"Soft landing" narrative is now the consensus
This also happened in 2000 and 2006
We all know what came after… pic.twitter.com/LUjenTWIgi
— Game of Trades (@GameofTrades_) August 23, 2023
Imagine working twenty hour days building complex financial models when you can make 5% risk-free doing nothing. pic.twitter.com/SpvBsdhnQb
— Genevieve Roch-Decter, CFA (@GRDecter) August 22, 2023
Office buildings could suffer an $800 billion crash as work-from-home remains popular, per McKinsey.
— unusual_whales (@unusual_whales) August 23, 2023
Economic data in Europe just went from bad to worse.
In terms of the breakdown between services and manufacturing, the former dropped to a 30-month low at 48.3 and the manufacturing PMI rose slightly from 42.7 in July to 43.7 this month.
“Considering the PMI figures in our GDP [growth] nowcast leads us to the conclusion that the euro zone will shrink by 0.2% in the third quarter,” Rubia added.
The euro zone, the region of 20 nations that share the same euro currency, grew by 0.3% in the second quarter, having grown by 0.1% in the first quarter. This lackluster growth shows the impact of higher interest rates and energy prices and subdued external demand.
However, it also masks sharp differences within the region. Germany, for example, reported the deepest contraction in business activity in August.
Global interest rates are set to rise, further destabilizing the already vulnerable banking system. The contraction of bank credit, indicative of a severe credit crunch, is just beginning. Rising price inflation is eroding currency purchasing power, leading to even higher interest rates and bear markets. The potential withdrawal of $32 trillion of foreign investment from the fiat dollar and BRICS’s move away from the dollar could exacerbate the crisis. Broad money, mostly comprised of commercial bank deposits, is contracting globally. China’s credit issues are becoming evident, defaulting on bond payments. Past financial safety nets may prove ineffective this time, as mounting unproductive debts threaten to overwhelm banks and drive the economy to a critical tipping point.