Charles Gave: So Here We Are...

Tyler Durden's picture

Now that David Rosenberg has thrown in the towel on deflation (spending a little too much risk parity time in Westport perhaps?) and sees inflationary signs everywhere, even in a payrolls report that was decidedly bearish, if not outright made up, the roster of skeptical realists gets even smaller. Luckily, voices such as Charles Gave's still remain. In the litany below, the GaveKal partner summarizes, in the most succinct fashion we have recently seen, just where the world finds itself right about now.

From GaveKal's Charles Gave

Here we are, with:

  • China, the single biggest contributor to global growth over the past decade, slowing markedly.
  • World trade now flirting with recession.
  • OECD industrial production in negative territory YoY.
  • Southern Europe showing renewed signs of political tensions (i.e.: Portugal, Greece, Italy...) as unemployment continues its relentless march higher and tax receipts continue to collapse.
  • Short-term interest rates almost everywhere around the world that are unable to go any lower.
  • Valuations on most equity markets that are nowhere near distressed (except perhaps for the BRICS?).
  • A World MSCI that has now just dipped below its six month moving average.
  • A diffusion index of global equity markets that is flashing dark amber.
  • Margins in the US at record highs and likely to come under pressure, if only because of the rising dollar (most of the US margin expansion of the past decade has occurred thanks to foreign earnings—earnings that may now be challenging to sustain in the face of a weaker global trade growth and a stronger dollar).

Lackluster growth? Falling margins (outside of Japan)? Rising real rates? Unappealing valuations (outside of the BRICS)?... Perhaps these make up the wall of worry that global equities will climb successfully. After all, if the British and Irish Lions can win a rugby series in the Southern hemisphere, while a Scotsman wins Wimbledon, then nothing is impossible. Though perhaps the simpler explanation to the above growing list of bad omens was formulated by Claudius who said that “when sorrows come, they come not as single spies, but in battalions”.

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sbenard's picture

You mean we CAN'T print our way out of this?

Who needs an economy. We have PRINTED prosperity now!

AlaricBalth's picture

In Shakespeare's "Hamlet", the insanity of Ophelia causes Claudius to lament ""when sorrows come, they come not as single spies, but in battalions".

Currently, it is Bernanke's madness which is precipitating battalions of economic sorrows on a global scale. Perhaps, like Ophelia, Ben will plunge himself to a muddy demise.

zorba THE GREEK's picture

Bad news doesn't count if the media refuses to cover it.

Cult_of_Reason's picture

Unfortunately, the media doesn't just simply refuse to cover bad news, the media selectively hypes up bad lies. CNBC is a perfect example.

Oh, Gertrude, Gertrude, when bad things happen, they don’t come one at a time, like enemy spies, but all at once like an army.

RockyRacoon's picture

See the entire Charles Gave article.  The graphs are worth the trip:

To cut a long story short, the investment rules after large declines in precious metals were almost always totally different from the rules which prevailed before the fall. More worryingly, each such decline was accompanied by a massive recession/depression somewhere in the world and almost every time by a recession in the US (grey shaded areas), the only exception being 1983-1984 when the Latin American depression did not trigger a US recession but instead a collapse in oil prices.

CheapBastard's picture

Before the times of change, still is it so: By a divine instinct men's minds mistrust Ensuing dangers; as by proof, we see The waters swell before a boisterous storm.


(Richard III, 2.3)

NoDebt's picture

Not to sound pessimistic, but I think we're getting pretty close to:  "Cry 'Havoc!', and let slip the dogs of war."  (Shakespeare, 'Julius Caesar' 3/1)

Debugas's picture

central banks can NOT print money to give away for free - they always attach obligations to repay. If no borrower wants to fall into this trick then they can not print.


It may sound strange to you why i am not willing to borrow at zero interest rate but it is simple - no stable economy means no stable income means trouble repaying the loan

nope-1004's picture

So........  Bullish?


flacon's picture

New "all time highs" in the Russell 2000 today.... My God it's pathetic!

fonzannoon's picture

The only reason the market is at these levels is because the algo bots are designed to buy off of bullshit headlines, and other algo bots are designed to buy what algo bots are buying. If, for some actual reason, the algo's were to given a signal to sell, they would all sell at once, and the market would go bidless in an instant.

kito's picture

whats your stock pick de jour fonz? whats going to make me rich? i need to feel like my normal 1990s self tell....................

fonzannoon's picture

did you get my response about the pension thing earlier? What do you think?

One of my close family members on my wife's side is the founder and CEO of a publicly traded company. It IPO'd a few years ago. Has gone up about 125% since. Full disclosure, this guy has not shared the wealth, so I am no better off for this. However I do get some insight into his thinking. The company is hoarding cash. It's sitting on over 100 million dollars. The guy is convinced the sky is about to fall, and is hoarding every penny until it does.



max2205's picture

LOL.  Margins.  que auditors whistle blowers

kito's picture

yep saw the pension thing....but im trying to figure out how it works to preserve anything........handing pensions over to the insurance company for a fixed return doesnt help when its underfunded to begin with............its not like these insurance companies are going to make up the difference......however i guess it deflects the problem away from the govt and unto the companies when the companies cant promise the returns they are offering..............also, the cash hoarding thing has been going on for a while with most large corps--yes? since the last downturn............i assumed the mentality of the cash rich corporations was to hold the cash because its not worth expanding in a crappy economic/political environoment............when he says the sky is about to fall, what does he envision? another stock crash, but not much more? because if you are the ceo of a company and believe the currency will die along with economy (as you do believe fonz)...wouldnt you want to put your company's money somewhere other than dollars? im interested to know what he is bracing for............

fonzannoon's picture

I believe he is bracing for a massive global slowdown. He does business all over. I am pretty sure the currency aspect does not play into it as much with him as it does with me. He grew up in Minsk and saw the devaluations so it boggles my mind how he does not seem to have much concern for it. I think he has real estate all over and different currencies as well so maybe he just does not care as much.

 It's in the Eastern European's who were born there to think the sky is falling all the time. I think it's the upbringing. The funny thing is the second generation of the family were raised in the U.S. They are in their 40's. They are famous in the science field. They are the total opposite. Big time liberals who crave to pay more taxes to support society and anything our dear leader wishes for.

I sit around these people during the holidays. They ask me about the market. I chew my food and grunt some response and then look away. My wife yells at me when we drive home.

More_sellers_than_buyers's picture



Your Honesty is spectacular.  We are brothers from another mother.  My life is strikingly similar to yours.



fonzannoon's picture

The funniest part is, I was a b plus student, these people are pure genius. I sit around them and can't help but be fascinated at how totally ignorant they are.

Or how completely insane I am.

I'm starting to think it's me.

When they leave for elysium they are going to backfire a big cloud of smoke in my face, that's for sure.

AlaricBalth's picture

Ask them if they understand what constitues a Normalcy Bias.
When they give you a dumbfounded, quizzical look you will know they are grist for the elites mill.

fonzannoon's picture

Alaric one of them is a psychologist. They were talking about the Petreus scandal around election time. I asked them if they considered the possibility the scandal was a distraction from benzaghi.

they said that was paranoid.

NoDebt's picture

I live in a family that treats me like I'm parentheses.  Nobody listens when I offer a piece of advice.  They go do whatever stupid thing they were going to do anyway.  Used to bother me more than it does.  Mostly I'm like the Sphinx at family get-togethers now.

On very rare occasion, someone will crash and burn and admit to me, privately and very quietly, "you were right, I should have listened to you."  Happens about once every 5 years or so.  I have slowly collected enough family members to my side to maintain my sanity and prevent the entire lot of them from careening off into the abyss.

Whatever.  All of them are absolutely certain they are right, even in the face of abject failure.  People believe what they want to believe.

prains's picture

failures are always internalized as a shade of grey so they can be easily washed

Mentaliusanything's picture

That is what all who gamble do. They keep the losses to themselves and lord it over you when they hit the triple 20 throwing darts. Funny but I see a lot of smart people downsizing of late. 

PiratePawpaw's picture

"Massive global slowdown" isnt a terribly bold prediction.

The consequences will be .................. That is the money prediction.

Debugas's picture

Belorussia is a socialist state that prints money to give away to people.

The west is not socialism but corporatism (or should i call it fascism?) that prints money to lend and not to give away.

Hence the difference

involuntarilybirthed's picture

had many of the same thoughts and

"believe the currency will die along with economy" 

My biggest concern.  As Yogi might say "when nothing ain't worth nothin" 

Even thinking gold in dollar value is odd.  It's like speaking in french but having to convert it back to english in your mind to understand it.  Not there yet.  When value is thought of in gold amount then gold is finally there.  Until then..... 

Seer's picture

"handing pensions over to the insurance company for a fixed return doesn't help when its underfunded to begin with"

And even IF it was fully funded to begin with there's the fundamental issue that they are ALL under a mandate to generate growth even if there is none to be had.  Calling Bernie Madoff...  Anyone mentioned this Hatch'd scheme ought to hear just one "word:" AIG.

They need to just fucking STOP DIGGING!

As far as "hording cash" goes, this implicitly says that they see no immediate growth.  Only "growth" left is through acquisition, and acquisitions tend to lay out all the dirty laundry: one wonders whether the justification will end up being that the acquisition would result in less LOSS than holding cash; when That reality is apparent is when the game has to fold (or otherwise change dramatically).

W74's picture

So what you're saying is that kids need to keep hacking Reuters and the AP to throw the Algobotz off before any humans can intervene?  Sounds like fun to me.

nbsharma's picture

We indeed live through interesting times.

knukles's picture

And Hope is"not" one of the deadly sins, either...



knukles's picture

Gosh this is all so disheartening.
I think I'll turn on CNBS for some pick me up optimistic enlightenment.

God I love the smell of fresh butt-aroma in the morning.


BTW that quote attributed to Claudius is from Shakespeare's Hamlet, Act IV, Scene V

Seer's picture

"I think I'll turn on CNBS for some pick me up optimistic enlightenment."

NOOOOOO!  Don't do it!  Knukles, we can't loose you to the brain-sucking zombies!

MyBrothersKeeper's picture

The market will never go down.  Remember that and you'll be fine

Rainman's picture

Better archive the whole list .....Bernank has it all covered for another half year. He's getting to be a short-timer now , ya know ?  

JJ McApe's picture

but the money honeys on cnbc said this is only the beginning of the biggest bull run in history :O

omi's picture

China depends more on Europe than on North American exports. So USA tried to bail out Europe, so that indirectly, it can bail out China. Now it seems USA is out of cash to do more European bail-outs. Will Japan, in its ever-expanding monetary strategy, bail out North America, who will in turn, bail out Europe, who will indirectly bail out China? I don't know, but I'm tired of propositions that are formed as questions.

Seer's picture

"Now it seems USA is out of cash"

Crap!  Did I miss that, did that just happen (and I forgot to make a withdrawal)?

starman's picture

I can imagine today's Econ college class, exhibit A printing machine exhibit B paper, ink- check, power - check,  push print, there is your economy! 

The Proletariat's picture

QUICK!!!!!!!!!!  Mail everyone a check for $600, $1,200, or more to stimulate the economy!!!!!!!!!!!  It has been five years since the proletarian were given free money!!!  Regards, GW and Bernanqe

Mentaliusanything's picture

It would not hurt to throw some money to the Proles. Vegas would be a happier place. " Its made round to go around"

To the helicopters Ben, grease the sqweaky wheel lest it fails and stops the Wagon Train.

Economics is simple, I doos it every day just to eat.

thismarketisrigged's picture

the scary part about this is, that aside from the people on zerohedge and a few other sites, people do not realize what is going on.


they go to work, come home from work, or at work and see that the dow, s&p and nasdaq keep climbing, and are near record highs in nominal terms ( except the nasdaq although a 13 year nominal high).


people see there googles, amzns, jpm, whatever fucking garbage companies they own and they prob think this is great, the economy is recovering.


what these assholes do not realize is that this market is so close to death, just 1 pull of a plug away from it. once that plug is pulled, the market goes from green to a bloody and painful death.

the average person prob does not realize how fucked we are, and its truly scary. 


luckily i, along with all zerohedgers are more than aware, and when the shtf, we will all be prepared as best as we can.

smacker's picture


What's difficult to understand is that if the vast majority of people have no understanding of the true state of economies and markets or what the hell is going on and are carrying on BAU, how is it that money velocity is down and economies are in the doldrums with virtually every statistic down or falling?



I suspect the explanation for this conundrum is that people *want to believe* all the bollix and bullshit spewed out by TPTB all day/every day, but in their heart of hearts they fear that it's all lies. So they go into denial of reality and just keep going. All the time fearing deep down that it's gonna go BANG, so they're cutting back on spending and investment.

smartstrike's picture

all the bollix and bullshit



SeattleBruce's picture

People can't spend as much, even if they want to (consumer confidence), because one or the other in the family has lost their FT job and are now working 2 or 3 PT jobs and not even making as much, and soon, maybe one of those jobs goes away.  So, Joe 6PK wants to be 'confident' and 'patriotic' and help us all come back to the good ol' US of A, and when they do get surveyed, they see their (perhaps former employer's) 401K plan has rebounded nicely on a nominal basis, and so has their house value bounced up slightly from the dregs, and so they say, 'yeah, sure I'm optimistic.'

But practically, they're spending less, and once those CC bills come due from Christmas and the kids birthday and their staycation, they're going to be forced to admit that, yes, Virginia, things aren't as good as I'd like.  Consumer confidence, lagging indicator.  The goobermint and the federal reserve bankstas are fighting that uphill battle with reality.

Time for the reset.  Prepare accordingly.

Seer's picture

I saw this the other day and nearly puked myself:

U.S. consumer borrowing up; credit card use rises

Debugas's picture

when you lost everything it does not hurt to borrow more, does it ?

SeattleBruce's picture

Probably true.  Especially because everyone else in the entire world is disregarding debt levels.  What could possibly go wrong with this?

Notarocketscientist's picture

"Please fool me some more"  That is what they want.... and that is the ONLY thing keeping this dead horse on its feet