What I Learned This Week

Pushing on a string: eroding sentiment toward global capex risks becoming a self-fulfilling prophecy. Are the U.S. industrials on the verge of a major technical breakdown (continued)?

Two observations from Standard & Poor’s June 2019 Global Corporate Capex Survey stand out. First, in more than a decade since the GFC, there have only been five years of positive global growth in non-financial capex—and this is despite the more than $12 trillion of QE conducted by the major central banks, the lowest interest rates in 5,000 years, a large tax-cut in the U.S., and global non-financial corporate balance sheets brimming with $6 trillion in cash and a ratio of cash-to-total assets approaching 10%. Second, while the survey projected modest negative growth in global capex in each of the next two years, any escalation of the trade war will drag global capex growth lower. These…

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