FEBRUARY 2016: GLOBAL MACRO TIPPING POINT - (Subscription Plan III)
UNCERTAINTY & APPREHENSIVE UNEASINESS - Sentiment Takes on a Tone of Worry
We have an incipient Global Bear Market underway with world equity market capitalization down over $16.8 Trillion. The technical charts suggest the completion of a 7.5 year cycle from the 2000 Dotcom highs to the 2007 GFC highs to today. With global debt at all time hights, a reversing credit cycle, global trade & Industrail Production collapsing, commodities reaching lows not seen in 40 years and oil below $30/bl - there is lots to worry about!
Central Bank Monetary Policy is now steadily coming under fire as many anaysts and bankers no longer believe QE and ZIRP are appropriate policy responses and are looking for new approaches which range from NIRP (Negative Nominal Interest Rate Policy), OMF (Overt Monetary Policy) and other untested experiments. With global liqiudity quickly evaporating the central bankers will soon be expected to respond, especially if global markets continue to deterioriate further.
Deflationary pressures coming out of China should not be underestimated, nor what is clearly a global oil price war now underway. he oil war was intially about Russian sanctions but now is taking on the complexity of a Saudi Arabia - Iran oil price war. Both giant middle east energy producers are aligned with opposing east-west powers (US versus Russia) and Syria has become the front for a proxy driven conflict (see pipeline map below).
The fall-out of plunging oil and commodity prices has shaken the HY (Junk) Bond Market, Distressed Debt Market and many of the US$ currency pegs. The Yuan, Hong Kong and Saudi currency pegs are exposed and may soon shock the financial markets similar to the Swiss Francs' capitualtion a year ago.
We l ook for a recession scare in the US, driven by the slowing global trade to force a Federal Reserve Policy reversal by mid 2016.
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