London (CNN Business) Happy Wednesday. A version of this story first appeared in CNN Business' Before the Bell newsletter. Not a subscriber? You can sign up right here .

The world's factories are hurting because of the trade war. That much is clear.

US manufacturing activity contracted for the second month in a row in September, bucking expectations for a slight recovery. The Institute for Supply Management's closely-watched manufacturing index dropped to 47.8 , its lowest level since June 2009.

Why? "Global trade remains the most significant issue, as demonstrated by the contraction in new export orders that began in July 2019," said Timothy Fiore, chair of the ISM's manufacturing business survey committee.

A company that makes machinery cited softening demand and reduced backlogs. "The tariffs have caused much confusion in the industry," one electrical equipment, appliance and components manufacturer said.

Not mentioned, as my CNN Business colleague Matt Egan points out: the Federal Reserve, which President Donald Trump quickly said was to blame

It's true that a strong dollar makes it harder for US companies to export their goods. But analysts argue that it's the trade war, not the Fed, that is contributing to the dollar's strength. Nervous about the global economic slowdown and trade policy, investors are dumping foreign currencies in favor of the greenback, Matt writes.

The US manufacturing data immediately sparked chatter about rising recession risks. That's in part because the state of global industry is so woeful, raising questions about how long the services sector can continue to compensate for losses.

See here: Germany's leading economic research institutes on Wednesday slashed their forecasts for economic growth for this year and next, blaming in part "the falling worldwide demand for capital goods." German GDP growth for the year is now forecast at just 0.5%. The last time Europe's biggest economy performed weaker than that was during the global recession in 2009.

"German industry is now in recession, and this is now also impacting the service providers catering to those companies," said Claus Michelsen of the German Institute for Economic Research.

Watch this space: The Institute for Supply Management's non-manufacturing index arrives Thursday. You can bet that investors will watch for similar trends.

JPMorgan: It's time to buy European stocks

Despite a looming Brexit, political uncertainty in Italy and a likely German recession, this is the moment to buy European stocks.

JPMorgan JPM That rare advice came in a note fromto clients this week, which said the bank now favors European stocks over US shares.

The argument? After nearly two years of outflows, European stocks look like a good deal. And with support from the European Central Bank, as well as growing expectations for fiscal stimulus, they could be poised for a rebound.

"We now believe that there is an opportunity for Eurozone [stocks] to bounce back," wrote Mislav Matejka, the firm's head of global and European equity strategy.

JPMorgan's recommendation is a bold one. In the past 18 months, eurozone stocks have underperformed US shares by more than 20% in dollar terms, per the bank's own analysis. And Matejka concedes plenty of reasons to worry about the path ahead — chief among them the worrying economic data that's been flowing out of Europe.

Despite this, Matejka and his team see room for optimism. That's largely thanks to recent stimulus efforts by the European Central Bank, which could support European assets, as well as growing anticipation of fiscal stimulus in the region.

"Meaningfully stronger fiscal support is unlikely anytime soon, [but] we believe that equity markets could start to price in increasing odds of this happening," JPMorgan wrote.

The online broker wars are in full swing

An all-out price war has hit the online brokerage industry, my CNN Business colleague Paul La Monica writes.

Charles Schwab SCHW TD Ameritrade AMTD On Tuesday,— under pressure from free trading apps like Robinhood — said it would eliminate commissions for trading stocks, ETFs and options on its mobile and web platforms. Shares fell nearly 10%. Before the day was over,— whose shares had nosedived almost 26% — responded in turn and matched the offer.

My thought bubble: In an intensely low- or no-fee environment, platforms are clearly worried about getting new customers in the door. Presumably, the goal here is to score headlines, gain new clients — and then direct them toward other products that actually gain revenue.

But Schwab and TD Ameritrade's investors clearly aren't buying that strategy just yet.

Up next

Bed Bath & Beyond BBBY reports earnings after US markets close.

Also today:

ADP's US employment report for September arrives at 8:15 a.m. ET.

US Energy Information Administration reports on crude oil inventories at 10:30 a.m. ET.

Coming tomorrow: Can US services withstand the manufacturing slump?