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1- Bond Bubble
2 - Risk Reversal
3 - Geo-Political Event
4 - China Hard Landing
5 - Japan Debt Deflation Spiral
6- EU Banking Crisis
 
7- Sovereign Debt Crisis
8 - Shrinking Revenue Growth Rate
9 - Chronic Unemployment
10 - US Stock Market Valuations
11 - Global Governance Failure
12 - Chronic Global Fiscal ImBalances
13 - Growing Social Unrest
14 - Residential Real Estate - Phase II
15 - Commercial Real Estate
16 - Credit Contraction II
17- State & Local Government
18 - Slowing Retail & Consumer Sales
19 - US Reserve Currency
 
20 - US Dollar
21 - Financial Crisis Programs Expiration
22 - US Banking Crisis II
23 - China - Japan Regional Conflict
24 - Corruption
25 - Public Sentiment & Confidence
26 - Food Price Pressures
27 - Global Output Gap
28 - Pension - Entitlement Crisis
29 - Central & Eastern Europe
 
30 - Terrorist Event
31 - Pandemic / Epidemic
32 - Rising Inflation Pressures & Interest Pressures
33 - Resource Shortage
34 - Cyber Attack or Complexity Failure
35 - Corporate Bankruptcies
36 - Iran Nuclear Threat
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39 - Oil Price Pressures
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MOST CRITICAL TIPPING POINT ARTICLES TODAY

 

   

 

Market Analytics - WEDNESDAY STUDIES
STUDIES - MACRO pdf      

TECHNICALS & MARKET ANALYTICS

 

   

 

TIPPING POINTS, STUDIES, THESIS, THEMES & SII

COVERAGE THIS WEEK PREVIOUSLY POSTED - (BELOW)

 

MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - Mar 13th, 2016 to Mar 19th, 2016      
TIPPING POINTS - This Week - Normally a Tuesday Focus
BOND BUBBLE     1
RISK REVERSAL - WOULD BE MARKED BY: Slowing Momentum, Weakening Earnings, Falling Estimates     2
GEO-POLITICAL EVENT     3
CHINA BUBBLE     4
JAPAN - DEBT DEFLATION     5

EU BANKING CRISIS

   

6

15 - Commercial Real Estate

   

15

 

Retail Sales Suffer Biggest 2-Month Drop In A Year After Huge Negative Revision

Thanks to dramatic downward revisions (from "resilient" historical data which we pointed out were entirely anomalous at the time and due entirely to seasonal adjustments) retail sales have dropped 0.54% in the last two months - the biggest sequential drop in a year.

While the YoY change rose from +3.0% to +3.1%, it remains below historically-recessionary levels and given the revisions suggests Q1 GDP growth markdowns are on their way with sales down MoM for every cohort from gas stations to furniture.

Retail Sales down most in a year:

 

And YoY changes still at weak recessionary levels...

 

And the breakdown shows sales dropped across the board, with all the key segments, including the all important online sales, posting sequential declines:

  • Motor Vehicles: -0.2%
  • Furniture and Home Furnishing: -0.5%
  • Electronics: -0.1%
  • Food and Beverage: -0.2%
  • Gasoline Stations: -4.4%
  • General Merchandise: -0.2%
  • Miscellaneous: -1.1%
  • Online Sales: -0.2%

 
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 - WEDNESDAY STUDIES
STUDIES - MACRO pdf      

TECHNICALS & MARKET ANALYTICS

 

   
COMMODITY CORNER - AGRI-COMPLEX      
 
     
THESIS - Mondays Posts on Financial Repression & Posts on Thursday as Key Updates Occur

2016 - CRISIS OF TRUST

  • LOSS OF CONFIDENCE & TRUST - People No Longer Believe in the System
  • DEMONIZATION OF OPINION & EXPRESSION - Era of "Controlling the Narrative"
  • ERA OF UNCERTIANTY - A World of Increasing Uncertainty & Risk
  • CASUALTIES OF UNCERTAINTY - Individualism, Risk Taking, Capitalism & Economic Growth
2016 THESIS 2016
2015 - FIDUCIARY FAILURE 2015 THESIS 2015
2014 - GLOBALIZATION TRAP 2014

2013 - STATISM

2013-1H

2013-2H

2012 - FINANCIAL REPRESSION

2012

2013

2014

 

Jeffrey Snider: US$ STRENGTH IS A MANIFESTATION OF A US$ SHORTAGE

FRA Co-Founder Gordon T.Long and Jeffrey Snider, Head of Global Investment Research at Alhambra Investment Partners discuss a broad array of Global Macro subjects in this 48 minute video discussion with supporting slides.

As Head of Global Investment Research for Alhambra Investment Partners, Jeff spearheads the investment research efforts while providing close contact to Alhambra’s client base. Jeff joined Atlantic Capital Management, Inc., in Buffalo, NY, as an intern while completing studies at Canisius College. After graduating in 1996 with a Bachelor’s degree in Finance, Jeff took over the operations of that firm while adding to the portfolio management and stock research process.

In 2000, Jeff moved to West Palm Beach to join Tom Nolan with Atlantic Capital Management of Florida, Inc. During the early part of the 2000′s he began to develop the research capability that ACM is known for. As part of the portfolio management team, Jeff was an integral part in growing ACM and building the comprehensive research/management services, and then turning that investment research into outstanding investment performance. As part of that research effort, Jeff authored and published numerous in-depth investment reports that ran contrary to established opinion. In the nearly year and a half run-up to the panic in 2008, Jeff analyzed and reported on the deteriorating state of the economy and markets. In early 2009, while conventional wisdom focused on near-perpetual gloom, his next series of reports provided insight into the formative ending process of the economic contraction and a comprehensive review of factors that were leading to the market’s resurrection. In 2012, after the merger between ACM and Alhambra Investment Partners, Jeff came on board Alhambra as Head of Global Investment Research.

Jeff holds a FINRA Series 65 Investment Advisor License.

US TIC REPORT, TREASURY SALES

FRA Podcast TIC2

TIC is a compilation done by the US Treasury based on their access to data on foreign accounts and holdings of Dollar accounts and securities, and estimates the foreign Dollar market. Over the last decade or so, it is clear that the Eurodollar market grew steadily at a rapid rate until about August 2007, at which point it pivots and comes back down. The TIC data shows the tendency of dollar markets to essentially be stable, usually addressed through selling Treasury. However, the private dollar markets offshore are in disarray to the extent that central banks around the world are forced to fill the dollar deficiency with their own holdings. Of especial note is China’s reduction of their US Treasuries and foreign currency reserves, and OPEC countries incurring serious Current Account deficits in an attempt to maintain their pegs with the US dollar.  In addition are the emerging markets who borrowed about $7-9T in USD, who now have difficulty paying back debts due to slowing trade and falling currencies.

This all leads to the US dollar strengthening, which is the manifestation of the dollar shortage. In recent days, Japan using NIRP will further disrupt the dollar system.

“US Dollar Strength is a manifestation of a US Dollar Shortage!”

JAPAN: QE FAILURE AND WHAT NIRP MEANS

FRA Podcast Japan2

Under QE, Japan obtained a burst of inflation around 2014. Instead of leading to sustained economic activity, household income and spending dropped about 7%, which was also not offset by growth in GDP and demand. The surge in expansion, due to cheaper money, increases supply which then demolishes pricing power. In addition to the reduced value of savings, large companies have also shifted production offshore, thus increasing the effect and emphasizing the failure of QE/QQE to stimulate the economy.

NIRP also carries with it the threat of failing like QE, along with numerous other particle effects that cannot be currently measured or predicted, mostly as this type of system has not existed for over a hundred years. This is an indicator of the lack of power central banks have over the economy, but can be put down to overemphasizing the value of monetary policy over fiscal policy in the developed world. The dollar system has been artificially expanded past any control by banks and monetary policy, globally, over the last decade. The only way to stop it is to focus on other fiscal factors that would allow economic potential to be realized again and to refrain from following Keynesian economics once it has been proven to be ineffective.

“Japan is a test case in almost clinical conditions for QE and QQE, and it failed on every count.”

CHINA: COLLAPSING TRADE AND CREDIT

FRA Podcast China2

China is both an impediment to growth and a casualty of the rest of the world, but recently more of a reflection of the global dollar economy as they are most sensitive to changes there. The lack of growth over several years forces a fundamental shift toward a Keynesian response of fiscal and monetary stimulation that creates asset buffers at odds with overcapacity. Meanwhile, China still lacks any real method for economic growth and is forced to react to outside influences while juggling the problem of overcapacity with the falling export industry. This then leads to capital flight, which furthers the struggle to grow GDP.

China is clearly attempting to manage the Yuan by selling dollars to strengthen it, but will eventually falter like any pegged currency. Many currencies pegged to the US dollar, Eurodollar, and Petro dollar will likely collapse. Keynesian economists believed that 2007 was the beginning of a temporary deviation from sustainable global growth, but was in fact the structural revaluation of higher economics of the financial system. We are likely headed for a systemic reset and reorientation, which will be disruptive with significant risk but can be adapted to.

“I think we are headed for a systemic reset.”

RETAIL: JANUARY SALES AND CONTINUING TREND

FRA Podcast Retail Sales1

Retail sales have been near recession levels of low, indicating that consumers are under pressure, but inventories are still rising despite manufacturers cutting back. Retail slowing is a fixed trend starting from 2012, amplified in 2014-2015 with the disappearance of the manufacturing industry and loss of export goods. This is likely due to lack of real recovery that slowly eroded US consumers’ ability to continuously expand their activity. The middle class has no savings, so thus the capitalist system that relies on savings to reinvest into productivity.

Over the last several years, companies have been spending on buybacks instead of investing in productive capacity. 1900 of the S&P companies spent more on buybacks and dividends than they were earning, thus creating more debt.

“Recession is a necessary process, like anything else. It’s creative destruction.”

LABOR: FULL EMPLOYMENT – NOT REALLY!

FRA Podcast LaborEmpl1

There is a major disconnect between major unemployment statistics and the rest of the economy, where even having a job is not necessarily enough to support the expected standard of living. There are low prospects for growth in the job market, and people sense that there is a need for a restructuring of the system. Job growth is mostly in low income occupations, which results in potential workers entering college with a loan but failing to actually enter the labour force.

The current economic state is similar to the suppressed state of the 1930’s and 1940’s, and once the systemic reset is allowed to occur, the economic potential released will be tremendous. Recessions are necessary to allow risk to be properly priced, which in turn creates confidence in investment. The resulting reset should shift away from one centered around banks and the value of credit toward a capitalist system that prioritizes “money is money” over “money is credit”.

“Monetary policy is designed for companies to borrow more; it’s just that economists expected they’d borrow more for productive capacity rather than financial capacity.”

Abstract by: Annie Zhoua: zhou108@gmail.com

Video Editing by: Minjung Kim: minjung.kim@ryerson.ca

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

MACRO MAP - EVOLVING ERA OF CENTRAL PLANNING

 

G THEME  
- - CRISIS OF TRUST - Era of Uncertainty G THEME  

CORRUPTION & MALFEASANCE - MORAL DECAY - DESPERATION - RESENTMENT.

US THEME PAGE
- - SECURITY-SURVEILLANCE COMPLEX - STATISM G 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

MA w/ CHS

  01-08-16 THEME

MA w/ CHS

- - - STANDARD OF LIVING - EMPLOYMENT CRISIS, SUB-PRIME ECONOMY US THEME
MA w/ CHS
 
III-FINANCIAL
     

FLOWS -FRIDAY FLOWS

FLOWS - Capital, Liqudity & Credit Flows

LIQUIDITY: Central Bank Liquidity Increases has slowed or Stopped

>> CREDIT: Cycle has turned

DEBT: Defaults/ Bankruptcies Will Emerge

 

MATA

RISK ON-OFF

THEME

w/ R Duncan

CRACKUP BOOM - ASSET BUBBLE 12-31-15 THEME  
SHADOW BANKING - LIQUIDITY / CREDIT ENGINE M THEME  
GENERAL INTEREST

 

   
 
STRATEGIC INVESTMENT INSIGHTS - Weekend Coverage
     

 

RETAIL - CRE

 

 

  SII

 

US DOLLAR

 

 

  SII

 

YEN WEAKNESS

 

 

  SII

 

OIL WEAKNESS

 

 

  SII
 
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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

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