Citi Gives You Five Reasons to Fear Global Recession

The Citi team is out with a doomful note of grave concern today, citing a sundry of reasons to be fearful, heretofore, of a global recession.

The reasons are clear and forthwith.

China, Emerging markets, political risk, U.S. economy surprisingly weak, and world central banks are out of ammo.

China’s recent return to a credit- and investment-led growth model “appears likely to exacerbate existing credit and investment excesses, and increase risks of an eventual credit and financial bust or a long-lasting period of low growth,” writes Citi’s team.
Emerging markets haven’t been fixed just yet
EM asset prices have been flattered by two things—”both of which may prove temporary,” write Rahbari and Co. While the U.S. dollar is weaker and expectations of an aggressive Fed tightening cycle have receded, “structural issues persist throughout many EM countries,” they say.
Omnipresent political risk
“A number of political risks threaten, including the risk of Brexit following the UK’s E.U. referendum on 23 June,” writes Citi.

The world’s economic engine is sputtering
“U.S. activity remains surprisingly weak,” the economists note.

If the whole rally since February is predicated upon some magical resurgence in crude oil prices and a stabilization of China, one would be hard pressed to defend that thesis under any minor degree of cognitive thinking and subsequent debate. Along those lines, should the price of crude drop again into the $30’s, it’d be supremely interesting to see how markets could absorb such a blow to its most central concern.