The first half of the year has been weaker than expected for the global economy, and the main cause is a significant slowdown in manufacturing and trade.

What's happening: The IMF wrote down its global growth expectations for the third time this year, pointing squarely to the U.S.-China trade war that has thrown a wet blanket on cross-border trade and investment, sending manufacturing into a recession in the U.S. and in an increasing number of countries around the globe.

• "Risks to the forecast are mainly to the downside," IMF economists said in their latest World Economic Outlook, released Tuesday. "They include further trade and technology tensions that dent sentiment and slow investment."
• Trade volume growth fell to around 0.5% year-over-year in the first quarter, IMF reported, and likely worsened in the second.

Why it matters: Manufacturing is a relatively small portion of the U.S. economy, but it remains a lifeline for much of the rest of the world.

Driving the news: Eurozone manufacturing activity fell to its lowest in more than 11 years this month, according IHS Markit figures released this morning. That number follows a report out of Britain showing manufacturing orders in the second quarter falling to their lowest since 2009.

The big picture: Things are moving clearly and quickly negative. Manufacturing in 2 of the world's 3 largest economies — China and the eurozone — is contracting (at an unprecedented pace in the eurozone), with the U.S. hanging in positive territory by less than half a percent.

• A global measure of the manufacturing industry from IHS Markit showed its weakest reading in nearly 7 years last month.
• Emerging markets, responsible for most of the world's growth, also are beginning to slow notably, data from the Institute of International Finance shows, with analysts highlighting in a recent report that "deteriorating manufacturing sentiment is becoming more broad-based globally."

The U.S. is also in the midst of a transportation recession. Freight shipments across all modes of transportation — truck, rail, air and barge — fell 5.3% in June, the seventh month in a row of year-over-year declines, according to the Cass Freight Index for shipments.

Yes, but: Economists remain hopeful that things will turn because the slowdown seems largely the result of political decisions, rather than a fundamental loss of demand.

• That may not mean much as there's no sign any of the world's economically damaging political decisions are reversing anytime soon.

After a strong rebound in the Philadelphia Fed's manufacturing index to start the month, the latest surveys from the New York and Richmond feds have been much less promising.

• The latest ISM and IHS Markit data show the U.S. on the verge of contraction in the sector, and the mixed numbers from regional surveys so far aren't providing much hope that things will improve after June's swoon.
• The exceptionally low readings last month coincided with President Trump's short-lived call to impose tariffs on all Mexican goods. That has analysts optimistic that bearish sentiment, rather than bad fundamentals, was to blame.

Market participants overwhelmingly expect a 25 basis-point cut from the Fed at this month's policy meeting, but positioning has varied wildly over the last 2 months.

• Comments from Fed chair Jay Powell during a speech in Paris pushed the likelihood of a 50-point cut as high as 60% in mid-July, despite strong data prints on U.S. retail sales, unemployment and industrial production.
• Fed fund futures prices now show investors see just a 14% chance the central bank cuts rates by 50 basis points to a range of 1.75%–2.00%, according to data provided by Deutsche Bank Securities.

U.S. existing home sales fell 2.2% in June, declining for the 16th straight month on a year-over-year basis, data from the National Association of Realtors showed. The losing streak comes as housing prices have touched all-time highs despite mortgage rates near record lows.

“Existing-home sales data continue to paint a weaker picture of the housing market than other market data suggests. The job market and consumer spending remain quite strong, but for housing, inventory remains tight — leading to a constrained sales pace, particularly in markets in the West and the South.”

Chipotle's stock has surged by nearly 200% since Brian Niccol was announced as the company's new CEO, more than any other stock in the S&P 500. Shares got another boost Tuesday after the company beat earnings expectations and rose to their highest price ever.

• The stock jumped 4% in after-hours trading and is now up more than 70% for the year.

By the numbers:

• Earnings per share: $3.99, adjusted, vs. $3.76 expected.
• Revenue: $1.43 billion vs. $1.41 billion expected.
• Same-store sales growth: 10% vs. 8.33% expected.
• Fiscal second-quarter net income rose to $91 million, from $46.9 million a year earlier.

Background: Niccol took over Chipotle's top job from founder Steve Ells in 2018 after leading a product renaissance at Taco Bell with a new focus on the company's late-night menu and social media branding.

• He's provided a similar spark at Chipotle, pushing the brand to focus on increasing digital orders, customer loyalty programs and menu innovation.
• Taco Bell has continued Niccol's irreverent style, even upping the ante by releasing a clothing line with Forever 21, announcing a resort for loyal customers and even offering weddings at 1 location.

On Nov. 8, the Federal Reserve Bank of San Francisco will host what is believed to be the central bank's first research conference specifically on climate change, Axios' Courtenay Brown reports.

Why it matters: Climate change poses systemic risks to the soundness of the U.S. banking system, and the Fed is signaling its appetite to learn more. The conference — together with an invitation to submit related research papers — comes at a time when the Fed is increasingly facing pressure to follow other central banks in considering the threats that global warming poses to the economy.

Details: The Federal Reserve Bank of San Francisco published a widely circulated paper in March on climate change-related economic risks. According to a memo seen by Axios, the Fed is seeking submissions for research on a number of related topics, including the "implications for monetary and prudential policy of climate change and its consequences."