The Santa Clause rally lifted equity markets, but Gold advanced in unison, therefore flashing a warning signal that one market is wrong about 2020. The US Dollar is under pressure as well, assisting the advance in this precious metal. Gold is priced in US Dollars and often enjoys an inverse relationship, meaning that a sell-off in the US Dollar results in a rally in Gold. As US equity markets pushed to new all-time highs, investors and traders opted to ignore the red flags flashing around the globe. Gold is shining as a result of what could be a very turbulent 2020.

Forex traders started the fresh trading month with a barrage of global manufacturing PMI’s and the final verdict remained extremely bearish. The global manufacturing sector slid deeper into recession in November and this shouldn’t be ignored. While manufacturing represents a smaller share of global GDP as compared to the services sector, it remains a key component with many high-paid employees. Most countries reported weak PMI data, except for China, India, and France.

Chinese industrial profits for October contracted by 9.9% annualized, this marked the worst contraction on record. Chinese data is not the only one suggesting more trade-related issues. South Korean exports in the first twenty days in November slumped by 9.6%, this suggests that the holiday shopping season may come in below expectations. South Korea exports key high-technology items globally and is often viewed as a health barometer for the global economy. The Chinese economy is expected to cool further in 2020 as the Indian economy is predicted to take the leadership position.

Investors and traders around the globe have feared a global recession and plenty of indicators suggest that we may be in the process of entering on. The manufacturing sector is already in a recession and while the services sector manages to expand, the growth rate is slowing down and some indicators are at lows last seen before the Great Recession following the financial crisis of 2008. The US-China trade war and a host of other global trade conflicts have sowed more uncertainty and economic reports suggest a weaker economy than most have accounted for.

With global recession calls swirling around plenty of trading desks, the global economy does feature hot pockets of activity in Europe, Latin America, Asia and Africa. Those economies are faced with disruptors ranging from climate change to automation and digitization and from protectionism to populism. How each economy approaches disruptors will have a significant impact on how their economies will perform. Then there are more traditional economic drivers such as labor force, education, investment and productivity.

For the first time since 2005, the 2-Year/10-Year yield curve inverted in the US bond market. An inverted yield curve means that the yield on 10-Year Treasuries trade below the yield of 2-Year Treasuries, suggesting that bond traders don’t see a bright future ahead. The yield moves opposite of the price, so as yields drop the price increases. The majority of analysts and economists view and inverted yield curve as a messenger for a recession. The last five times this inversion occurred, the US economy entered a recession.

Sentix, the pioneer in behavioural finance since 2001, has released its June 2019 report which offered a recession signal for the German economy. The trade war the US initiated with China is having an effect on investor confidence readings across economies as the global economic slowdown intensifies. PMI readings, industrial and manufacturing production data as well as factory orders have all clocked in below expectations for several months. Employment data has now joined the chorus of economic indicators which suggest that a global recession is around the corner.

The global economy has cooled in the first-quarter of 2019 and there are plenty of factors which keep downside pressure on growth. Some analysts are now seeing economic green shoots as spring is blossoming. The biggest focus has been progress in trade talks between the US and China in order to end their trade war. The Eurozone economy has suffered significantly so far in 2019 which kept the Euro in refined to tightening trading ranges. Will the economic green shoots materialize or falter as summer approaches?

The Italian economy slipped into a recession in the fourth-quarter of 2018, data released Istat showed. A recession is usually defined by two consecutive quarters of negative growth. Fourth-quarter Italian GDP contracted by 0.2% quarterly or twice the expected contraction, which followed the third-quarter’s decrease of 0.1% quarterly. While economists anticipated technical recession, the severity of it may suggest a worse economic foundation moving forward.

Economic data out of the Eurozone released this morning showed economic confidence posted its 12th consecutive contraction in the month of December. This represented a decrease in every single month for 2018 and the worst such streak since the global financial crisis in 2008. The Eurozone Economic Sentiment Index, which includes confidence data from households as well as companies, dropped to a two-year low.

Over the past years, many ignored the US yield curve as the Federal Reserve kept interest rate near zero and supplied three rounds of quantitative easing. This was done in reaction to the 2008 global financial crisis and the U Great Recession which followed. The US central bank hoped to buy the economy enough time to heal and grow on its own. Since the Fed ended its QE purchases and started to increase interest rates, the yield curve started to slowly become more interesting.

Most traders did not have inflation on their radar for almost one decade or since the last global financial crisis. Central banks in developed countries have embarked on large economic stimulus packages know as quantitative easing, slashed interest rates to near 0% and printed money. That is a terrible combination for anyone watching for inflation and inflationary pressures.

The World Economic Forum, which is held every year in the Alpine resort town of Davos, Switzerland, has commenced and the global elite from the private sector and governments are gathering this week to discuss everything from the economy to innovation and from security to immigration. Many deals get either announced or signed and there are plenty of forums hosted to give leaders a platform to share ideas and discuss problems which the economy is likely to face in the near future.