rpt-GMTP-2015-08-Peek

1 August 2015 Edition Restricted & Confidential Copyright 2015 Gordon T. Long All Rights Reserved [email protected]

THE VALUE VORTEX Why Value Is Getting Harder to Find

GLOBAL RISK

GLOBAL MACRO TIPPING POINTS - AUGUST 2015

7/25/2015


THE VALUE VORTEX Why Value Is Getting Harder to Find

GLOBAL MACRO TIPPING POINTS - AUGUST 2015

GLOBAL RISK ......................................................................................................................................... 35

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 35 POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 35 LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 36

Our Assessment ................................................................................................................................................................................................ 36 James Rickards Global Risk Assessment ........................................................................................................................................................ 49

MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 97 LATEST FROM THE MONITORS ..................................................................................................................................................................... 97

RESEARCH OF NOTE ................................................................................................................................................................................ 101 NEW-MONITORS World Bank - Global Economic Prospects Report.................................................................................................. 101 NEW-MONITORS World Bank Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ..................................... 102 NEW-MONITORS OECD Leading Indicator Casts Doubt on US Economic Rebound ..................................................................... 104 NEW-MONITORS OECD Warns 40 Million People Will Be Out of Work Next Year ....................................................................... 104 NEW-MONITORS IMF Tells Regulators to Brace for Global Liquidity Shock ................................................................................... 107 MONITORS - Lagarde warns of lopsided global growth ........................................................................................................................ 111 MONITORS - OECD Cuts Global Growth Projections Again .................................................................................................................. 112 MONITORS World Bank Global Growth Outlook .............................................................................................................................. 113 MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 114 MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 115 MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 116

BIS ................................................................................................................................................................................................................... 118 NEW-BIS - BIS Quarterly Report ................................................................................................................................................................. 118 BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 118 BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 119 BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 121 BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 125 BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 128 BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 129 BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 134

WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 138 CHARTS OF NOTE ..................................................................................................................................................................................... 138

WEF Global Business Risks ................................................................................................................................................................. 140 WEF The 2015 Global Risk Landscape ................................................................................................................................................ 141 WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 142 WEF Global Risk Exposures By Region ............................................................................................................................................... 143

SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 144 RESEARCH WE FOLLOWED ......................................................................................................................................................................... 144 CHARTS OF NOTE ......................................................................................................................................................................................... 146

NEW-Total Global Credit-Market Debt Owed as % of GDP ........................................................................................................................ 146 NEW-$57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ........................................................... 147 NEW-Global Risk Landscape Grid .............................................................................................................................................................. 148 NEW-Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .................................................................................... 149 NEW-Global Risks of Highest Concern ....................................................................................................................................................... 149 NEW-Global Risks Versus Impact ............................................................................................................................................................... 150 The economic balance of the world is shifting ............................................................................................................................................. 151 Global Conflict Intensity is heating up.......................................................................................................................................................... 152 World Conflict Map ....................................................................................................................................................................................... 153 World Conflict Map Details........................................................................................................................................................................ 154 Global Conflict & Protest Intensity ............................................................................................................................................................... 155 Deutsche Banks Key Global Risk ............................................................................................................................................................... 155 Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 156

RESEARCH OF NOTE .................................................................................................................................................................................... 157 NEW- McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE ................................................................................... 157 NEW- Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 .................................................................................... 161 Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 164 These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 165 "Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 167 Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 170 Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 171 Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 172

REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 175 FOURTH TURNING ACCELERATING ....................................................................................................................................................... 175 AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 186 THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 189


THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 190 THE RISK CONTINUUM ............................................................................................................................................................................. 193 GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 195 GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 197 DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 199 WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 201

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 208 GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 210

NEW-GREECE - Greek Lawmakers Won't Back Deal; Finnish FinMin Says "Can't Agree" To New Greek Loans ...................................... 210 NEW-GREECE - Goldman: The Greek Solution "Exposes The Whole System To Collapse" ....................................................................... 210 NEW-GREECE - Munchau: "The Eurozone As We Know It Is Destroyed" .................................................................................................... 210 NEW-GREECE - What Assets Did Greece Just Hand Over To Europe: "Airports, Airplanes, Infrastructure And Most Certainly Banks" .... 210 NEW-GREECE - New Government Likely In Greece, Depositor Bail-In Still Possible, Deutsche Bank Says ............................................... 210 NEW-GREECE - Yanis Varoufakis: "Merkel's Control Over The Eurogroup Is Absolute, They Are Beyond The Law" ................................ 211 NEW-GREECE - How German Media See The New Greek 'Deal'................................................................................................................. 211 NEW-GREECE - Greece Banks Not Out Of The Woods, May Impose Tougher Capital Controls, Barclays Says ....................................... 211 NEW-GREECE - Even The Players Are Losing Faith In Their Own Shenanigans ........................................................................................ 211 NEW-GREECE - After "Deal", Here's What's Next For Greece ...................................................................................................................... 211 NEW-GREECE - EU Exit Will Now Be "Threat To Those Who Don't Behave The German Way," BofA Says ............................................. 213 NEW-GREECE - Tsipras Releases Statement Following Greek "Deal", Will "Fight To Regain Lost National Sovereignty" ......................... 213 NEW-GREECE - Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms ............ 214 NEW-GREECE - How The Greek Deal Almost Collapsed At 6am In The Morning ....................................................................................... 214 NEW-GREECE - The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out" ........................................................... 215 NEW-GREECE - Eurogroup Officially Threatens Greece With 5 Year Grexit "Time Out" ............................................................................. 215 NEW-GREECE - Eurogroup Fails To Reach Deal, Gives Greece 24 Hours To Accept Draconian Terms ................................................... 216 NEW-GREECE - A Broken Greek PM Says He Is "Ready For An Honest Compromise".............................................................................. 216 NEW-GREECE - Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option ........................... 217 NEW-GREECE - Someone Told Merkel... ...................................................................................................................................................... 217 NEW-GREECE - Schauble Proposes "5 Year Grexit With Humanitarian Support" ....................................................................................... 217 NEW-GREECE - Eurogroup Meeting Ends Without Agreement: "Huge Problems", "Issue Of Greek Trust Very Difficult" ........................... 217 NEW-GREECE - Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit ............................................................... 217 GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ............................... 218 GREECE - Greece Prepares To Leave ........................................................................................................................................................... 220 GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ................................................................................ 222 GREECE - Will Greece Call A Referendum On Euro Membership? .............................................................................................................. 223 GREECE - What Greece Owes, And More Importantly - When! .................................................................................................................... 226 GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ........................................................................... 229 GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ................................................................................... 232

GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 235 IRAN ................................................................................................................................................................................................................. 235

RESEARCH OF NOTE ................................................................................................................................................................................ 235 NEW-IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ......................................................................................................... 235 NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 238

YEMEN ............................................................................................................................................................................................................ 239 CHARTS OF NOTE ..................................................................................................................................................................................... 239

YEMEN Strategic Position .................................................................................................................................................................... 239 YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 240 YEMEN The Decisive Storm Coalition ............................................................................................................................................... 240 YEMEN Global Oil Chokepoints ........................................................................................................................................................... 241 YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 241 YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 243 YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 244 YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 245

RESEARCH OF NOTE ................................................................................................................................................................................ 246 YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 246 YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 248 YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 251 YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 252 YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 254 YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 259 YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 261

UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 266 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 267 RESEARCH OF NOTE ................................................................................................................................................................................ 273

UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 273 UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 274 UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 278 UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 282 UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 283 UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 286 UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 289 UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 290 UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 292 UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 306

ISIS .................................................................................................................................................................................................................. 308


ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 309 ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 313 ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 313 ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 314

SYRIA .............................................................................................................................................................................................................. 317 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 317

SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 318 SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 319 SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 320 SYRIA - 25 Quotes ................................................................................................................................................................................... 321 SYRIA - What Coalition? .......................................................................................................................................................................... 324 SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 326 SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 328 SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 336

SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 338 GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 341

ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 341 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 341 CHARTS OF NOTE ..................................................................................................................................................................................... 344

AIIB Demanding Infrastructure .............................................................................................................................................................. 344 RESEARCH OF NOTE ................................................................................................................................................................................ 345

AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 345 AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 347 AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 348 AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 350 AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 353 AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 355 AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 357

EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 360 MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 360 MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 362 MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 364

ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 367 HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 369

KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 369

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 372 AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 372

NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 373 NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 373 NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 374 NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 374 NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 375 NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 375 NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 377 NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 377 MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 378 NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 378

AGGREGATED RISK LEVEL ................................................................................................................................................................................ 379

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 381 CHANGES TO RANKINGS Q3 2015 ................................................................................................................................................................. 381 CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 383 CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 384 CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 385 TIPPING POINTS: TOP 5 FOCUS - AUGUST 2015 ............................................................................................................................................. 388

NEW-I BOND BUBBLE................................................................................................................................................................................. 388 $140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse"............................................................................ 388

NEW-II - RISK REVERSAL ............................................................................................................................................................................. 390 What Happened The Last Time The Fed's Balance Sheet Hit 25% Of GD ................................................................................................ 390

NEW-III - GEO-POLITICAL EVENT RISK ....................................................................................................................................................... 396 The REAL Reason Greece Matters For Investors ....................................................................................................................................... 399

NEW-IV - CHINA HARD LANDING ................................................................................................................................................................. 406 Chinese Stock Markets - 1929 In Chinese Markets .................................................................................................................................. 408

NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 417 Abenomic's QQE Phiosophically Unsound ............................................................................................................................................ 417

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 425 ECONOMIC WARNINGS....................................................................................................................................................................................... 425

IMF WARNS .................................................................................................................................................................................................... 425 NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 425 IMF sees risk of new eurozone .................................................................................................................................................................... 427 IMF Tells Central Europe to Spend More .................................................................................................................................................... 430


Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 433 Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 435

BIS WARNS ..................................................................................................................................................................................................... 437 NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................... 437 Monetary Policy At Its Limits ........................................................................................................................................................................ 449

WORLD BANK WARNS ................................................................................................................................................................................. 450 Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 452

G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 454 RESEARCH WE FOLLOWED .............................................................................................................................................................................. 455 CHARTS OF NOTE ............................................................................................................................................................................................... 458

NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis .................................................................... 458 NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................. 459 NEW-CHART: Global Business Equipment Investment ............................................................................................................................ 460 NEW-CHART: EM versus DM Credit Risk ................................................................................................................................................... 461 NEW-CHART: MSCI World P/E versus EM P/E ........................................................................................................................................... 461 NEW-CHART: Emerging Capital Flows & Currency Moves ...................................................................................................................... 462 NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................ 462 NEW-CHART: Domestic Bank Credit of EM versus DM ............................................................................................................................ 463 NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ................................................................................. 463 NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................ 465 NEW-CHART: There is a Problem in Global Credit .................................................................................................................................... 465 CHART: Serial Disappointments & Ratcheting Down of Global Growth ................................................................................................. 466 CHART: Continuous Weakening of Global GDP Estimates ...................................................................................................................... 467 CHART: Reduced Demand Pressures on Energy Prices .......................................................................................................................... 467 CHART: Reduced Demand Pressures on Commodities ........................................................................................................................... 468 CHART: Global Corporate Profit Trends ..................................................................................................................................................... 468 CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst .................................................................. 469 CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ............................................................................... 470 CHART: Growth of Asian Middle Class Dominates Next 20 Years ....................................................................................................... 471 CHART: Global Domestic Demand Growth ................................................................................................................................................ 471 CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ............................................................................................ 472 CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 472 CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 473 CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 474 CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 474 CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 475 CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 476 CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 476 CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 477 CHART: Shifting Global GDP Share ............................................................................................................................................................ 478 CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 479 CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 479 CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 480 CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 480 CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 481 CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 482

RESEARCH OF NOTE .......................................................................................................................................................................................... 483 NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ...................................................................................................... 483 NEW-GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ........................................... 486 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile..................................................................................................... 487 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ........................................................ 490 GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession .......................................................................................... 491 GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ..................................................................................................... 494 GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................ 498 GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ........................................................... 501 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 503 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 505 GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 506 GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 511 GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 513 GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 516 GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 519 GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 522 GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 524 GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 527 GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 529

ECONOMIC CUTS ................................................................................................................................................................................................. 533 CHARTS OF NOTE ......................................................................................................................................................................................... 533

CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 533 CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 536 CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 536

IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 536 IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 542

OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 552 OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 554


GLOBAL MACRO: INDICATORS ............................................................................................................................................ 557 GLOBAL TRENDS ................................................................................................................................................................................................. 557

CHARTS OF NOTE ......................................................................................................................................................................................... 557 NEW-GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................... 557 NEW-GLOBAL TRENDS US Macro Continues to Plummet ................................................................................................................. 557 NEW-GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ............................ 558 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ............................................................. 558 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector ............................................................................. 559 GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .............................................................................................. 559 GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ................................................................................. 560 GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies .................................................................................. 561 GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 561

RESEARCH OF NOTE .................................................................................................................................................................................... 562 GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 562 GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 566 GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ................................................................................. 570

GLOBAL EMPLOYMENT....................................................................................................................................................................................... 571 CHARTS OF NOTE ......................................................................................................................................................................................... 571

CHART Global Employment Rates ........................................................................................................................................................ 571 CHART Global Unemployment ................................................................................................................................................................. 572 CHART Global Unemployment EU Comparison ................................................................................................................................... 572 CHART Unemployment in Advanced Countries .................................................................................................................................. 573 CHART Global Labor Participation Rates ............................................................................................................................................ 573 CHART Global Youth Unemployment By Country ........................................................................................................................... 574 CHART Global Chance of Finding a Job Within Year ......................................................................................................................... 574

RESEARCH OF NOTE .................................................................................................................................................................................... 575 GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ........................................................................................ 575 GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................ 577 GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 579

GLOBAL SENTIMENT ........................................................................................................................................................................................... 581 CHARTS OF NOTE ......................................................................................................................................................................................... 581

NEW-GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................. 581 NEW-GLOBAL SENTIMENT Global Consumer Confidence by Country ........................................................................................... 582 NEW-GLOBAL SENTIMENT Global Consumer Confidence Improves the Most In North America ............................................... 583 NEW-GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................... 584 NEW-GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators ................................. 585 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets....................................................... 586 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets ................................................... 587 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ............................................... 588 NEW-GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls...................................................................... 589 NEW-GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................... 590 GLOBAL SENTIMENT Global Business Activity Future Expectations ............................................................................................. 591 GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ........................................................................... 591 GLOBAL SENTIMENT Global Consumer Confidence by Country .................................................................................................... 593 GLOBAL SENTIMENT Global Consumer Confidence Trends by Country ....................................................................................... 594 GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen ......................................................... 595

RESEARCH OF NOTE .................................................................................................................................................................................... 596 GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 596 GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 598 GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................ 602 GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 603 GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 605 GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 606

GLOBAL CONSUMPTION ..................................................................................................................................................................................... 617 CHARTS OF NOTE ......................................................................................................................................................................................... 617

GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand ........................................................................... 617 GLOBAL CONSUMPTION Global Home Prices Are Rolling Over ..................................................................................................... 617 GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU .............................................................................................. 618

RESEARCH OF NOTE .................................................................................................................................................................................... 619 GLOBAL GROWTH ............................................................................................................................................................................................... 619

CHARTS OF NOTE ......................................................................................................................................................................................... 619 NEW-GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ..................................................................................... 619 GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 620 GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 621 GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 622 GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 623 GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 623 GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 624 GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 625 GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 625 GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 625 GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 626 GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 627 GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 627

RESEARCH OF NOTE .................................................................................................................................................................................... 628


GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 628 GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 629 GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................... 631 GLOBAL GROWTH Potential of a Global Recession Mounting ............................................................................................................ 632 GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates....................................................................... 636 GLOBAL GROWTH - Uneconomic Energy Problematic ......................................................................................................................... 638 GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 640 GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 641 GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 642

GLOBAL CREDIT .................................................................................................................................................................................................. 643 CREDIT CYCLE - HY Leading the Way ........................................................................................................................................................ 643 CREDIT CYCLE - Reversal Ahead ................................................................................................................................................................ 646

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 649 GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 649

RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 649 CHARTS OF NOTE ......................................................................................................................................................................................... 652

NEW-CHARTS Consensus Fed and ECB Rate Hike Projections ....................................................................................................... 652 NEW-CHARTS Global Monetary Policy Stance & Bias ....................................................................................................................... 653 NEW-CHARTS Global Government Bonds Trading With Negative Yields ....................................................................................... 654 NEW-CHARTS Lack of Inflation in Europe ........................................................................................................................................... 654 NEW-CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s) .......................................... 655 NEW-CHARTS Quantitative e Easing No Longer Drives Commodity Prices ................................................................................... 656 NEW-CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................ 656 NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ......................................................................................... 657 NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ......................................................................................... 657 NEW-CHARTS Falling Global Bond Rates Continue in Q1 2015 ....................................................................................................... 658 NEW-CHARTS The Road to NIR (Negative Rates) ............................................................................................................................... 658 CHARTS Central Bank Policy Rates ..................................................................................................................................................... 659 CHARTS Days of Chinese Credit-Driven Growth are numbered ....................................................................................................... 659 CHARTS Major Central Bank Assets versus GDP Forecast .............................................................................................................. 661 CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ............................................................................................................... 661 CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 .................................................................................. 662 CHARTS Global Central Bank Assets versus World Equity Prices .................................................................................................. 662 CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 .................................................................................. 663

RESEARCH OF NOTE .................................................................................................................................................................................... 664 NEW- CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................. 664 NEW- CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode ............................................................................. 665 NEW- CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................ 666 NEW- CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage .......................................................................... 669 NEW- CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ............................................................... 670 NEW- CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation ....................................... 672 NEW- CENTRAL BANKS - The year of Dollar Danger for the world ...................................................................................................... 674 NEW- CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ..................................... 679 CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 683 CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 685 CENTRAL BANKS Axel Merks 2014 Outlook ....................................................................................................................................... 686 CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries .............................................................. 689 CENTRAL BANKS - Austerity Now Officially Dead Public Policy ........................................................................................................... 690 CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ............................................... 691 CENTRAL BANKS - Global Balance Sheet Expansion .......................................................................................................................... 693

NEW-WAR ON CASH ..................................................................................................................................................................................... 698 NEW-WAR ON CASH Elliott Waves Report on the War on Cash ........................................................................................................ 698 NEW-WAR ON CASH The "War On Cash" Migrates To Switzerland...................................................................................................... 703 NEW-WAR ON CASH Chase Joins the War on Cash ............................................................................................................................. 706 NEW-WAR ON CASH Largest Bank In America Joins War On Cash ..................................................................................................... 708 NEW-WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban ................................................................................................. 710

NEW-SWISS PEG ........................................................................................................................................................................................... 714 NEW-SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .......................................................................................... 715 NEW-SWISS PEG Swiss Peg Failure The Financial System Broke Last Week .................................................................................. 717 NEW-SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ................................................... 718

TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 722 TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 722 TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies...................................................................................................................................................................................................................... 723 TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 726 TROUBLING DEVELOPMENTS Global Tax Overhaul .......................................................................................................................... 728

BOE - UK ............................................................................................................................................................................................................... 729 CHARTS OF NOTE ......................................................................................................................................................................................... 729

UK Dissent within BOE Set to Continue ............................................................................................................................................... 729 RESEARCH OF NOTE .................................................................................................................................................................................... 729

UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 729 UK - Mark Carney and "Flexible Inflation Targeting" ............................................................................................................................. 731

FED - US ................................................................................................................................................................................................................ 733 CHARTS OF NOTE ......................................................................................................................................................................................... 734


NEW-CHARTS Feds QE History versus UST 10 Year Yields ............................................................................................................ 734 NEW-CHARTS Fed Balance Sheet Growth .......................................................................................................................................... 734 CHARTS June 2015 Fed Rates Hikes Diminish ................................................................................................................................... 735 CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ..................................................................................................................... 735

RESEARCH OF NOTE .................................................................................................................................................................................... 736 NEW-US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed.................................... 736 NEW-US MONETARY - Audit the Fed Yellens Testimony .................................................................................................................. 738 NEW-US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy ....................................................... 747 US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory ............................................................... 750 US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery ........................................................................... 753 US MONETARY - The Fed is stuck in a QE Trap .................................................................................................................................... 756 US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) ........................................................... 758 US MONETARY - Mathematically, The Fed Can Only Fail ..................................................................................................................... 760 US MONETARY - QE Standing Between Inflated Equity Markets and A Recession .......................................................................... 766 US MONETARY - QE Programs versus S&P 500 Movements ............................................................................................................... 767 US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will ..................................... 769 US MONETARY - Debt Increases $1 Trillion in One Year ...................................................................................................................... 771

GLOBAL ABE-NOMICS The Road Ahead ....................................................................................................................................................... 774 CHARTS OF NOTE ......................................................................................................................................................................................... 774

NEW-JAPAN Japan Heads Back towards Deflation ............................................................................................................................ 774 JAPAN The Third Arrow of ABE-Nomics -I ........................................................................................................................................... 775 JAPAN The Third Arrow of ABE-Nomics II ......................................................................................................................................... 776 JAPAN Japanese Households Remain Pessimistic ............................................................................................................................ 777

RESEARCH OF NOTE .................................................................................................................................................................................... 778 NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 778 NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 781 GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 782 GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 785

BOJ JAPAN ......................................................................................................................................................................................................... 787 CHARTS OF NOTE ......................................................................................................................................................................................... 787

JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 787 JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 788 JAPAN Japanese Trade Balance ............................................................................................................................................................. 789 JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 789 JAPAN CPI Shoots To 3.3% Y-o-Y ......................................................................................................................................................... 790 JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 790 JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 790 JAPAN Real Wages Plummet as Financial Repression Takes Hold .................................................................................................. 791

RESEARCH OF NOTE .................................................................................................................................................................................... 792 JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 793 JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 795 JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 798 JAPAN - No Way Out But to Expand the Monetary Base ....................................................................................................................... 800 JAPAN - BOJ to "Own" 100% Of GDP In 5 Years .................................................................................................................................... 801 JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history .......................................................................................... 804 JAPAN - Some Policies Have Clearly Hit the Limit ................................................................................................................................. 806 JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 807 JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 812 JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 813 JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 816 JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 817

PBOC - CHINA ....................................................................................................................................................................................................... 819 CHARTS OF NOTE ......................................................................................................................................................................................... 820

NEW-CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ............................................................... 820 NEW-CHARTS China Reduces Bank Reserve Ratio .............................................................................................................................. 820 NEW-CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ................................................................................. 821 NEW-CHARTS Falling Chinese Government Revenue Growth .............................................................................................................. 822 NEW-CHARTS Falling National New Residential Housing Starts ........................................................................................................... 822 NEW-CHARTS China and Asia Residential Property Tracking US Housing Bubble .............................................................................. 823 NEW-CHARTS Real Chinese Rates versus Cuts .................................................................................................................................... 823

RESEARCH OF NOTE .................................................................................................................................................................................... 824 NEW-CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says ............................. 824 NEW-CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ............................................................................. 826 NEW-CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears......................................................................................... 828

ECB EU ............................................................................................................................................................................................................... 834 NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................... 834 CHARTS OF NOTE ......................................................................................................................................................................................... 835

NEW-CHARTS Welcome to the EUs NIRP ........................................................................................................................................... 835 NEW-CHARTS Negative Swiss Government Bonds ........................................................

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