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Global Business Confidence Collapses To Post-Lehman Lows
As we noted here, despite record high stock prices and talking-heads imploring investors to believe CEOs are confident, they are not (consider the clear indication of a lack of economic confidence from tumbling capex and soaring buybacks), That is further confirmed today as Markit's survey of over 6000 firms showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further. More worrying, perhaps, is the US is not decoupled whatsoever, with future expectations of US business activity at the lowest since the financial crisis.
The Markit Global Business Outlook Survey, which looks at expectations for the year ahead across 6,100 companies, showed optimism falling sharply in October, dropping to the lowest seen since the survey began five years ago. Hiring and investment plans were also at or near post-crisis lows, while price expectations deteriorated further.
Long list of worries
The surveys highlight a growing list of concerns among companies about the outlook for the year ahead that led to a cooling of business optimism in recent months.
Key threats include fears of a worsening global economic climate, and notably a renewed downturn in the Eurozone, the prospect of higher interest rates in countries such as the UK and US next year, geopolitical risk emanating from crises in Ukraine and the Middle East, plus growing political uncertainty in many countries, notably the US, UK and Japan.
“Clouds are gathering over the global economic outlook, presenting the darkest picture seen since the global financial crisis. Companies’ hiring and investment intentions have both fallen to post-crisis lows alongside the bleakest outlook for future business activity seen over the past five years.
“Inflationary pressures are expected to ease further, meaning central banks will have leeway to keep policy looser for longer to help support economic growth, especially as the risk of deflation remains a major worry.
“Of greatest concern is the slide in business optimism and expansion plans in the US to the weakest seen over the past five years. US growth therefore looks likely to have peaked over the summer months, with a slowing trend signalled for coming months.
“There’s also little sign of the Eurozone’s malaise ending any time soon, as companies have become even less optimistic about the outlook. Confidence is weakest in the core countries of Germany and France, with the gloomy mood in the latter being highlighted by France being the only country in the survey in which companies expect to cut staffing levels over the coming year on average.
“The Eurozone’s ongoing weakness remains one of the major concerns seen in the global survey, and especially in the UK, where optimism waned further from the post-crisis high seen at the start of the year. However, firms in the UK remain more optimistic than in any other major developed or emerging country, suggesting the UK will continue to outperform its peers in 2015, albeit with growth slowing from that seen in 2014.
“Optimism in Japan continued to lag behind that of the US, UK and even the Eurozone, dropping to a twoyear low to suggest companies have become increasingly disillusioned with the potential for ‘Abenomics’ to boost growth, although there are signs that Japan’s recent deflation-beating policies will continue to drive prices higher next year.
“A key factor that has held back economic growth in recent years has been the disappointing performance of major emerging market economies, and this looks set to continue, and perhaps even intensify, over the coming year. Across the four ‘BRIC’ emerging markets, business optimism has sunk to the lowest seen since the financial crisis. Russia is the biggest concern, with sanctions, a spiralling currency and uncertainty driving business expectations down sharply to a new low. A slight upturn in business expectations in China provides some hope that companies there are at least not expecting a hard landing.”
As Markit reports, the US is not immune...
“This survey is a timely reminder that the U.S. economy has not been immune from weakening global business conditions, with euro area woes and heightened geopolitical risk weighing on firms’ business outlook and job hiring intentions for 2015.
“U.S. companies reported the lowest degree of confidence since the survey began in late 2009, reflecting domestic concerns and a subdued external demand environment.
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So QE managed to surge inequality, did nothing for wages, and achieved nothing in sparking animal spirits... but apart from that it was a great success.
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Throw away the rose-colored glasses, we are in real trouble now.
Buckle up, It's not going to be a soft landing.....
maybe, but what are you thoughts here==> http://bit.ly/1fMcakI
It shows how the market keeps crashing up and up and up.
Bears had their asses handed to them for years now. WOW!
what "markets"
the manipulated ones?there is only one way for them
Yet stocks are at ALL TIME highs...
In the past three years, price of gold and the S&P 500 have an (inverse) correlation of -0.912, extremely high. Stocks up, gold down.
"What is We BEARS are Wrong?"
http://goo.gl/Kg7Nth
wrong and right?
you can buy this in US
We're going to have Great Depression 2 soon - the kindling's been lit, and from 2009 through present, consumers AND businesses have completely gorged on cheap "debt," releveraging themselves to the highest degree in history (even more so than in the 2005 to 2007 period).
The kicker is that much of what has been purchased via debt, whether stocks (by corporate buybacks), homes (via mortgages) or autos (notes), are "assets" highly amenable to rapid loss in value, depreciation, and/or having huge carrying costs.
Total FUBAR economy.
Watch the captured media talk of "strong holiday sales," as stores and businesses continue to close.
off to DOW 20000, Yeah baby , yeah
Watch the captured media talk of "strong holiday sales”
TruthInSunshine, please add:
Watch the delusional religions talk of "strong salvation coming”
Watch the hypocritical education talk of "strong economic recovery nonsense because we’re entitled of special treatment.”
Watch the politicians promising talk of “strong charlatanism? Not me.”
Watch the misinformed sheeple talk of “strong denial and rationalization while distracted by Bread and Circuses (Ferguson).”
The BEARS are wrong because the bears do not understand that governments can run deficits longer than the private sector can. And that governments are more powerful than markets.
The BEARS are wrong because they’re incapable of understand that humans are not rational. Heck, we, humans, share 98% of our DNA with Bonobos.
Anyway, I’ll leave you with this quote that should summarize my point well:
“Falling in love is not at all the most stupid thing that people do — but gravitation cannot be held responsible for it.” – Albert Einstein
Yes, but the stock markets are...
DavidC
So what? Markets are at all time highs and the trend up is firm and unambiguous. Rich people are getting richer and that's all the politicos and banksters worry about.
Deal.
The dollars strength and the rising American stock market can be taken as a sign of an unstable global economy. The money flowing in from other countries in search of a safe home screams of a bigger problem! When a strong shift in currencies occurs someone gets hurt and this leads to bankruptcy and contagion.
A great deal of the shadow banking world falls into and overlaps into the grey world of derivatives. There is no single commonly adopted definition of derivative or derivative contract in the European Union. This plays havoc with what and when reporting rules apply. It also highlights divisions in how national regulators view reporting rules for the $693 trillion over-the-counter derivatives market.
Remember this is only part of a much larger market, it is estimated the total derivatives market includes hundreds of trillions of dollars in non-reported agreements and private contracts. Everyone paying attention knows that the size of the derivatives market is 20 times larger than the global economy. The article below explores some of its ins and outs of derivatives and why they could collapse the economic system.
http://brucewilds.blogspot.com/2014/03/derivatives-house-of-cards.html
Confidence collapsing ----> More buying of assets by CBs ----> More new highs ----> Confidence restored
Look I solved the problem and I don't even have my doctorate in economics...
US recession by January! Japan Europe USA China!
How Come they never just call up a bunch of Little guys.. and Say, " How's it Going "
be a lot faster a lot more accurate and a lot less Lieing bull shit
they do by University of Michigan sentiment reading total crap
"dad did not allow me to drive his new Porsche today so I'm not happy"
Go long Smith and Wesson! Buy, hold then SQUEEZE!
Instead of asking corporations, they should as the lower class how they are doing. Talk to people collecting unemployment. Talk to people receiving food stamps. Just ask them if things are improving or getting worse. I'll believe in the recovery when the poorest people are saying it feels like things are improving.
Yes, but that would skew the figures...
DavidC
everywhere i turn in mpls mn it looks non gloom/doom
recently found a job with plenty to choose from(complete reverse of 2-3 years ago).
recent washer purchase with delayed delivery due to "higher business activity".
getting quotes from contractors (hvac, floor installers, ect.) difficult-they are busy.
parking lots are near full at typical shopping places. just not seeing what i read here.
reverse rose colored glasses- thinking clear vision of stimulated econ. my question would be - where would we be at if all the debt backed deficit spending went away?
MAYBE THAT IS THE GLOOM/DOOM PENDING AND ZHERS ARE SEEING THE FUTURE TODAY TRU THIS BLOG
Ask any older bankruptcy expert what is the most dangerous period for biz.
They will all tell you the major cause is overtrading coming out of the down cycle.
You are wrong anyways.The few particiants LEFT, are doing quite well.All my competition
went to the wall over the last six years, but I'm not doing as well as I should be for having my
market nearly to myself.My turnover should have tripled, hasn't. and still can't really raise prices
overall.
New Game - Congrats on the new job! I have encouraged making hay while the sun shines. Consumers are feeling a bit better with lowered energy costs and food costs discontinuing to rise along with corps doing a lot of discounting.
As for the debt, it will be restructured. There is also a huge problem with healthcare entitlements and pension funding shortfalls.
Our American culture has a dramatic flair to it. I believe a false flag will be used to restructure. Hedge with sin luxuries and food you like to eat for three months. A new dollar will likely be re-issued, a 30% theft of your money to reinvest in the economy. So hedge with gold. Also because the new global currency will be backed by gold, these things run in multi-decade cycles. The new reserve currency is already the Yuan.
Once your hedges are in place go have fun and enjoy your life. There are very exciting things going on with science and where our species are headed. Stay optimistic but keep a small cynical side to avoid predation.
Happy Thanksgiving to all!