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Robert Burgess

Markets Finally Start Acknowledging Reality

A synchronized global slowdown leads financial commentary. 

Not even trade-war optimism can counter a global slowdown. 

Not even trade-war optimism can counter a global slowdown. 

Photographer: Jason Lee/AFP/Getty Images

Maybe it’s a case of “buy on the rumor and sell on the news,” but the fact that the MSCI All-Country World Index of stocks was at one point down the most in two weeks on Thursday after news of advances in U.S-China trade talks is a bit concerning.

Besides the dovish turn taken by the Federal Reserve and other major central banks, no other development has contributed more to the rebound in equities this year than optimism that the end of the trade war was in sight. But the action Thursday was less about hope and more about reality — the reality that the global economy is slowing and can no longer be ignored. Activity in Japan’s manufacturing sector contracted in February for the first time in two and a half years, data showed. South Korea, seen as a sort of early warning system for the global economy, said its exports tumbled 12 percent during the first 20 days of the month as shipments of semiconductors plummeted. A report showed German manufacturing shrinking the most in six years. In the U.S., sales of previously owned homes fell in January to the weakest pace since November 2015 despite a big drop in mortgage rates. Yes, that was due in part to the government shutdown, but everybody knew it would get resolved sooner rather than later. “Clearly there’s been a lot weaker data than I think anybody was expecting, including the spate of data that was released today,” Matt Forester, the chief investment officer at BNY Mellon’s Lockwood Advisors, told Bloomberg News.