Something very strange is happening.
Global Trade Collapsing To Depression Levels
May 15, 2019
With the trade war between the US and China re-escalating once more, investors are again casting frightened glances at declining global trade volumes, which as Bloomberg writes today, “threaten to upend the global economy’s much-anticipated rebound and could even throw its decade-long expansion into doubt if the conflict spirals out of control.”
“Just as tentative signs appeared that a recovery is taking hold, trade tensions have re-emerged as a credible and significant threat to the business cycle,” said Morgan Stanley’s chief economist, Chetan Ahya, highlighting a “serious impact on corporate confidence” from the tariff feud.
To be sure, even before the latest trade war round, global growth and trade were already suffering, confirmed most recently by last night’s dismal China economic data, which showed industrial output, retail sales and investment all sliding in April by more than economists forecast.
Gold Gold Gold!
Central Banks Are Buying Gold At The Fastest Pace In Six Years
May 15, 2019
Earlier this month the World Gold Council published its quarterly report– and it shows that central banks and foreign governments from around the world are buying up gold at their fastest pace in six years.
This is pretty big news, and it says a LOT about the future of the dollar.
Remember, central banks and foreign governments hold literally TRILLIONS of dollars of reserves… and traditionally they do this by buying US government debt.
It sounds strange, but to big institutions, banks, etc., US government debt is equivalent to cash. They use it as a form of money.
More importantly, they hold US dollars because that’s the global standard: the US dollar has been the world’s primary international reserve currency for seventy five years.
So US debt is extremely liquid. In fact, the $22 trillion US debt market is the biggest and most liquid market in the world.
But foreign governments have started breaking with the tradition of buying treasuries.