Halloween is a scary time of the year. It gets dark at the crack of dinner. The temperature drops, threatening at any moment to dump out that white substance that makes traveling misery. Mariah Carey is thawing out and getting ready to assault our ears with her infamous Christmas tune, which will be on repeat at every brick-and-mortar and big box department store on the planet. I mean, honestly. How can things be any more terrifying than that?
Well, for one, there’s how crappy our current economic situation is. And frankly, it doesn’t really look like it’s going to get a whole lot better. In fact, there are a series of five charts from Tyler Durden at ZeroHedge that show some seriously spooky trends in global markets that will no doubt make it hard to sleep at night.
The first trend is all about how right now, across the planet, it is the worst time in many, many moons to buy a car or house.
“According to University of Michigan surveys, consumers view this as the worst time in 40 years to buy a house or car – a worrying sign for consumer intent. Big purchases like these can be crucial drivers of economic growth, and with buying intent so low, we could be underestimating the severity of the slowdown,” Durden writes.
The second horrible, terrible, absolutely no good trend that should scare the pants off you is that employees are too scared to quit their jobs and employers are too terrified to hire anyone.
“The US labour market appears healthy, especially after September’s non-farm payrolls exceeded economists’ expectations and unemployment fell to 4.1%. However, beneath the surface, both hiring and quits rates have dropped to levels typically seen in recessions. Companies are hesitant to hire full-time workers, and employees are reluctant to quit due to job security concerns and fewer opportunities available. These signs of weakness suggest that the effects of restrictive monetary policy may be more severe than the headline labour market numbers imply,” the article continues.
And now, ladies and gentlemen, allow me to reveal to you a monster the likes of which will terrify you beyond the capacity for rational thought: Restrictive rates echoing through the economy.
Durden explains that for a rather lengthy amount of time, restrictive monetary policy was the norm because it works well with a lag, however, its impact is only now becoming clear. And while central banks have started to ease up a bit, policy is still more restrictive than what might be considered neutral and that’s having a massive effect on businesses and consumers alike. Here in America, Chapter 11 Bankruptcy filings are going up, up, up and that’s horrific. To make matters worse, credit card delinquencies over 90 days are climbing at warp speed. Until things are loosened up, these trends might be sticking around for a bit.
According to Durden, another trend is that of “not-so-high’ yield vs. investment grade.
The report then revealed, “Despite the unsettling warning signs, credit markets are pricing in minimal risk of a major slowdown, let alone a recession that could significantly impact credit fundamentals. In fact, the spread between investment grade and high yield bonds has narrowed to just under 2.7% — the lowest level since 2006. Could investors be underestimating the potential for economic turbulence ahead?”
Lastly, the pot of global government debt continues to increase at alarming rates.
Global government debt levels have been on the rise for awhile now, but this is a trend that while not surprising is still very worrisome. Take the United Kingdom for example. The public sector in the UK’s net debt as a percentage of the country’s GDP is scary high. Why is this a major concern? When a nation’s debt is super high it can impact that country’s growth because it redirects government spending from productive investments toward servicing the debt.
There’s also a chance it could cause central banks to look closer at fiscal risks when upping interest rates.
"*" indicates required fields