Weighing the Week Ahead: Will Slowing Chinese Growth Spark a Global Recession?

We have a big economic calendar with some reporting still catching up from the government shutdown. Inflation data, small business and consumer confidence, and retail sales lead the list. In addition to the U.S. economic data, there is increasing concern about China. Pundits are wondering:

Will weakening Chinese growth drag the world into a recession?

Last Week Recap

In last week’s installment of WTWA I suggested renewed attention to what was “baked into” current market prices. While the topic attracted frequent mention, the daily market declines and political news attracted more attention.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring Investing.com. In addition to several choices of index, they include versions for both cash and futures. The interactive charts are very flexible and highlight key news events.

Stocks lost 2.2% in the week and the trading range increased to 3.5%. You can see volatility comparisons in our Quant Corner.

Of special interest is the pre-market trading on Friday. For this we need to see the futures chart. The horizontal red line represents Thursday’s close. Futures fell to the 2736 range, apparently in reaction to China news. After the employment report release the decline was another 8 or 9 handles – 30 to 40 bps. The Friday close was actually higher than prices when the employment news was announced. I have a more complete discussion of the weak employment report below, but we should take note of the market impact of the news.


Puzzles often illustrate the critical thinking required of investors. Try out the two in this short video. Learning two spot these two tricks will inoculate you against much of the misleading noise about the economy and markets.