A World On Fire

Global Recession Is Already Here

We have tariffs. We have retaliation. We already have recession. Many are stretching for the parallels, but this is not the 1930s. America’s Great Depression resulted from an extreme monetary deflation. There is currently no evidence for monetary deflation, namely the rising strength of paper monies. Rather the strong gold market is signalling the very reverse: long-term monetary inflation!

Yet, this does not mean the next few months will be smooth sailing. The future is uncertain, notably also because of the Fed. We know two things for sure. First, investors are panicking. Second, China, among others, cannot afford to suffer further economic pain and will likely employ all tools, monetary and Keynesian, to boost her growth. Expect more stimulus ahead.

Consider, latest economic data. We show here an AI-based model of daily World GDP growth. The data evidence a skidding World economy. The pace of activity has dropped by a whopping near 300 basis points since mid-December, 2024. Tariff uncertainty will reinforce the trend lower, but this slowdown plainly started well-before the latest trade tensions. In short, the World is already in recession. Indeed, that is what US bond markets are screaming.