Weekly Economic Report
The global policy framework appears to be at a turning point. As we see it, there are five great uncertainties stalling investment and growth, in order of importance, they are; the Chinese credit crunch; the Sino-US trade war; US Federal reserve policy; Brexit, and the US government shutdown. The Chinese credit crunch heads the list, because in our view it is Chinese – not US – credit policy that drives the global industrial cycle. China’s consumption of commodities and dominance of trade is the key to global economic volatility. That is also why the trade war is second. US monetary policy is a key input to dollar strength, and the ability of Emerging Markets to exploit Chinese stimulus. Clearly Brexit is the major issue facing Europe regardless of the global cycle. The US government shutdown, now temporarily ended, is a key signal as to whether the US remains in political gridlock.