Canary in the coal mine.

Dear readers,

We are constantly checking analyses and opinions of established research houses in order to provide you with only interesting and relevant information on our homepage instead of the usual noise and white noise.

We have just noticed a graph that we do not want to deprive you of. The source is the renowned British research house Capital Economics. It shows the annual rate of change in new orders in Danish exports and in the volume of world trade (below). This chart is interesting because, according to CE, Denmark is the most "open" of the Nordic economies. Therefore, the record crash in July is a clear warning signal regarding the state of the global economy. The Danish canary in the coal mine is no longer chirping.

Capital Economics notes, however, that the data series from Denmark is a very "volatile beast". Therefore, the British would not bet against a rebound in August. Still, readings as weak as July's are consistent with a year-on-year decline in global trade of around 20% in the following three-month period. And that would indeed be a nasty surprise.

The bottom line:

The private-wealth stock market indicator's economic traffic light has been on red for a long time. The data from Denmark confirm our cautious stance on the global economy and the outlook for the stock markets.

Yours sincerely,

Klaus Meitinger

Note: Despite careful selection of sources, no liability can be accepted for the accuracy of the content. The information provided in private wealth is for informational purposes and is not an invitation to buy or sell securities.