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Citi: World economy seems trapped in 'death spiral'

Jackson

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Citi: World economy seems trapped in 'death spiral'


The global economy seems trapped in a "death spiral" that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned.

Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

"The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday.

"Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)... and repeat. Ad infinitum, this would lead to Oilmageddon, a 'significant and synchronized' global recession and a proper modern-day equity bear market."

Stubbs said that macro strategists at Citi forecast that the dollar would weaken in 2016 and that oil prices were likely bottoming, potentially providing some light at the end of the tunnel.

"The death spiral is in nobody's interest. Rational behavior, most likely, will prevail," he said in the report.

Crude oil prices have tumbled by around 70 percent since the middle of 2014, during which time the U.S. dollar has risen by around 20 percent against a basket of currencies. 

Has OPEC lost its claws?

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Yes, they can't reach consensus

No, they are keeping their powder dry

Yes and no, it's all about Saudi Arabia

Bottom of Form

VOTE

Vote to see results

The world economy grew by 3.1 percent in 2015 and is projected to accelerate to expand by 3.4 percent in 2016 and 3.6 percent in 2017, according to the International Monetary Fund. The forecast reflects expectations of gradual improvement in countries currently in economic distress, notably Brazil, Russia and some in the Middle East.

By contrast, Citi forecasts the world economy will grow by only 2.7 percent in 2016 having cut its outlook last month.



World economy on edge of recession: Citi

Overall, advanced economies are mostly making a modest recovery, while many emerging market and developing economies are under strain from the rebalancing of the Chinese economy, lower commodity prices and capital outflows.

Stubbs added that policymakers would likely attempt to "regain credibility" in the coming weeks and months.

"This is fundamental to avoiding a proper/full global recession and dangerous disorder across financial markets. The stakes are high, perhaps higher than they have ever been in the post-World War II era," he said.

Just 151,000 new jobs were created in January in the U.S., in the latest sign that the world's biggest economy is slowing. Economists are concerned about an industrial or manufacturing recession in the country, following some warnings from companies in earnings seasons and recent weak manufacturing activity and durable goods orders data.

However, some analysts say markets are overegging the prospect of a global slump.

"Many markets are now pricing in a significant probability of recession and when we talk about recession, we're talking particularly about a U.S. recession. Do you think that is likely or not? To me, the odds are too high; the market is pricing too high a probability," Myles Bradshaw, the head of global aggregate fixed income at Amundi, told CNBC this week.


Citi: World economy trapped in 'death spiral'

Hold on to your wallets!
 

SassyIrishLass

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Can't be, Dear Leader assures us all is well......sadly his robots believe it and keep repeating it
 

Mac1958

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It's pretty unusual to be in a position where there is no country that appears to have the ability to get the ball rolling. The closest is India right now, and they probably don't have enough juice.

China's going through major restructuring and probably won't be a factor again until 2017 at the earliest, and we're still stuck in the mud and may well be slipping.

Domestic wage growth is improving, but if we have to wait for that to be the impetus, that's probably not great news. That would take some time.

Outside of that, some positive surprise that creates momentum may be the best we can hope for short term.
.
 

IcebergSlim

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Can't be, Dear Leader assures us all is well......sadly his robots believe it and keep repeating it

Gassy,

Which of the nations of the world are currently contributing to global growth?
 

IcebergSlim

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Citi: World economy seems trapped in 'death spiral'


The global economy seems trapped in a "death spiral" that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned.

Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

"The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday.

"Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)... and repeat. Ad infinitum, this would lead to Oilmageddon, a 'significant and synchronized' global recession and a proper modern-day equity bear market."

Stubbs said that macro strategists at Citi forecast that the dollar would weaken in 2016 and that oil prices were likely bottoming, potentially providing some light at the end of the tunnel.

"The death spiral is in nobody's interest. Rational behavior, most likely, will prevail," he said in the report.

Crude oil prices have tumbled by around 70 percent since the middle of 2014, during which time the U.S. dollar has risen by around 20 percent against a basket of currencies. 

Has OPEC lost its claws?

Top of Form

Yes, they can't reach consensus

No, they are keeping their powder dry

Yes and no, it's all about Saudi Arabia

Bottom of Form

VOTE

Vote to see results

The world economy grew by 3.1 percent in 2015 and is projected to accelerate to expand by 3.4 percent in 2016 and 3.6 percent in 2017, according to the International Monetary Fund. The forecast reflects expectations of gradual improvement in countries currently in economic distress, notably Brazil, Russia and some in the Middle East.

By contrast, Citi forecasts the world economy will grow by only 2.7 percent in 2016 having cut its outlook last month.



World economy on edge of recession: Citi

Overall, advanced economies are mostly making a modest recovery, while many emerging market and developing economies are under strain from the rebalancing of the Chinese economy, lower commodity prices and capital outflows.

Stubbs added that policymakers would likely attempt to "regain credibility" in the coming weeks and months.

"This is fundamental to avoiding a proper/full global recession and dangerous disorder across financial markets. The stakes are high, perhaps higher than they have ever been in the post-World War II era," he said.

Just 151,000 new jobs were created in January in the U.S., in the latest sign that the world's biggest economy is slowing. Economists are concerned about an industrial or manufacturing recession in the country, following some warnings from companies in earnings seasons and recent weak manufacturing activity and durable goods orders data.

However, some analysts say markets are overegging the prospect of a global slump.

"Many markets are now pricing in a significant probability of recession and when we talk about recession, we're talking particularly about a U.S. recession. Do you think that is likely or not? To me, the odds are too high; the market is pricing too high a probability," Myles Bradshaw, the head of global aggregate fixed income at Amundi, told CNBC this week.


Citi: World economy trapped in 'death spiral'

Hold on to your wallets!

I'd advise you to consider sources OTHER than those to which Drudge directs you......
 

g5000

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Has OPEC lost its claws?

Top of Form

Yes, they can't reach consensus

No, they are keeping their powder dry

Yes and no, it's all about Saudi Arabia

Bottom of Form

VOTE

Vote to see results
Dude, when you copy and paste, take out the chaff!
 

g5000

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Citi strategists, eh? They have their reasons for transmitting this message to the public. They are trying to panic the herd in a direction that will benefit their derivatives bets.

Grain of salt, etc.

However, we are overdue for a recession. After printing trillions of dollars trying to bring future demand forward, the Fed is trapped in their circular delusions.

That sound you hear is the bond bubble about to pop. With falling equities, investors are flying to safety. Negative interest rates, here we come?
 

Arianrhod

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Pretty amusing, considering that Citi and three other megabanks own every other bank in the U.S.
 

LoneLaugher

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Another good news thread started by a nutbag! Look at the list of threads in politics or current events at any given moment in time. What you will see is a dozen or more threads started by nutbags which try to scare people or sadden them.

You fucking bunch of losers.
 

SassyIrishLass

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Can't be, Dear Leader assures us all is well......sadly his robots believe it and keep repeating it

Gassy,

Which of the nations of the world are currently contributing to global growth?

When you can respond like an adult perhaps I'll answer your question. Now grow the fuck up, acting like a middle school child isn't something to be proud of
 

IcebergSlim

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Another good news thread started by a nutbag! Look at the list of threads in politics or current events at any given moment in time. What you will see is a dozen or more threads started by nutbags which try to scare people or sadden them.

You fucking bunch of losers.

Unrepentant 2 Time Scrub Voting Imbeciles gotta keep trying to redeem.....
 

g5000

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IcebergSlim

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Can't be, Dear Leader assures us all is well......sadly his robots believe it and keep repeating it

Gassy,

Which of the nations of the world are currently contributing to global growth?

When you can respond like an adult perhaps I'll answer your question. Now grow the fuck up, acting like a middle school child isn't something to be proud of

You're an angry empty vessel, aren't you?
 

waltky

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Granny says, "Dat's right - dem Chinamens is eatin' our lunch...

Half of Americans see China as world's No. 1 economy
Feb. 22, 2016 -- A Gallup poll shows half of Americans think China is the world's top economic power, though economic reports show otherwise.
For the first time in the nearly two-decade-long history of the Gallup World Affairs survey, the majority of Americans picked another country -- not their own -- when asked what country they considered the top economic power. Only 37 percent of the random sample of 1,021 adults said that America was the global economic leader.

More than 44 percent of the participants in the study predicted that the United States would surpass China and once again be the leading economy in the world, and that it would happen in the next 20 years.

But economic reports out of China, known to usually mask problems and overstate growth, nonetheless dispute the perceptions in the United States. Chinese leaders announced last Friday that trade exports in January fell 11 percent from the previous year and that the country had its largest-ever trade surplus on record.

After record-breaking growth over several years, the Chinese economy slowed in 2015, growing just 6.9 percent, according to official reports, the lowest in 25 years. The per capita GDP in the United States was $55,904 in 2015, compared to $8,280 in China.

Half of Americans see China as world's No. 1 economy
 

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