: America’s two-faced liberalism | Bernard Harcourt | Comment is free | guardian.co.uk
- La salida de capitales de España suma más de 128.000 millones desde julio | Economía | EL PAÍS
- Schäuble: "España ha tomado las medidas correctas" – ABC.es
- New Jersey Goes After Woman For $73 Debt From 1977 – The Consumerist
- Spain’s Central Bank consults experts on toxic assets: sources | Reuters
- German Retail Sales Rebounded in March on Job Creation – Bloomberg
- Analysis: After Argentina, firms brace for more asset raids | Reuters
- Donde decíamos austeridad decimos crecimiento – CincoDías.com