More Of What Was Behind December, And Not Just December

As more and more data rolls in even in this delayed fashion, the more what happened to end last year makes sense. The Census Bureau updated today its statistics for US trade in November 2018. Heading into the crucial month of December, these new figures suggest a big setback in the global economy that is almost certainly the reason markets became so chaotic.

After all, money dealers don’t need this kind of statistical data as we do. They sit in between real economy participants, and though it may not be a complete picture they do get a sense of what’s actually happening in the real economy in real-time. I wrote last month:

And if banks are already scaling back their eurodollar involvement to then find how it is having an effect on both Sweden and Japan, it isn’t surprising to learn they’d cut back on pretty much everything in between (and maybe do so at great speed, focusing squarely on the exits above all else). This would include purely financial transactions, so-called hot money, otherwise having less or little to do with the real economy transactions of trade.

That’s especially true if the one giving off weak signals for banks in the middle is China rather than just Sweden or Japan. If that one goes into reverse, the pullback from it can become much more generalized. Sweden goes sour, get out of Sweden; China goes sour, get out of everything.

If China is sour because US demand for Chinese goods might be disappearing, all the worse.

Especially in the context of globally synchronized growth. For many, this was an abrupt difference; real economy and effective eurodollar participants could tell the economy of 2017 and early 2018 wasn’t really robust, yet it was the promise of how that was just the first step toward a real boom. First synchronized growth, then boom.

Instead, the more the year dragged on the more it became clear a real boom was increasingly unlikely. Then October, when it seems as if “unlikely” was downgraded even further. The economic estimates for November and some of the foreign numbers for December make for very real concerns about the economy not in some distant future probability, but right now at this very moment.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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