8 Reasons Why The Telegraph Thinks The Market Doomsday Clock Is One Minute To Midnight

Tyler Durden's picture

"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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JustObserving's picture

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.

Haus-Targaryen's picture

Standard "funded" US debt grew at a rate faster than GDP in the same time period as well.  

 

SickDollar's picture

Bring it on bitchez and please put silver  and gold on sale

 

 

remain calm's picture

 9) Currency wars heating up, despite being a zero sum gain, Begger thy neighbor is the only stadegy left for governments.

BaBaBouy's picture

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.

Manthong's picture

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.

InjectTheVenom's picture

aahhh ponzi schmonzi....hey doesn't the NFL season start soon ? ? ?     ;>)

Kaervek's picture

Herbalife is still being marketed as a proper company, so ponzis still seem to be doing quite alright

The9thDoctor's picture

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.

KnuckleDragger-X's picture

 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.......

madcows's picture

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.

Haus-Targaryen's picture

If the Treasury keeps to the FY2015 budget we still borrow $750 Billion.  

If it doesn't, well then -- whats a few hundred billion? 

madcows's picture

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.

saveUSsavers's picture

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...

BandGap's picture

9. Ventura endorses Trump

Winston Churchill's picture

Happens as you approach a black holes event horizon.

Oh regional Indian's picture

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

detached.amusement's picture

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)

lakecity55's picture

"Reggie, can we build these black holes here, for YT?"
"I suppose."

GeorgeHayduke's picture

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.

New_Meat's picture

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

BeansMcGreens's picture

Old saying here in the South.

 

"Blacker the berry, the sweeter the cherry."

clade7's picture

The correct saying is: "Once you go Balck, you never go bock" 

just go axe any speller....

V in PA's picture

Once you go Black, DON'T come back.

zeroaccountability's picture
zeroaccountability (not verified) V in PA Aug 17, 2015 4:47 PM

Yep...something like 1 in 10 have aids, and 1/2 have some form of std.

detached.amusement's picture

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.

ebear's picture

Electric Universe Theory

Grounded

(but not in science or epistemology)

ebear's picture

"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?

Radical Marijuana's picture

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!

Radical Marijuana's picture

That may be so, Oh regional Indian, but those black holes still make a great metaphor.

mkhs's picture

Short and sweet.  Who are you and what have you done with the real Radical Marijuana ?

Radical Marijuana's picture

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"
Son of Captain Nemo's picture

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?...

SSRI Junkie's picture

"the seconds keep getting longer"

 

i agree, machines (AI) perceive time differently than humans

Pumpkin's picture

This will not be an issue.  All that was only promised to the people.  Breaking that promise will no big deal for TPTB.

Reichstag Fire Dept.'s picture

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. 

Kaervek's picture

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)

Dr. Engali's picture

9) Obama in the white house causing chaos throughout the globe.

Dr. Engali's picture

Keep telling yourself that, if that's what helps you sleep at night.

Latitude25's picture

OK please educate me on how Obumble is making these globalist decisions.  He's the boss?  Really? 

Dr. Engali's picture

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.

lunaticfringe's picture

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.

Latitude25's picture

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.