Bunker fuel is the primary type of fuel used to power large shipping vessels. In the crudest of terms, bunker fuel is excess fuel leftover after refineries have processed gasoline and diesel from the crude. The shipping fuel is dense and heavy, has to be boiled before it can flow into the vessels' engine(s).

Bunker fuel prices serve as a proxy to the health of the global shipping industry. If prices rise, that usually means the demand to fuel vessels is increasing, which in turn, powers container ships and tankers from the East to West, or West to East.

Over the last month, bunker fuel prices in Houston, Rotterdam, Fujairah, and Singapore, major shipping terminals across the world, have collapsed. Bunker fuel in Houston has fallen -30% in 30 days, -27% in 27 days in Rotterdam, -18% in 26 days in Fujairah, and -29% in 27 days in Singapore.

The start of the rapid decline pre-dated President Trump's latest escalation of the trade war with China on August 01 by at least 15 days, which he tweeted: "on September 01, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%."

...during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%... — Donald J. Trump (@realDonaldTrump) August 1, 2019

Seems like declining bunker price could be another canary in the coal mine, a warning to investors that the global economy could remain depressed through 2H19. Most global cyclical indicators are showing business activity is flat or negative in the months ahead.

Global manufacturing surveys, industrial output, new orders, business investment, construction activity, motor vehicle production and freight volumes are flat or down YoY, reported Reuters. This means trade volumes are declining as fewer goods or raw materials are being transported by vessel.

Recent purchasing surveys and industrial production data suggest that the global economy worsened in June and July, which was around the time bunker rates started to decline.

With the global economy in the most severe slowdown since 2015, the decline in bunker rates across major ports could be an indication the global economy hasn't bottomed.

And to make matters worse, Mærsk A/S, also known as Maersk, the world's largest shipping company, just had its price target slashed Thursday by Morgan Stanely to DKR 7,800 ($1,169) from DKR 9,000 ($1,349), on fears the global shipping industry is about to sink.

So what does this mean for global stocks?