(Dec 9, 2018) Weekly Topics of Global Economy

[kyonmanchung]

(Dec 9, 2018) Weekly Topics of Global Economy

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“Don't worry, trade wars are easy to win”이라던 Trump의 장담과는 달리 중국과의 무역 분쟁은 쉽게 해결될 기미를 보이지 않고, 미국의 무역적자는 되려 확대되고 있습니다. Trump의 판단 잘못이라면?

1. Job growth falls short of expectations in November: 155,000 payrolls created vs 198,000 estimate, CNBC

- 미국의 11월중 신규 고용은 155천명으로 예상(198천명)보다 적었지만, 실업률은 전월과 같은 역사적 저점의 3.7%. 시간당 평균 급여는 전월대비 0.2% 상승(전년 동기 대비로는 3.1%).

 -> 견조한 노동시장 -> 12월19일 Fed 금리인상 가능성 높음.

그러나 최근 주가 큰 폭 조정, 국채시장 장단기 금리 역전(3년물>5년물)에 따른 경기침체 우려 증가 등으로 내년에 금리인상 시기가 늦어지거나 인하 횟수를 줄일 가능성 높아짐.

2. Trade deficit hits 10-year high as China shuns soybeans, Americans snap up imports, MarketWatch

- 미국의 10월중 무역적자가 관세 부과 등 무역전쟁의 심화에도 불구하고 10년내 최고인 $55.5bn를 기록(전월비1.7% 증가).

수입은 자동차, 약품, 기타 소비재중심으로 전월대비 0.2% 증가한 $266.5bn. 중국제품에 대한 관세 인상 전 미리 사두기 요인이 크다고 함. 수출은 대중국 대두 수출 급감으로 전월대비 0.1% 감소한 $211bn에 그침.

이로 인해 대중국 무역적자는 $43.1bn로 또다시 월 단위 신기록 수립.

11월말에 미-중간 무역전쟁 90일간 휴전 합의가 있었으나, 지난 수요일 Huawei CFO인 Meng Wanzhou의 체포 사태로 협상은 쉽지 않을 것으로 시장이 판단 -> 주가는 tech 중심으로 크게 하락하고 국채 가격은 상승(10년물 국채 수익률 2.95%)

<생각>

미국은 컴퓨터 등 전자제품, 섬유의류 등의 소비재를 거의 생산하지 않고 중국 등으로부터 수입. Apple등은 중국에서 제작하여 수입 판매 ->이런 Supply-chain은 단기간내 변경 불가 -> 관세 중과해도 수입 불가피 -> 수입 cost 상승 분 소비자에게 전가.

Trump의 위기가 서서히 다가오는 느낌 – Trumpnomics불신 태동, 소비자 불만, 조기 경기침체 우려(재정정책의 한계), Russian scandal 등등.

3. Huawei arrest: This is what the start of a tech Cold War looks like, CNNMoney

- Huawei’s CFO겸 부회장(4인)인 Meng Wanzhou의 체포 사태를 미-중간 기술 전쟁 (‘tech cold war’)의 시작으로 보는군요. Trade war에 이어 tech supremacy를 향한 전투가 시작되었다는 것.

Huawei사는 세계적 smartphone maker(2위)이자 통신장비 업체로서 5G wireless사업 (next wave of new technology)을 추진하고 있는데, 중국정부가 로봇, 전기차, computer chips 분야 등에서 세계 최고 기술을 지향하는 "Made in China 2025"plan의 핵심 사업체의 하나.

Meng Wanzhou(孟晚舟; born 1972)는 Ren Zhengfei 회장(1944년생)의 딸. 중국 화중과기대에서 회계학 석사 취득. 현재 Huawei사의 부회장(4명) 겸 CFO로서 차기 회장 가능성. 지난 수요일 미국의 요구(Iran 제제 위반혐의)로 Canada에서 체포, 미국이 범인 인도 요구 중임.

중국의 첨단기술 사업추진과 관련, 최근 몇 년간 미국은 기술 빼가기 (misappropriation)에 대해 제동을 걸고 있음. 지난 4월 미 상무성은 중국 2위 통신업체인 ZTE에 대해 미국 업체가 핵심부품을 수출하지 못하도록 저지한 바 있음(명목상으로 이란 및 북한제재 위반). 지난 10월에는 중국정부 소유 chipmaker Fujian Jinhua에 대해서 유사한 수출금지 조치를 한 바 있음. 한편, 미국은 중국에 대해 미국업체의 중국시장 진출 시 기술이전을 요구하지 말 것을 주문하기도 함.

Huawei사가 5G network 사업을 성공하기 위해서는 92개 주요부품 공급업체가 필요한 데 이중 33개가 미국업체(chipmakers Intel, Qualcomm, and Micron, and software firms Microsoft and Oracle 등)라고 하는군요.

따라서 이번에 Huawei사에 대해 미국이 제재를 가하게 되면 중국의 5G통신사업에 큰 제동이 걸리는 것임

<생각>

패권국 미국이 2위 패권국의 도전을 저지하는 시점이 2위국 GDP가 미국의 40% 수준이 되는 시점이라는 주장이 있음. 즉 1980년대 중반 일본의 GDP가 미국의 40%가 된 시점에 미국은 Plaza Agreement를 강제 발동하여 일본의 경제침체 유발 ->패권 도전을 저지..

그런데 중국의 경우 40%가 되던 시점이 2008년 미국발 세계경제 위기 시점이라 이를 실행하지 못하고 실기하였음(현재 중국GDP는 미국의 65% 수준). 이에 미국의 중국에 대한 견제가 더 노골적이고 강력해 질 듯.   

정견만 드림

1. Job growth falls short of expectations in November: 155,000 payrolls created vs 198,000 estimate, CNBC

Jeff Cox | @JeffCoxCNBCcom

Published 2018.12.7, 2 Hours Ago Updated 20 Mins Ago

• Nonfarm payrolls increased by 155,000 in November, the Labor Department says. Economists surveyed by Dow Jones had been expecting payroll growth of 198,000.
• The average hourly earnings gain of 0.2 percent fell short of estimates for a 0.3 percent increase.
• October's jobs count was revised lower from an initially reported 250,000 to 237,000.

Job growth slowed in November amid fears that economic growth is losing steam.

Nonfarm payrolls increased by 155,000 for the month while the unemployment rate again held at 3.7 percent, its lowest since 1969, the Labor Department reported Friday. Economists surveyed by Dow Jones had been expecting payroll growth of 198,000 and the jobless rate to hold steady.

Average hourly earnings, a closely watched sign of whether inflation pressures are building, again rose at a 3.1 percent pace from a year ago. The monthly earnings gain of 0.2 percent fell short of estimates for a 0.3 percent increase. The average work week edged lower by 0.1 hours to 34.4 hours.

Stock futures turned positive following the weak report as traders bet it may mean the Federal Reserve is less aggressive next year on rate hikes.

A separate gauge that includes discouraged workers and those holding part-time jobs for economic reasons, sometimes called the real unemployment rate, rose from 7.4 percent to 7.6 percent.

The unemployment rate for African-Americans fell 0.3 percent to 5.9 percent, tied for its lowest on record.

Services jobs see gains

Job creation skewed to services-related industries, which added 132,000, while goods producers grew by 29,000, the lowest increase since March. Government jobs declined by 6,000.

Health care and professional and business services added the largest number of workers with 32,000 apiece. Manufacturing rose by 27,000, while transportation and warehousing contributed 25,000.

Heading into the holiday season, retail jobs edged higher by 18,000, though clothing stores reported a net decline of 14,000. Electronics and appliances stores lost 11,000, as did sporting goods, hobby and book stores.

Those losses were offset by a jump of 39,000 in general merchandise stores and 10,000 for miscellaneous retailers.

The report comes amid questions over whether the above-trend growth in 2018, the best since the recession ended in mid-2009, can continue as fiscal stimulus fades and interest rates rise. Financial markets have been skittish lately, posting aggressive gains and losses, and the major indexes have been in and out of correction territory.

Policymakers at the Federal Reserve are watching the jobs numbers closely as they prepare for an expected interest rate hike on Dec. 19.

In addition to the November jobs report falling below expectations, October's count was revised lower from an initially reported 250,000 to 237,000. September's total was revised up from 118,000 to 119,000.

Those considered not in the November labor force rose by 60,000 to 95.94 million. However, the size of the labor force also grew by 133,000 to 162.77 million. On net, the labor force participation rate was unchanged at 62.9 percent.

2. Trade deficit hits 10-year high as China shuns soybeans, Americans snap up imports, MarketWatch

By Jeffry Bartash

Published: Dec 6, 2018 11:04 a.m. ET

Trade deficit rises to $55.5 billion in October, which is highest since 2008

U.S. imports from China, ranging from clothes to Apple iPhones, rose to a record high in October.

The numbers: The trade deficit rose in October to a 10-year high amid a record shortfall with China, keeping the U.S. on pace to record the largest annual gap in a decade.

The deficit edged up 1.7% to $55.5 billion from a revised $54.6 billion in September, the Commerce Department said Thursday. That’s the biggest shortfall since October 2008, and ironically, it stems in part from tariffs imposed by President Trump in an effort to reduce the deficit.

Economists polled by MarketWatch had forecast a $55.1 billion gap.

What happened: Imports rose 0.2% to a record $266.5 billion in October. The U.S. imported more autos, drugs and other consumer goods

Part of the recent surge in imports reflects American companies stocking up on Chinese goods ahead of the holidays to get ahead of another increase in U.S. tariffs that was supposed to kick in on Jan. 1. The U.S. tariff increase has been temporarily been postponed until March.

Exports slipped 0.1% to $211 billion, largely because of a big drop in soybean shipments. Retaliatory tariffs by China has curbed U.S. exports of big sellers such as soybeans.

The trade deficit with China in goods, meanwhile, rose again to a fresh all-time high of $43.1 billion. Exports to China are running slightly behind last year’s pace.

The trade gap has continued to widen despite punitive Trump administration tariffs meant to reduce Chinese imports and force the Asian giant to alter what the White House considers unfair trade practices.

The U.S. agreed last week to postpone another round of tariff increases to give the two countries 90 days to make progress in resolving trade conflicts, but the arrest on Wednesday of senior Chinese business executive in Canada could throw a kink into negotiations.

The U.S. trade deficit added up to almost $503 billion in the first 10 months of 2018. That compared to about $451 billion in the same span in 2017.

The last time the U.S. trade deficit was higher was in 2008, when it topped $700 billion.

Big picture: One reason the U.S. runs large trade deficits is because the economy is doing so much better compared to other countries. Americans simply can afford to buy more.

Yet the U.S. has also stopped producing many goods such as clothes and computers and it has to get them elsewhere. China is one of the largest suppliers for the U.S. and is likely to remain so for years even if the country can’t strike a trade agreement with President Trump, who referred to himself as “Tariff Man” in a tweet this week.

The big danger is that lingering trade tensions will raise costs for Americans businesses and consumers and damage the U.S. economy.

What they are saying?: “The widening in the trade deficit ... was mainly driven by a further plunge in exports to China, and suggests that net trade will once again be a drag on GDP growth in the fourth quarter,” said economist Andrew Hunter at Capital Economics.

Market reaction: The Dow Jones Industrial Average DJIA, -1.51% and S&P 500 SPX, -1.27% sank in Thursday trades after the arrest in Canada of a Chinese executive of the tech company Huawei at the request of the U.S.

Stocks also sank on Tuesday. The market was closed Wednesday for the funeral of former President George. H.W. Bush.

The 10-year Treasury yield TMUBMUSD10Y, -1.35% fell again to 2.95%. Yields have tumbled from a seven-year high of almost 3.25% just one month ago.

3. Huawei arrest: This is what the start of a tech Cold War looks like, CNNMoney

By Julia Horowitz, CNN Business

Updated 1610 GMT (0010 HKT) December 8, 2018

New York (CNN Business) The arrest of a top Huawei executive raises the stakes in the intensifying battle between the United States and China for tech supremacy.

Huawei is one of the world's biggest makers of smartphones and networking equipment. It is at the heart of China's ambitions to reduce its reliance on foreign technology and become an innovation powerhouse in its own right.

The country is pumping hundreds of billions into its "Made in China 2025" plan, which aims to make China a global leader in industries such as robotics, electric cars and computer chips. The introduction of 5G wireless technology, which hinges on Huawei, is a top priority.

The United States, meanwhile, has made clear it intends to push back against China's growing tech power in order to maintain American dominance.

"In the 20th century, steel, coal, automobiles, aircraft and ships — and the ability to produce things in mass quantity — were the sources of national power," said James Andrew Lewis, director of the Technology Policy Program at the Center for Strategic and International Studies in Washington, in a report this week. "The foundations of security and power are different today. The ability to create and use new technologies is the source of economic strength and military security."

It's through that lens that some in the Chinese government view the arrest of Huawei's chief financial officer, Meng Wanzhou, at the request of US authorities.

"The US is trying to do whatever it can to contain Huawei's expansion in the world simply because the company is the point man for China's competitive technology companies," said an editorial Thursday in state-run newspaper China Daily.

Weng's case could rapidly escalate a broader fight that's been steadily building. Much depends on the language the United States uses moving forward — and how China ultimately responds.

Growing pressure

China's tech aspirations have garnered concern in the United States for years — especially because Beijing's goals are seen as relying on the misappropriation of American technology.

President Donald Trump has tried to tackle these issues directly. His administration says that the hundreds of billions of dollars in tariffs it's slapped on Chinese goods are part of an effort to stop China from stealing US tech. Officials also say that China must stop forcing companies to hand over trade secrets as a condition of market access.

Meanwhile, the United States has targeted Chinese tech companies that rely on US parts.

The Commerce Department in April banned American companies from exporting essential components to ZTE, which the agency said had violated an earlier deal punishing the company for evading sanctions on Iran and North Korea. The high-profile move forced ZTE to halt almost all of its operations for months.

In October, the department issued a similar export ban for state-owned Chinese chipmaker Fujian Jinhua. The US government said it posed "a significant risk of becoming involved in activities that are contrary to the national security interests of the United States."

At the same time, Chinese President Xi Jinping has been pushing for China's tech sector to become more self-sufficient by cutting reliance on foreign suppliers.

Turning the spotlight on Huawei, however, adds a new wrinkle. Huawei is a state champion that plays a crucial role in China's rollout of 5G.

The company has spent heavily on research and development and on marketing its 5G devices. Paul Triolo, the head of global tech policy at risk consultancy Eurasia Group, said it's the only company in the world right now that can produce all the elements of a 5G network, such as base stations, data centers, antennas and handsets, and put them together "at scale and cost."

"Xi Jinping says that he wants China to dominate the 5G market globally," Lewis told CNN Business. "A lot of people see it as the next wave of technology [and think] it will be like the internet or smartphones."

The Huawei risk

But for Huawei to succeed at building out 5G networks, it needs the United States.

Out of the Huawei's 92 main suppliers, 33 are US companies, including chipmakers Intel, Qualcomm, and Micron, and software firms Microsoft and Oracle, Tom Holland of Gavekal Research said in a note Friday.

"If Washington now prohibits these companies from selling to Huawei, the Chinese telecoms giant will struggle to survive," Holland said.

The Meng case, then, has major ramifications. The US government claims that Meng covered up violations of sanctions on Iran, according to Canadian prosecutors, who spoke at Meng's bail hearing in Vancouver on Friday.

Whether Huawei itself faces legal trouble remains to be seen, though there's speculation that the company could receive an export ban due to sanctions violations like the one imposed on ZTE.

Such a ban, if enacted, would be catastrophic for the company — and would derail Beijing's plans to deploy 5G on a large commercial scale by 2020.

"The arrest of Huawei's CFO in Canada will significantly raise the uncertainty of China's 5G timing, since any US export ban imposed on Huawei could either delay China's 5G rollout, or significantly reduce the scale near term," Jefferies analyst Edison Lee said in a note Friday. Such a ban would force Huawei's business to "come to a halt," he added.

In this, the United States has the upper hand. "They're dependent, so that puts them in a weak position," Lewis said.

Huawei has already run into problems in the deployment of its 5G technology amid concerns that its devices pose national security risks. New Zealand and Australia have barred Huawei equipment from its 5G mobile networks. UK telecoms group BT said earlier this week that it wouldn't buy Huawei equipment for the core of its 5G wireless network.

But formally penalizing Huawei could have serious consequences for how the US-China tech fight plays out down the line.

"They'll accelerate their efforts to become independent, and they'll look for ways they can ding us," Lewis said, noting that China could reduce orders of Boeing airplanes, or target US companies for violations of Chinese law. "Their hope is that in 10 years, they won't need us anymore."

US strikes at heart of 'Made in China' with Huawei arrest

Bolton says he knew in advance, clouding trade truce

HSBC flagged Huawei's suspicious financial dealings, Nikkei

Chinese company allegedly skirted American sanctions on Iran

TAISEI HOYAMA, Nikkei staff writer December 07, 2018 07:58 JST Updated on December 07, 2018 09:31 JST

WASHINGTON -- The arrest of Huawei Technologies' chief financial officer in Canada was triggered by a tip from HSBC Holdings, U.S. media reported on Thursday.

A federally appointed overseer at HSBC flagged suspicious transactions in accounts of Huawei to prosecutors, The Wall Street Journal reported. The bank "is cooperating with investigators and isn't a target in the Huawei probe," the Journal said, citing sources.

Meng Wanzhou, daughter of Huawei founder Ren Zhengfei, is suspected of involvement in a scheme aimed at evading American sanctions on Iran, according to Reuters.

Meng was arrested by Canadian authorities last Saturday at the request of the U.S.

U.S. authorities have been looking at least since 2016 into whether Huawei has been involved in illegal transactions with Iran, Reuters reported.

According to Canadian authorities, the U.S. is seeking extradition of Meng, who was arrested at Vancouver Airport. The Canadian side has not disclosed details at Meng's request. Canada is set to hold a bail hearing Friday. China is demanding her immediate release.

The arrest has thrust Huawei into the center of the U.S.-China trade war. Leading China's research and development into fifth-generation wireless communications, Huawei is central to Chinese President Xi Jinping's signature "Made in China 2025" initiative, which aims to elevate the country into a high-tech powerhouse.

If the Trump administration bans Huawei from doing business with American companies, China's largest private enterprise by sales is expected to suffer a major setback.

US case against Huawei CFO revealed in Canadian court, CNN

By Julia Horowitz and Scott McLean, CNN Business

Updated 0751 GMT (1551 HKT) December 8, 2018

Vancouver, Canada (CNN Business)The United States is claiming that the chief financial officer of Chinese tech giant Huawei covered up violations of sanctions on Iran, according to Canadian prosecutors.

Meng Wanzhou, who was arrested in Vancouver and faces extradition to the United States, is believed to have helped Huawei circumvent US sanctions by telling financial institutions that a Huawei subsidiary was a separate company, prosecutors said at a hearing Friday to determine whether Meng should be released on bail.

Her lawyer said that she has ties to Canada and is not a flight risk. The judge, after hearing arguments from Meng's lawyer and prosecutors, did not rule on bail. The hearing will resume Monday at 1 p.m. ET.

Previously, details surrounding why Meng, 46, had been detained were limited due to a press ban. A judge had accepted Meng's request to bar both police and prosecutors from releasing information about the case prior to the hearing. The ban was lifted on Friday.

A judge in the US District Court for the Eastern District of New York issued a warrant for Meng's arrest on August 22, it was revealed at the hearing Friday. She was arrested on December 1.

Read More

Earlier this week, Huawei said Meng was detained by Canadian authorities on behalf of the United States when she was transferring flights in Canada.

In a statement after Friday's hearing in Canada, Huawei said: "We will continue to follow the bail hearing on Monday. We have every confidence that the Canadian and US legal systems will reach the right conclusion."

The company has said it was "not aware of any wrongdoing by Ms. Meng" and that it "complies with all applicable laws and regulations where it operates."

In addition to her role as CFO, Meng serves as deputy chairwoman of Huawei's board. She's the daughter of Huawei's founder, Ren Zhengfei.

Meng's attorney said she would not breach a court order because doing so would embarrass her personally, and would also humiliate her father, Huawei and China itself. He added that the case against Meng had not been fully laid out, even though the US had signed off on her arrest warrant months ago.

"This isn't some last minute thing," he said.

Meng did everything she could to be transparent with Huawei's banking partners, and the company always worked to ensure its compliance with sanctions law, her lawyer continued.

Huawei is one of the world's biggest makers of smartphones and networking equipment and one of China's best-known companies. It is central to the country's ambitions to become a tech superpower.

But concerns that Huawei devices pose national security risks have hurt its ability to grow abroad.

The company has been repeatedly singled out by officials in the United States. US intelligence agencies have said American citizens shouldn't use Huawei phones, and US government agencies are banned from buying the company's equipment.

Huawei is a "bad actor," White House trade adviser Peter Navarro told CNN on Friday.

Navarro admitted that is was "unusual" that Meng's arrest came just as US President Donald Trump and Chinese President Xi Jinping reached a trade truce in Argentina, but said the government's actions are "legitimate."

"Let's look at what the indictment says and let the [Justice Department] do its thing," he said.

China Debates Pros and Cons of Retaliation After Huawei Arrest

Bloomberg News,

‎2018‎년 ‎12월‎ ‎7‎일‎ ‎오후‎ ‎7‎:‎08

• Officials involved with economy want trade talks to proceed
• Others want to take stronger action against U.S. companies

<생각>

Current Issues of Global Economy를 보면 Trade war, Brexit, Italy’s Budget, 장단기 금리 역전 현상(이미 3년물 국채금리가 5년물 국채금리를 상회)이 Recession f ears조성

Volatility is normal이란 말도 성립.

나이 들면 재빠른 대응이 어려운 만큼 위기관리가 필요한 듯. 따라서 오를 때 팔고 나오는게 어떨지?

해결이 쉽지 않는

A death cross for the S&P 500 highlights a stock market in tatters , MarketWatch

By Mark DeCambre

Published: Dec 7, 2018 2:27 p.m. ET

The S&P 500’s 50-day moving average was below its 200-day since April 22, 2016, says Dow Jones Market Data

The S&P 500 index on Friday has joined the ranks of market benchmarks forming that dreaded Wall Street chart pattern: the death cross.

Read: Bearish death crosses keep popping up, this time in retail and technology stocks

A death cross has materialized in the S&P 500 SPX, -2.33% with the 50-day moving average at 2,759.28.02, below the 200-day moving average of 2,762.02, according to FactSet data.

A death cross is what chart watchers refer to as the point where the 50-day — a short-term trend tracker — crosses below the 200-day, which is used to define the longer-term trend. Many believe the cross marks the point where a shorter-term decline graduates to a longer-term downtrend.

S&P 500’s Thursday action— falling in tandem with the Dow Jones Industrial Average DJIA, -2.24% ( and briefly with the Nasdaq Composite COMP, -3.05% )— helped deliver a breach for the large-cap index’s short-term trend line beneath the 200-day.

The formation marks the first time the 50-day MA was below the 200-day for the S&P 500 since April 22, 2016, according to Dow Jones Market Data. However, the last time that a death cross formed was in January of 2016.

The move for the benchmark comes amid a series of bearish patterns that have cropped up in equities and fixed-income markets, highlighting growing concerns about the durability of a bull run in stocks that has lasted about a decade as the economy’s vital signs have also been strong, in a long-running, if measured, rebound from the 2007-09 financial crisis.

Thursday’s slump — coming after bond and stock markets were closed during a day of mourning following the death of the 41st U.S. president, George H.W. Bush — has been attributed to further signs that a U.S.-China trade spat may not be resolved soon, even after a detente was described as having been forged over the weekend on the sidelines of the G-20 summit in Argentina, offering investors a reason to be sanguine.

Canadian authorities arrested Huawei Technologies Co.’s chief financial officer, reportedly at the U.S.’s behest, fanning fears of another escalation in tensions between the world’s two largest economies, with Chinese officials demanding the release of Meng Wanzhou, who was arrested on Dec. 1.

A number of strategists have pointed out that a recent run of death crosses appearing in the market — a death cross formed in the small-cap Russel 2000 index RUT, -1.98% last month — can be used as tools for those looking to re-enter beleaguered assets.

“As I mentioned in the previous article about the Death Cross forming in the Nasdaq Composite, the apparition of this infrequent omen does not necessarily mean the end of the world. In fact, it has occurred in the S&P 500 four times since the start of the market cycle that began in March of 2009,” wrote Nathan Edwards, financial planner and wealth manager at IMG Management, in a recent blog.

Read: Opinion: Here’s what a ‘death cross’ really means for stocks

But as MarketWatch’s Tomi Kilgore writes, the ominous formation also is a sign of how viciously equity markets have unraveled in the past several weeks. More than half of the S&P 500’s 11 sectors have seen death crosses, and a chunk of the index’s constituents are in bear markets, having declined at least 20% from a recent peak. Both the S&P 500 and the Nasdaq are in correction, usually defined as a 10% drop from a peak, while the Russell 2000 is 15% beneath its recent peak.

With those unsightly technical developments at play, crude-oil futures CLF9, +1.24% have been plunging, and bond yields, which draw safety investment are tumbling — fast. The 10-year Treasury note TMUBMUSD10Y, +0.00% yielded 2.85% at last check, down from 2.92% on Tuesday. Bond prices rise as yields fall.

Moreover, a narrowing differential between the benchmark 10-year Treasury and the 2-year Treasury note TMUBMUSD02Y, +0.00% , known as the yield curve, is flattening and threatens to invert, a feature of the fixed-income market that has presaged every recession since 1975.

Read now: Painful short squeeze slams bond-market bears amid powerful yield drop

On their face, developments in bonds and oil suggest that investors are doubtful about the enduring health of the global economy in years to come.

See: OIl futures in decline as OPEC delays decision on output level

To be sure, this may be a perfect opportunity for long-term investors, but, presently, it may also appear that all is not right with this bull market. Or, as Michael Antonelli, equity sales trader at R.W. Baird & Co., told the Wall Street Journal on Thursday: “Everything feels out of control right now.”

 

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