recovery

The consequences of all this will be felt all over the world, and for a long time to come. All of our economic systems run on oil, so many jobs are related to it, so many ‘fields’ in the economy, and no, things won’t get easier when oil is at $20 or $10, it’ll be a disaster of biblical proportions, like a swarm of locusts that leaves precious little behind. Squeeze oil and you squeeze the entire economic system. That’s what all the ‘low oil prices are great for the economy’ analysts missed (many still do). Entire nations will undergo drastic changes in leadership and prosperity.

"Today we feast, for tomorrow we die..."

"Japan’s deflation didn’t begin until the mid-1990s, a half-decade after the collapse of Japanese real estate and equity prices. Furthermore, during the early years of deflation, Japanese long-run inflation expectations remained well anchored, averaging about 1½ percent as measured by consensus forecasts. So, unfortunately, a Japan-style deflation remains a relevant worst-case scenario for us going forward."

As so often happens, whenever there is a political spat in Europe, the rating agencies are quickly involved (thing S&P and Moody's downgrades and upgrades of Greece depending on how well the vassal nation is "behaving"), and moments ago S&P downgraded Poland from A- to BBB+ outlook negative, precisely due to Poland's new media law which has been the topic of so much consternation over the past week. In other words, S&P is now nothing more than a lackey for Brussels, threatening to send Polish yields higher if Poland does not fall in line.

There has been some confusion overnight whether Goldman, in a note released overnight, is calling for a new "bull market" in oil and commodities in general. Goldman did not call for a bull market. This is what it did say, and it is not good news for US banks.

“Yeah well, considering you’ve got a book value of $20 billion and you haven’t reported an operating EBIT gain in the last two years, I think they’ve been lucky to get away with such a modest amount. I think they’ll be having the same discussions with their auditors in July."

Since 2011, when the E/P ratio for those with less than a high school diploma bottomed, that metric has regained almost two-thirds of its recessionary losses (orange line in chart). But the E/P ratio for high school or college graduates – i.e., eight out of nine American adults – has not recovered any of its recessionary losses, and has barely budged in four years (purple line). This data underscores how the jobs recovery has been spearheaded by cheap labor, with job gains going disproportionately to the least educated — and lowest-paid — workers.

The (anti)correlations between Chinese FX and US junk debt raises an intriguing question that is somewhat chicken and egg. While Chinese financial conditions were terrible to the point of near disaster, junk bonds were, on the whole, almost inconceivably placid at the same time. But now that Chinese factors regarding the likely Asian “dollar” state have gone on and gone so far, it appears as if the US junk bubble can no longer idly withstand it. Again, all indications here are for renewed selling and participation in the “run.” Does that mean the Asian “dollar” is driving the junk bubble?

Earlier today GE announced plans to cut 6,500 jobs in Europe over the next two years, including 765 in France, a spokesman for the company in France said on Wednesday. The spokesman added that GE was sticking to its pledge to create 1,000 net jobs in France in the next three years as part of its recent acquisition of Alstom's energy business. So definitely firing 6,500, but tentatively promising to add 1,000.

As the towering forces that are prevailing against failing global economic architecture and the pit of debt beneath that structure, as laid out below, it is clear that the 'Epocalypse' - encompassing the roots "economic, epoch, collapse" and "apocalypse" - is here, and it is everywhere. The Great Collapse has already begun. What follows are the megatrends that will increasingly gang up in the first part of 2016 to stomp the deeply flawed global economy down into its own hole of debt.

Tank cars, once feverishly ordered during the US shale boom, are sitting on sidings. Lessors are obtaining car rents 20-30 per cent below early 2015 — “if you’re lucky enough to keep your car in service”, said James Husband of RailSolutions, a consultancy.

"Overall, the county economies recovered on all four indicators by 2015 still represent only 7 percent of all county economies. In contrast, almost 16 percent of county economies had not recovered on any indicator by 2015."

This is the title of its latest piece looking at retail spending paterns based on its credit and debit card data: "Confusingly cautious consumer." Here is why BofA so confused by the cautious consumers.

"Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the USD and equity markets,” Horsnell said. "We think prices could fall as low as $10/bbl before most of the money managers in the market conceded that matters had gone too far."

On Tuesday we get the latest tragedy out of Turkey as at least 10 are dead in a suicide attack on Istanbul. The explosion rocked Sultanahmet Square outside the city’s Blue Mosque injuring 15 in addition to those killed.