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Seven Reasons To Be Fearful
Hope springs eternal that 2015 is the year that the US economy stretches its escape velocity growth as consensus growth expectations at 2.9% are still at their highest since 2005 (although world GDP expectations are falling rapidly). However, as Bloomberg's Rich Yamarone explains, with 5 of the Top 10 economies in the world in or near recession, the wall of worry can be constructed as follows...
1) Strong Dollar
A strong dollar is in the best interests of the U.S. Until it isn’t. Dollar strength can carry some costs, particularly for investors. Corporate profits usually get crimped by a rising currency. Recently U.S. companies have started commenting on the dollar’s earnings impact. Lower profits traditionally mean diminished capital spending and hiring. Import prices fall and this may be an invitation to deflation, which is something the Fed wants to avoid at all costs. Further dollar appreciation can be viewed as a tax on exports, since they appear higher-priced compared to products fabricated overseas.
2) Emerging Markets
For the developing world, persistent dollar strengthening invites a great deal of instability. In the past, this has led to revaluations, pegging and de-coupling from the dollar. The Thai baht crisis in 1997 had long tentacles that hit Russia, causing a default on sovereign bonds, and a Fed-arranged rescue of the hedge fund Long Term Capital Management.
3) Cheap Oil
The dollar rally has also resulted in lower-priced commodities. This is welcomed by businesses in general, but hurts a good number of oil-producing companies and nations that depend on those revenues. Savings at the pump are positive for most households. Economic costs of cheap oil are more unevenly distributed. North American oil corporations’ capital expenditure plans are getting slashed for 2015 and job cuts are probably not too far away if the price slide is sustained. Regionally, low oil prices could prove costly to some outperformers among the United States in recent years, including Texas, North and South Dakota, Minnesota and Oklahoma. This also carries negative consequences for state and local tax revenues.
4) The Federal Reserve
The least likely risk is that the Fed adopts a severely restrictive policy stance that precipitates a recession. Historically, it’s always been the Fed that trips up the economy. That’s probably not the case with Fed Chair Janet Yellen at the helm. Her feelings are well-known about keeping the foot on the accommodation accelerator for as long as necessary. She also has total support of the Fed governors. Rates will rise when the data support a full employment and stable price environment. That appears close, if not already achieved. Yet the rate increase won’t happen if the situation regarding key world economies, the stronger dollar or oil unfolds in an unpleasant manner.
5) China
In the Chinese Zodiac, 2014 was the Year of the Horse, and the second largest economy in the world pulled up lame. Estimates by economists polled by Bloomberg expect 7.0 percent growth in 2015, and some respected forecasting outfits now anticipate growth as low as 5.6 percent for China in 2016. China’s current pace of aggregate demand is the same as during the global crisis and market meltdown in 2008. In order to combat that, the Chinese government implemented a four trillion yuan ($586 billion) stimulus plan, ultimately sending economic activity toward 12 percent growth. Today, Chinese policy makers have no such plans. Rumors are running through the market of a Chinese devaluation. Don’t look for China to be the hero. We’re entering the Year of the Goat.
6) Japan
When a country is stuck in a liquidity trap, monetary policy prescriptions of lower interest rates are ineffective. If it adopts a fiscally restrictive policy such as a consumption tax increase when things are just barely improving, it tends to send the economy into a tailspin. That’s exactly what occurred for Japan, as its economy slipped into its third recession since 2008 and entered its third lost decade. Japan cannot even benefit from the plunge in oil prices since the massive devaluation of the yen has negated much of the price decline in purchase terms.
7) Europe
Multinational companies complain about Europe, where too many economies are on very thin ice. A collapse in Greece or Russia could precipitate a global crisis. If Russia implodes, the likelihood of a severe European recession increases sharply. Essentially all companies in the Bloomberg Orange Book of CEO Comments that have dealings in Russia have already made mention of the drag on their performance because of the sanctions imposed internationally.
Source: Bloomberg Briefs
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Who needs reasons to be fearful or worry when you have Yeller? BTFD.
What? Another itemized least of things to fear? Where's Mike Snyder? He's gonna be pissed that someone else is stealing his schtick.
Everybody gives Mike Snyder the business over his enumerating lists, yet the content of his lists never gets mention.
There have always been plenty of harbingers on the horizon.
It is only now that we realize we are near the edge of the earth and can hear the roar of the waterfall.
Hedge Accordingly...
DaddyO
I don't necessarily disagree. The lists just seem kinda melodramatic sometimes.
Seven reasons to not be fearful
Number 8:
Fonestar is back
pods
Number Nine:
Live in the moment, savor it and accept life is always in transition. Let Go and not grasp for a mooring. They are ultimately illusions.
Miffed
Thanks Miffed, way to make my post seem as childish as it is!
;)
pods
Actually, I thought yours was quite cute.
It's the little things in life you cherish. God made idiots for our entertainment ( as long as they don't get power) and fonestar has certainly provided that. If only I could do as well.
Cheers!
Miffed;-)
All of those except 2) and 5). And maybe one and three. Probably not four, either. OK, the only one I have is the last one. ;-) But really, All of 'em 'cept 2 and 5.
Are you sure?
Seven includes drawing from a concealed holster; target is at CQB distance, 7 feet away.
Yeah. I actually practice that one. Do dry (non-firing) runs almost daily. Pretty smooth.
Badass.
Good luck knocking out the other six.
I was kinda joking around, but I really do need to work on number five.
5? No problem.
Just actually practice that one. Do short (not-fast) runs almost daily. Pretty smooth.
I so hate to run. The zombies might just get me. Bicycling is OK though.
So God created this fucked up mess,why would i want to be right with him ?
Free will is a blessing and a bitch.
Man is responsible for all that is fucked up.
Am I wrong?
God supposedly created man,yes you are wrong.
Yes, God created man, but man, with a little help from Satan, made a mess of it. Fortunately God provided us a way out, just believe in Jesus. This is the first step, realizing you need a savior.
It is not God's fault we chose (and continue to choose) badly. But it will all be fine, just read that last book.
sschu
Point taken but no ones head is only 3 inches diameter.
The right eye socket of a bad guy peaking out from behind a kid that he is holding hostage is a little smaller than 3" in diameter.
Under stress, we don't rise to the occasion, we fall to the lowest level of our training.
Personally, I think the lists work for the "doom & gloom" predictions. We all know that not ALL of the events/predictions on these lists will happen. But it takes one to set off a chain of events. The real risk of major collapse is always in the tails....
I find this much scarier. Stuck home with a cold and this is playing on the local FOX station. Xploration America 2050, Big Brother indoctrination aimed at 13 to 16 year olds. http://www.dailymotion.com/video/x289ase_xploration-earth-2050-future-of...
Is this part of America 2050? 80+% of America will be off limit for most of us As we are hurdled between restricted population centers on non-stop, Jerry-Brown crazy trains as we will be coralled, restricted, watched and scanned every moment of our lives? And this is good for us? No wonder there is so much race baiting, stirring the pot toward violence against the police, and massive data theft. Is this intended to condition young people to accept what TPTB are planning for us?
Leviataion will commence when the little people start gathering pitch fork and torches. In the meantime just BTFD in aniticipation.
Exactly. This stock market will never crash again. All these articles are tiresome by now.
While I do not agree with your comment I am nevertheless fascinated by the absence of any down vote.
In my view this is not a sign of confidence in the economy but a sign that at least your voters have succumbed to the notion that the FED will back stop the stock market.
... the FED has been back stopping and will continue to back stop. This is the reality, however, surreal it is to a normal logical mind. Nobody succumbed, everyone just understand that this is what it is and nothing we can change from where we are. This world is run by the big shots like the Rotchdilds, who can override any technical indicators to suit their aims.
That's right. This will go on forever. In 500 years the FED will still be goosing the stock market.
Fool
Go to NK or some other PINKO COMMIE nation where others think like you. You are NOT an American who loves FREEDOM!
Mere pap.
Just seven? Must be a slow news day.
IT's GOING GREEN FOLKS.
Are you not entertained?
No, no I'm not. Entertain me bitchez! Say something funny.
https://www.youtube.com/watch?v=dQw4w9WgXcQ
The better version: https://www.youtube.com/watch?v=NN75im_us4k
Nirvana vs Rick Astley - Never Gonna Give Your Teen Spirit up
We Rock n Rolled some folks..
That's pretty epic.
I found that incredibly disturbing. Profane.
And yet, rather amusing.
Did ya see fonestar got out of prison?
Here is a quick cameo of him for your entertainment:
https://www.youtube.com/watch?v=edQ1cOkDujU
Spiderman, spiderman, does whatever a spider can.................
pods
You forgot The Bernak, The Greenspammmm, and Old Yeller.
Old Yeller to the rescue. Going green BTMFD bitches...
The Bohner is in..
The FED is my shepherd; I shall not want.
I thought this was supposed to be seven reasons to be fearful, not seven reasons to be hopeful.
once day it will break, clearly not this week though
Market almost green... my erection is nearly gone....
Fear is the mind killer. Reasons to be fearful should never be in a ZH post...much less one with TD's name attached to it. Tighten up your shotgroup ZH this isnt Business Insider.
Hope springs eternal that 2015 is the year that the US economy stretches its escape velocity growth
Another year of negative growth and ZIRP Happy New Year!
I have no fear in BTFD because it is FED or rather central bank software. You will certainly see those mushroom clouds before you see the market get off of track. In any case earth is toast unless the people stop the NWO. They are insane and should be stopped but they have control of the money and power. I don't know what to do and so I go to college to study what the best minds have done in the past. Don't worry. Be happy.It is all going to end soon enough.
KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES! KILL THE ZOMBIES!
Eh, what? Oh hell. I dozed off for a second there.
Yes! Im watching reruns of the walking dead.
i'm not so much much sacred, as sad, and mad as hell.
there's not doubt it's going to be scary, that's what some have been preparing for.
i'm sad because there's going to be alot of pain, and suffering for many, that had nothing to do with with what's happened, or what's comming.
i'm mad as hell at elected, govt. employees, (politicians, and all the grubers they appointed), that used the public trust for personal financial enrichment, dating back 100 yrs..
none of this would have been possible in america, if politicians, and their appointees, honored the oath they took, end of story.
there's only one way the BIS, the fed., and tbtf banks could've done this to america, preferencial legislation being passed, and the failure to up hold the rule-of-law.
none of the means, (tools for the nwo), have changed, assets have moved, but that's what the BIS thrives on, it actually empowers them, the actions over the last 6 yrs. have given them more power than ever, basically they can do whatever they want, when they want.
80% of working americans in the equity markets, via 401k's, have two choices, cash-out, and lose 40% of their retitirement, or stay, and thats anybodies guess, but it doesn't look good when myra's, and gates on mmf's are publicly talked about.
now i'll come to the quite ones, the dumb as rocks govt., state, county, local, and public sector union member employees.
what do they think is going to happen when there is no tax-base, your salary, benifits, and retirements can't be paid, socializing labor is a bitch for everyone,
i thought common-sense would break-out when the last tax increase was passed, people wanted to tax millionaires, and billionaires more, thats fine with me, the blue team was arguing that the rich were not paying enough in taxes, this was their reasoning for the national debt.
then it was made public, taxing millionaires, and billionaires at 100% would fund americas govt. for 2-3 months, take note, you that depend on tax revenues for a living.