About 80% of world manufacturing activities have been shrinking. Yet many of the world’s equity markets seem detached to this reality. Negative developments have been offset with positive expectations from promises of central banking rescues.
From Zero Hedge, (bold original)
With the US closed today, the rest of the world is enjoying a moderate rise in risk for the same old irrational reason we have all grown to loathe in the New Normal: expectations of more easing, or "bad news if great news", this time from China, which over the weekend reported the first official sub-50 PMI print declining from the magical 50.1 to 49.2, as now even the official RAND() Chinese data has joined the HSBC PMI indicator in the contraction space for the first time since November. Sadly, following today's manufacturing PMI update, we find that the rest of the world is not doing any better, and in fact of the 22 countries we track, 80% are now in contraction territory. True, Europe did experience a modest bounce from multi-month lows of 44 in July to 45.1 in August (below expectations of 45.3), but this is merely a dead cat bounce, not the first, and certainly not the last, just like the US housing, and now that China is officially in the red, expect the next shoe to drop in Europe. Also expect global GDP to eventually succumb to the manufacturing challenges faced by virtually every country in the world, and to post a negative print in the coming months.
The above only exhibits of the growing risk of a global recession.
This means central banks will either make good their promises soon or that the diminishing returns of returns from political promises may jolt the markets back to reality.
Be careful out there.
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