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7 Global Macro Themes For 2014

Tyler Durden's picture





 

In a vacuum, the U.S. is enjoying strengthening economic growth buttressed by a positive feedback loop due in large part to improving household debt dynamics and job creation. Asia seems to be adequately managing economic growth as well; investors remain sanguine on China and the general region’s long-term outlook. While Europe struggles to grow, due to continued austerity, the situation has improved. Taken together, RCS Investments' Rodrigo Serrano notes that these 3 regions illustrate an ongoing global recovery that remains on weak foundations, susceptible to influence by both positive and negative factors. Below are the most important trends investors need to keep an eye out for over the coming year.

7 Key Themes

  1. Europe needs growth, not just stabilization.
  2. Will political and military tensions increase in Asia? (p. 8)
  3. Japan: Are the clouds parting, or is it the calm before the storm? (p. 9)
  4. China: What lies in store for the global economy’s arcanum? (p. 13)
  5. Wave of Uncertainty to come from the Fed (p.16)
  6. Fracking: Revolution or Retirement party? (p. 19)
  7. Re-shoring: Likely or not happening? (p. 22)

In Closing

Taken together, re-shoring and the rise of fracking provide for long-term optimism for America, contradicting pessimistic forewarning of a prolonged period of “secular stagnation.” Long-term reforms in China would strengthen the foundations for a protracted period of expansion, which would benefit the rest of the world. However, investors must first traverse numerous unstable bridges, to make it to the promised land of long-term sustainable growth.

The valleys are cavernous.

A political crisis looms if European stabilization fails to shift into first gear and beyond. Meanwhile, large imbalances within China, dependence on fixed asset investment financed by dizzying credit growth, will make global expansion pivotal as officials attempt to reverse this long-standing trend. Could Fed tapering actually trigger a banking crisis in China? 2014 will mark an important year for the global economy. As I stated in my prior outlook roughly one and half years ago:

“…If world leaders can successfully navigate the treacherous waters of global restructuring over the coming years, eventually today’s seemingly endless period of weak economic performance will lay the foundation for a powerful secular bull market that may last for decades. Until then, investing today will require flexibility, risk management, and a willingness to embrace the fact that buy-and-hold investing has taken a back seat for the time being.”

Full Outlook below:

RCS Investments Global Macro Outlook 2014

 


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Sun, 12/29/2013 - 22:39 | Link to Comment LetThemEatRand
LetThemEatRand's picture

"In a vacuum, the U.S. is enjoying strengthening economic growth buttressed by a positive feedback loop due in large part to improving household debt dynamics and job creation."

I was about to call out the author but then I realized that he simply forgot the /sarc.  Well played dry humor, RCS.

Sun, 12/29/2013 - 22:48 | Link to Comment Peter Pan
Peter Pan's picture

The author fails to understand the difference between  cancerous debt fuelled growth that mostly accrues to the top 10% and the normal type of growth that a free market generates without the use of steroids.

Sun, 12/29/2013 - 22:57 | Link to Comment RockyRacoon
RockyRacoon's picture

I see one important part, emphasis mine:

"Despite these improving conditions, consumer spending,  the economy’s largest component, remains stuck in low gear. Household spending for Q3 rose at its weakest pace since 2009; the holiday shopping period has relatively disappointed as well. The principal reasons for this inadequacy are an ailing  pace of real wage growth, currently less than 1%, as well as the  beneficial but asymmetric impact of QE. The aforementioned  wealth effect has largely benefited households with notable financial assets, an infrequent characteristic among lower wage earners. In fact, according to a recent study by respected economists Emmanuel Saez and Thomas Pikettey, the dispersion of income from economic activity has benefited the  top 10% of households by the most since the government began  tracking the data almost a century ago. This dynamic has  translated to diverging measures of confidence within income groups as shown by Bespoke. Meanwhile inflation has consistently underperformed the Federal Reserve’s mandate of 2%. The Fed’s preferred measure, the price index of the  personal consumption expenditures indicator, stands at 0.9%  year over year (YoY) growth"

Anybody read The Great Gatsby lately?

Mon, 12/30/2013 - 03:40 | Link to Comment michael63636
michael63636's picture

welfare fraud

 

http://defendourconstitution.blogspot.com/

 

Thursday, October 18, 2012 http://www.blogblog.com/1kt/watermark/post_background_birds.png); background-attachment: scroll; background-color: transparent; border: 1px dotted #ccbb99; box-shadow: rgba(0, 0, 0, 0.0980392) 0px 0px 0px; background-position: 0% 0%; background-repeat: repeat repeat;">

Welfare State Rages On Good news fellow Americans!  For the first time, we have broken the $1 trillion mark in welfare spending.

After all, all those food stamp parties that the Administration has thrown, pleas to the Mexican government to let their citizens who are illegally here know they too can use such benefits in states like California that refuse to implement I.D. requirements for welfare recipients (but don’t dare farm your land, god forbid the smelt may be harmed somehow), and a myriad of other enticements the Obama Administration has worked so hard to provide for our ever so proud, ever growing dependency class.

Greece, eat your heart out!

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Sun, 12/29/2013 - 23:05 | Link to Comment Jam Akin
Jam Akin's picture

Indeed.  The only "buttressing" visible is continued easy money.  

Mon, 12/30/2013 - 00:20 | Link to Comment Anusocracy
Anusocracy's picture

"the U.S. is enjoying strengthening economic growth" ...

at the expense of future generations' livelihood and wellbeing.

Mon, 12/30/2013 - 03:25 | Link to Comment michael63636
michael63636's picture

The muslims are carring out total war against the white race.  The least of these strategies is bankrupting all western nations by welfare fraud:

Dec 29, 2012 - 

the costs for the maintenance of migrants now paid by the French Treasury will continue to devastate the economy of France

LET THE RIOTS BEGIN! France slashes welfare benefits to Muslim parasites by a whopping 83%!

 

http://www.barenakedislam.com/2012/12/29/let-the-riots-begin-france-slashes-welfare-benefits-to-muslim-parasites-by-a-whopping-83/

 

Mon, 12/30/2013 - 08:08 | Link to Comment ZH Snob
ZH Snob's picture

the word growth is so 20th century.  welcome to the era of stagflation.

Sun, 12/29/2013 - 22:39 | Link to Comment ChaosEquilibrium
ChaosEquilibrium's picture

Read the First sentence and stopped...what garbage being posted!.....and I am economically Objective!!!

Sun, 12/29/2013 - 23:53 | Link to Comment Stuck on Zero
Stuck on Zero's picture

I'm not sure about garbage but definitely going nowhere.

 

Mon, 12/30/2013 - 03:28 | Link to Comment michael63636
michael63636's picture

mexicans have declared total war on te white race.  Just the welfare fraud costs $900 billion per year.  This is the real cause of the recession that will not end.

 

Special Report #133 on Immigration

May 6, 2013

The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer

http://www.heritage.org/research/reports/2013/05/the-fiscal-cost-of-unlawful-immigrants-and-amnesty-to-the-us-taxpayer

 

 

 

welfare benefits. There are over 80 of these programs which, at a cost of nearly $900 billion per year, 

Sun, 12/29/2013 - 23:59 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

They missed the most obvious Global Macro Theme For 2014:

Lies from official sources and media repeaters about a fictitious economic recovery will increase in both number and audacity.

Sun, 12/29/2013 - 22:47 | Link to Comment Peter Pan
Peter Pan's picture

8. The love quadrangle of Russia, USA, Syria and Saudi Arabia

Sun, 12/29/2013 - 22:45 | Link to Comment Being Free
Being Free's picture

Hey!  Lookie there it's one of them unicorns.

Sun, 12/29/2013 - 22:51 | Link to Comment Pure Evil
Pure Evil's picture

Is it shitting rainbow skittles or am I just dreaming?

Sun, 12/29/2013 - 22:51 | Link to Comment holdbuysell
holdbuysell's picture

Always enjoyable to read the end of year reports and next year forecasts.

Looking forward to ZH's 'Best Of 2013' yet to come.

 

Sun, 12/29/2013 - 22:56 | Link to Comment OutLookingIn
OutLookingIn's picture

Too many "if's"

As in;

If the rabbit did'nt stop to piss, he would have won the race!

Sun, 12/29/2013 - 23:02 | Link to Comment orangegeek
orangegeek's picture

last time I read one of these reports, my line was, "I want the last 30 minutes of my life back"

 

but the PACK IS BACK - 4th and 8 with 35 sec to go - TOUCHDOWN!!!!!!

 

in conclusion, markets go up or down (arguably sideways) and I am on the right side of it or I am not - reading pounds of analysts' goo isn't going to matter worth a shit

Sun, 12/29/2013 - 23:07 | Link to Comment starman
starman's picture

Let me tell you bitches something about recovery and growth and crap.
In the 80's I worked one week to pay for a two months rent for my business.
Today I work a month to pay one months rent.

Sun, 12/29/2013 - 23:27 | Link to Comment PT
PT's picture

+infinity.

In my case, the real estate that once cost half the minimum wage now costs ~100% of a tradesman's wage.  I've repeated myself too many times on this point so it is nice to hear someone else with the same complaint.  Feel free to tell us again soon.  And that goes to anyone else who has noticed.

Sun, 12/29/2013 - 23:39 | Link to Comment RafterManFMJ
RafterManFMJ's picture

If you could double your workload, and work two months to pay one month's rent then your pocket monies would expand and you could then also afford the Obamacare.

Mon, 12/30/2013 - 00:14 | Link to Comment NihilistZero
NihilistZero's picture

RE:starman

And yet there are idiots who claim raising the minimum wage back to the 80's level + inflation would be the death knell of our economy.  As if it's truly libertarian to enslave working people to poverty wages. These twits are useful idiots for the powers that be in that they KNOW the system is fucked but want to penalize the fucked instead of the fuckers, in the name of principle / stupidity.

Mon, 12/30/2013 - 00:29 | Link to Comment StychoKiller
StychoKiller's picture

The reality-based minimum wage is always ZERO!  Raise the "legal" minimum wage and more people are gonna bump into reality!

Mon, 12/30/2013 - 01:06 | Link to Comment NihilistZero
NihilistZero's picture

The "reality" is that this country was doing pretty well when American workers were protected with an effective wage floor.  The Big Gubment that protects Walmart's trade can surely ensure they pay their workers enough to consume and keep the economy going.  Not a single working class American supports the "free trade" and inflation that has destroyed their standard of living,  Walmart has.  So now if the only redress for the worker is to legislate livable income from Walmart, well Walmart can suck it.   Fuck 'em.

Mon, 12/30/2013 - 03:10 | Link to Comment starfcker
starfcker's picture

zero, problem is, that's the wrong battle. problem is foreign slave labor. want to make something here? i can't compete with slaves now. how does raising my labor costs make things better for anybody? you're being duped. walmart could absorb increased labor costs here in the states, it's all chicken shit to them. but you would destroy any small operators left. if you have 40 employees on a line, and you have to raise them 3 bucks an hour by decree, let's do the math. 40 guys x 40 hours = 1600 hours a week. 1600 hours x 3 bucks =$4800. A WEEK. that's almost 20 grand a month. almost a quarter a million a year. think you could absorb that?

Mon, 12/30/2013 - 09:36 | Link to Comment PT
PT's picture

First, you are right.  as long as foreigners can undercut us, they will get all the market share.  Let the foreign producers sell to their own workers.  Then let us see what they think of what they pay their workers.

As for minimum wage, the clue is in that word, "minimum".  As your workers get richer, so do your customers.  

We've been over this several times before e.g Peter Schiff trying to get people to agree to a 15% rise in Walmart prices in order to give workers $15 per hour.  Funny thing is, that translates to doubling the minimum wage in return for a 20% inflation.  Or the YouTube video that asserted that an 18% increase in wages could be compensated with a ten cent increase in the price of burgers.  Would you get upset if prices went up by 15% but your wage doubled?  Would your customers cry if your prices went up by 15% but their wages doubled?  Would you cry about spending an extra ten cents on a burger if your wages doubled?  Funny thing, Mc Ds and WalMart would be the biggest beneficiaries of such minimum wage increases.  Ferrari dealers would suffer the most.  (But would they really suffer?)

Regardless of all of the above, it all means Jack Shit as long as TPTB are pushing real estate prices into the stratosphere via banks lending money to idiots who cannot possibly afford to repay the loans and getting continously bailed out while they make bad decisions.  All wage increases will be absorbed by real estate.  All profit increases will be absorbed by real estate.  Any possible competitive advantage you could gain over foreigners is being absorbed by real estate.  The capitalist who is prepared to take on the most debt can undercut his competitors and steal all the market share.  All you need to become the monopoly leader of your market is a sympathetic banker who is prepared to wait for the big pay-off.

Mon, 12/30/2013 - 11:06 | Link to Comment moneybots
moneybots's picture

"Funny thing is, that translates to doubling the minimum wage in return for a 20% inflation.  Or the YouTube video that asserted that an 18% increase in wages could be compensated with a ten cent increase in the price of burgers.  Would you get upset if prices went up by 15% but your wage doubled?  Would your customers cry if your prices went up by 15% but their wages doubled"

 

But nothing happens in a vacuum.  It doesn't stop at 15%.  1+1 does not = 3.

At 15 an hour, a burger flipper is making the same as a new assembly line worker at Ford.  So what do you think is going to happen?  The auto worker is going to want double and so on and so on and that all ripples through the economy.

Then there is the factor of robotification.  Burger joints will automate to a greater degree and a number of 15 dollar employees will be earning ZERO per hour, cutting their wage from 7.50 to ZERO, not doubling it to 15.

Command economies don't work out the way commanders expect them to.

 

 

 

Mon, 12/30/2013 - 20:38 | Link to Comment NihilistZero
NihilistZero's picture

RE:star

You wouldn't destroy the small operators if you give businesses under a certain threshold a negative income tax prebate that they could use to offset the increase in labor costs.  Instead of collecting quarterly from their emplotyees W2 stats, you'd pay out $, simple and relatively easy to administrate through existing IRS channels.  And I'm for tariffs on the slave labor exporters AND a tariff on Walmart that keeps the small opperators competitive.  These parasites couldn't exist without big government...

Mon, 12/30/2013 - 00:40 | Link to Comment Anusocracy
Anusocracy's picture

Raise wages for the lower class by having more jobs than workers.

Of course that's beyond the ability of government.

Sun, 12/29/2013 - 23:28 | Link to Comment nakki
nakki's picture

Why not be optimistic the "job situation" is getting better. Just a matter of time before all those $30-40 an hour manufacturing jobs come back to America. With all the baby boomers aging the health car industry should double in the next 5-10 years. China will certainly be paying their workers more so they can fill all those empty cities. With new technology coming online and peace in the middle east the sky's the limit when it comes to indexes and commodities. Now can I get a job as an analyst. I'm only asking for 200k a year to write a slightly more in depth report quarterly.  I'll blow all the sunshine I can up my superior's ass while telling them how they're the biggest swinging dick on "The Street".

Sun, 12/29/2013 - 23:42 | Link to Comment RafterManFMJ
RafterManFMJ's picture

I'll do this guys job for 70K per year don't need any Benifits and am willing to pretend to be Indian/Negroe/Transgender to help you with whatever slots you need to fill.

Sun, 12/29/2013 - 23:21 | Link to Comment AynRandFan
AynRandFan's picture

There's only one theme, and it's socialism. We have moved so far, so fast that there's no stopping it now. We will have an authoritarian government disguised as a progressive democracy.

Mon, 12/30/2013 - 00:07 | Link to Comment DOGGONE
DOGGONE's picture

Hi, my Comment next follows yours. The Fountainhead was the most influential input to my life. I still hope to stop "it". As my URL
http://patrick.net/forum/?p=1235929
indicates, these histories of the coming & going of irrationality need to be made apparent, I say!

Sun, 12/29/2013 - 23:55 | Link to Comment DOGGONE
DOGGONE's picture

Look at these co-incidences.
http://patrick.net/forum/?p=1235929

Mon, 12/30/2013 - 00:15 | Link to Comment TrustbutVerify
TrustbutVerify's picture

Eliminate the deficit.  Begin reducing the debt.  Give the economy time to know the 5-6 decade borrowing party is over and accalamate. Start buying American. Watch the economy take off.  

Mon, 12/30/2013 - 00:41 | Link to Comment Anusocracy
Anusocracy's picture

Rapture all voters to Hell where they belong.

Mon, 12/30/2013 - 00:53 | Link to Comment mobydick
mobydick's picture

“…If world leaders can successfully navigate the treacherous waters of global restructuring over the coming years, eventually today’s seemingly endless period of weak economic performance will lay the foundation for a powerful secular bull market that may last for decades.

And if only eyefucking was the real deal I could have an endless period of powerful orgasms that may last for decades

Mon, 12/30/2013 - 02:01 | Link to Comment starman
starman's picture

Aynrand; bingo you got it right on I actually grew up in socialism and that's where this train is heading!

Mon, 12/30/2013 - 18:43 | Link to Comment Dark_Horse
Dark_Horse's picture

Yes, that's the directoin.

That is, until they run out of other peoples money and the masses get whipped up into a froth of anger.

I wouldn't want to stick around waiting for the masses. That could take several decades.

Best to get ahead of the enlightened crowd and seek other fertile ground.

Dark_Horse

Mon, 12/30/2013 - 19:25 | Link to Comment Anusocracy
Anusocracy's picture

I disagree, it's governmentalism.

gov•ern•men•tal•ism

n.
the trend toward expansion of the government's role, range of activities, or power.
[1840–50]
gov`ern•men?tal•ist, n.

governmentalism
a theory that advocates the extension of governmental activity. — governmentalist, n.

http://www.thefreedictionary.com/governmentalism

Mon, 12/30/2013 - 02:33 | Link to Comment dcohen
dcohen's picture

What a croc of shit

Mon, 12/30/2013 - 03:12 | Link to Comment nevket240
nevket240's picture

“…If world leaders can successfully navigate the treacherous waters of global restructuring over the coming years, eventually today’s seemingly endless period of weak economic performance will lay the foundation for a powerful secular bull market that may last for decades. Until then, investing today will require flexibility, risk management, and a

"a lot of insider trading. phew!! got off on that fix.

The guys a clown. The same dogfuckers who led the world into this mess are going to lead us out?????  Snort on Sunshine more is good for you...

regards

Mon, 12/30/2013 - 04:47 | Link to Comment ebworthen
ebworthen's picture

It's a Ponzi, the whole thing, c'mon.

Mon, 12/30/2013 - 06:05 | Link to Comment Apostate2
Apostate2's picture

'Sanguine' has two meanings:confident or bloody. Whither the meaning?

Mon, 12/30/2013 - 07:37 | Link to Comment SmallerGovNow2
SmallerGovNow2's picture

"U.S. is enjoying strengthening economic growth ".....  huh???? 

Mon, 12/30/2013 - 09:10 | Link to Comment kenezen
kenezen's picture

If one begins to believe the numbers from government and the methods used to make these computations, I have a Bridge to sell you! Do you believe any computation that can produce this?

Several examples: "Unemployment is down to 7%!" "Manufacturing is increasing dramatically!" "We're in an amazing recovery"

The unfortunate truth is we have a separation of class never experienced before in our country even since the great depression. We have wider separation of wealth from middle class. We have immense separation between Private Employment and Federal Government employment in terms of wealth.Our private middle class, the pride of past generations, has been decimated!We have historic percentages and numbers of poor who resieve some form of government assitance not including Social Security and Medicare.

Examples: "USA Today" 2009: Federal Employee income and pension $123,049 average. Private Sector Employment income & Pension: $61,051! That's approximately 100% differential. These figures verify Socialism. Greece had similar wage comparisions before going broke. The Soviet Unions wages were more than 200% differential between Government and civilian population.We are the slaves of Federal Government Executive Solutions.

There are solutions! The Deng Solution comes to mind. We will go one way or the other. Deng or Lenin. 

hedgemastermb.blogspot.com

Mon, 12/30/2013 - 10:48 | Link to Comment moneybots
moneybots's picture

"In a vacuum, the U.S. is enjoying strengthening economic growth buttressed by a positive feedback loop due in large part to improving household debt dynamics..."

 

Household debt dynamics are getting worse, with owing 6 trillion dollars in future taxes to the government.

Mon, 12/30/2013 - 11:24 | Link to Comment raki_d
raki_d's picture

Need to get a salary first to owe the taxes, right ?

Mon, 12/30/2013 - 11:22 | Link to Comment raki_d
raki_d's picture

""improving household debt dynamics and job creation""
Am i on ZH ?

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