Morgan Stanley: If the trade war escalates, a recession will be here in 9 months

[question everything]

Source: CNBC

If the U.S. continues to raise a wall of tariffs on Chinese goods in the coming months and China responds, expect a global recession in three quarters, Morgan Stanley said Monday.

“As we view the risk of further escalation as high, the risks to the global outlook are decidedly skewed to the downside,” Morgan Stanley chief economist Chetan Ahya said. The firm believes a global recession will come in about nine months if the trade war further escalates through the U.S. raising tariffs to 25% “on all imports from China for 4-6 months,” Ahya said. “We would see the global economy entering recession in three quarters,” he said in a note to investors.

President Donald Trump on Thursday unexpectedly announced that, beginning Sept. 1, the U.S. will add levies of 10% on the remaining $300 billion in Chinese imports that had not previously faced duties. These new tariffs “raise downside risks significantly,” Ahya said.


Read more: https://www.cnbc.com/2019/08/05/morgan-stanley-escalating-trade-war-means-global-recession-is-coming.html

[mopinko]

1. this trade war should be part of the articles of impeachment.

these tariffs are utterly illegal.
he cant even get it through his thick head that americans pay them and not "those people".

abuse of power, complete incompetence, and prolly a fat side of pump and dump.

impeach before it is too late.

[elleng]

2. Hope it happens soon enough to affect voters.

[Wellstone ruled]

3. Wow,so

optimistic for Morgan Stanley,nine months . Let's close that space by maybe three months when all the Tariff's drive our retails beyond 80% of the public buying ability.

West bound exports are just a dribble and soon will be a drop. Mexico and Canada are barely keeping us afloat.

[SWBTATTReg]

6. Highly optimistic...I think that it's on us already. rump's actions alone (no one else's) is...

pushing us into a recession already:

-tariffs paid by consumers;
-no action on tax relief for consumers;
-inflation still creeping up, costs still going up more than wages going up;
-idiot president who doesn't know what the crap he's doing;
-inability of senate to check the president's insincerities;
-fewer and fewer allies less inclined to support the dollar/American consumer;
-already at the end of a long economic cycle;
-weaker dollar support across the world;
-consumers, already whiplashed by high rental costs (vs. ownership), are unable to come to the economy's help;
-high asset prices are suppressing economic development (continued high real estate and stock market prices are depressing economic activities);
-low farm commodities demand is suppressing a big portion of the US market;

List goes on and on...I'm sure that I've only touched the tip of this...

[Wellstone ruled]

13. We both are on the same track

Looking at the lead and lag effects,lead being orders that are in transit or are in contract are now being shipped. Sounds like Future orders are on hold subject to Cancellation. Did some Wholesale Buying of Grocery Products during the Reagan years and just by inspection,we are at that edge of a major downturn.

The Lag effect is already showing up. Housing has been showing downturn since about a year ago. The new mover uppers and new families are not cash extra to make that move. They are stuck with a House that will loose appreciation and therefore extra cash when and if they sell in order to move up.

Historical local numbers are,we are about 10% less homes sold in this past twelve months on a year over year basis in our Community of 1355 homes. In Real Estate terms,if a Community has 10% of their homes for sale at any given times,well you have a stable market. We are at 15+ as of last week and our normal is maybe 5-8% meaning our Retiree's are in a Stress situation.

Sure looking like 2006-07 again.

[SWBTATTReg]

14. Thanks for adding more to the list! I didn't think of housing or future orders at all...take care!

[Wellstone ruled]

16. My Spouse and I

were just trying to add up all the downturns we have had to endure. This will be the sixth in 58 years for us. Each and everyone caused by Market Manipulation and Banking failures to protect their interests to serve the Public and Bad Tax Policy.

[thesquanderer]

17. Though NYT reported that housing is doing better than expected

see https://www.nytimes.com/2019/08/04/business/economy/mortgage-interest-deduction-tax.html

they expected more of an impact from the changes on mortgage deduction

[Wellstone ruled]

19. The Housing season is pretty much done for the near future.

Yes,there are houses being sold on a daily basis,most were under contract for 3-6 months,but the future sales are pretty much done, the wealthy will do their thing and the remaining Middle Class and working poor are toast. Those that have to relocate for work might squeak by. But the bloom is gone.

[area51]

20. +1

If we're not already in a recession, why are bosses unwilling to give out raises, and why are employers so picky in selecting candidates?

[SWBTATTReg]

21. Good points too. The tight job market too is raising eyebrows...wages should be going up...

to attract job seekers but they are not. It's not like they have thousands of job seekers per job opening, is that there are thousands of jobs out there for the thousands of job seekers, 1 for 1, thus, the markets aren't keeping up w/ the demands of job seekers thus hurting themselves (businesses that are hiring) in the long run, by hiring less qualified candidates (IMHO).

Just speculating here too, in the push and railing against immigrants, big areas of the economy are hurting as farmers can't find the workers to pick their crops, other areas too are suffering.

[question everything]

8. Retailers are already worried about Christams shopping

Trump - the man who stole Christmas?

[Wellstone ruled]

22. When we go out to do shopping,

being in B to B sales,the first thing that is noticed is the Inventory Levels or Stock outs. On soft and hard goods,lots and lots of overstock. Displays are downstocked to the max and even a bit over stocked . And a comment from a Major Big Box Manager last week was not that encouraging. He will not be hiring the same number of temps for Holiday Sales. If fact he was concerned they will not have a good sell through . In other words,lots of stuff to count in January.

Grocery Stores are going to be a crap shoot this fall and winter the way it is looking as of now. First off,there are Millions of dollars of surplus Beef,Pork,and Chicken in Cold and Frozen storage that was waiting for Foreign Buyers by September first. All in a effort to hold retail prices to the max as possible.

This stuff will either have to be sold at fire sale prices or dumped in landfills,going to be very interesting come the middle of September forward.

[bronxiteforever]

4. Kick and recommend.

[58Sunliner]

5. Shit! I think he wants this. Americans destroyed, demoralized. Chaos.

I bet Putin would love a global recession.

[MarcA]

9. Agreed. n/t

[AtheistCrusader]

24. Some of the rich would too.

A solid recession is a good time to acquire certain things like stocks and entire companies.

The bears well.. they love a bear market.

[Lithos]

7. We are in a recession now

Most definitions are done "after the fact".

L-

[bucolic_frolic]

10. Yes. You can feel it and see it.

We are headed for a market crash and a contraction.

[Lithos]

11. Trump is attracted to it

Like Potter from _It's a Wonderful Life_ during the depression - only the rich are buying. The rich tend to do *very* well during bad events.

L-

[Bayard]

12. And there's NOTHING Congress can do about it?

Well....other than removing him from office, and we'll already be sunk by then.

[Javaman]

15. ...the trump mentality

[Ford_Prefect]

18. Trump is following Putin's plan note by note to destabilize the world economically and politically.

Putin plays for the oligarchs who own him, as Trump is owned by Putin along with his own patrons.

Thus Trump engages in a losing trade war with China our largest trading partner and holder of much of our national debt. Why?

Who gains from this?

Guess who has the most to gain?

Who owns most of the known world and much of its natural resources? Who appears to own both the Republican and Tory parties?
Who is it that appears to want government oversight disabled, not just in the US but throughout the democratically elected world?

[yellowcanine]

23. It just escalated. China devalued its currency and Dow plunged 767 points.

Catching Trump with his pants down again.