Over the last three decades, one gauge of healthy, robust global economic growth has been and presumably still is the condition of South Korean (Taiwanese and Singapore) exports of electronics. Economists view demand for electronics shipments as a meter gauging the health of the global consumer. The attached charts show demand for such products has nosedived in recent months, and in the case of the technical set up of EWY (South Korea ETF) shows the glaring lack of upside progress compared to either SPY or QQQ, for instance, both of which have climbed to new all time highs. As we speak, EWY is 29% off of its all time high at 79.07 hit on 1/26/18!
Is this divergence a BIG WARNING about the health of the consumer in the U.S.? Maybe the U.S. consumer IS tapped out-- also suggested by the consumption component of Q1 GDP released last Friday, which is exactly what 10 year YIELD sees over the horizon, and what the Fed will eventually see as a need for lower rates rather than a pause in its three year rate hike cycle.
If there is some merit to this analysis, then the equity markets are approaching the "discovery" stage of their post-2009 bull market run. That is, trying to discover if the Fed can successfully-front run an approaching recession, or if Powell and Company might remain too tight for too long?
Could Trump be exactly correct in his assessment of the need for lower rates and the re-imposition of QE (apart from his unconventional, bull-in a-china shop approach)?