The divergence theme is not longer being eclipsed by the Greek drama and the Chinese stock market slide. See how this week's developments fit into the bigger picture.
The ongoing downshift in property construction will continue to undercut China's demand for commodities, raw materials and machinery, weigh on property as well as mining and industrial investment, and be a drag for overall GDP growth in 2016. The most direct and important channel through which this impact spreads is trade linkages, given China's role as the top exporter and second largest importer in the world.
"Moody’s, which in 2013 began using a lower rate than governments do to calculate future liabilities, has estimated that the 25 largest U.S. public pensions alone have $2 trillion less than they need", Bloomberg reports.
As Bloomberg reports, "an old debt for Peru has come home to roost..."
If you were a shareholder of a Greek bank, you wouldn’t lose sleep over your relationship with your regulator. In that context, the statement of the 12 July Euro Summit may have come as a shock—particularly the bit about the new program for Greece having to include "the establishment of a buffer of EUR 10 to 25bn for the banking sector in order to address potential bank recapitalisation needs and resolution costs." You could be forgiven for thinking—where did that come from?
Searching for a refuge in today's uncertain markets? BlackRock has a solution...
The trick is to borrow as much as you can and leverage it to the hilt, and buy, buy, buy.
Remember when Greece was fixed... when The ECB extended its ELA to Greek banks and bridge loans were provided to repay The ECB? As we noted previously, it seems Greek banks are a sell at any price and today's continued crash in National Bank of Greece ADRs ahead of 'supposedly' a Greek bank re-opening on Monday, suggest "mark it zero" is coming soon to some knife-catchers' portfolios.
The preposterous Gong Show in Brussels over the weekend was the financial “Ben Tre” moment for the Euro and ECB. That is, it was the moment when the Germans - imitating the American military on that ghastly morning in February 1968 - set fire to the Eurozone in order to save it. In short, Greece will become an outright debtors’ colony and its government will function as page-boy legislators for the Troika occupiers. Needless to say, political and social upheaval will erupt when the full extent of the Tsipras surrender becomes evident, and the resulting political contagion will spread throughout the length and breadth of Europe as Greece implodes. In due course, the euro will collapse and the baleful Keynesian money printers’ regime in Frankfurt will be repudiated and dismantled. But not before European democracy has a brush with death, and European prosperity is extinguished for a generation.
China’s central bank is officially in the business of financing leveraged stock buying and as Bloomberg reports, the country's state-run margin lender now has the capacity to pump the equivalent of five Greek bailouts into leveraged stock trades.
The coming few months will prove challenging for the sector, and some small and medium U.S. producers may start missing their debt repayments or even file for bankruptcy. Quicksilver Resources and American Eagle Energy are two of the six U.S. based companies that have filed for bankruptcy in 2015 so far. Sabine Oil and Gas Corp. is the latest, and the biggest, U.S. producer to file for bankruptcy so far. Even mergers and acquisitions have slowed down considerably for the U.S. oil and gas industry in 2015. If the present trend persists, companies will have no choice but to cut their workforces even further to remain competitive and reduce their rising overheads. If oil prices remain in the range of $50 per barrel for longer than expected, even big operators such as Exxon Mobil, Chevron and ConocoPhillips (who have so far not made any major layoffs) could start downsizing their workforce.
Tennessee Woman Arrested For Printing Money: "All These Other Bitches Get To Print Money So I Can Too"Submitted by Tyler Durden on 07/16/2015 22:02 -0400
In what is either the best example why one should never believe anything they read on the internet, or just blatant frontrunning of the last QE by a few years, earlier this week a woman from Kingsport, Tennessee was arrested for counterfeiting money. Her justification: she read online that President Barack Obama made a new law allowing her to print her own money. "I don't give a ****, all these other bitches get to print money so I can too."
With Puerto Rico missing a payment on a bond overnight "due to non-appropriation of funds" but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now "fixed." As Peter Schiff explains, this is far from over... As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.
Hyperinflation in the U.S. is coming sometime in the next 20 years or so, and this isn't a cry from a Chicken Little, but a conclusion that the analysis strongly suggests. It is possible hyperinflation could happen during the next few years, but that seems unlikely since it would require a series of major crises and political blunders – events unprecedented in the history of the United States. If this led to a corruption of Constitutional rights in the midst of an exaltation of the Executive Branch that resulted in loss of the rule of law, hyperinflation might result. It is much more probable that hyperinflation will be preceded by a long slow decline that will include a protracted period of high inflation, and that the crash of the dollar and hyperinflation will be the final tumble off a looming, steep cliff.