The one thing the globally synchronized growth narrative had going for it was sentiment. It often had that in surplus. But therein lies a major drawback; are people happy because things are getting better, or do they believe things are getting better because “everyone” says so? There’s a difference and it’s a big one.

And it may not matter much any longer. Over the past few months, sentiment has been shifting. It isn’t as quite as universally negative as it was positive before, but, as the brave IMF spins it, the clouds are at least gathering on the horizon where nothing other than sunshine and rainbows were expected to gather.

This worrisome economic view has even penetrated far inside investor sentiment:

The poll showed that a net 38 percent of respondents expected the global economy to slow, the worst outlook on global growth since November 2008. A net 35 percent of participants identified trade war as the biggest risk.

Investors were also gloomy on corporate earnings, with a fifth of respondents expecting global profits to deteriorate in the coming year, BAML said, noting that in January a net 39 percent of investors had predicted an improvement. [emphasis added]

Wherever you see references to “trade war” as an offered explanation it is merely the stand-in for what’s really going on. Eurodollar squeeze as opposed to tariffs, the former cutting off global trade universally where the latter can only ever apply narrowly.

These worldwide factors are exhibited by those economies most exposed at the margins. China’s is one that tells us a quite a bit about where things are headed, as is Germany’s. Inside the engine of Europe, the sentiment is captured again by the wrong direction.

Falling precipitously after January (dollar, not trade war), in a manner consistent with a global slowdown if not recession, the Zentrum für Europäische Wirtschaftsforschung’s Index of Economic Sentiment stabilized re-energizing some limited optimism. In July 2018, the index registered -24.7, the lowest level since Europe’s re-recession in 2012. Last month, it had improved to -10.6 sparking talk of “transitory” negative factors once again.