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8 Reasons Why The Telegraph Thinks The Market Doomsday Clock Is One Minute To Midnight
"Time is now rapidly running out," warns The Telegraph's John Ficenec as the British paper takes a deep dive into the dark realities behind the mainstream media headlines continued faith in central planning. Sounding very "Zero Hedge", Ficenec warns that from China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations.
There are signs things could get a whole lot worse.. (via The Telegraph)
1 - China slowdown
China was the great saviour of the world economy in 2008. The launching of an unprecedented stimulus package sparked an infrastructure investment boom. The voracious demand for commodities to fuel its construction boom dragged along oil- and resource-rich emerging markets.
• Ambrose Evans-Pritchard: China cannot risk the global chaos of currency devaluation
• Why China has devalued the renminbi
The Chinese economy has now hit a brick wall. Economic growth has dipped below 7pc for the first time in a quarter of a century, according to official data. That probably means the real economy is far weaker.
The People’s Bank of China has pursued several measures to boost the flagging economy. The rate of borrowing has been slashed during the past 12 months from 6pc to 4.85pc. Opting to devalue the currency was a last resort and signalled the great era of Chinese growth is rapidly approaching its endgame.
Data for exports showed an 8.9pc slump in July from the same period a year before. Analysts expected exports to fall only 0.3pc, so this was a huge miss.
The Chinese housing market is also in a perilous state. House prices have fallen sharply after decades of steady growth. For the millions who stored their wealth in property, it makes for unsettling times.
2 - Commodity collapse
The China slowdown has sent shock waves through commodity markets. The Bloomberg Global Commodity index, which tracks the prices of 22 commodity prices, fell to levels last seen at the beginning of this century.
The oil price is the purest barometer of world growth as it is the fuel that drives nearly all industry and production around the globe.
• Andrew Critchlow: Oil companies travel back to 1986 in search of a future
Brent crude, the global benchmark for oil, has begun falling once again after a brief rally earlier in the year. It is now hovering above multi-year lows at about $50 per barrel.
Iron ore is an essential raw material needed to feed China’s steel mills, and as such is a good gauge of the construction boom.
The benchmark iron ore price has fallen to $56 per tonne, less than half its $140 per tonne level in January 2014.
3 - Resource sector credit crisis
Billions of dollars in loans were raised on global capital markets to fund new mines and oil exploration that was only ever profitable at previous elevated prices.
With oil and metals prices having collapsed, many of these projects are now loss-making. The loans raised to back the projects are now under water and investors may never see any returns.
Nowhere has this been felt more acutely than shale oil and gas drilling in the US. Tumbling oil prices have squeezed the finances of US drillers. Two of the biggest issuers of junk bonds in the past five years, Chesapeake and California Resources, have seen the value of their bonds tumble as panic grips capital markets.
As more debt needs refinancing in future years, there is a risk the contagion will spread rapidly.
4 - Dominoes begin to fall
The great props to the world economy are now beginning to fall. China is going into reverse. And the emerging markets that consumed so many of our products are crippled by currency devaluation. The famed Brics of Brazil, Russia, India, China and South Africa, to whom the West was supposed to pass on the torch of economic growth, are in varying states of disarray.
• Is the global economy headed for another crash? Three signs to watch out for
• Regulators could be responsible for next financial crash
• Global stock markets jolted by China's historic renminbi devaluation
The central banks are rapidly losing control. The Chinese stock market has already crashed and disaster was only averted by the government buying billions of shares. Stock markets in Greece are in turmoil as the economy grinds to a halt and the country flirts with ejection from the eurozone.
Earlier this year, investors flocked to the safe-haven currency of the Swiss franc but as a €1.1 trillion quantitative easing programme devalued the euro, the Swiss central bank was forced to abandon its four-year peg to the euro.
5 - Credit markets roll over
As central banks run out of silver bullets then, credit markets are desperately seeking to reprice risk. The London Interbank Offered Rate (Libor), a guide to how worried UK banks are about lending to each other, has been steadily rising during the past 12 months. Part of this process is a healthy return to normal pricing of risk after six years of extraordinary monetary stimulus. However, as the essential transmission systems of lending between banks begin to take the strain, it is quite possible that six years of reliance on central banks for funds has left the credit system unable to cope.
Credit investors are often far better at pricing risk than optimistic equity investors. In the US while the S&P 500 (orange line) continues to soar, the high yield debt market has already begun to fall sharply (white line).
6 - Interest rate shock
Interest rates have been held at emergency lows in the UK and US for around six years. The US is expected to move first, with rates starting to rise from today’s 0pc-0.25pc around the end of the year. Investors have already starting buying dollars in anticipation of a strengthening US currency. UK rate rises are expected to follow shortly after.
7 - Bull market third longest on record
The UK stock market is in its 77th month of a bull market, which began in March 2009. On only two other occasions in history has the market risen for longer. One is in the lead-up to the Great Crash in 1929 and the other before the bursting of the dotcom bubble in the early 2000s.
UK markets have been a beneficiary of the huge balance-sheet expansion in the US. US monetary base, a measure of notes and coins in circulation plus reserves held at the central bank, has more than quadrupled from around $800m to more than $4 trillion since 2008. The stock market has been a direct beneficiary of this money and will struggle now that QE3 has ended.
8 - Overvalued US market
In the US, Professor Robert Shiller’s cyclically adjusted price earnings ratio – or Shiller CAPE – for the S&P 500 stands at 27.2, some 64pc above its historic average of 16.6. On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007.
* * *
But apart from that BTFATH!!!
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There are another 210 trillion reasons more. US unfunded liabilities of $210 trillion that no one mentions. And they grew from $60 trillion in 2003 to $210 trillion in 2014 - $150 trillion in 11 years . Faster than US GDP during that period.
Standard "funded" US debt grew at a rate faster than GDP in the same time period as well.
Bring it on bitchez and please put silver and gold on sale
9) Currency wars heating up, despite being a zero sum gain, Begger thy neighbor is the only stadegy left for governments.
Keynesian Master Plan - Quick Guide, Page 3:
* Placate The Masses With Junk Foods And Bogus Statistics.
* Make GOLD And SILVER A Pariah Asset Holding.
* Keep The Sheeple Buying Apples And Googels Stocks.
There is NO market.
There is NO market.
With CB’s buying stock it is all a Ponzi until the first CB with big positions wants out.
Then it’s Bernie Madoff all over again.
aahhh ponzi schmonzi....hey doesn't the NFL season start soon ? ? ? ;>)
Herbalife is still being marketed as a proper company, so ponzis still seem to be doing quite alright
Reason #9 is that we have "leaders" with an industrial age mindset running an information age society. Of course the system will collapse. The pipedream -isms such as capitalism, socialism, fascism, communism were concocted back in the days when 90% of the workforce worked in agriculture and used horses to run a plow. I just laugh at how we cling to these horrendously outdated economic theories from the 18th and 19th Centuries that have no bearing in a society made up of 1s and 0s. We need to start totally over again. As for the can kicking, that's all the Central Banks can do. Hopefully a cryptocurrency system or a resource based economy will finally be phased in before Central Banking's ultimate demise.
It's amost at the end of game for buying PM's. People are starting to figure that the economy is about to take shit and paper gold isn't the shiny stuff. Get it while you can...if you can get it at all.......
Yes, but they've reduced the level of the deficit spending. so, they're only going in the hole half as fast. that's just the same as slashing all spending and paying off the debt. so that's good.
If the Treasury keeps to the FY2015 budget we still borrow $750 Billion.
If it doesn't, well then -- whats a few hundred billion?
yup. that's the point. reducing deficit spending still means they're spending more than they bring in. which means more debt. but, hey, just increase the debt ceiling. let the next liar in chief worry about it. Obama did his part by kicking the can for 8 years.
MARGIN DEBT (near record)= $505 Billion
NEGATIVE CASH BALANCE (to pay margin calls)= far and away MINUS -$225 Billion (record)
http://www.advisorperspectives.com/dshort/updates/NYSE-Margin-Debt-and-t...
9. Ventura endorses Trump
ElectionMania Summerslam LVIII, oh yeahhh!!!
https://www.youtube.com/watch?v=VBdgVbUPQwA
It's closer to 4 seconds execpt the seconds keep getting longer.
Happens as you approach a black holes event horizon.
Black holes DO NOT exist....
One of the best science presentations I've ever seen and always good to see einshitien ass-whupped...
https://www.youtube.com/watch?v=wRsGPq77X0Q
Gotta laugh at the notion of GR's "total" failure. Were it a "total" failure, it wouldnt predict shit. But it has plenty of usefulness and is able to predict things, ergo there is some veracity to the framework, areas of "here be dragons" aside.
Is this guy giving a technical talk, or a comedy schtick?
(still watching....jesus fn christ GET ON WITH IT....skip the first few minutes of poor comedy..)
finally...ok, "the black hole is not consistent with GR"...no shit, anyone paying attention knows that...
"contains no matter and therefore is not a black hole" *facepalm* e=mc^2, one may have heard of?
again, anyone who remotely understands GR will understand that it does not explain the singularity of a black hole and understands it has plenty of shortcomings...one doesnt need to watch this dude ramble on for 45 minutes to understand that, unless one is of the opinion that GR is a complette theory.
(not railing at you ori, its just as if this were some actual new idea or data, its not, this guys entire talk is old knowledge)
There was one in Kolkata, ORI.
https://en.wikipedia.org/wiki/Black_Hole_of_Calcutta
"Reggie, can we build these black holes here, for YT?"
"I suppose."
According to the Electric Universe Theory Balck holes do not exist and many of our current gravitational-based theories are wrong. And, the evidence for the electric universe is quite compelling. It will be interesting to see how this understanding of the universe plays out.
I fell into a Balck Hole one night in Rosie Roads. The saying then was: "Once you go Balck, you'll never go back."
Haven't been the same since.
- Ned
Old saying here in the South.
"Blacker the berry, the sweeter the cherry."
The correct saying is: "Once you go Balck, you never go bock"
just go axe any speller....
It's all pink inside
Once you go Black, DON'T come back.
Yep...something like 1 in 10 have aids, and 1/2 have some form of std.
Tries too hard to explain away gravity with electromagnetism. No doubt there's facets of it that are useful and not considered deeply enough, but one neednt toss out the baby with the bath water.
Electric Universe Theory
Grounded
(but not in science or epistemology)
"Black holes DO NOT exist...."
Paradigm shifts are not the result of table pounding or hand waving. They are the result of a crisis arising from the failure of an existing model to explain an objective, empirical fact.
Furthermore, paradigm shifts require more than bold assertions, they require experimental proof (eg. the double slit experiment).
So, where's the crisis, and where's the experimental proof?
Final thought. If you discover, midway through life, that everything you believed in was wrong, then what guarantee is there that your response to that realization doesn't simply compound the error?
Yeah, ebear!
Astrophysical data, due to new technology, has become an exponentially deluge in recent decades: plenty of counter-examples, possibly indicating some wild gyrating theories, striking off in all directions.
People who popularized stories based on "science" have tended to have grossly oversold those stories. Narratives full of sufficient qualifications tend not to be popular! (Of course, much more so for stories about political economy!)
More and more, I am sure that NOBODY understands what is really happening. "Life is bitch," since the existential dilemma remains that one still has to act, despite never having good enough data, much less any adequate models ... Good luck!
That may be so, Oh regional Indian, but those black holes still make a great metaphor.
Short and sweet. Who are you and what have you done with the real Radical Marijuana ?
Well, mkhs, I took the time to watch through this video:
https://www.youtube.com/watch?v=wRsGPq77X0Q
Stephen Crothers Destroys the Quackademic "Black Hole"It's closer to 4 seconds execpt the seconds keep getting longer.
Hey if you can Algo the entire fucking stock exchange why not the second hand on every clock starting with GMT/EST?...
.
"the seconds keep getting longer"
i agree, machines (AI) perceive time differently than humans
WTFATH!!!!
This will not be an issue. All that was only promised to the people. Breaking that promise will no big deal for TPTB.
Are unfunded pension liabilities our hyperinflation in waiting? The only way there can be hyperinflation is for that money to get into people's hands, right?
Disclosure: I'm gold miner running for MP in Canada, not an economist.
Well the only way there can be hyperinflation is for ANY money to get into the people's hands.
As long as QE only profits the 0.001% all is well, no hyperinflation!
But wait, it gets better, without any money the mob won't spend anything. So no spending means we obviously have to do even more QE. (This circle will continue until the poor start to eat the rich)
Ron Paul - "The United States Is About To Collapse"
https://www.youtube.com/watch?v=FebGaCyNhys
9) Obama in the white house causing chaos throughout the globe.
Obumble is irrelevant
Keep telling yourself that, if that's what helps you sleep at night.
OK please educate me on how Obumble is making these globalist decisions. He's the boss? Really?
I never said he was the boss, but he is not irrelevant either. He has the support of 50% of this country regardless of what he says or does and that means something. Let's just say for an instance there was any real opposition, opposed to the fake opposition we currently have in the one party system, as the first black president what do you think would happen if he were really held accountable for his crimes? Why do you think TPTB put him in this position? He is the lighning rod, the distraction, while TPTB continue their plan towards the NWO.
Exactly. I am weary of the meme that Presidents don't matter. The fuck they don't. This dipshit has proven that they do indeed matter- be sure and ask that question of the hundreds of convicted felons- many black- who will be receiving pardons next year and coming to a check out line near you soon.
Sure 50% of sheep support him but I say he is irrelevant becasue it could be ANYONE in his job who will implement the NWO. He's just a nice image for the sheep. We basically agree on this guy but maybe have a difference in definitions of what relevance is.
A person with balls could have turned this piece of shit around. There was a critical point- probably many years ago where decent people still had hope. That moment has passed. There is no way we can rescue our country from these elite, greedy bankers who are choking the life out of us while raping us from behind. It's game over. Nobody captures it better than this guy- the best read of the week.
http://www.freemansperspective.com/wont-be-fixed/
A person with balls will be terminated.
I wouldn't call it support. More like indifference.
They're not going to get off their couches and implement his orders or anything like that.
This.
Franklin Delano Roosevelt — 'Presidents are selected, not elected.'
Your vote doesn't matter. We've never been free; not even the 4-year or 8-year installed "leader of the free world" is free. POTUSs are actors that occaionally need to be kept in line: Ronald Reagan flippantly commanded during his speech by Donald Regan formerly of Merrill Lynch to "speed it up", G W Bush with a bitch slap mark on cheek supposedly from fainting while choking on a pretzel and slamming cheek on way down. JFK anyone?
It never ceases to amaze me the naivete in the comments on this website. Politics is WWE, i.e., choreographed. "In politics, nothing happens by accident. If it happens, you can bet it was planned that way." - Franklin D. Roosevelt
Haven't you seen the little mark on POTUS neck...
"Property of the Rothchilds on Loan only"
Obama can't wipe his ass without getting authorization from his handlers. Even his fight with Netanyahu is staged -good cop, bad cop
+1for that, we have the same here in the UK with the EU...
‘David Cameron will orchestrate a ‘bang the table’ row with the French to try to convince voters he has secured a good deal from Brussels, senior Tories have admitted.
Former health secretary Andrew Lansley is reported to have told business leaders last week that the Prime Minister plans to ‘choreograph’ a row with French president Francois Hollande before putting his new deal on Europe to voters in an in/out referendum in the following months.
Another senior Tory said it was vital for the Prime Minister’s talks to have some ‘theatre’ to persuade voters that Mr Cameron had fought hard for Britain in the negotiations, which will be conducted behind closed doors.’
http://www.dailymail.co.uk/news/article-3200330/Cameron-stage-bang-table...
No business like show business. Too bad most either believe all the BS or don't even follow it.
Wrong - there is no business like Shoah business (Abba Eban former Israel Foreign Minister).
"Shoah me the money"
"too many white christian faces"
~Cameron
I rest my case your honor.
"Slurp, slurp, acck! Reggie, can't they deliver these messages differently?"
"Well, I guess they know a dick will attract your attention."
Yeah! If it wasn't for Obama, Leahman Brothers and Bear Stearns would never have gone bankrupt and the 2008 meltdown would have never occurred. Oh, wait...
Bummer
WOW, that's what I call a contrarrian BUY-signal.
ZIRP is spent. But they still have QE4++++. That should buy at least one more bounce. Maybe. NIRP the final final straw? Psychology of the masses and all that
Libor from 0.52 to 0.58? Kind of stretching out to find reasons, when so many other ones are out there!
The Telegraph are clowns. Why they release investment advice by journos I don't know. Called the bottom on oil at 60... Mugs.
At some point in time somebody is gonna be right.
Right. One day, by pure chance and probability someone will be right. He will become a saint and give inteviews forever.
Just to be contrary,
Nobody will every be right about anything. Let me know when I'm right about that because then I'll be wrong.
Meh! Doom porn....This time It's totally different!
Sarc/ if necessary
Can this whole market and money system explode already? I am so tired of hearing about this shit heap of a system and all of its followers and cheerleaders watching and gaming every micro move.
Explode already and let those who live and die by every tick jump out their windows or become obsolete and needing to find something useful to do in life. Let everyone else with a life beyond "the financial sector" live without these scumbag parasites screwing up their world with their antics, scams and political influence.
I just stood up and cheered.
The Central Banksters aren't "all-in" yet, just you wait and watch them coordinate a temporary raise of rates, equities crash, then double-down on the QE of the last 5 years. That's what gamblers do.
Money costs nothing for them, so as long as they have an infinite supply of nothing to create the illusion of something they will bluff with their infinite stack of chips until finally, at some nebulous point, the cards have to all be shown.
+1 EB. Only when we see a equivalent of J.P. Morgan himself, going to the NYSE, to intervene in the crash of 1929, will we know for sure that we are in a true "death spiral."
JPM doesn't have to show up in 2015 to intervene, just call the writers of the trading software programs and tell them 'change the algos' today.
Wham, bam thank you Ma'am.
I you had JPM going to the Fed, your last sentence is pretty perfect.
+1. I think we are witnessing banksters exit now. Print paper money, give to banks, buy or steal real assets on the cheap, then trash the system. Be sure the police and military keep it 'peaceful' when SHTF.
Who is really holding all the gold and real estate ? Who is getting more each day ? Media/politics is just the distraction. Stockton's comment about politics is best ' if I wanted to see clowns I'd go to the circus '.
Only a fool would tell.
That's pretty much their funny-money game in a nutshell. We're seeing deflation wreak havoc on the BRICS. It's been a much longer and slower grinding death for the middle class, which has been masked by phony data all along. That they pawned this off as a "recovery" for the last eight years, should remind us that the socio-paths pulling the levers could grind this out longer than we think. "Collapse" of the world economy may come "swiftly" or in these continued periods of more frequent and dramatic boom and bust cycles. I think it will be the latter.
Damn straight eb.
All you had to do was watch Japan's charts while Fukushima was melting down after the tsunami. They were going under, not just water. Currency trade unwinds were causing swirls and eddies in the global economy that were promising to make the reactor look like secondary news. Several central banks (including the Fed) kicked in doing currency swaps with them to stabilize the slide. No one hid it, it just happened.
If one goes in the alliance, they all go. No altruism, it's all self interest.
De-centralized while you can.
History....ignore at your own risk. Fiat fails finally.
for the same reason CNBC pundits think everything is fine. they simply do not understand that debt matters (if its actually going to be paid back). 2.00-3.00% economic growth would be considered weak regardless. factor-in that we've paid $9 trillion ABOVE what we actually HAVE under this president (and multiply that # by 2 from the other clown before him) and its IN-FUCKING-SANE when you look at our spending/borrowing-to-GDP.
and even more fucking insane when taken in the context of $200 Trillion unfunded liabilities!
^^^
yeah, i try not to even go there because my stomach inflames & my eyeballs wanna pop-out when i listen to a bernie sanders or debbie wasserman-shultz talk about "how poplular the social security & medicare/medicaid programs are". uhhh, yeah, i like free-money too.
im fully committed that im working til im dead since rates will NEVER be 4-5% in my lifetime (which is what i believe any rational person would expect to have a target of and feel comfortable to be living off a fixed-income). that and i just hope im long dead before this shit hits the fan.
It ain't free. That money was taken from my paycheck.
You're right about the unfunded liabillties, but that problem didn't magically appear. The decision was made to reduce taxes to unreasonably low levels. The argument being that low taxes create a strong and vibrant economy. How did that work out? In the 1950's the marginal tax rate was over 90%, and as I recall things were pretty good then and the future looked bright for working people. Of course, the rich were unhappy because they were stuck with their crappy 100 foot yachts instead of the 300 foot yachts they think they deserve.
We also chose (long ago) to eliminate all taxes on one of the major industries in the US. That being the selling of hope and dreams to the gullible in the form of stories about invisible beings in the sky who do magic tricks. They need to start paying taxes like any other business. And they are businesses.
To be fair, we can't blame all of the religious welfare queen problem on the the current governments. Europe should be given credit for that blessing because they used the new world as a dumping ground for the most annoying of their religious lunatics.
We also need to also stop complaining about welfare bums who are feeding at the government trough (EBT cards) while no one seems too concerned about multinational corporations ... like GE ... who never pay taxes.
your's is a common mistake made by those too young to have filed a high income tax return prior to the "rate reductions". no one with a high income was paying the max rate due to the deductions which were concurrently phased out with the rate reductions. following the reductions i was disappointed to find that my taxes actually went up because i lost so many deductions. unfortunately, many people believe as you do but when you try to explain the loss of income averaging and interest deductions and accelerated depreciation their eyes just glaze over.
Ha, CNBC us no different from the Cold War days of Pravda. They just have more graphics...
If you keep talking about it, it won't happen.
A watch pot economy never collapses?
:)
There are facts and yet it is still only an "assumption" that the facts will lead to a market collapse.
All I can say ... and this is assumed as well: Is, if it happens, it will be a planned event. And, we already have a severe bear market in commodities, which was arranged after the bull market in commodities, for no apparent reason.
Maybe we just need occasional bouts of "creative destruction" to get us off of our collective asses. My guess is that those running the show believe so as well. But, they do not want to be blamed for it and in the crosshairs of retribution.
No apparent reason? I think demand had something to do with it...
They can plan things. Does not mean they can keep them under control.
Everyone has a plan until they get punched in the face - Mike Tyson
Re: "if it happens, it will be a planned event."
Exactly. The article leaves out the most important indicator: Has Goldman Sachs shorted the market yet?
Telegraph Uk reads ZeroHedge. Cool!
And the emerging markets that [manufactured] and consumed so many of our products are crippled by currency devaluation
Fixed it.
Yes, it's coming and appears to be getting close. People will suddenly wake up at once and realize that there is nothing but huge amounts of debt backing their currency. Precious metals will become the interim money as history has shown - most likely some kind of return to Bretton Woods style system.
Be careful what you wish for however. With the destabilization of the fiat currency system (thanks to central banksters) comes significant social unrest. Imagine law enforcement becoming overwhelmed, riots, coup attempts, a sudden increase in violent extremist groups (neo-Nazi's, KKK, Radical Islam, neo-Cons - anyone who violently practices intolerance). Imagine extreme food shortages, extended power outages, fuel shortages, extreme unemployment, and hyperinflation.
I do NOT wish for these things to happen. But I realize the PROBABILITY that they will soon come to pass is higher than not. The Western Economy simply cannot correct without the systemic risk in the markets taking the system down like it did in 2008.... except this time, QE will create a loss of faith and the bond market will crash as yields skyrocket. The only safe place will be gold and hard assets. And if you wait until it happens, you will be too late.
All of it may be for nothing though. With the type of economic collapse discussed here comes war and the world is already a hotbed for military escalation. And I do not think the world is prepared for the type of war that modern nuclear weapons can bring. The idea of mutual deterrence may very well lead to our inevitable annihilation. This is not how an intelligent species conducts itself.
Fuck it! Humans are not indigenous to the planet anyway...
The KKK will become an appreciated organization and return to functioning like it originally did, protecting people.
According to Macquarie Research:
Deflators of the world unite
Impact on the US & Global PPIs
Pressure to export overcapacity in flat trade=devaluations
- US wholesale inflation could get worse over the next twelve months. PPI ex Food & Energy stands at only ~0.5% YoY, although it slightly accelerated in July. It is likely that regions with the greatest need to export domestic over-capacity (China, Euro, Japan and Korea) will accelerate export of deflation.
- As discussed (here), China is between a rock and a hard place and unless global cyclicality and trade recovers (an unlikely occurrence, in our view), the pressure to devalue Rmb will remain unrelenting. China’s US$ import prices into the US are already falling at ~1.2% and have been negative for six months. Given latest Rmb devaluation, it is quite likely that the index of China import prices (US$) will fall by ~2% or more.
- At the same time, the Eurozone and Japan are also increasingly exporting their domestic over-capacity and deflation into the US. Germany’s import prices into the US are currently falling by ~2% and have been negative for seven months whilst Japan’s import prices are falling by ~3%.
Low supply of US$ adds further pressure
- Inability of the US to improve its velocity of money (i.e. encourage consumers and businesses to accelerate spending and investment) and associated slow growth in global trade (volumes rising by less than 2% vs. historic average of ~6%), implies that supply of US$ remains exceptionally low (close to zero vs. average growth between 2001 and 2013 of ~15%, refer here and here).
- This in turn has a tendency to push US$ exchange rates up (DXY and US TWI), causing further expansion of deflationary pressures and erosion of commodity indices, feeding through global supply chains. Apart from an outside chance of much faster than expected nominal GDP growth rates leading to higher US Current Account deficits, supply of US$ can only expand via QE4.
Challenging choice for the Fed
- As the latest revisions of the US GDP shows, not only was this recovery the most muted on record but perhaps most importantly the US has a challenge accelerating nominal GDP growth rates above the 3%-3.5% range (here). Given the US’ overall leverage of ~3.5x GDP and need to continue leveraging in a more sustainable fashion, it is nominal rather than real GDP growth rates that matter. The objective is to keep nominal GDP as high as possible and real interest rates low. Deflationary pressures are therefore not constructive.
- Whilst the Fed seems desperate to get out of zero range-bound policies of the last seven years and is constantly shifting its public decision goalposts (first it was unemployment, and then it was broad measure of under-employment, followed by wages and inflation etc), it is just as much between a rock and a hard place as China is. It is the classic case of damned if you do and damned if you don’t. As long as it is accepted that deleveraging is no longer possible, then what is needed is QE4, not a rate rise, but currently the hurdle for QE4 is higher than doing nothing or raising rates and then walking them down again.
- The above implies that deflationary winds could get stronger and volatility rates higher. We continue to prefer commodity consumers and markets with significant domestic liquidity (i.e. India, China, Taiwan & Philippines).
Makes me wonder; how much stuff from China is sitting in containers and warehouses around the US nation?
When one considers how valuations are supported by CB's balance sheets, https://finviz.com/futures_charts.ashx?t=HG&p=m1 this is the thing that tells me we're fucked. Currently rolling equity accounts to cash myself. Keep shit dry so you can snort it.
Copper and crude are telling the deleveraging story. Bullshit financialized demand is crashing hard. Junk bonds telling the same story.
BUT wait, Home Builder CONfidence is the highest in 10 years!
Those graphs do look quite compelling...
https://www.eurgold.eu
Shane,
I am sure you are a fine young man. Are you over 16? Your picture makes me wonder...
Me, I buy gold I can put in my hand from older chicks and dudes. I like my guy because he is "experienced."
If MSM start to talk like that, we shouldn't be far from it.
Mainstream media starting to sound "very Zero Hedge" - shit must be very close to hitting the fan!
I swear I thought Greece was "it."
I am beyond collapse fatigue.
I think the real fire will start and I will stare at it and not know what it is because I will go, "Yeah, I've smelled smoke before, yeah, I've seen flames before, but that does not mean there is a fire."
zero hedge fever contagious to MSM?
Wow, whowood've known that !
BTFD is no longer the thingie to do?
Mr. Falak Pema, although not yet a trend,
I think yours and the point made by another above are actually very telling ones with regards to the MSM.
If I remember correctly, in 2008 the U.S. media outlets were still spouting off about whatever fashionable nonsense in American pop culture very nearly until the financial crisis was upon us. It was only by paying attention to world news in European media that I knew something in the financial world was amiss in the months leading up to the mortgage crisis.
It appeared to me then that there was a tremendous disconnect between audiences as there surely is still today.
Not that I particularly favor the Telegraph, but if the mainstream news in Europe now begins further distancing themselves from the ongoing fake-believe of U.S. outlets, then "Tage X" may soon be upon us.
We shall see.
All these issuses can be fixed with money. The supply of money in a fiat system is unlimited.
Wake me up if you see a currency crisis brewing. Otherwise it's steady-as-she-goes im afaird doomsayers.
'Steady as she goes".
Probably the last order Capt. Smith gave on the bridge before hitting the iceberg,
queue scene of SAC michaud in the X files movie, watching the soda machine
nice anaylogy since most of the rich people where saved from the sinking titanic...as they were in 2008 and as they will be in he next crisis, whenever that might be.
Isn't the Doomsday Clock the exclusive venue of the Federation of American Scientists?
Auslanders raus!
Very clever but you forgot one thing. The financial markets are not the real world economy. The financial markets can burn without destroying the real world economy. The major issues as I see them are environmental degradation, rapid demographic change and income inequality. These issues can feed into the financial market woes, but I don't see how China's massive debt load is an issue. They just execute a few oligarchs and hit reset on the currency, and they're back to normal.
Catoon Network Narrative (CNN)???
Captain...I believe I see an iceberg straight ahead...full rudder to the left...wow..that was close...I only hit part of the iceberg...log entry for the Titanic
Add to that the fact that the US is quickly becoming just another country with nothing special except lots of illegals.
[Telegraph]: "Time is now rapidly running out. From China to Brazil, the central banks have lost control and at the same time the global economy is grinding to a halt. It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations."
Meanwhile, any time you turn on the TV News or read the Daily Slime, they are still peddling the notion that the UK & US economies are recovering from the 2007-8 crash. GDP is doing just fine and inflation is low or close to zero etc etc etc. There is no end to the good news being spewed out of .gov and MSM, and I include other parts of the Telegraph in that.
"On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007." ha, that's a punchline worth reading.
Those years look vaguely familiar. I wonder if anything notable might have happened.
Dats whut its prolly gon' be...in a blink of a eye.
I love the smell of cherry-picked charts in the morning.
The commodity index displayed since 2000, but the oil price only since 2010 to cover up its massive drop in 2008 so to not interfere with the narrative...
65,21 RUB <-> 1 USD
http://www.forexpf.ru/currency_usd.asp
https://youtu.be/5L0q09CgUWo?t=42s
http://www.zerohedge.com/users/newsoutlet
First comes currency wars that lead to trade wars then there will be world war. We shall see if history repeats.
Time is a game used for labor, cost and time models. If you have time on your hands, this shit flies out the window.
Millennials are utilizing the Matrix approach in problem solving tactics. This will be fun to watch disintegrate.
Companies with no charter, mission statement, and 5 year goals will fail.
What is a Matrix Organization Structure - YouTube
This is the org style in use for the last 3 years at the S&P 150 corporation I work at. How proud we once were of the 100 year old decentralized organizational business model & its entrepreneurial spirit.
The combination of activist investors directing rudderless top corporate management and the late Gen Y & Millenials in top divisional ranks are the perfect "leadership" to maximize spray in the next economic shit storm. Their arrogance, ignorance, and folly are what business books will be written about in the coming decades.
Here is an interesting read. It's the DANGER report comissioned by NAR. Turns out, they realize there are some issues up ahead after all.
https://s3.amazonaws.com/dangerreport.com/Danger+Report+-+Item%23E135-10...
how about 2 minutes to midnight instead???
https://youtu.be/7sXPmz9b4lM
you did NOT just put up a chart of the LIE-bor on zh. no. you. didn't.
Apple better release another "iPhone" or we're doomed.
John is right about 1 minute to midnight on the market doomsday clock. Because it precedes the Atomic Scientists doomsday clock in the bigger plan. And those that are running this game want to crash the global economy and then start a global war to distract everyone and cover it all up.
http://www.zerohedge.com/news/2015-08-12/solyndra-20-nears-bankruptcy-bo...
Ask yourself why would someone who is a part of an organization that is supposed to want to stop death and destruction smiles as they reveal the doomsday clock is advancing to 3 minutes to midnight?
https://www.youtube.com/watch?v=YtAy2_FfpxY#t=23
Is it a coincidence that at least as far back as 1984 there is a song that spells out what 2 Minutes to Midnight means?
http://www.metrolyrics.com/2-minutes-to-midnight-lyrics-iron-maiden.html
There are those that want this to happen and will do their best to make it happen. And they believe they've informed you in many ways and obtained your consent since we have collectively failed to stop them. This goes for the planned upcoming global financial collapse and war. And so I've withdrawn my consent for them to do this and will continue to do what I can to stop this plan. Each of you might want to do the same unless you're looking forward to the outcome. And I have a great future post waiting for those of you that think you welcome this outcome. It isn't too late yet to prevent it but it soon will be unless enough counter it. So if you're still unaware or undecided you'd better act very quickly.
Last week was just a small example of what the future holds as financial actions lead to violent actions. And just like the preplanned violence on Sept. 11 many will allow their patriotism or emotions to lead them into preplanned larger scale violence that will not benefit anyone except those that planned this all long ago. For Europeans and Americans it won't be overseas this time.
http://www.zerohedge.com/news/2015-08-13/if-nuke-went-what-one-stunned-t...
“Signs and symbols rule the world, not words nor laws.” -Confucius
Excellent post, Ben, as always. Good to see you here.
The US economy was already trashed when Obama took office. Very silly to blame the coming woes on him.
Ah, but the entire Obama Regime, along with the media molls claim 6 years into a recovery...such as lowest unemployment rate (Headline) in 40 years. So to what are you referring?
"It is only a matter of time before stock markets collapse under the weight of their lofty expectations and record valuations."
For sure, but coming from the Telegraph, he will also know that this will simply not be allowed to happen. Jeremy Corby wins the Labour Party leadership on the back of an anti-austerity ticket, and the markets collapse triggering a global recession.
The powers that be will simply not have that.........................I mean, after all, Jeremy Corbyn is a joke candidate...isn't he ...
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State controlled capitalism. There will be no crash, just mass slavery.
I Am Spartacus!
Given that the political economy is based upon governments ENFORCING FRAUDS by privately controlled banks, and therefore, the political economy actually operates according to the principles and methods of organized crime, it makes sense to me that those events which transpire in the future will continue to closely correspond to the calendar preferred by the culture which currently constitutes the best organized gangs of criminals, that have the most control over that kind of political economy.
However, my main qualification to that is that nobody has a total monopoly on the principles and methods of organized crime, including whomever or whichever cultural groups have previously been the best organized gangs of criminals, which therefore were most able to control the biggest form of organized crime, known as governments. Moreover, I would insist that, theoretically speaking, it is NOT possible for civilization to operate any other way than as the dynamic equilibria between different systems of organized lies operating robberies. Indeed, in that context, the reasons for events such an economic crises were due to the prolonged history whereby the best organized gangs of criminals were able to dominate civilization to the extent that they could more and more get away with their systems of legalized lies, backed by legalized violence. Hence, the deeper paradoxes are due to that civilization does and must operate according to the principles and methods of organized crime, (in which the death control backing up the debt controls are the most important features of those combined money/murder systems), becomes EXCESSIVELY SUCCESSFUL ENFORCED FRAUDS, as the prequel to the eventual crazy collapse into chaos of those systems.
Ideally, more people would have understood better the principles and methods of organized crime, so that there had been better dynamic equilibria. However, as repeatedly demonstrated in the content published on Zero Hedge, most people want to stay within their favourite bullshit based upon false fundamental dichotomies and the related impossible ideals, which was the result of civilization going into feedback loops of excessive social successfulness based upon ENFORCING FRAUDS, since there developed almost nothing but the core of organized crime, surrounded by controlled opposition groups, which are primarily controlled by the ways that they continue to take for granted the bullshit based upon false fundamental dichotomies.
To put that another way, the problem is NOT that there are some well organized gangsters, the banksters, that are able to dominate the government, and thus the political economy. Rather, the problem IS that there are not enough better alternative organized crime gangs able to resist that more effectively. Overall, the biggest bullies' bullshit world views are so extremely dominate that there is almost no publicly significant opposition that does not still think using the same bullshit language and presumptions, as is quiet characteristically demonstrated in the content published on Zero Hedge.
Economic events are NOT based upon the rise and fall of systems of natural laws in any simple linear ways. Economic events that rise and fall are based upon rather hyper-complicated systems of organized lies operating robberies, whose original strengths eventually become their weaknesses. The only relationship between natural laws and human laws is the ability to back up lies with violence, which systems became more sophisticated in the form of governments ENFORCING FRAUDS by privately controlled banks, which is what has risen, and appears more probably must fall.
Meanwhile, behind that, the ways that people understand that also could rise and fall. Ideally, enough people would recognize that money is and must be measurements backed by murders, so that there would not be allowed to develop such extremely unbalanced systems of debt slavery, that are able to generate numbers which become debt insanities, which then can provoke death insanities. However, to actually do that would require more regularized and constant death control systems to operate ... and even then, that would likely provide the grounds for an eventually even greater imbalance, due to the new groups of professional liars and immaculate hypocrites that operated those systems more and more enjoying excessive social success based upon their improved system of lies backed by violence.
Overall, I stand by the view that the only things which actually exist are the dynamic equilibria between different systems of organized lies operating robberies, and that, therefore, better political processes would necessarily be better dynamic equilibria between better systems of organized lies operating robberies. However, right now, the best previous systems of organized crime are suffering from having become too successful, for too long. Hence, their overshoot, and subsequent collapse into chaos ... Of course, throughout that process, those who were the previously best organized gangs of criminals will surely strive to continue to be so, and therefore, the most likely calendar of events will most probably more follow their preferred calendar, rather than any other.