Resilient Growth Masks Debt

By Matthew Gutierrez and Shawn O'Malley · April 15, 2024

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? Happy Jackie Robinson Day!

Today marks 77 years since Robinson broke the color barrier in baseball, becoming the first Black player to take the field for a Major League team. “A life is not important except in the impact it has on other lives,” Robinson said.

Meanwhile, the S&P 500 and Nasdaq retreated again as rising Treasury bond yields and conflict in the Middle East spooked traders.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• A resilient global economy masks growing debt and inequality
• U.S., UK ban Russian metals from exchanges

This, and more, in just 5 minutes to read.

POP QUIZ

?What’s the best-performing S&P 500 stock thus far in 2024? (The answer is at the bottom of this newsletter!)

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In The News

?? How a Resilient Economy Masks Global Debt and Inequality

Few areas of markets and economies are as black and white as textbooks portray them. Often, they’re a mixed picture full of gray areas and surprise.?

That’s most definitely the case about economic growth and avoiding a major recession.?

A big picture lay of the land:

• On the one hand, there's short-term optimism driven by a resilient U.S. economy, a rebounding UK, and signs of recovery in Germany and China. The International Monetary Fund (IMF) is expected to revise upwards its growth forecasts, with Bloomberg Economics predicting a 2.9% global growth for 2024.
• But beneath this optimistic facade lie deeper challenges: Geopolitical tensions are escalating, notably between Israel and Iran, with potential economic repercussions worldwide, especially if oil flows are disrupted or trade through the Strait of Hormuz.
• Policymakers fear that geopolitical realignments and technological disruptions could slow global growth and concentrate gains in a few wealthy nations.?

A step back: According to Bloomberg, climate change, rising debt burdens, and food price increases are driving a surge in migration that’s reshaping politics in richer nations.

• The pandemic has halted the decades-long trend of economic convergence, widening the gap between rich and less well-off countries.?
• After years of remarkable progress, the number of people living in extreme poverty has increased, and low-income countries are burdened by debt servicing costs that limit their growth prospects.
• Meanwhile, as pictured below, progress in reducing global inequality has slowed.

Why it matters:

Trade tensions are escalating, particularly between the U.S. and China.?

China's aggressive industrial policies — creating subsidized gluts of cheap goods that its own consumers can’t absorb — are causing concerns in the U.S. and other industrialized countries, leading to potential trade wars. Rich countries are adopting...