Juggling Dynamite

This is a teaser preview of the full interview that has not yet been released.

Jeremy Grantham, co-founder of the Boston-based investment firm Grantham Mayo Van Otterloo (GMO), predicts a US recession “running perhaps deep into next year.” Grantham says we have entered a period of “moderately higher inflation.” Grantham speaks in an interview taped on August 17th for an upcoming episode of “Bloomberg Wealth with David Rubenstein.” Here is a direct video link.

A glut of Chinese homes and goods, with falling domestic consumption, suggests less demand for global commodities and a deflationary impulse through the rest of the world.

China’s momentum is fading after decades of supercharged growth. A much anticipated post-pandemic recovery appears to have flopped, with data flashing warning signs across the economy. The government’s traditional tools to boost growth may not provide such obvious options this time. We’ll look at why China’s slowdown could send ripples around the world. Here is a direct video link.

Historical context is critical in assessing where we are in this credit, business and employment cycle. Facts demand sobriety, and the discussion below is lucid.

This overall strength in U.S. equities is painting a misleading picture as to where the global economy is heading, especially with the Chinese market indicating signs of a slowdown, David Rosenberg, president, chief economist and strategist at Rosenberg Research, told BNN Bloomberg in a TV interview on Thursday. Here is a direct video link.

David’s table below shows the lags between the first Fed hike and the onset of recession in tightening cycles over the last 55 years. The range is 13 to 31 months, and the average is 22 months. August marks 17 months since the first hike this cycle in March 2022. The rapidity of the increases this time, coming after unprecedented years of near-zero rates, suggests the shock is likely to be faster and bigger than historically average.

See, We’re not getting out of this without a recession:

As for Canada in particular, he warned that the country’s fate will be closely tied to China’s economy.

“Although Canada is hitched to the U.S., commodity markets are really hitched to China, and the Chinese economy is reeling. It’s not getting better, and it’s probably on the precipice of heading into a recession,” he argued.

China accounts for half the demand for basic materials, which is a large component of Canadian corporate profits and a big share of the TSX Composite Index, he explained.

“We’re not getting out of this without a recession,” Rosenberg said.

Also see, China’s housing slump is much worse than official data shows.