Man the pumps – World Recession? Current Central Bank Actions

Posted by Richard Russell - Dow Theory Letters

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“As the entire world sinks slowly into recession, four central banks have moved in an effort to jazz up or shake their respective economies out of recession. The actions were taken separately with each on his own.

China’s central bank unexpectedly cut bank lending rates for the second time in four weeks.

The European Central Bank cut its benchmark interest rate to .75%, the lowest rate in its 14 year history. 

The Bank of England announced that it would expand its holdings of government bonds by about 15%.

The Federal Reserve announced two weeks ago that it would extend its own buying program until the end of the year.

Europe is suffering from a political crisis and an economic slowdown. 

The US is faring a bit better, but it is in a mild recession and also dealing with intractable unemployment.”

“China is suffering from what its government describes as a sharp economic slowdown (see chart of China) China is now considered to be the “economic engine” of the world. Great, and I’m not arguing with that thesis. But I have a strange feeling that China may surprise us. I think China could sink into a slump or a recession. The chart below shows the Chinese stock market in what I consider to be showing a lot of distribution and selling. I see declining tops and most recently a head & shoulders formation with a breakdown. So I think if there’s an overseas surprise coming up, it could easily be bad news and a recession in China. Remember, 40% of China’s exports go to Europe, and Europe is already in a recession, and they’re going to be cutting down on imports”.- both comments from Richard Russell- Dow Theory Letters