Early signs of a global turning point? - TDS

Analysts at TD Securities note that the global trade, which is a key indicator of economic health has fallen into negative territory in late 2018, but this occurs infrequently: 2001, 2008, 2016 (briefly), and now, raising concerns of a synchronised global slowdown.

Key Quotes

“Our models suggest this dip was short-lived, with trade growth back in positive territory in March.”

“Global trade is a good proxy for corporate profits, and we previously noted a disconnect in recent data. This is now correcting, with EPS slowing toward global trade. A rebound in trade should take pressure off corporate profits, limiting downside risks to firm investment and hiring.”

“As we expected, euro area data surprises have now turned positive, and are now stronger than the US. We are seeing early signs of a rebound in EM Asia activity in March data.”

“We continue to expect the year-ahead growth consensus to deteriorate in the coming months, but this deterioration will be at about half the pace seen in the last three months. Overall, economic momentum remains soft but is showing further signs of a positive inflection.”