Germany and China have been the acclaimed heroes of global growth coming out of the last recession. It is significant to note then that both of their stock markets-leading indicators of their economy–are now in the midst of downturns which has the Dax back to where it was in October 2009 and the Chinese market 19% lower than it was in October 2009. Bottom line: more than 2 years of gains have been wiped out in the last three months…and both are still in a downtrend. All of this before the next recession has been officially declared. This suggests that still more elevated markets like the S&P and TSX have some further downside work to do in this contraction cycle.
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