Signs of the Global Slowdown

American investors may spend this week focusing on the U.S. election, but it’s worth noting today’s alarming signs that weakness in the economy continues to spread around the globe.

 A few points:

 1) ArcelorMittal, the world’s largest steel producer and a Wall Street darling over the last few years as it snatched up billions worth of new capacity by buying up rivals, has slashed its 2009 output and investment forecasts because of the credit crisis. Its shares are off double-digits for a second straight day this morning, and have dropped from $100 a share to around $20 in just the last six months. Raw materials and steel were at the core of any argument that the global building boom will hold up even as the U.S. slows. If you’re looking for a sign that global demand is in real trouble, this is it.

 2) European rate cuts today are large, but probably a little late. The European Central Bank cut rates half a point to 3.25 percent, about what was expected though a larger move was on the table. Meanwhile, the Bank of England surprised markets by slashing its interest rate by a big 1.5 percent to 3 percent, and cited slow consumer spending and tight credit conditions. Larger moves would’ve spooked markets, but rates could come down further. Both are still higher than the Fed funds rate of 2 percent, and the tone of commentary around the cuts argues for slower growth and hints at the possibility of deflation.