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This Wasn't Supposed To Happen
From exuberant escape velocity 'expansion' hopes and dreams in June, to 'slowing' in September, and 'drastic downward revisions' in early October, the Goldman Sachs Global Leading Indicator has had a very troubled recent past (as QE is just 4 POMOs away from coming to an end). But nothing could prepare the avid reader for what happened to the infamous Goldman "swirlogram" this month - an epic, total collapse. As Goldman 'politely' notes, "the October Advanced reading places the global cycle deeper in the ‘Slowdown’ phase, with momentum (barely) positive and declining."
And just as amazing: the world has gone from Expansion and Recovery, to Slowdown and borderlin Contraction in the span of just 3 months.
Goldman explains,
The October Advanced reading places the global cycle deeper in the ‘Slowdown’ phase, with momentum (barely) positive and declining.
This reading agrees with the September Final GLI that the global cycle is currently in the ‘slowdown’ phase. As the Advanced GLI ‘leans’ more on the US data, we will look to the October Final GLI for confirmation of this reading.
Components mixed, market-based components worsen
Five of the seven Advanced GLI filtered components have worsened in October so far. Notably, the S&P GSCI Industrial Metals Index® and AUD and CAD TWI aggregate components, two market-based gauges, declined from last month alongside the recent growth repricing and Dollar appreciation in markets. The Philadelphia Fed headline (the Advanced proxy for the Global PMI) and Philly Fed New Orders less Inventories components also continued to come in softer, while the volatile Baltic Dry Index also declined this month after last month’s improvement.
‘Slowdown’ deepens
The October Advanced GLI locates the global industrial cycle in the ‘Slowdown’ phase, which is characterised by positive but decreasing momentum. Last month’s Final GLI also placed us in ‘Slowdown’. The October Advanced GLI ‘Slowdown’ reading moves out of the recent stable and compressed growth range and near ‘Contraction’ territory.
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Which explains this...
And confirms concerns that this time is no different, as we noted previously,
For the past five years there has been a very clear and significant cycle to US macro data - a slight rise to start the year, notable weakness into the middle of the year, a rapid recovery into the fall, then generally flat to year-end. A year ago, we explained this cycle appears to be created by government agencies need to spend, spend, spend their budgets out ahead of fiscal year-end (Sept).
This year has been no different, aside from the knee-jerk higher in macro data - somewhat shocking in its magnitude to 'every' economist with 3, 4, and 5-sigma beats in many data - came a little earlier but to the same level of past year's exuberance (as perhaps Ex-Im concerns, Fed concerns, and election concerns sparked earlier-than-usual spend-down by agencies).
* * *
Of course, if this plays out... it's 'perfect' for the Fed to extend dovish language and investors to pile on into stocks on the back of the bad news... or without QE, is Fed talk no longer enough?
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US typically enters recession when lest expected
if expected (like summer 2010 double dip) kitchen sink thrown at and averted
So somebody tell me the difference between that swirl and the microscope pics of the Ebola strain we have all seen.
both harbingers of doom. DOOOOOOOOOOM, I tell you!
Oh, and Rickards noted on a chart that the velocity of money now is almost identical in slope and duration to the months immediately preceding the 1929 crash.
Crack-up boom, bitchez.
Its the all feared Loupity Lou! Run, BITCHEZ, RUN!
He's dead Jim...
Not that I GAF, but some F'ng clown out there does not understand the role that the velocity of money plays in an expanding or contracting economy.
edit: "some clowns don't" pl.
The unemployed and under employed don't buy other than food.
Food stamps for autos? Naa. Neither do they pay taxes.
"black swan" for you Tyler(s). Try and factor this in. Nuclear fusion may be here to stay. What the fuck will that do? Seriously.
How about you show us the working plant first and then brag about it. Seriously.
That's exactly why Americans appear as mostly DELUSIONAL to the rest of the world... How's that "zero point free energy" going ? And where's my "anti-gravity" space ship I ordered quite a few decades ago ?
and teleporters! where are they? I want to make my living by mugging people in the Ether in between cellular dissasembly and reassembly
Solar can already supplant fossil fuel, but none of that that gonna happen until the shale runs dry...
Okay; listen to this, this will prepare the avid reader. There is no growth. Okay? None. nada. zilch. We;re in a structural depression, and as part of that there is over installed capacity; eg; too much of everything. there will be no growth.
Not averted, just postponed.
People I see on a daily basis don't seem to understand how all these 'postponed' corrections add up to one huge mess.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://goo.gl/yioYBZ
Starvation wages.
fwiw, i think we're at onset of another recession ... Q1 2015 latest
Please enlighten us with more of your wisdom oh wise one.
He means to say that the depression continues.
I think he means that once the 'G' portion is taken out of the GDP calculation (with QE ending) it will finally become apparent (even to the great unwashed masses) that we never left the 2008 depression...
[Economics Lesson 101: GDP = C + I + G + (X - M). Where G = Government Spending Money it Doesn't Have]
Yep. And the only way for the entire global financial system to avoid a Minsky moment will be to revalue financial assets in real terms (which can only be done via real assets that do not depend upon cash flows.... gold).
@techstrategy:
That sounds interesting, but I probably haven't understood what you mean.
Could you be more specific?
Why doesn't the price of gold depend on cash flows? When one prices all financial assets (real estate, equity, I would exclude bonds and derivates for now) in gold, where the fuck should the gold/dow-ratio be? 1, 100, or even 100.000?
Channel stuffed. Wholesale inventories rising more than expected. NRF (national retail federation) reports record amount of imports for the holidays ... we just had a negative retail sales month. Blowing out of HY credit and more important OCC and FDIC have warned on subprime auto loans going sour.
Rising inventories + slowing demand = inventory correction (recession if bad enough ... it will be bad enough)
Bells, I learn a lot from your comments, but I had to downtick you here for appearing to believe that the 'recession' ever ended.
haha. I agree with you 100%
"official" recession ended june 2009
Ren, I'm downvoting you on a technical pooper too
the 'depression' is the one that never ended, not the 'recession'
definition of depression: A depression is commonly defined as an extreme recession that lasts two or more years.
definition of recession: A significant decline in activity across the economy, lasting longer than a few months.(commonly accepted as 2 consecutive qtrs of negative growth)
Ha! Guess I should be careful where I point that petard, huh. Hey, it's worth it for the educational comment - now you've posted the definitions for all to read! In these days of pervasive propaganda, it's more important than ever that our language be clear.
The swirlogram is now looking like a "curler", which is appropriate.
Sort of looks like a hang-man's noose. How appropriate.
Ebola diagram...WB7 might do something with this.
Buzzsaw99 has it right first.
ebolagram
Please give credit where credit is due... Obolagram...
Eventually all Swirlograms get flushed down the Tidybowl of life.
2.46% global growth and global inflation rates of >> 5% => Real economy is shrinking. Contr+P and hyperinflation or deflationary collapse are looming.
Probably deflation in some areas, hyperinflation in others. I think U.S. might be crazy enough to hyperniflate. Europe, China will probably deflate. Again. Russia could go either way, but with the current action in its currency, may inflate significantly. Unless Putin reveals some gold-backing...doubtful that he will, but it's a possibility as a 'stabilization measure' or something similar.
Actually, as the real economy collapses (deflation) they will print print print IMO either openly or in some more or less stealth manner. We'll likely continue with economic deflation AND monetary (hyper)inflation at the same time in most places, until the wheels come of completely.
The key is to exchange financial assets for real assets along the way because eventually the financial ponzi implodes. The only stable path is G3 currencies getting crushed relative to CNY, but the move likely comes from gold going exponential.
Once a banker creates money out of thin air by lending it into existence, there are only 3 possible outcomes:
1) The borrower goes even deeper into debt while continuing to service the original debt (what's been happening over the last 30 years). This is necessary to the continuation of our existing Ponzi financial system, and is where inflation comes from. The Ponzi must always increase: money and credit must constantly be created, or the system implodes. Unfortunately, no Ponzi scheme can go on forever (See # 2 & 3 below:)
2) The debt is payed off. This destroys the money that was in existence and is deflationary.
3) The debt is defaulted. This destroys the value of the loan 'asset' on the bank's books and is also deflationary. This is what happened in 2008 resulting in a rapid downdraft of deflation, which was reversed only by the massive credit creation of the central banks. Note that the debts and bad assets never went away, they were merely 'papered-over.'
Because the US dollar is still the world's reserve currency, a hyper-inflation cannot happen. Hyper-inflation is a political, not an economic event.
The most likely outcome of the current mess is a replay of 2008 on steroids (i.e., initial defaults, followed by a 'hunt for liquidity' liquidation of assests to meet obligations, followed by an immediate slowdown in economic activity, resulting in a vicious-cycle feedback loop of debt destruction, asset price collapse and eventually depression). That will all be highly deflationary...
[We are all Japan. Cash, Bonds, Gold...]
The problem is this: default, which is the only logical solution in the current conditions, will affect very badly the 1% (who own most of those loans). So, it won't happen ! That leaves us with the other options... however, the debt is already unpayable. Enjoy !
@Pool Shark:
I beleive in the deflationary scenary, too.
However... what do you mean by "a politcal event"? Wouldn't a QE5 starting with... let's say... 250 Billion USD a month be a political event? Wouldn't that be fascinating to see? What would be next? How would they communicate such a step?
By the way, haven't heard from Belgium buying US-Treasuries in a long time! That was supposed to be a covered QE-programm. How is it going, how much are they buying?
And just when we were about to swirl through the green shoots, recovery and expansion again
That is what happens when people look at FX exchange to guage the economy.
If country A prints local currency in order to claim real assets of country B, then country B simply stops REAL TRADE with country A
People still think the rest of the world is stupid and will continue to ship goods and services in exchange for digital dollars, without USA providing anything REAL in exchange
No they won't and they are not right now
Federal Reserve has absolutely zero power.
Federal Reserve has no guns, no military to enforce anything.
Congress, white house tell them to do this or that and they do it. They are just academics anyway.
The trick is to own White House and Congress, which leads to control of Federal Reserve.
Hence, Warren Buffett
This can last until the Military becomes weak, which leads to the world ignoring USA.
That is now. This is the end of the game.
I hate to be an albatross around your neck, but I think you are brilliant.
I hate to be an albatross around your neck by saying this, but I think you are brilliant.
very humbled, thank you
Knowledge is a multiple way street. We all learn from each other
Another few more cases of Ebola in the US and many people will stop flying, going to sporting events and restaurants, and heaven forbid, going to malls. With thousands of people being monitored for Ebola, we may be just a week or two away from this reality. Yellen better be ready to buy airlines and hotels and restaurants with a trillion or so in freshly-minted fiat.
Have not heard anything about Nina Pham's boyfriend who worked at Alcon and was allegedly admitted to a hospital for monitoring.
Ebola fears blamed for poor turnout at mainland's largest trade fairLack of buyers at the mainland's largest trade exhibition amid fears over disease and economy
The number of buyers attending the mainland's largest trade fair was down significantly yesterday, the first day of its autumn session, with the downturn attributed to fear of the Ebola virus and global economic gloom.
The opening of the fair coincided with reports the number of Ebola cases in West Africa could reach between 5,000 and 10,000 a week by December and that a second nurse who contracted the virus while treating a patient in Texas boarded a plane the day before she fell ill, sparking fears the disease could spread elsewhere in the US.
Exhibitors at the Canton Fair, held twice a year in eastern Guangzhou, said they had seen far fewer buyers yesterday than at the spring session in April.
"In the past the hall was full of people. There are fewer people this session, around half of that in the spring session this year," said Joyce Lin, a sales representative for Guangdong Kito Ceramics, which sells ceramics used for building materials. She said her company's exports had declined.
http://www.scmp.com/news/china/article/1617231/ebola-fears-blamed-poor-t...
It may be my shitty network here at work, but on the CNN page, where they list about 20 different friggin' sections (World, US, Entertainment, etc), the 'Business' section is the only one that is completely blank with no linked articles.
Fitting...for CNN anyway. Or any big news outlet.
CNN- Communist News Network with no real substance, kinda like Odumaba Campaigns
I did a swirlagram in the snow last winter when i went ice fishing,my swirlogram was more accurate.
Mine, was in your wifes handwriting.
lol
Cool dogfish. Did you punch through in the 3rd quadrant too ?
This sucks, I've been hanging on by a thread for what feels like 6 years, waiting for this economy to get going again. I don't know how much longer I can make it.
False data leads to useless charts with lots o' WTF moments.
As long as you trust that the markets are headed predominately downward, swirlograms are of little concern... or use. You can Expect new lows in the Dow and the S&P next week as the downward pressure continues
The S&P 500 is still tracking in lockstep with the Dow Jones Industrials. Like the Dow, the S&P will continue its downward trek in the coming week. The corrective rally Thursday and Friday should have relieved the oversold pressure from earlier in the week allowing the index to trace out new lows over the coming week or so.
Dow:
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-wave-update-for-week-ending-10172014/
S&P 500:
http://www.globaldeflationnews.com/sp-500-indexelliott-wave-update-for-week-ending-10172014/
It's pretty clear that the Fed used its gold short proceeds to buy the ES on Friday. I would not be surprised if that maneuver completely explains the ES/PM divergence since the PM "top".
But what the fuck do I know.
Muppetfuckers muppetfucking muppets.
Nothing to see here, move along.
OMG! Run for your lives!
The swirlogram looks just like Ebola!
If they want to get things back up into the upper right-hand corner, somebody needs to go out and find some better liars who aren't afraid to work the numbers a little more effectively. But given that it's all just bullshit anyway, they probably just do this to mix things up a bit, provide a little volatility for some trading profits, etc.
<<But given that it's all just bullshit anyway, they probably just do this to mix things up a bit>>
heh...how far does the the market have to fall before 'folks' start believing it's really down? I think the machines and printers may have a wee credibility problem with their market numbers, going up AND going down, these days. Nobody I've heard from thinks this fall is real...so far. Bet it'll take a lot bigger than 2008 to get a good panic going this time.
Trouble with believing the printers will always come to the rescue, is that this same belief leads to their inability to do so. It's just logic. You need some real, true believers in there to take the losses, in order to convince anyone that this is a real market.
But the jig is up. Every BTFATH moment of the last six years, has proven that this is nothing but printing. Delete risk, delete market. There are no market moves anymore, no charts to follow, no production to judge. There is only what the central planners do and don't do next. I think we're done here, at least with this economic iteration.
But then, I always was an optimist.
today's zh brought to you by: Prudential, Capital One, Barron's, Barclays, Synchrony, Charles Schwab, and Merril Lynch.
I'm getting love, shrubs, investing opportunity and usually a pressure canner that I searched for last week...I wonder how they do it...
Of course.. because GS and the G3 Central banks it runs are trapped. They need people to believe deflation... they cannot afford people to rush into gold, nor OPEC to hold out the abuse of the exorbitant privelege and their unending glorified theft will stop.
................i still eat a cookie per day and trust me i feel better.....
BTFD its Goldman's swirlogram. It's Goldman's FED.
But, but, but... Craig Johnson of Piper Jaffray says 2100 by December... He's actually been quite right for the past (2) years, but not on the back of fundamentals as many would suggest. Same with Jeffrey Saut. Remember, "this bull market has 8 - 10 years left in it..."
e-conomy will kill many more the e-bola
Food riot in Zone 7 in progress, dispatch Control Teams. Remember, Tuesday is Soylent Green Day!
I'm a bold/major ZH protagonist for some time. I get the big picture. Most people just want to be unbothered\free. It's not a left/right thing. It's a freedom thing. The idea that Americans are hysterical about ebola is an Obola thing: shame on them.
Back off QE, let some air out of the bubble, crank it up in time to get another false prosperity rolling for Hillary in 2016?
Incubus - Pardon Me
http://www.youtube.com/watch?v=PXzuDXZwZtI (3:29)
Tipping Point. GLI Growth is slightly negative. Gravity wins.
BTW the first graph is fudge, the vertical bar should be at 0.0%, not -0.5%.
We are in the swirl-o-gram 3rd quadrant now.
Ebola is the BLACK SWAN and is clearing the books now...hmm.
A previous poster made the profound observation that the "swirlogram" looks just like the ebola virus.
Makes you go hmmmm...indeed.
"QE is 4 POMOs away from coming to an end" is all you need know about this. ZHers already knew that "Recovery and Expansion" were just flim flam for the terminally stupid.
Back a few years ago, it was pretty clear that these corrections in the market help to prolong the agony of the collapse. So instead of a Zimbabwe-type exponential rise in the market indexes followed by collapse, you have a much longer stepped rise in the indexes followed by collapse.
1. Stick my neck out and say that after a contraction that looks like a systemic collapse (And giving false hope to all the preppers and doomers like me), new QEx, hiding under a more snappier acronym, will be implemented. I reckon there will be a few more squeezes of the printing press before the final nail in the coffin of the ripe, rotting corpse of the reserve currency, because let's face it, the Fed just doesn't know how to do anything else.
2. OR, this really is the big one, with sporadic wars and disease pandemics to divert attention away from the real culprits as the financial system collapses under the weight of its own corruption and bullshit. If the no. of new ebola cases in the US > 100 in the first week of November, then this could be it. But I say that every year, so what the fuck do I know?
This looks like what happens when the grab bar on the merry-go-round breaks loose.