Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Business Cycle Weaker As Trade Tensions Continue

Published 04/20/2018, 07:08 AM
Updated 05/14/2017, 06:45 AM

Global business cycle weakening

We see clear signs that the global business cycle has peaked in early 2018 in line with our expectations outlined in Five Macro Themes for 2018 , 3 January 2018. Our MacroScope models point to a further deceleration over the coming quarters. The recent uncertainty over a potential trade war is likely to reinforce this picture. Monetary tightening, higher yields, lower real wage growth, more uncertainty - and in the case of the euro area a stronger currency - are all factors pushing production growth a notch lower for the rest of 2018, in our view, see Research: Global business cycle moving lower , 19 April 2018.

While the cycle is softening, we still expect growth levels to stay above potential growth in 2018 and 2019. US fiscal easing will temper any deceleration in 2019. Nevertheless, declining PMI levels across regions tends to cause some anxiety about the strength of the recovery, giving less support to risk assets and putting a cap on bond yields.

Trade tensions continue

The trade spat between the US and China has changed arena the past week as another battle is being fought in the tech area . On Monday, the US banned US sales to the Chinese telecommunications equipment maker ZTE for seven years, saying it had broken a settlement agreement. ZTE is one of the leading tech companies in China within telecoms equipment and gets 15% of its supplies from US companies. The move from the US could quickly backfire though. China has not yet approved a takeover deal by the big US tech company Qualcomm (NASDAQ:QCOM) of Dutch semiconductor company NXP. China is going through an antitrust review and said this week it had found issues hard to resolve regarding the deal. An equally big problem for US tech companies could be that Chinese consumers are now posting patriotic statements on social media in China and continued obstacles for Chinese companies in the US would risk triggering a form of consumer boycott in China, see Reuters .

To read the entire report Please click on the pdf File Below:

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.