Charts of the Day: Collapsing World Export and Import Prices

Yesterday I featured a news site which showed of an astounding chain of negative headline economic developments in Asia. 

Yet the following charts from Gavekal Blog provide us clues for such unfolding dynamic. 

Writes Gavekal's Eric Bush:(bold mine)

According to the World Trade Monitor, world export prices declined by -15.8% year-over-year in April and are back at level last seen in 2009. World import prices have declined by -15.1% year-over-year as well.

In the developed world, export prices are down-16.6% year-over-year. This a larger drop than what occurred in 2009 and is the largest year-over-year decline since 1990 (when this series began). Import prices have declined by -17.5% year-over-year. The drop it 2009 was slightly larger.

Lastly, in the emerging markets, trade prices have fallen but not quite to the extent that they have in developed world. Emerging market export prices are down -15.1% and import prices are off -12.6% year-over-year.

The speed of plummeting rate of prices of merchandise trade last seen during the Global Financial Crisis appear to be indicative of the conditions of the global economy. They are most likely symptoms of sharply slowing demand and a glut of goods (from excess capacity)

Yet the above represents the periphery to core dynamics in progress.

As I wrote last February 2014

if the adverse impact of emerging markets to the US and developed economies won’t be offset by growth (exports, bank assets and corporate profits) in developed nations or in frontier nations, then there will be a drag on the growth of developed economies, which would hardly be inconsequential. Why? Because the feedback loop from the sizeable developed economies will magnify on the downside trajectory of emerging market growth which again will ricochet back to developed economies and so forth. Such feedback mechanism is the essence of periphery-to-core dynamics which shows how economic and financial pathologies, like biological contemporaries, operate at the margins or by stages. 

 Worry not. Stocks are bound to rise forever.