The IMF recently lowered its outlook for global real GDP for this year and next year. It’s been doing so all year. But now, the IMF sees an “alarmingly high” risk of a deeper global slump. That’s alarming, especially since the open-ended QE policies of both the Fed and the ECB were just recently implemented. Apparently, the IMF is skeptical that these programs will do much to stimulate global economic growth. I’m no fan of QE, but I have to believe they’ll provide some lift to the global economy by reducing the risk of a Lehman-style meltdown.
While the IMF is downgrading the outlook for global economic growth and fretting about the downside risks, especially in Europe, did you hear that Germany’s merchandise exports rose to a new record high during August? That doesn’t jibe with the weakness in German foreign orders for manufactured goods, or the sluggishness in German industrial production. It does jibe with the strength in the DAX. This morning, we learn that Italy’s industrial production rose unexpectedly by 1.7% during August.
Even the Baltic Dry Index is turning higher just as the IMF is ringing the alarm bell. It is up 33.6% since September 12. It’s been weak all year after plunging during January. It’s had a couple of false recoveries since then. Maybe this one is too. We’ll see. Meanwhile, as I noted yesterday, the CRB raw industrials spot price index, which bottomed this year on August 2, remains on a solid upward trend, though it did dip a bit the past couple of days.
Today's Morning Briefing: The Silly Season. (1) Start spreading the news. (2) Attention-grabbing headlines. (3) Bombing the bomb. (4) The White House is leaky. (5) Have you heard about the “fiscal cliff?” (6) Signing up for Jack’s tweets. (7) Small business owners have more jobs to fill. (8) They also have plenty of complaints about taxes and regs. (9) IMF growth forecast doesn’t give much credit to QE. (10) German exports at record high! (More for subscribers.)