• The Expansion’s Endgame?
  • Latin America: Caught In The Middle
  • What The Yield Curve Is (And Isn’t) Telling Us
  • In this age of electronic entertainment and communication, it has been surprising to see bars using board games to attract visitors. Battleship, Connect Four and Trivial Pursuit have all found new life in these establishments, which are trying to buck the general trend towards more remote interaction (and also sell more drinks).

    Among my favorite board games as a child was Clue, in which players move around a mansion as they try to solve a homicide. The goal is to ascertain the identity of the murderer, the weapon used and the room in which the deed was done. The true details slowly come to light through a process of elimination.

    It is often said that economic expansions do not die of old age; something kills them. The murderer is often a policy mistake that hinders both sentiment and business activity. With our decade-long upswing showing signs of strain, the search for a suspect is on. If we can identify and apprehend the perpetrator in time, recession might be avoided.

    Last summer, the world was still enjoying a synchronous expansion that promised to continue indefinitely. Growth was strong, unemployment was falling and markets were rallying. As always, there were known risks, but they seemed manageable.

    Since then, the horizon has clouded. China is clearly struggling, the eurozone is flirting with recession, Brexit is torturing Great Britain and several emerging markets are under renewed pressure. Even the U.S. economy is slowing, although this was widely anticipated as the benefit of the 2017 tax reductions fades.



    Leading indicators of global manufacturing have nearly come to a standstill. While services make up the lion’s share of output in most developed markets, manufacturing indicators still have a strong relationship with turns in the business cycle. Global interest rates have turned downward; the German 10-year yield recently dropped back below zero for the first time in three years, and the U.S. yield curve is mildly inverted in spots. Recession risks are rising. What has changed? The timeline and the geography of recent events provide important clues.