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KEY TO TIPPING POINTS

1- Bond Bubble
2 - Risk Reversal
3 - Geo-Political Event
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6- EU Banking Crisis
 
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8 - Shrinking Revenue Growth Rate
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11 - Global Governance Failure
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"BEST OF THE WEEK "

MOST CRITICAL TIPPING POINT ARTICLES TODAY

 

   

 

MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - Nov. 8th, 2015 - Nov 14th, 2015      
BOND BUBBLE     1
RISK REVERSAL - WOULD BE MARKED BY: Slowing Momentum, Weakening Earnings, Falling Estimates     2
RISK REVERSAL - WOULD BE MARKED BY: Slowing Momentum, Weakening Earnings, Falling Estimates 10-29-15 GLOBAL RISK SIGNALS 2
GEO-POLITICAL EVENT     3
CHINA BUBBLE     4
JAPAN - DEBT DEFLATION     5

EU BANKING CRISIS

   

6

US DOLLAR

Strong $ = Implosion in “Risk On” Assets

  • Brazil’s stock market (blue line),
  • Commodities in general (red line) and
  • Oil (green line).

An inverted US Dollar chart (so when the US Dollar rallies, the chart falls),

 

11-10-15   20 - US Dollar

Submitted by Phoenix Capital Research on 11/09/2015

The US Dollar Bull Market Could Trigger a $9 Trillion Debt Implosion

The US Dollar rally, combined with the ECB’s policies and the Fed’s hint at raising rates in December, is at risk of blowing up a $9 trillion carry trade.

When the Fed cut interest rates to zero in 2008, it flooded the system with US Dollars. The US Dollar is the reserve currency of the world. NO matter what country you’re in (with few exceptions) you can borrow in US Dollars.

And if you can borrow in US Dollars at 0.25%... and put that money into anything yielding more… you could make a killing.

A hedge fund in Hong Kong could borrow $100 million, pay just $250,000 in interest and plow that money into Brazilian Reals which yielded 11%... locking in a $9.75 million return.

This was the strictly financial side of things. On the economics side, Governments both sovereign and local borrowed in US Dollars around the globe to fund various infrastructure and municipal projects.

Simply put, the US Government was practically giving money away and the world took notice, borrowing Dollars at a record pace. Today, the global carry trade (meaning money borrowed in US Dollars and invested in other assets) stands at over $9 TRILLION (larger than the economy of France and Brazil combined).

This worked while the US Dollar was holding steady. But in the summer of last year (2014), the US Dollar began to breakout of a multi-year wedge pattern:

Why does this matter?

Because the minute the US Dollar began to rally aggressively, the global US Dollar carry trade began to blow up. It is not coincidental that oil commodities, and emerging market stocks took a dive almost immediately after this process began.

The below chart shows an inverted US Dollar chart (so when the US Dollar rallies, the chart falls), Brazil’s stock market (blue line), Commodities in general (red line) and Oil (green line). As you can see, as soon as the US Dollar began to rally, it triggered an implosion in “risk on” assets.

This process is not over, not by a long shot. As anyone who invested during the Peso crisis or Asian crisis can tell you, when carry trades blow up, the volatility can be EXTREME.

Indeed, the US Dollar as broken out of a MASSIVE falling wedge pattern that predicts a multi-year bull market.

The market drop in August triggered by China devaluing the Yuan (another victim of the US Dollar bull market) was just the start. Once the US Dollar rally really begins picking up steam, we could very well see a crash.

TO TOP
MACRO News Items of Importance - This Week

GLOBAL MACRO REPORTS & ANALYSIS

     

US ECONOMIC REPORTS & ANALYSIS

     
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES      
     
Market Analytics
TECHNICALS & MARKET ANALYTICS

 

   
Market Analytics - WEDNESDAY STUDIES
TECHNICALS & MARKET ANALYTICS

 

   
STUDIES - MACRO pdf      
11-12-15 STUDIES
ANALYTICS
Submitted by Tyler Durden on 11/11/2015

When Does The Market Breakdown Again? The Answer Is In The A-D Line

A few days ago we explained just how the dramatic divergence between the broader market and the number of stocks which are actually up and leading this rally has become, when we showed a chart of the NYSE advance/decline line overlaid on the S&P500.

The simple explanation of the above is that there are fewer and fewer stocks propelling the market higher.  In fact, as we showed yesterday, if one removes just 8 stocks, AMZN, NFLX, FB, GOOG, NKE, ORLY, SBUX and HD, the S&P500 would be the red for the year.

Today, BofA's new chief technician Stephen Suttmeier picks up on this dramatic divergence and gives out the following warning: "A month-long bearish divergence for the US 15 most active advance-decline line has the potential to limit S&P 500 upside." His details:

The weekly global A-D line of 73 country indices in US Dollars peaked on September 5, 2014 vs. a May 15 peak for the weekly closing price of the MSCI ACWI Index, which is also based in US Dollars. The rise in the US Dollar has had a bearish impact on global equity market breadth (many equity markets have done much better in local currencies) and this A-D line has not confirmed the global equity market rally. This is a major bearish breadth divergence and a classic sign of diminishing breadth for global equity market indices.

Suttmeier then warns what our readers are already aware of, however extended to the global market, namely that there now exists "a major bearish divergence for global A-D line in US Dollars"

The weekly global A-D line of 73 country indices in US Dollars peaked on September 5, 2014 vs. a May 15 peak for the weekly closing price of the MSCI ACWI Index, which is also based in US Dollars. The rise in the US Dollar has had a bearish impact on global equity market breadth (many equity markets have done much better in local currencies) and this A-D line has not confirmed the global equity market rally. This is a major bearish breadth divergence and a classic sign of diminishing breadth for global equity market indices.

Most importantly, it appears that historically changes in the A-D line have been a useful advance indicator of major market breakdowns. To wit:

Watch big support on the most active A-D line

Big breakdowns in the most active A-D line preceded or coincided with big breakdowns for the S&P 500 in 2000 and 2007. The key for the US equity market in late 2015 and into early 2016 is for the most active A-D line to hold its support at the August, July, and December 2014 lows. A failure to do so would put in a top for this advance-decline line and increase the risk for a deeper US equity market pullback.

Which means that the central banks, whose only mandate is to keep the global market from crashing, will have to buy - either directly like the SNB and BOJ or indirectly/spoof like the NY Fed via Citadel - much more than just the E-mini and a handful of stocks to give the impression that the market is healthy when in fact, it is not.

Whether they can pull this off will determine if the Fed's long telegraphed "rate hike" is executed, or if come December 16 Yellen chickens out one more time, and the next thing the market will have to look forward to is the inevitable arrival of negative interest rates.

11-11-15 STUDIES
ANALYTICS

Submitted by Tyler Durden on 11/10/2015

If It Wasn't For These 8 Companies The Market Would Be Down In 2015

While FANG (Facebook, Amazon, Netflix, Google) has become ubiquitous among the retail investing public still 'trading stocks', now it is time to meet NOSH (Nike, O'Reilly, Starbucks, Home Depot). The reason is simple -without these 8 stocks, the S&P 500 would be down year-to-date... "solid foundation" for the next leg in the bull market? Or teetering inverted pyramid scheme?

Finally, we couldn't help but notice that this list of 8 stocks is basically all the names that Jim Cramer is jamming down retail investors' throats (and thus hedge fund momo chasers) as the only stocks "that work." Such 'weak' hands do not bode well if this whole ponzi scheme turns down once again.

Chart: Goldman Sachs

COMMODITY CORNER - AGRI-COMPLEX   PORTFOLIO  
SECURITY-SURVEILANCE COMPLEX   PORTFOLIO  
     
THESIS - Mondays Posts on Financial Repression & Posts on Thursday as Key Updates Occur
2015 - FIDUCIARY FAILURE 2015 THESIS 2015
2014 - GLOBALIZATION TRAP 2014

2013 - STATISM

2013-1H

2013-2H

2012 - FINANCIAL REPRESSION

2012

2013

2014

2012 - FINANCIAL REPRESSION

THE CORE TENETS OF THE AUSTRIAN SCHOOL OF ECONOMICS

FRA Co-Founder, Gordon T. Long interviewed Robert Blumen, noted follower of the Austrian School of Economics, on the Core Tenets of the Austrian School and the Key Elements for investing in an Era of Financial Repression.

CORE TENETS

1. All economic understanding must be based on individual action
2. Subjective valuation drives prices
3. Marginal utility
4. Entrepreneurship
5. Time preference as the basis of interest and profit
6. The role of capital in production
7. Savings is required to create capital
8. Price Theory:  – prices determine costs, not the other way around
9. Money as an evolutionary solution the problem of barter
10. Precious metals as an evolutionary solution to the choice of the best money
11. The purchasing power of money as a price that balances money supply and money demand
12. Non-neutrality of money  (Cantillon effects)
13. The importance of money prices
14. Money is a good, and like any good, money does not have constant purchasing power.   Stable money does not mean stable prices.
15. Mises’ “critique of intervention”:  one thing leads to another
16. The “impossibility” of socialism (central planning)
17. Macro-Economics must be founded on micro economics
18. Macro-economics is based on Say’s law.
19. The rejection of the Keynesian revolution in macro.
20. Money and money substitutes (bank deposits, bank notes).
21. Banking with 100% gold reserves
22. Fractional reserve banking.  The Austrian critique of fractional reserve banking
23. Central banking.  The Austrian critique of central banking.

24. Austrian business cycle theory – the theory of unsustainable booms drive by fractional reserve banking and central banking.

a.    Inflation is not just rising prices, it distorts production as well.
b.    Distortions are unsustainable
c.     The “crack up bust” as one possible ending to the unsustainable boom

25. Deflation:

a.     Deflation has been demonized by the Keynesians.
b.    Natural slow deflation is the result of increasing production.
c.     Deflation is the correction process from inflation.
d.    Deflation is not a mouse trap that the economy gets stuck in and cannot escape.

26. An Austrian understanding of recessions and depressions through Say’s Law, entrepreneurship, and market price theory

 

KEY ELEMENTS IN AN ERA OF FINANCIAL REPRESSION

1. Entrepreneurs create wealth by employing scarce resources in production within the context of the price system.

    This requires real markets with real prices.

2. Central planning can not replace market prices.

3. Central bankers have it backwards.  Counter-cyclical policies create the business cycle.

4. Interest is not a number you can set to anything you like for “policy” reasons.  It is a price and it cannot be zero.

5. Attempting to keep interest rates at zero creates unsustainable distortions in the productive part of the economy. 

6. Something that is unsustainable must stop  - at some point.

7. In the end there are two choices – market prices or destruction of the monetary system

8. Investors think in terms of money, but money itself is unstable.

9. The path from fake prices to real prices will be difficult.

 

LINK HERE to the VIDEO

 

2012

2013

2014

2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS

2011

2012

2013

2014

2010 - EXTEND & PRETEND

   
THEMES - Normally a Thursday Themes Post & a Friday Flows Post
I - POLITICAL
     
CENTRAL PLANNING - SHIFTING ECONOMIC POWER - STATISM   THEME  

- - CORRUPTION & MALFEASANCE - MORAL DECAY - DESPERATION, SHORTAGES.

  THEME
- - SECURITY-SURVEILLANCE COMPLEX - STATISM M THEME  
- - CATALYSTS - FEAR (POLITICALLY) & GREED (FINANCIALLY) G THEME  
II-ECONOMIC
     
GLOBAL RISK      
- GLOBAL FINANCIAL IMBALANCE - FRAGILITY, COMPLEXITY & INSTABILITY G THEME  
- - SOCIAL UNREST - INEQUALITY & A BROKEN SOCIAL CONTRACT US THEME  
- - ECHO BOOM - PERIPHERAL PROBLEM M THEME  
- -GLOBAL GROWTH & JOBS CRISIS      
- - - PRODUCTIVITY PARADOX - NATURE OF WORK   THEME

MACRO ANALYTICS w/ CHS

- - - STANDARD OF LIVING - EMPLOYMENT CRISIS, SUB-PRIME ECONOMY US THEME
MACRO ANALYTICS w/ CHS
STANDARD OF LIVING - SUB-PRIME ECONOMY US THEME
MACRO ANALYTICS w/ CHS
III-FINANCIAL
     
FLOWS -FRIDAY FLOWS

MATA

RISK ON-OFF

THEME

 

CRACKUP BOOM - ASSET BUBBLE   THEME  
SHADOW BANKING - LIQUIDITY / CREDIT ENGINE M THEME  
GENERAL INTEREST

 

   
STRATEGIC INVESTMENT INSIGHTS - Weekend Coverage

 

RETAIL - CRE

 

 

  SII
Submitted by Tyler Durden on 11/13/2015

Retail Stocks Are Crashing At The Fastest Pace In Over 4 Years

 

The S&P Retail Sector ETF is down almost 9% in the last 8 days. That is the fastest collapse in this bellwether industry since August 2011... and it may be about to get a lot worse...

Retail is back to flash crash lows...

Its biggest 8-day drop since August 2011...

And it's about to get a lot worse...

Charts: Bloomberg

Equal-weighted Consumer Discretionary v $XLY has been in Virtual Free-Fall of late, Lowest since 2009 $RCD/$XLY

Embedded image permalink

The Equal-weighted Version of Consumer Discretionary, HOWEVER, is much more Telling.. Far beneath prior highs $RCD

Embedded image permalink

 

 

US DOLLAR

 

 

  SII

 

YEN WEAKNESS

 

 

  SII

 

OIL WEAKNESS

 

 

  SII
 
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