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Home / Business / These 10 "Gray Swan" events could threaten the global economy and markets

These 10 "Gray Swan" events could threaten the global economy and markets



US. Equity investors were worried in August as escalating US-China trade and a brief reversal of a benchmark spread helped equities to their worst performance in the first half of 2019.

Dow Jones Industrial Average

DJIA, + 1.20%

has dropped 3.7% since the beginning of the month, the S & P 500

SPX, + 1.44%

fell 3.1

% and the Nasdaq Composite Index

COMP, + 1.67%

lost 3,4%.

But while high-risk risks – such as the US-China trade dispute – are catching investors' attention, the number of lower-risk risks that can occur individually or in combination increases. More heartburn for investors of the third quarter.

1st No-Deal Brexit: The 31st of October, by which Britain can achieve an orderly exit from the European Union, is approaching, and newly elected Prime Minister Boris Johnson has signaled that he willing to face the consequences A conservative legislature has even suggested that Johnson could unilaterally expel Britain from the EU by [August 24] .

The UK's Office of Budgetary Assets estimated in July that a Brexit without agreement would lead the world's sixth largest economy into recession. The European economy, already shaken by the global weakening of the manufacturing sector, would also be adversely affected by new trade barriers and uncertainties that would arise as a result of Britain's exit from the EU.

2. Car Tariffs: An even greater threat to the European and global economy could be a significant increase in trade tensions between the US and the EU. On May 17, the Trump government announced its determination that US imports of automobiles and car parts pose a national security risk, and laid the basis for tariffs of up to $ 128 billion on vehicle duties from the EU and Japan , which would be the main targets of the new levies [194559002] See also: Trump delays the tariffs of the EU and Japan by six months

3rd EU-USA. Commercial Dispute: Apart from car fares, a broader European US market is threatening. Trade conflict threatens. Europe was hit by tariffs of 25% steel and 10% aluminum in 2018, against which the EU retaliated with its own 25% steel tariff.

The most recent development is the imposition by the Trump government of tariffs on the European aerospace manufacturer Airbus SE

EADSY, + 0.50%

which is expected by Europe to be similar to Boeing Co.

BA, + 0.75%

. Although previously described, an increase in trade tensions with the EU could be a much bigger problem than China given the degree of economic integration.

4. Protests in Hong Kong : Hong Kong has been rioting for more than two months in protest of an extradition treaty with mainland China, which has become a broader democratic movement.

The conflict has led to a 14% fall in the reference Hang Seng Index

HSI, + 0.94%

since May, as investors worry about Hong Kong's fate as a global financial center and whether Beijing's potential move could trigger another conflict with the West

] 5. Italian Household Drama : While Italy avoided Brussels' sanctions in 2019 for failing to reduce its budget deficit to an acceptable level, Europe's third-largest economy is approaching a conflict with the European Commission each year With a budget deficit in 2020, it is expected to rise to 3.5% of GDP, well above the EU limit of 3%.

6. Iran Conflict : A series of quasi-military clashes between the US and Iran have been largely fended off this year by oil and stock markets, including claims by Iranian and US military units, Hormuz – a 34-kilometer global global oil-supply restriction bordering Iran and separating the Persian Gulf from the Arabian Sea, was launched by one of the enemy drones operating near the Strait.

Following these incidents, British and Iranian tankers were confiscated and Iran threatened to shut them down completely, disrupting the flow of one-third of world oil supplies and threatening a broader military conflict affecting the global economy and the United States Markets could have.

7th Currency Wars : A headwind for US equities this year was the historically strong dollar, supported by relatively strong US economic growth and exceptional monetary stimulus by the European Central Bank and the Bank of Japan has been.

Central bankers say that monetary incentives are aimed at lowering interest rates in their home countries and not devaluing currencies to boost exports. However, President Trump has put this reality in the forefront of his attacks and accused alleged commercial rivals of using monetary stimulus to lower the value of their currencies.

The government has recently classified China as a currency manipulator while pressureing the Federal Reserve to cut interest rates to partially depreciate the dollar. An escalation towards currency wars could further undermine investor and corporate confidence, which is already a major headwind for global markets.

8th India-Pakistan Conflict : Since the partition of British India into independent states in 1947, the Kashmir region has been a point (sometimes military) conflict between the two nuclear powers.

Tensions in India are on the rise The government of Prime Minister Narenda Modi revoked the special status of the Indian state of Jammu and Kashmir in early August, granting him autonomy and allowing him to legislate to maintain his status as the only Muslim majority state in the country Uphold India.

The Indian government then tried to suppress the protest by sending thousands of troops into the region; Cutting off Internet, mobile and landline connections; and arrest of politicians from Kashmir. Pakistan downgraded diplomatic relations with India and stopped bilateral trade, and the Pakistani prime minister said he expected violence to occur.

9. Argentina : The Argentine stock market

SPMERVAL, -2.04%

fell more than 37% on Monday after its pro-business president Mauricio Macri lost a primary election against left-leaning Alberto Fernandez by 48% to 32% , Fears are aroused that Macri will lose the parliamentary elections in October and that Argentina will fall behind in its austerity measures, which have led to numerous defaults and inflation crises in recent decades.

Barron's on MarketWatch: Argentina is facing a leadership crisis. and this is a problem for the country's markets

10. All Other Trade Barriers : Other major economies have followed Trump's lead when it comes to using trade barriers as instruments to bring about political change abroad force. South Korea and Japan are involved in a trade dispute stemming from decades of conflict over reparations for atrocities committed by Japan during its colonization of South Korea in the first half of the 20th century.

The US and India, the fifth largest economy in the world, are also approaching a trade war after India fought US and US tariffs on steel and aluminum in June and raised import taxes to $ 1.4 billion. Trump responded with attacks on the Indian government and wrote in a tweet that "India has long had a big day raising tariffs on American products. No longer acceptable! "


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