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February 7, 2020 | Four Macro Indices To Watch!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Image result for macro indices suggest slow down to come

Where is the global economy going in 2020? Are we heading for more growth and expansion? There are four indices which I watch to give me guidance on this issue. Let’s briefly cover the four indices and think about what they mean:

1. The Baltic Dry Index:
 this index is now at 431 and the trend has been down for months. A healthy BDI would suggest that it should be around 2,000. It has been as high as 11,000 in the past. The current level suggests that global trade is slowing and demand is also declining. This index is a leading indicator of our general macro economy. If this index stays at the current level (give or take a couple hundred points) then my sense is that trade is slowing and this could lead to a recession later in 2020.

2. The drop in our oil prices is another indicator: WTI crude is now at $50.31/barrel and this price seems to indicate a decline in demand going forward. A price of $60/barrel was the reality just one month prior. Some experts are now projecting a 3 million/day drop in demand from China. If this continues, then China trade will slow and we could witness zero growth for China in the next quarter. This could lead to slower growth globally. But a lower oil price also can spur growth globally if demand starts to grow. So this indicator is pointing to a slowing world GDP as of now but it may spur growth later.

3. The recent drop in Liquid Natural Gas is another indicator:
 The current U.S. price is now at $1.85. This is a drop from $2.15 one month prior. This is significant as the drop in price is also global. Demand for energy seems to be falling and this points to a declining GDP for the next quarter. The above three indices point to a slowing global economy which will (likely) affect the U.S. economy later in 2020. The signs are on the wall that our economic cycle is changing from BULL to BEAR (gradually).

4. The coronavirus situation is a fourth indicator: China is mostly affected by this virus as of now. But the virus could spread globally in the next couple of months. Some 400 million people are currently affected by the virus over in China. The death number is small as of today, but the potential damage to China’s economy could be significant. If China growth stalls and then declines, we could witness a similar stalling in the other major markets later in 2020. All this takes time to evolve. But the trend (as I write) is rather ominous. It appears that a cycle change is in the making and this will recreate the coming BEAR market for stocks, bonds, real estate, and auto’s.

Keep an eye on the above and I will report coming changes to this scenario as we move forward.

The other issue of significance is the emerging war cycle over in the Middle East. The Trump ‘Deal of the Century’ has been rejected by the Arab states (with a few exceptions). Israel did benefit from this Trump plan but the Palestinians sense that their future was not advanced. My sense is that the Arab countries (22 nations) will act to counter any future gains for Israel. All this means that there is no plan to solve this strife over in the Middle East. Terrorism and war is likely in this area of our world.

Finally, the ideological wars continue to grow. America is polarized (ideologically) and so is most of our global society. This inner war of the spirit is growing exponentially and I find this as our core problem for making progress going forward. Islam is at war with Christianity and Judaism (and vice versa). Secular thinkers are at war with religious thinkers. All this inner strife leads to a greater polarization over time. Unity is unlikely given this situation. The election of 2020 in America could get ugly later in 2020 as November approaches.

All the above leads me to conclude that our world is in serious trouble going forward. Nothing can work when the system is fragmenting and polarizing. A HOUSE divided will fall at some point. Think for yourself to discern the trends. I will update you on these issues as new information evolves. Have a great day! I am:

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February 7th, 2020

Posted In: Kingdom Economics

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