Leading economic PMI indicators show that the three major economies are entering recession territory

time:2023-01-30 06:29:25source:chakarski.com author:Hot industry
Leading economic PMI indicators show that the three major economies are entering recession territory

Yesterday, the official account article talked about our PMI falling below the 50 dividing line between prosperity and decline. In fact, this is no accident, because Europe and the United States also fell below in July, and a new round of global recession has officially begun. The PMI released by Europe was 49.8, a 25-month low, which means that the economic recovery since the outbreak of the epidemic in March 2020 has officially come to an end. Among them, an interesting thing is that Germany is dying. Germany has always been the locomotive of the European economy. In previous crises, teammates were too bad, and Germany could not take it. And this time, Germany turned itself off first, and there should be no suspense that there will be negative growth in the second quarter. The previously announced trade deficit has already appeared, which is the first time since 1992. Germany's performance this time is really striving. Of course, compared with the European and pig countries, the negative GDP growth has once again reached more than 10%, which is still stronger. The manufacturing index released by the United States also fell into the recession range. In July, the MARKIT composite PMI was only 47.5, a 26-month low. The White House also gave everyone a precaution before, saying that even if GDP growth has been negative for two consecutive quarters, the economy will not be wiped out. Sure enough, the United States continued to fall by 0.9% in the second quarter, and by definition, the United States has also entered a technical recession. While the economic data fell sharply, the European and American stock markets performed very well. In July, the European and American stock markets achieved their best monthly performance this year. On the contrary, our A shares continued to buck the global trend and closed down in July. Commodities, cryptocurrencies, precious metals and copper all rallied more than 10% along with the stock market rally. This round of rebound is not surprising, but the magnitude is difficult to predict in advance. Before, I made blank silver by hand, and directly gave a target price below 18.5, and then let everyone take profit freely. This round of rebound, an important time point, is the interest rate hike in Europe. I said that the central bank of other countries can have a significant impact on the US dollar and US debt, and only the European Central Bank can. After the European Central Bank raised interest rates, the dollar fell, and U.S. bond yields plummeted. In addition, the news of the US interest rate hike in July has stimulated the 10-year US Treasury yield to fall from 3.5% to 2.5%, which has lifted the inversion with our 10-year Treasury yield. This is the main logic driving US stocks and precious metals to rise. Except for A shares, the global stock market is basically led by the US stock market, and the correlation is above 0.7. However, a rate hike is a rate hike, and a recession is a recession. Regardless of whether it is "losing a happy event" or whether it is a good news on the news, it is short-lived after all. After the recession, the profits of listed companies will further decline, the Fed's interest rate hike will not stop (it is indeed possible that the pace will slow down), and the Fed's shrinking of its balance sheet has just begun, all of which have suppressed the stock market and monetary policy. It will indeed continue to tighten. Based on the above logic, the European and American stock markets and bulk stocks are only rebounding. As for how much the rebound will be, I don’t have much confidence in the rest except for crude oil. I can only say that today’s point is a good position to be short.
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