Friday, February 5, 2016

News Note: Citibank - World Economy Seems Trapped in Death Spiral

We have noted for quite some time here that the global economy has been in a depressed state of growth trending more towards deflation than inflation. Today CNBC runs this article quoting Citi analysts as saying the global economy appears to be in a "death spiral." 

Since we do keep watch here for another major crisis worse than 2008, this is another indicator that we have to stay alert. It's still too early to know if we are seeing the start of such a crisis or not, but more and more mainstream analysts are sounding alarms like this one. Below are a few quotes.

"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."
Added comments: The other trend starting to emerge is that both gold and silver seem to have caught a more solid bid that we have seen for those precious metals in some time. Rising precious metals and falling stock markets can be indicators of problems ahead so those are things to keep an eye on. This discussion on new tightness in the precious metals market is worth a listen if you have time.

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