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– Saturn Devouring His Son (image above) is the name given to a painting by Spanish artist Francisco Goya. It depicts the Greek myth of the Titan Cronus, who, fearing that he would be overthrown by one of his children, ate each one upon their birth.
Deny it all you want, but the global economy appears to be headed into recession. It became clear the cycle had started to turn once the FAANG stock bubble popped and the U.S. stock market plunged 20% late last year. The optimists among us insist this is merely a growth scare or blip as we saw in 2016, but that scenario looks increasingly unlikely.
Bond - Market - Signals - Evidence - Emerges
As usual, the bond market tends to give us signals before more obvious evidence emerges. As such, I received a lot of insight from the following tweet.
Moreover, we’re also starting to see hard evidence of a slowdown. Earlier today, the EU Commission slashed growth forecasts for the region, and bad data emerged from of Germany.
US - Stock - Market - Weeks - Idea
What I find most fascinating about all of this is how the U.S. stock market has gone vertical for the last six weeks based on the idea the Federal Reserve can come in and save the day, yet the Fed hasn’t committed to doing anything at this point. As such, the market seems to be pricing in very little risk of a full-blown recession, an event that seems more likely over the next twelve months than at any point in the past decade.
From what I can tell, nobody wants to actually consider the prospect of a global recession because establishment institutions and the status quo paradigm simply can’t handle one. This is because nothing structurally changed in the aftermath of the last one.
Consequence - Bank - Government - Policy - Crisis
The biggest consequence of central bank and government policy following the financial crisis of ten...
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