One of the greatest teachers of economics and concurrently the first American to win the Nobel Prize in economics once, Paul Samuelson, once joked, "The Wall Street index predicted nine out of five recessions." For those who didn’t get it, the market may sound false alarms.
Does it mean that all those statements on poor financial health are nothing but a clear provocation? Taking into account that fundamentals of credit market have not deteriorated significantly and the interest coverage ratio for the vast majority of companies is still performing well, one may erroneously believe that there is nothing to worry about, when there actually is.
Despite the fact that many people managed to record much more profits than they did before, the year 2018 appeared to be the worst of the global market since the financial crisis. The substantial decrease in stock prices was the result of unresolved economic problems and prevailing insecurities amongst market players.
News on Caterpillar’s slowing sales just pour more oil on the flame. Economists including those at the International Monetary Fund have been paring their 2019 estimates, and investors will get a better idea of just how much global growth is likely to slow when the company reports quarterly results on Wednesday. Sales and earnings at Caterpillar may show signs of moderating as China’s expansion ebbs and trade uncertainties damp demand, according to Bloomberg Intelligence’s Karen Ubelhart.
According to the Guardian , if the second half of 2018 provided isolated evidence that global growth had peaked, the data since the turn of the year has been unambiguous: all of the world’s major economies look weaker than they did 12 months ago. Britain grew by just 0.2% in the final three months of 2018, as did the eurozone. And Italy is suffering its fifth recession in two decades.
Spending by American consumers in December was weak, but perhaps of more significance was the sharp pull-back in manufacturing in January, which fits with a picture of declining factory output elsewhere. In the winter of 2008, crashing industrial production and a contraction in trade flows were signs of the depth of the global slump. Ominously, both are again weak.
By IGOR KUCHMA