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THE G-7 SENDAI DISCHORD

SHANGHAI ACCORD CRUMBLES WITH G-7 SENDAI DISCHORD

GLOBAL MACRO UPDATE

GLOBAL MACRO TIPPING POINTS - JUNE 2016

5/30/2016

1 MAY 2016 Edition


Copyright 2016 Gordon T. Long All Rights Reserved

Restricted & Confidential


general@GordonTLong.com

THE G-7 SENDAI DISCHORD

SHANGHAI ACCORD CRUMBLES WITH G-7 SENDAI DISCHORD


GLOBAL MACRO TIPPING POINTS - JUNE 2016

GLOBAL RISK ......................................................................................................................................... 33


GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 33
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 33
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 34
Our Assessment ................................................................................................................................................................................................ 34
James Rickards Global Risk Assessment ........................................................................................................................................................ 47
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 95
IMF ..................................................................................................................................................................................................................... 99
NEW-IMF Dark economic cloud over IMF-World Bank meeting ................................................................................................................. 99
NEW-IMF World faces 'lost year' as policymakers sleepwalk towards fresh crisis, warns IMF ................................................................ 100
NEW-IMF Beware self-fulfilling prophecy of crashing markets, IMF warns as growth is cut again .......................................................... 104
NEW-IMF IMFS WORLD ECONOMIC OUTLOOK REPORT Too Slow for Too Long ....................................................................... 108
NEW-IMF IMFs GLOBAL FINANCIAL STABILITY REPORT (GFSR) Potent Policies for a Successful Normalization ...................... 110
NEW-IMF IMFs FISCAL MONITOR Acting Now, Acting Together ....................................................................................................... 112
IMF IMF warns of stagnation threat to G7 economies .............................................................................................................................. 113
IMF IMF Fears $3 Trillion Credit Crunch ................................................................................................................................................... 115
IMF Tells Regulators to Brace for Global Liquidity Shock ......................................................................................................................... 117
IMF- Lagarde warns of lopsided global growth .......................................................................................................................................... 122
IMF warns of new threats to global economy due to excessive risk taking ................................................................................................ 123
OECD ............................................................................................................................................................................................................... 125
NEW-OECD "Negative Rates Are Dangerous" OECD Chair Warns "Our Entire System Is Unstable" ................................................... 125
OECD World cannot spend its way out of a slump, warns OECD chief .................................................................................................. 133
OECD OECD Chief Economist: It's Time To "Temper The Frothiness" In Markets ................................................................................ 135
OECD Leading Indicator Casts Doubt on US Economic Rebound .......................................................................................................... 137
OECD Warns 40 Million People Will Be Out of Work Next Year .............................................................................................................. 138
OECD Cuts Global Growth Projections Again ............................................................................................................................................. 140
WORLD BANK ................................................................................................................................................................................................. 141
WB Key Takeaways From the World Bank/IMF Meetings ....................................................................................................................... 141
WB Federal Reserve rate rise would cause panic and turmoil, warns World Bank .................................................................................. 142
WB World Bank - Global Economic Prospects Report .............................................................................................................................. 142
WB Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ........................................................................................ 143
WB Global Growth Outlook ........................................................................................................................................................................ 146
WB- World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ................................. 147
WB- World Bank Says 300M Young People neither Working nor Studying ............................................................................................... 148
BIS ................................................................................................................................................................................................................... 150
BIS BIS Warns of Major Faultlines In Global Debt Bubble ..................................................................................................................... 150
BIS - BIS Quarterly Report ........................................................................................................................................................................... 152
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 152
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 153
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 155
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 159
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 162
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 163
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 168
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 172
WEF Global Business Risks ..................................................................................................................................................................... 174
WEF The 2015 Global Risk Landscape ................................................................................................................................................... 175
WEF Evolving Risk Landscape (2007-2015) ............................................................................................................................................ 176
WEF Global Risk Exposures By Region ................................................................................................................................................... 177
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 178
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 178
CHARTS OF NOTE ......................................................................................................................................................................................... 180
Credit Denominated in US Dollars ............................................................................................................................................................... 180
IMFs Global GDP Outlook ........................................................................................................................................................................... 180
IMF Economic Forecasts Are So Consistently Bad That it Says they Dont Understand the Problem! .................................................... 181
Total Global Credit-Market Debt Owed as % of GDP ................................................................................................................................. 182
57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ....................................................................... 183
Global Risk Landscape Grid ........................................................................................................................................................................ 184
Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .............................................................................................. 185
Global Risks of Highest Concern ................................................................................................................................................................. 185
Global Risks Versus Impact ......................................................................................................................................................................... 186
The economic balance of the world is shifting ............................................................................................................................................. 187
Global Conflict Intensity is heating up.......................................................................................................................................................... 188

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World Conflict Map ....................................................................................................................................................................................... 189


World Conflict Map Details........................................................................................................................................................................ 190
Global Conflict & Protest Intensity ............................................................................................................................................................... 191
Deutsche Banks Key Global Risk ............................................................................................................................................................... 191
Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 192
RESEARCH OF NOTE .................................................................................................................................................................................... 193
Why Are The IMF, The UN, The BIS And Citi All Warning That An Economic Crisis Could Be Imminent? ............................................... 193
The G-30 Group Of Central Bankers Warn They Can "No Longer Save The World" ................................................................................. 195
A Generation in Crisis- - The World Needs 5 Million Jobs-Month To Stymie Youth Extremism................................................................. 198
Presenting SocGen's 5 Black Swans For 2016 ........................................................................................................................................... 199
Paul Brodsky: "Expect The Unexpected. It Might Be Time To Duck And Cover" ....................................................................................... 202
McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE .............................................................................................. 205
Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 ............................................................................................... 209
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 212
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 213
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 215
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 218
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 219
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 220
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 223
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 223
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 234
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 237
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 238
THE RISK CONTINUUM ............................................................................................................................................................................. 241
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 243
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 245
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 247
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 249

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 256


GEO-POLITICAL RISK - SOCIAL, ECONOMIC & FINANCIAL ........................................................................................................ 258
EU REFUGEE CRISIS Tearing EU Apart........................................................................................................................................................... 258
NEW-EU REFUGEE - Latest Shock in Europe's Refugee Crisis: Austria Right-Wing Party Sweeps 1st Round of Presidential Election ..... 258
NEW-EU REFUGEE - Turkey Blackmails Europe on Visa-Free Travel ......................................................................................................... 260
NEW-EU REFUGEE - Switzerland Readies Military in Preparation For A New Wave Of Migrants ............................................................... 263
NEW-EU REFUGEE - Is Sweden Facing Another Migrant Invasion? ............................................................................................................ 269
NEW-EU REFUGEE - "There .......................................................................................................................................................................... 275
GROWING ELECTORATE ANGER Failing Social Contract .............................................................................................................................. 276
NEW-ELECTORATE - Why Voters Will Stay Angry ....................................................................................................................................... 276
PARIS SHOCKER ISIS Reality ........................................................................................................................................................................... 284
TERRORISM - "There's No Such Thing As ISIS": Journalist Destroys West's Terror Narrative, Warns Of Crackdown On "Dissidents" ..... 284
TERRORISM - Secretary of Defense Chuck Hagel: ISIL poses a threat greater than 9/11. ....................................................................... 285
TERRORISM - Two Reasons the 'War On Terror' Will Always Fail ................................................................................................................ 286
TAXATION Setting the Stage for the Coming Taxation Explosion ..................................................................................................................... 288
RESEARCH OF NOTE .................................................................................................................................................................................... 288
TAXATION Taxes must be paid, says George Osborne, as he backs crackdown on havens. ............................................................... 288
TAXATION The Coming Tax Tsunami Will Erode Wealth and Capital at a Shocking Pace ................................................................... 290
DEMOGRAPHICS Aging Population & Youth Unempolyment........................................................................................................................... 292
CHART OF NOTE............................................................................................................................................................................................ 292
YOUTH UNEMPLOYMENT Global Population ........................................................................................................................................ 292
YOUTH UNEMPLOYMENT Global Aging ................................................................................................................................................ 292
YOUTH UNEMPLOYMENT Global Aging By Country ............................................................................................................................. 293
RESEARCH OF NOTE .................................................................................................................................................................................... 295
YOUTH UNEMPLOYMENT - "A Generation In Crisis" - The World Needs 5 Million Jobs/Month To Stymie Youth Extremism ............... 295
YOUTH UNEMPLOYMENT - Four Ticking Global Time-Bombs Few Even Hear ...................................................................................... 296

GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 301


NEW-SAUDI-IRAN CONFLICT A Persian/Arab Sunni/Shiite Conflict ...................................................................................................... 301
NEW-SAUDI-IRAN Saudi Arabia Shows Obama How Dissatisfied they are With His Administration and the Iran Deal. .................. 301
NEW-SAUDI-IRAN - Deep Rifts With Saudi Arabia Overshadow Obamas Trip .................................................................................... 301
NEW-SAUDI-IRAN - Saudi Arabia, U.S. drifting apart despite Obamas efforts Russian media ......................................................... 303
ISIS .................................................................................................................................................................................................................. 306
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 307
ISIS - An Undercover Look Inside ISIS .................................................................................................................................................... 311
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 - Pipeline Politics: Russia, Turkey Clash Over Energy As Syria Rift Shifts Focus To German Line .......................................... 318
SYRIA - Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead ........................................................ 321
SYRIA - Is The US Going To War With Syria Over A Natural Gas Pipeline? ......................................................................................... 323
SYRIA - Why Did Obama Choose Syria? ................................................................................................................................................ 326

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SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 327


SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 328
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 330
SYRIA - 25 Quotes ................................................................................................................................................................................... 331
SYRIA - What Coalition? .......................................................................................................................................................................... 334
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 336
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 338
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 346
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 348
CHINA SEA - Why China Wants Control of The South China Sea In 10 Charts .................................................................................... 349
CHINA SEA - "Strongly Dissatisfied" China Warns US "Accident" Is "Highly Likely" In South China Sea ............................................. 355
CHINA SEA - PLA Officer: China Must Establish South China Sea ADIZ; Will "Fight ............................................................................ 356
IRAN ................................................................................................................................................................................................................. 359
RESEARCH OF NOTE ................................................................................................................................................................................ 359
IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ................................................................................................................... 359
IRAN NBC Special Report: Nuclear Agreement Reached With Iran .................................................................................................... 362
YEMEN ............................................................................................................................................................................................................ 363
CHARTS OF NOTE ..................................................................................................................................................................................... 363
YEMEN Strategic Position .................................................................................................................................................................... 363
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 364
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 364
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 365
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 365
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 367
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 368
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 369
RESEARCH OF NOTE ................................................................................................................................................................................ 370
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 370
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 372
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 375
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 376
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 378
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 383
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 385
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 390
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 391
RESEARCH OF NOTE ................................................................................................................................................................................ 397
NEW-COLD WAR - "They Should Be Met By Force" - US General Warns Russia Future Fly-Bys "Won't End Well For You" ............. 397
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 398
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 399
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 403
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 407
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 408
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 411
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 414
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 415
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 417
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 431

GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 433


NEW-BREXIT ......................................................................................................................................................................................................... 433
NEW-BREXIT Brexit Is No Business of U.S.................................................................................................................................................. 433
NEW-BREXIT Cameron could not have asked for more from Obama's Brexit warning .............................................................................. 433
NEW-BREXIT The G-30 Group of Central Bankers Warn They Can "No Longer Save The World" ........................................................... 434
NEW-BREXIT TTIP is a Very Bad Excuse to vote for Brexit ........................................................................................................................ 435
GENERAL .............................................................................................................................................................................................................. 436
GOVERNANCE The G-30 Group of Central Bankers Warn They Can "No Longer Save The World" ........................................................ 436
ASIAN INFRASTRUCTURE INVESTMENT BANK A Threat to World Bank and US$ Reserve Status ..................................................... 440
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 440
CHARTS OF NOTE ..................................................................................................................................................................................... 443
AIIB Demanding Infrastructure .............................................................................................................................................................. 443
RESEARCH OF NOTE ................................................................................................................................................................................ 444
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 444
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 446
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 447
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 449
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 452
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 454
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 456
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 459
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 459
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 461
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 463
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 466
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 468
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 468

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GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 471


AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 471
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 472
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 472
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 473
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 473
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 474
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 475
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 477
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 477
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 478
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 479
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 480

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 481


OVERALL CATEGORY RANKINGS Q2 2016 ................................................................................................................................................... 481
CURRENT RANKINGS Versus Longer Term Benchmarks ............................................................................................................................... 482
TREND NOTES...................................................................................................................................................................................................... 486
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 487
CHANGES TO MACRO MAP$ ROADMAP$ - Longer Term Trends .................................................................................................................... 488
TIPPING POINTS: TOP 5 FOCUS - MAY 2016 .................................................................................................................................................... 490
NEW-I - RISK REVERSAL .............................................................................................................................................................................. 490
NEW-II - CHINA HARD LANDING .................................................................................................................................................................. 505
NEW-III - EU BANKING CRISIS ...................................................................................................................................................................... 508
NEW-IV BOND BUBBLE .............................................................................................................................................................................. 515
NEW-V- GEO-POLITICAL EVENT RISK ........................................................................................................................................................ 523

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 527


ECONOMIC CUTS ................................................................................................................................................................................................. 527
NEW-IMF BLAMES GLOBALIZATION FOR INEQUALITY & MARKET CRASHES ...................................................................................... 527
NEW- In Stunning Reversal, IMF Blames Globalization for Spreading Inequality, Causing Market Crashes ............................................ 527
IMF Now Projects the world economy will grow by only 3.4% in 2016 ....................................................................................................... 530
IMF Slashes Global Growth Outlook Again, Warning "Of Great Challenges" In Year Ahead .................................................................... 531
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 535
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 546
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 548
CHARTS OF NOTE ......................................................................................................................................................................................... 550
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ........................................................................................ 550
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 554
CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 558
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 558
ECONOMIC WARNINGS....................................................................................................................................................................................... 559
OECD WARNS ................................................................................................................................................................................................ 559
'WORSE THAN 2007': OECD Chairman warns of looming wave of worldwide bankruptcies .................................................................... 559
IMF WARNS .................................................................................................................................................................................................... 561
IMF Warns of gloomy eurozone outlook ...................................................................................................................................................... 561
IMF Warns U.S.: Your financial system is (still) vulnerable ......................................................................................................................... 565
IMF Warns Japan over Its Staggering National Debt .................................................................................................................................. 567
IMF Warns Japan to step up reforms .......................................................................................................................................................... 567
IMF Warns Fed on risks of hiking too soon ................................................................................................................................................. 568
IMF Warns of Permanent Stagnation .......................................................................................................................................................... 569
IMF Sees risk of new eurozone ................................................................................................................................................................... 571
IMF Tells Central Europe to Spend More .................................................................................................................................................... 574
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 577
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 579
BIS WARNS ..................................................................................................................................................................................................... 581
BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................................... 581
Monetary Policy At Its Limits ........................................................................................................................................................................ 593
WORLD BANK WARNS .................................................................................................................................................................................. 594
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ............................................................................... 596
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 599
RESEARCH WE FOLLOWED ............................................................................................................................................................................... 600
CHARTS OF NOTE ............................................................................................................................................................................................... 603
NEW-CHART: Gini Coefficient since US Left Gold Standard ......................................................................................................................... 603
NEW-CHART: Global Gini Coefficient since WWII Currency Cartel & China Lead the Way ...................................................................... 603
CHART: A Global Bear Market? ...................................................................................................................................................................... 604
CHART: World Equity Market Capitalization Loses ........................................................................................................................................ 605
CHART: A 7.5 Year Global Cycle May be Underway ..................................................................................................................................... 605
CHART: Chinas Total Debt at 3005 A Drag on Future Growth ...................................................................................................................... 606
CHART: The Largest Rolling Losses in Commodities Since the Great Depression ....................................................................................... 606
CHART: Latest IMF Global Growth Projections .............................................................................................................................................. 607
CHART: IMF Global Growth Projections -2 ..................................................................................................................................................... 607

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CHART: IMF Perspective on Global Transitions & Associated Risks ............................................................................................................. 609
CHART: Global Consumer Confidence Turns................................................................................................................................................. 609
CHART: Global Consumer Confidence Momentum versus Bond Yields ....................................................................................................... 610
CHART: Bear Grip Felt Around the World ....................................................................................................................................................... 610
CHART: Emerging Market FX in Freefall ........................................................................................................................................................ 611
CHART: Asian Dollar Index Sends Ominous Sign .......................................................................................................................................... 612
CHART: Biggest Currency Losers ................................................................................................................................................................... 612
CHART: The Great Unwind - A Triple Unwind of EM Credit, Chinas Leverage and US Monetary Easing ................................................... 613
CHART: Latin Americas Economic Slowdown ............................................................................................................................................... 614
CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 614
CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 615
CHART: Global Business Equipment Investment ........................................................................................................................................... 616
CHART: EM versus DM Credit Risk ................................................................................................................................................................ 617
CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 617
CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 618

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 619


GLOBAL TRENDS ................................................................................................................................................................................................. 619
CHARTS OF NOTE ......................................................................................................................................................................................... 619
NEW-GLOBAL TRENDS IMF Lowers Growth Forecast Across G-7 ....................................................................................................... 619
NEW-GLOBAL TRENDS IMF is increasingly worried that more countries could slip into recession. ..................................................... 619
NEW-GLOBAL TRENDS IMF Says Deflation Risk Probabilities have increased .................................................................................... 620
NEW-GLOBAL TRENDS IMF Says the 'oil dividend' may never materialize .......................................................................................... 620
NEW-GLOBAL TRENDS IMF Worried about Secular Stagnation developing in advanced economies ................................................. 621
NEW-GLOBAL TRENDS IMF Global debt to soar unless policymakers act now with fiscal stimulus and structural reforms ................. 621
GLOBAL TRENDS Global Nominal GDP Growth May Be in the Midst of a Secular Downturn .............................................................. 622
GLOBAL TRENDS World GDP Growth Rates Since 2000 ...................................................................................................................... 622
GLOBAL TRENDS World Industrial Production Index ............................................................................................................................. 623
GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ............................................................ 623
GLOBAL TRENDS UNITED STATES Industrial Production Index .......................................................................................................... 624
GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015 ......................................... 624
GLOBAL TRENDS JAPAN Industrial Production Index ........................................................................................................................... 625
GLOBAL TRENDS EURO AREA Industrial Production Index ................................................................................................................. 625
GLOBAL TRENDS EMERGING ASIA Industrial Production Index.......................................................................................................... 626
GLOBAL TRENDS EMERGING ASIA Industrial Production Index.......................................................................................................... 626
GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 626
GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 627
GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 628
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 628
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 629
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 629
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 630
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 631
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 631
RESEARCH OF NOTE .................................................................................................................................................................................... 632
NEW-GLOBAL TRENDS The dire state of the global economy .............................................................................................................. 632
NEW-GLOBAL TRENDS The Global Economic Slowdown And Why Central Banks Can't Fix It ........................................................... 637
GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse .......................................................................................... 643
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 643
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 648
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 652
RESEARCH OF NOTE .................................................................................................................................................................................... 653
GLOBAL CREDIT .................................................................................................................................................................................................. 653
CREDIT CYCLE - HG Spread Widening ..................................................................................................................................................... 653
CREDIT CYCLE - Widening Gap Between Debt & Equity .......................................................................................................................... 653
CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 654
GLOBAL SENTIMENT ........................................................................................................................................................................................... 657
CHARTS OF NOTE ......................................................................................................................................................................................... 657
GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected............................................................ 657
GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ................................................... 658
GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ....................................................................................... 659
GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ...................................................... 660
GLOBAL SENTIMENT Differing Concerns Around the World By Region ............................................................................................ 661
GLOBAL SENTIMENT Growing Recessionary Sentiment ....................................................................................................................... 662
GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ................................................................................. 663
GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 664
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 665
GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 666
GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 667
GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 668
GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 669
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 670
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 671
GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 672
GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 673
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 674

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GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 674
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 676
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 677
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 678
RESEARCH OF NOTE .................................................................................................................................................................................... 679
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 679
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 681
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 685
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 686
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 688
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 689
CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 700
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 703
CHARTS OF NOTE ......................................................................................................................................................................................... 703
CHART Global Employment Rates ........................................................................................................................................................... 703
CHART Global Unemployment ................................................................................................................................................................. 704
CHART Global Unemployment EU Comparison ................................................................................................................................... 704
CHART Unemployment in Advanced Countries ....................................................................................................................................... 705
CHART Global Labor Participation Rates ................................................................................................................................................ 705
CHART Global Youth Unemployment By Country ................................................................................................................................ 706
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 706
RESEARCH OF NOTE .................................................................................................................................................................................... 707
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 707
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 709
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 711
GLOBAL GROWTH ............................................................................................................................................................................................... 713
CHARTS OF NOTE ......................................................................................................................................................................................... 713
NEW-GLOBAL GROWTH World Trade Prices/Unit in US$ ..................................................................................................................... 713
NEW-GLOBAL GROWTH World Trade by Value .................................................................................................................................... 713
NEW-GLOBAL GROWTH World Trade Prices Per Unit Values in USD Index........................................................................................ 713
NEW-GLOBAL GROWTH Yardenis Global Growth Barometer .............................................................................................................. 714
NEW-GLOBAL GROWTH Anemic Global Revenue Growth ................................................................................................................... 715
NEW-GLOBAL GROWTH World Trade Growth & Value in US$ Terms .................................................................................................. 715
NEW-GLOBAL GROWTH Global Manufacturing PMI ............................................................................................................................. 716
NEW-GLOBAL GROWTH Dismal Trade Growth Limits Scope for Competitive Devaluations ................................................................ 716
GLOBAL GROWTH Global Nominal Y-o-Y GDP Grow ........................................................................................................................... 717
GLOBAL GROWTH World Trade Volume Y-o-Y ..................................................................................................................................... 717
GLOBAL GROWTH World Industrial Production ..................................................................................................................................... 717
GLOBAL GROWTH World Trade Values in US$ ..................................................................................................................................... 718
GLOBAL GROWTH World Industrial Production ..................................................................................................................................... 719
GLOBAL GROWTH World Trade (Values in US$) Index ......................................................................................................................... 720
GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 .............................................................................. 721
GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................................. 722
GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ................................................................................ 722
GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ...................................................................... 723
GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ........................................................................................... 723
GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 724
GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ............................................................................. 724
GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ..................................................... 725
GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ..................................................................... 725
GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ...................................................... 726
GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ...................................................................... 726
GLOBAL GROWTH CHINAS Imports, Annual % Change ...................................................................................................................... 727
GLOBAL GROWTH CHINAS Exports, Annual % Change ...................................................................................................................... 727
GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 728
GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 729
GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 730
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 731
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 732
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 732
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 733
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 734
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 734
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 734
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 735
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 736
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 736
RESEARCH OF NOTE .................................................................................................................................................................................... 737
NEW-GLOBAL GROWTH - Manufacturing Recession Goes Global as Demand Withers ......................................................................... 737
GLOBAL GROWTH - World Trade & Industrial Production Growth near Post-Crisis Lows ....................................................................... 738
GLOBAL GROWTH - CEO of World's Largest Shipping Company: "Global Growth Is Worse Than Official Reports".............................. 741
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 743
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 745
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 746
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 748
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 752

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GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 754


GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 756
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 757
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 758
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 759
CHARTS OF NOTE ............................................................................................................................................................................................... 759
GLOBAL CONSUMPTION Historic Record Low Baltic Dry Index ........................................................................................................... 759
GLOBAL CONSUMPTION China Containerized Freight Index ............................................................................................................... 759
GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region .............................................................................. 760
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 760
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 761
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 762

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 763


GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 763
CHARTS OF NOTE ......................................................................................................................................................................................... 763
NEW-CHARTS Central Banks Dump US Debt ........................................................................................................................................ 763
NEW-CHARTS Central Bank Balance Sheets as a % of GDP ................................................................................................................ 764
NEW-CHARTS Government Deficits v Gross Debt v Net Debt ............................................................................................................... 764
NEW-CHARTS Regional Composition of Global Wealth Distribution - 2015 .......................................................................................... 765
CHARTS Debt of Advanced Economies Higher as %of GDP then After WWI and WWII ....................................................................... 765
CHARTS Global Debt to GDP Growth 1994 to 2014 ............................................................................................................................ 767
CHARTS Central Bank Balance Sheet Growth as Percentage of Nominal GDP .................................................................................... 767
CHARTS Central Bank Key Policy Rates ................................................................................................................................................. 768
CHARTS Central Bank Pack Seen to be Needed to Spur Inflation ....................................................................................................... 768
CHARTS Global Banking Profits after Tax ............................................................................................................................................... 768
CHARTS Global Stock of Debt Outstanding by Type .............................................................................................................................. 769
CHARTS Total Public Debt Outstanding by 2017 Forecasts for Currency Cartel .............................................................................. 770
CHARTS Saudi + China Reserves versus 10Y UST Yield ...................................................................................................................... 770
CHARTS Total World Reserve Foreign Exchange Reserves .................................................................................................................. 771
CHARTS Why Canada May Become a Problem For Janet Yellen .......................................................................................................... 772
CHARTS Consensus Fed and ECB Rate Hike Projections ..................................................................................................................... 773
CHARTS Global Monetary Policy Stance & Bias ..................................................................................................................................... 774
CHARTS Global Government Bonds Trading With Negative Yields........................................................................................................ 775
CHARTS Lack of Inflation in Europe ........................................................................................................................................................ 775
CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s)............................................................. 776
CHARTS Quantitative e Easing No Longer Drives Commodity Prices .................................................................................................... 777
CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................................ 777
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 778
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 778
CHARTS Falling Global Bond Rates Continue in Q1 2015 ...................................................................................................................... 779
CHARTS The Road to NIR (Negative Rates) ........................................................................................................................................... 779
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 780
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 780
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 782
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 782
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 783
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 783
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 784
RESEARCH OF NOTE .................................................................................................................................................................................... 785
CENTRAL BANKS - How We Got Here: The Fed Warned Itself In 1979, Then Spent Four Decades Intentionally Avoiding The Topic .. 785
CENTRAL BANKS - 8 Capital Markets 'Threats' To The Central Bank Narrative ...................................................................................... 789
CENTRAL BANKS - How Much More Faith In Central Banks Is Left? ....................................................................................................... 791
CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................................ 793
CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode .............................................................................................. 794
CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................................ 795
CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage ......................................................................................... 798
CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ................................................................................ 799
CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation .......................................................... 801
CENTRAL BANKS - The year of Dollar Danger for the world ..................................................................................................................... 803
CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ........................................................ 808
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 812
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 814
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 815
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 818
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 819
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 820
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 822
WAR ON CASH ............................................................................................................................................................................................... 827
WAR ON CASH Elliott Waves Report on the War on Cash .................................................................................................................. 827
WAR ON CASH The "War On Cash" Migrates To Switzerland ............................................................................................................... 832
WAR ON CASH Chase Joins the War on Cash ....................................................................................................................................... 835
WAR ON CASH Largest Bank In America Joins War On Cash ............................................................................................................... 837
WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban .......................................................................................................... 839
SWISS PEG ..................................................................................................................................................................................................... 843
SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .................................................................................................... 844

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SWISS PEG Swiss Peg Failure The Financial System Broke Last Week ............................................................................................ 846
SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ............................................................ 847
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 851
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 851
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 852
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 855
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 857
BOE - UK ................................................................................................................................................................................................................ 858
CHARTS OF NOTE ......................................................................................................................................................................................... 858
UK Sterling/ US Dollar Exchange Rate after UK Super Thursday ......................................................................................................... 858
UK Dissent within BOE Set to Continue ................................................................................................................................................... 858
RESEARCH OF NOTE .................................................................................................................................................................................... 859
UK - Neutral Report Leaves BOE on Track for February Liftoff .................................................................................................................. 859
UK - Did The Bank Of England Just Admit Financial Markets Aren't "Real"? ............................................................................................. 861
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 862
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 863
FED - US ................................................................................................................................................................................................................ 865
CHARTS OF NOTE ......................................................................................................................................................................................... 866
NEW-CHARTS Pace of Fed Hikes v 2-30 Yeild Curve v 2016 GDP Growth Expectations .................................................................... 866
CHARTS Fed Balance Sheet Trend Changes versus S&P 500 .............................................................................................................. 866
CHARTS Fed May Potentially Hike Rates When Liquidity Conditions Are Negative .............................................................................. 866
CHARTS Fed Tightening Periods versus US and World GDP Growth .................................................................................................... 868
CHARTS Federal Reserve Balance Sheet Trend Changes ..................................................................................................................... 868
CHARTS Long Term Rates Fell in the Last Tightening Cycle ................................................................................................................. 869
CHARTS Markets have been Pricing in a Fed Rate Liftoff Since 2009 ................................................................................................... 869
CHARTS Long Term Trend of 10Y UST .................................................................................................................................................. 869
CHARTS Likely Policy Support Levels by the Federal Reserve for a Falling S&P .................................................................................. 870
CHARTS Inflation Expectations versus Fed QE Easing Operations ....................................................................................................... 871
CHARTS Depth of US Treasury Markets Has Declined from Recent Highs ........................................................................................... 871
CHARTS China Dumping US Treasuries as Chinese Forex Reserves Fall ............................................................................................ 872
CHARTS US Defenses Down ................................................................................................................................................................... 873
CHARTS September Rate Hike Forecast History .................................................................................................................................... 874
CHARTS Only One Thing Can Stop the Fed from a September Rate Hike Emerging Market Weakness .......................................... 874
CHARTS Feds QE History versus UST 10 Year Yields .......................................................................................................................... 875
CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 875
CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 875
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 876
RESEARCH OF NOTE .................................................................................................................................................................................... 877
US MONETARY Why We Have Low Level Equilibria............................................................................................................................ 877
US MONETARY Crashing Inflation Expectations Suggest Imminent Launch Of QE4 ............................................................................. 879
US MONETARY Why Goldman Is Confident the Fed Will Wait To Hike Until December (At Least) ...................................................... 880
US MONETARY Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End of Debt Supercycle .............. 882
US MONETARY What Options Are Saying About A Possible September Rate Hike ............................................................................. 883
US MONETARY The Fed Is Scared To Raise Rates, Ron Paul Warns "Everything Is Too Vulnerable" ................................................ 885
US MONETARY Hilsenrath Warns Fed Is Out Of Ammo, "Policy Makers Resorting To Backup, Backup Plans" .................................. 886
US MONETARY China's Record Dumping Of US Treasuries Leaves Goldman Speechless ................................................................. 888
US MONETARY Fed Goes Looking For Evidence of Broken Treasury Market, Decides Everything Is Fine ......................................... 893
US MONETARY The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts ................................................................ 898
US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ....................................................... 898
US MONETARY - Audit the Fed Yellens Testimony ................................................................................................................................ 901
US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy .......................................................................... 910
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 913
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 916
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 919
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 921
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 923
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 929
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 930
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 932
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 934
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 937
CHARTS OF NOTE ......................................................................................................................................................................................... 937
JAPAN Japan Heads Back towards Deflation .......................................................................................................................................... 937
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 938
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 939
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 940
RESEARCH OF NOTE .................................................................................................................................................................................... 941
GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ................................................................. 941
GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game............................................................ 943
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 944
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 947
BOJ JAPAN ......................................................................................................................................................................................................... 949
CHARTS OF NOTE ......................................................................................................................................................................................... 949
NEW-JAPAN Japans NGDP, Tax Revenue, Expenditures and Bond Issuances ................................................................................... 949
NEW-JAPAN BOJs Balance Sheet of % of GDP .................................................................................................................................... 950

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JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 950


JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 951
JAPAN Japanese Trade Balance ............................................................................................................................................................. 952
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 952
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 953
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 953
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 953
JAPAN Real Wages Plummet as Financial Repression Takes Hold ....................................................................................................... 954
RESEARCH OF NOTE .................................................................................................................................................................................... 955
JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 956
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 958
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 961
JAPAN - No Way Out But to Expand the Monetary Base ........................................................................................................................... 963
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years....................................................................................................................................... 964
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................... 967
JAPAN - Some Policies Have Clearly Hit the Limit ..................................................................................................................................... 969
JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 970
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 975
JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 976
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 979
JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 980
PBOC CHINA ...................................................................................................................................................................................................... 982
CHARTS OF NOTE ............................................................................................................................................................................................... 982
NEW-CHARTS China Needs 6.5 Units of New Debt to Create One Unit of Nominal GDP .................................................................... 982
NEW-CHARTS Chinas Non-Gold International Reserves versus CNYUSD .......................................................................................... 982
NEW-CHARTS Chinas Non-Gold International Reserves versus Merchandise Trade Surplus ............................................................. 983
NEW-CHARTS Without Chinese Restructuring the Engine of Global Investment Will Not Return ......................................................... 983
NEW-CHARTS USDCNY Developments ................................................................................................................................................. 983
CHARTS Chinese Debt at 282% of GDP in 2014 .................................................................................................................................... 984
CHARTS Change in Chinese Bank Assets Since Q4 2008 Compared to Big 4 Central Banks .............................................................. 986
CHARTS Chinas Capital Inflow / Outflow ................................................................................................................................................ 986
CHARTS Chinas Falling Holdings of US Treasuries ............................................................................................................................... 987
CHARTS Cumulative % Increases in Pork Since the Start of the Cycle .................................................................................................. 987
CHARTS Severe Supply of Food Staple - Pork ....................................................................................................................................... 988
CHARTS Chinese CPI (Minus Pork) ........................................................................................................................................................ 989
CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ......................................................................... 989
CHARTS China Reduces Bank Reserve Ratio ........................................................................................................................................ 989
CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ........................................................................................... 990
CHARTS Falling Chinese Government Revenue Growth ........................................................................................................................ 992
CHARTS Falling National New Residential Housing Starts ..................................................................................................................... 992
CHARTS China and Asia Residential Property Tracking US Housing Bubble ........................................................................................ 993
CHARTS Real Chinese Rates versus Cuts .............................................................................................................................................. 993
RESEARCH OF NOTE .................................................................................................................................................................................... 994
NEW-CHINA MONETARY - Daiwa: "Round Two Of China Capital Outflows Is About To Begin" ............................................................. 994
NEW-CHINA MONETARY - PBOC to continue with loose policy ............................................................................................................. 996
CHINA MONETARY - Devaluation Stunner: China Has Dumped $100 Billion In Treasuries In The Past Two Week .............................. 996
CHINA MONETARY - China's Record Dumping Of US Treasuries Leaves Goldman Speechless ........................................................... 998
CHINA MONETARY - Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts ......................... 1003
CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says .................................... 1009
CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ..................................................................................... 1011
CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears ................................................................................................ 1013
ECB EU ............................................................................................................................................................................................................. 1019
CHARTS OF NOTE ....................................................................................................................................................................................... 1019
NEW-CHARTS ECB Purchase Program (Excl Public Sector) ............................................................................................................... 1019
CHARTS EU QE Results An Abject Failure ........................................................................................................................................ 1020
CHARTS Welcome to the EUs NIRP .................................................................................................................................................. 1020
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1021
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1021
CHARTS UK & German Total Return Indices ........................................................................................................................................ 1022
CHARTS ECBs Dilemma of Digging Up Enough Debt .......................................................................................................................... 1022
CHARTS Nearly $2T European Nonds Trading With Negative Yields .................................................................................................. 1023
CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ............................................................... 1023
CHARTS The Fastest Growing Asset Class NIR Products ................................................................................................................. 1024
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ......................................................................................................... 1025
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU ............................................................................................................ 1026
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 .............................................................................................................. 1026
CHARTS Euro-Area Inflation Expectations Decline ............................................................................................................................... 1027
CHARTS Euro-Area Private Sector Loan Creation ................................................................................................................................ 1028
CHARTS Euro-Area Money Supply, Private Sector Lending Growth .................................................................................................... 1028
CHARTS Euro-Area 10 Yr Sovereign Bond Yields ................................................................................................................................ 1029
CHARTS Slovenia May BE the Next EU Debt Hotspot .......................................................................................................................... 1029
CHARTS Spain & Portugal NPL ............................................................................................................................................................. 1030
CHARTS ECBs Turn to Expand Its Balance Sheet ............................................................................................................................... 1031
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................. 1031
CHARTS Expect Major ECB Policy Announcement in Q2 2014 ............................................................................................................ 1032
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................. 1033

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RESEARCH OF NOTE .................................................................................................................................................................................. 1034


EU MONETARY - Draghi Failed: European Inflation Expectations Slide To Pre-QE Level ..................................................................... 1035
EU MONETARY - NIRP Is A Flawed Economic Concept ......................................................................................................................... 1036
EU MONETARY - NIRP ............................................................................................................................................................................. 1038
EU MONETARY NIRP - Yield scarce as the world turns negative ........................................................................................................ 1042
EU MONETARY - Draghi Key Statements ................................................................................................................................................ 1045
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................. 1046
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action .................................................................................... 1048
EU MONETARY - Euro-Area Data Deterioration Points toward QE ......................................................................................................... 1050
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down .......................................................................... 1052
MACRO MONETARY INFLATION ................................................................................................................................................................... 1054
CHARTS OF NOTE ............................................................................................................................................................................................. 1054
NEW-CHARTS Inflation Breakevens in Europe and US ........................................................................................................................ 1054
CHARTS US 5Y5Y Forward Swap ......................................................................................................................................................... 1054
CHARTS The Fall of Hyperinflation & the Rise of Deflation ................................................................................................................... 1055
CHARTS Falling US Consumer Price Index........................................................................................................................................... 1055
CHARTS Global Consumer Prices are Rising Significantly ....................................................................................................................... 1057
CHARTS Global Country Inflation Rates ................................................................................................................................................ 1057
CHARTS Two Worlds if Inflation EM and DM ..................................................................................................................................... 1057
CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1059
RESEARCH OF NOTE .................................................................................................................................................................................. 1060
INFLATION Martin Armstrongs Explanation of Monetary Inflation ........................................................................................................ 1060
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ........................................... 1062

GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1064


GEO-ECONOMIC INDEX .................................................................................................................................................................................... 1064
NEW-BREXIT Too Close To Call...................................................................................................................................................................... 1065
CHARTS OF NOTE ....................................................................................................................................................................................... 1065
NEW-BREXIT Arguments For and Against Brexit .................................................................................................................................. 1065
NEW-BREXIT Likelihood Score .............................................................................................................................................................. 1065
NEW-BREXIT Current Polls.................................................................................................................................................................... 1066
NEW-BREXIT Sterling & Gilt Reaction ................................................................................................................................................... 1068
NEW-BREXIT From A Trade Perspectiv, Britain Needs EU More ......................................................................................................... 1069
NEW-BREXIT EU Over-Regulated Compared to Britain ....................................................................................................................... 1069
NEW-BREXIT UKs Top 10 Export Markets ........................................................................................................................................... 1070
RESEARCH OF NOTE .................................................................................................................................................................................. 1070
NEW-BREXIT The UK's EU referendum: All you need to know ............................................................................................................ 1070
NEW-BREXIT A background guide to Brexit from the European Union 02-24-16 The Economist ..................................................... 1079
NEW-TTIP Trans-Atlantic Trade & Investment Partenrship .............................................................................................................................. 1086
CHARTS OF NOTE ....................................................................................................................................................................................... 1086
NEW-TTIP Who Lobbies the Most - By Industry ................................................................................................................................... 1086
NEW-TTIP Who Lobbies the Most Private versus Public ................................................................................................................... 1086
NEW-TTIP Who Lobbied Hardest for TTIP in EU? ................................................................................................................................ 1087
NEW-TTIP FDI Inflows ............................................................................................................................................................................ 1088
NEW-TTIP Business Sectors Driving TTIP Most Behind Closed Door Meetings ............................................................................. 1088
RESEARCH OF NOTE .................................................................................................................................................................................. 1089
NEW-TTIP The Transatlantic Trade and Investment Partnership (TTIP) .............................................................................................. 1089
NEW-TTIP What is TTIP? And six reasons why the answer should scare you ..................................................................................... 1090
NEW-TTIP Greenpeace Netherlands releases the secret TTIP negotiation documents ....................................................................... 1092
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1094
CHARTS OF NOTE ....................................................................................................................................................................................... 1094
NEW-CHINA LIQUIDITY US GDP v Chinas GDP ................................................................................................................................. 1094
NEW-CHINA LIQUIDITY Chinese Bank Loans v GDP .......................................................................................................................... 1094
NEW-CHINA LIQUIDITY Chinese Deposits v M2 Money Supply .......................................................................................................... 1095
NEW-CHINA LIQUIDITY Balance of Payments ..................................................................................................................................... 1095
NEW-CHINA LIQUIDITY Cumulative $4T in FX Reserves Change Between 1982-2014 ..................................................................... 1096
NEW-CHINA LIQUIDITY A 20% RRR Takes $4T to $22T in Deposits ................................................................................................. 1096
NEW-CHINA LIQUIDITY The Loser: US Manufacturing -- The Winner: International Banking ............................................................ 1097
NEW-CHINA LIQUIDITY The Big Driver of Chinese GDP = Direct Investment .................................................................................... 1097
NEW-CHINA LIQUIDITY Money Flows Into China not Out. .................................................................................................................. 1098
NEW-CHINA LIQUIDITY Chinas Jobs Strategy Delivered 350M Jobs Since 1980 ........................................................................... 1098
NEW-CHINA LIQUIDITY Investment (Gross Fixed Capital Formation) from $92B to $4.6T Created Jobs .......................................... 1099
NEW-CHINA LIQUIDITY Investment Went Into Construction (Ghost Cities and Malls) ........................................................................ 1099
NEW-CHINA LIQUIDITY Global Economy Too Weak To Absorb Chinese Surplus (Production-Consumption) .................................. 1100
NEW-CHINA LIQUIDITY Chinas Hard Landing Now Underway ........................................................................................................... 1100
CHINA LIQUIDITY Chinese Reserves Have Fallen Steadily Since the Completion of US TAPER ...................................................... 1101
CHINA LIQUIDITY Chinese Reserve Total and Monthly Change.......................................................................................................... 1102
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1102
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1104
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1104
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1105
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1105
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1106
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1106
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1107

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CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1108
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1108
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1109
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1109
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1110
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1111
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1111
RESEARCH OF NOTE .................................................................................................................................................................................. 1113
CHINA LIQUIDITY - PBOC Injects Massive $60 Billion Liquidity - Most In 3 Years; China Stocks, Yuan Drop ...................................... 1113
CHINA LIQUIDITY - "China 2016 Is US 2008" Felix Zulauf Warns "The Outcome of A Major Yuan Devaluation Would Be Disastrous"
.................................................................................................................................................................................................................... 1115
CHINA LIQUIDITY - Pressures on the Yuan Held in Check by Reserve Currency Depletion .................................................................. 1119
CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls ........................................................ 1121
CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio ............................................................................ 1125
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1127
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1128
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1129
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1131
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1132
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1133
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1136
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1138
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1141
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1142
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1143
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1146
CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1151
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1154
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1156
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1157
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1159
CHARTS OF NOTE ....................................................................................................................................................................................... 1159
CURRENCY WARS Falling US$ PEGS of Oil Exporter Nations ........................................................................................................... 1159
RESEARCH OF NOTE .................................................................................................................................................................................. 1160
CURRENCY WARS - Square Holes and Currency Pegs ......................................................................................................................... 1160
CURRENCY WARS - Pegs under pressure - Currency pegs are still in fashion, but some are creaking................................................ 1163
CURRENCY WARS - Another Petro-State Throws In the Towel: The Last Nail In The Petrodollar Coffin .............................................. 1166
CURRENCY WARS - A Currency War That Few Economists And Analysts Notice, Much Less Understand......................................... 1167
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1171
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1176
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1177
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1179
EUROPE - Euro Exposed .............................................................................................................................................................................. 1179
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1181
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1182
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1182
SWITZERLAND - No Choice ......................................................................................................................................................................... 1182
SINGAPORE - Hot Money ............................................................................................................................................................................. 1183
UK- Pound Joins War .................................................................................................................................................................................... 1184
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1185
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued ........................................................................................................ 1185
CHARTS OF NOTE ....................................................................................................................................................................................... 1185
ENERGY Islamic versus Qatar-Turkey Pipeline..................................................................................................................................... 1185
ENERGY Sunni versus Shiite In the Middle East ................................................................................................................................... 1186
ENERGY The Iranian Encirclement Strategy....................................................................................................................................... 1186
ENERGY Drowning in Oil Over Supply .................................................................................................................................................. 1188
ENERGY Rig Count Down But Not Production ...................................................................................................................................... 1188
ENERGY Saudi Crude Oil Production & Brent Price ............................................................................................................................. 1190
ENERGY World Liquids Percent of Production ...................................................................................................................................... 1190
ENERGY Interest Rates & Oil Prices in 2015 Dollars ............................................................................................................................ 1190
ENERGY Oil Production and CAPEX by Operating Environment 2014 ................................................................................................ 1191
ENERGY Global Drilling Intensity Will Increase ..................................................................................................................................... 1191
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 .................................................... 1192
ENERGY Breakeven for All Global Oil Projects ..................................................................................................................................... 1193
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1194
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1195
ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years .......................................................................................... 1196
ENERGY Falling Inflation Adjusted Gasoline Prices .............................................................................................................................. 1197
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ..................................................................................................... 1198
ENERGY US Shale Oil Breakeven Prices .............................................................................................................................................. 1200
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................. 1200
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ............................................................ 1201
ENERGY EM Oil Producers Being Crushed .......................................................................................................................................... 1201
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................. 1202
ENERGY Oil Supply / Demand and Price .............................................................................................................................................. 1203
RESEARCH OF NOTE .................................................................................................................................................................................. 1204

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SAUDI-IRAN-Iran, Saudi Arabia "Clash" Over Syria At "Secret", Closed-Door Meeting In Davos ....................................................... 1204
SAUDI-IRAN- Another Petro-State Throws In The Towel: The Last Nail In The Petrodollar Coffin ..................................................... 1206
SAUDI-IRAN- Mainstream Media Finally Admits Syrian Conflict Is US-Russia Proxy War ................................................... 1208
SAUDI-IRAN- Russia and Iran Moving To Corner The Mideast Oil Supply .......................................................................................... 1213
SAUDI-IRAN- Migrant Crisis & Syria War Fueled By Competing Gas Pipelines ...................................................................... 1216
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .................................................... 1220
RUSSIA- OPEC Presents: QE4 And Deflation ...................................................................................................................................... 1223
RUSSIA Energy War ........................................................................................................................................................................... 1225
PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ....................................................................... 1228
PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? ............................................................................ 1232
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ........................... 1237
PETRODOLLAR Collapsing PetroDollar Foundation ......................................................................................................................... 1243
UKRAINE - Pulled between EU v Russia .............................................................................................................................................. 1247
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................. 1247
UKRAINE - Pulled between Economic Inequality Factors ..................................................................................................................... 1248
UKRAINE - Pulled between the Global Military Balance ....................................................................................................................... 1249
UKRAINE - Pulled by Global Financial Markets .................................................................................................................................... 1250
UKRAINE - A Deep State Analysis ........................................................................................................................................................ 1253
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ..................................................................................................... 1257
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ............................................................... 1258
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield .................................................... 1259
ENERGY - The Oil Price Decline ........................................................................................................................................................... 1261
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................. 1268
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1270
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1273
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1278
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1279
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1281
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1284
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1287
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1291
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1296
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1303
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1306
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1308
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1310
EMERGING & FRONTIER MARKETS - Emerging Markets Growth, Credit & Forex Problems - Fx Plummet ................................................ 1315
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1315
CHARTS OF NOTE ....................................................................................................................................................................................... 1319
CHARTS MSCI Emerging Markets Start to Year % - Worst Ever .......................................................................................................... 1319
CHARTS FX markets are collapsing as traders are betting policy makers will not continue defending exchange rates ...................... 1319
CHARTS Premium investors demand to hold EM debt over U.S. Treasuries widened to 481 ............................................................. 1320
CHARTS Capital Controls Arrive In Emerging Markets China & Azerbiajan ...................................................................................... 1320
CHARTS EM Credit Outstanding in US Dollars Increased $17.7T Since 2006 ..................................................................................... 1321
CHARTS EM Credit Has Expanded Dramatically Compared to Developed Markets ............................................................................ 1322
CHARTS Emerging Market 10 Year Shift in Share of World GDP 2004 to 2014 ............................................................................... 1323
CHARTS Emerging Market Fx in Freefall ............................................................................................................................................... 1323
CHARTS Total Economy Debt as a % of GDP India, Poland, Ireland and Spain .............................................................................. 1323
CHARTS Global FX Reserves 2000 versus 2005 versus 2015 .......................................................................................................... 1324
CHARTS GDP per Capita Income .......................................................................................................................................................... 1325
CHARTS EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 .................................................................................... 1326
CHARTS Brazil in or Near a Serious Recession .................................................................................................................................... 1326
CHARTS Collapsing Currencies in Columbia and Chile ......................................................................................................................... 1327
CHARTS The Unwind of EM Credit, Chinas Leverage and US Monetary Easing ................................................................................ 1328
CHARTS The Tale of Two Economies Chile versus Portugal ............................................................................................................ 1329
CHARTS Emerging & Developed Economy Growth Rates Converge ................................................................................................... 1330
CHARTS Emerging Market Currency Sell-Off ........................................................................................................................................ 1330
CHARTS Emerging Markets Stocks versus Developed Market Stocks ................................................................................................. 1331
CHARTS Investors Are Pulling Money From Developing Markets ........................................................................................................ 1332
CHARTS Valuation of EM Stocks is Falling Against Developed Markets .............................................................................................. 1332
CHARTS EM Capital Outflows Surge Towards $1T .............................................................................................................................. 1333
CHARTS Developing Nation Currencies Plunge After Chinas Devaluation Rattles Markets ............................................................... 1333
CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ........................................................................... 1335
CHARTS Wide Spread Emerging Market Capital Out Flows ................................................................................................................. 1336
CHARTS Emerging Market Debt versus GDP - 2013 ............................................................................................................................ 1337
CHARTS Emerging Market Resilience Indicator Changes .................................................................................................................... 1337
CHARTS BRIC Countries Responsible for 43% of Global Growth ........................................................................................................ 1338
CHARTS BRIC & Emerging Market Inflation Rates ............................................................................................................................... 1338
CHARTS Emerging Market Default Probability ...................................................................................................................................... 1339
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions ................................................ 1339
CHARTS Emerging Market Outflows...................................................................................................................................................... 1340
CHARTS Emerging Market Outflows -2 ................................................................................................................................................. 1340
CHARTS Developed versus Emerging Equity Markets 1990-2014 .................................................................................................... 1341
CHARTS Total GEM Flows..................................................................................................................................................................... 1341
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................. 1342
RESEARCH OF NOTE .................................................................................................................................................................................. 1343

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EMERGING MARKETS - Emerging Markets Running Scared with Capital Controls ............................................................................... 1343
EMERGING MARKETS - For Emerging Markets, It Is Now Worse Than the Asian Financial Crisis ....................................................... 1344
EMERGING MARKETS - Be Very Afraid: "The 3 EM Debacles" Loom, HSBC Warns ............................................................................ 1347
EMERGING MARKETS - Emerging Market Currencies To Crash 30-50%, Jen Says ............................................................................. 1350
EMERGING MARKETS - Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse .............................. 1352
EMERGING MARKETS - Emerging markets: Redrawing the world map ................................................................................................. 1358
EMERGING MARKETS - Lost Decade in Emerging Markets: Investors Already Halfway There ............................................................ 1365
EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ..................................................................................... 1370
EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" .............................................................. 1373
EMERGING MARKETS - Emerging markets: The great unraveling ......................................................................................................... 1375
EMERGING MARKETS - Moodys warns on EM dollar finance costs ...................................................................................................... 1380
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................. 1381
EMERGING MARKETS - Crisis Redux? ................................................................................................................................................... 1382
EMERGING MARKETS - Losing Their Punch ....................................................................................................................................... 1387
EMERGING MARKETS - Risk-On!........................................................................................................................................................... 1389
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................. 1390
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1392
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................. 1393
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1399
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1404
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ................................................... 1408
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain ........................................ 1411
US$ RESERVE STATUS & ERODING INFLUENCE.......................................................................................................................................... 1414
RESEARCH WE FOLLOWED DE=DOLLARIZATION ............................................................................................................................ 1414
CHARTS OF NOTE ....................................................................................................................................................................................... 1417
DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ............................................... 1417
DE-DOLLARIZATION - AIIBs Founding Members ................................................................................................................................... 1417
DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ................................................................... 1418
DE-DOLLARIZATION - AIIB Infrastructure Investment ............................................................................................................................. 1419
DE-DOLLARIZATION - The Rise & Fall of Modern Empires .................................................................................................................... 1419
RESEARCH OF NOTE .................................................................................................................................................................................. 1421
DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund..................................................................................... 1421
DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ....................................................................................... 1425
DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ....................................................... 1427
DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ............................................. 1429
DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .................................................................. 1431
DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe .................................................... 1433
DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ..................................... 1433
DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? ..................................................................................................... 1437
DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities .................................... 1439
DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar?..................................................................................... 1440
RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ................................................................ 1441
RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system.......................... 1443
RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ............................................................... 1445
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ..................... 1446
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................. 1447
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ..................................................................... 1448
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order .......................... 1449
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar .................................................................... 1452
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ...................................................... 1453
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar ................................................................................................ 1455
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries .................................................... 1456
GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1458
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1458
CHARTS OF NOTE ....................................................................................................................................................................................... 1460
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1460
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1460
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1462
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1462
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1463
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1463
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1464
RESEARCH OF NOTE .................................................................................................................................................................................. 1466
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1466
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1467
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1470
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1472
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1474
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1476
DEBT Growth of Financial Services ....................................................................................................................................................... 1477
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1477
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1479
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1481
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1482
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1482

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CHARTS OF NOTE ....................................................................................................................................................................................... 1483


CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1483
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1483
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1484
CHARTS Food Importers ........................................................................................................................................................................ 1484
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1485
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1486
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1486
CHARTS CRB Food Index One Year .................................................................................................................................................. 1488
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1489
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1490
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1491
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1491
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1493
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1494
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1495
CHARTS Coffee Futures ........................................................................................................................................................................ 1495
CHARTS Lean Hog Futures ................................................................................................................................................................... 1496
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1496
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1497
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1497
RESEARCH OF NOTE .................................................................................................................................................................................. 1498
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1498
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1501
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1502
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1504
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1504
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1507
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1510
CYBER SPYING ............................................................................................................................................................................................ 1511

REGIONAL ........................................................................................................................................... 1512


EU ONCE UNORTHODOX NEGATIVE RATES NOW INCREASINGLY ORTHODOX!........................................................ 1513
EU......................................................................................................................................................................................................................... 1513
CHARTS OF NOTE ....................................................................................................................................................................................... 1516
NEW-CHARTS Negative Interest Rates on 40% of Outstanding European Government Bonds ......................................................... 1516
NEW-CHARTS Once Unorthodox Negative Rates Now Increasingly Orthodox ................................................................................... 1516
NEW-CHARTS EU Savings Rates Surge in Countries With NIRP ........................................................................................................ 1517
NEW-CHARTS 1 Million Syrian Refugee Arrivals By Land & Sea in 2015 ............................................................................................ 1517
NEW-CHARTS Main Migrant Route to Germany ................................................................................................................................... 1518
NEW-CHARTS Alternative Migrant Route to Europe ............................................................................................................................. 1519
CHARTS Many Migrant Routes Being Taken ........................................................................................................................................ 1520
CHARTS Many Migrant Routes Being Taken- Air, Land and Sea ......................................................................................................... 1521
CHARTS Migrants Entering Hungary ..................................................................................................................................................... 1522
CHARTS Schengen Non Shengen EU Countries ............................................................................................................................... 1523
CHARTS Schengen Non Shengen EU Countries-2 ............................................................................................................................ 1523
CHARTS Migrant Detentions .................................................................................................................................................................. 1524
CHARTS German Asylum Applications ............................................................................................................................................... 1525
CHARTS Euro Area and EU28 Unemployment Rates ........................................................................................................................... 1526
CHARTS Unemployment Rates by Country Seasonally Adjusted ...................................................................................................... 1527
CHARTS Inflation Tracks Commodity Prices .......................................................................................................................................... 1527
CHARTS Tracing EU Dis-Inflation towards Deflation .............................................................................................................................. 1528
CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ......................................................................................... 1530
CHARTS Eurozone GDP Since 1999 ..................................................................................................................................................... 1530
CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" .................................................... 1531
CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ..................................................... 1532
CHARTS "Over 1/2 of all government bonds yield less than 1%." ......................................................................................................... 1533
CHARTS A weaker Euro has been good for the STOXX 600 ................................................................................................................ 1534
CHARTS Eurozone equity inflows continue to rise ................................................................................................................................ 1535
CHARTS YTD flows into European equity funds ................................................................................................................................... 1535
CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ........................................................................................... 1535
CHARTS Negative Yields Have Become the New Norm in the Euro area .......................................................................................... 1536
CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ............................................................... 1536
CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. .................................................................................................................... 1537
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre..................................................................................... 1537
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ........................................................................................ 1538
CHARTS Eurozone is the Biggest Drag on Global Profits ..................................................................................................................... 1538
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ....................................................................... 1539
CHARTS EU PMIS Rolling Over ............................................................................................................................................................ 1540
CHARTS Eurozone Banks Too Big To Be Bailed Out! .......................................................................................................................... 1541
CHARTS Eurozone Area Consumer Confidence May Be Misleading ................................................................................................... 1542
CHARTS Eurozone GDP & Recession Pattern ...................................................................................................................................... 1542
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1543
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1543
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1544

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CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1545


CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1546
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1546
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1547
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1548
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1548
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1549
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1549
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1550
CHARTS EU Confidence ........................................................................................................................................................................ 1551
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1552
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1553
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1553
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1554
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1555
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1556
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1557
CHARTS - EU Area Weakness ................................................................................................................................................................. 1558
CHARTS - EU Area GDP ........................................................................................................................................................................... 1559
CHARTS - EU Area PMI ............................................................................................................................................................................ 1560
CHARTS - EU Area PMI ............................................................................................................................................................................ 1561
CHARTS - EU Real Rates ......................................................................................................................................................................... 1562
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1563
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1564
CHARTS - EU PMI ..................................................................................................................................................................................... 1564
CHARTS - EU CPI ..................................................................................................................................................................................... 1566
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1567
CHARTS - Europe's "Core" Problem is France .................................................................................................................................... 1568
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ........................................................................... 1571
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................. 1572
CHARTS - EU Credit Downgrades, France and UK On Tap ................................................................................................................... 1574
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1576
CHARTS - Dangerous Delusional Divergences .................................................................................................................................... 1578
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1579
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1580
CHARTS - Eurozone Misery Indices Never Been Higher ..................................................................................................................... 1581
CHARTS - Euro Currency .......................................................................................................................................................................... 1583
RESEARCH OF NOTE .................................................................................................................................................................................. 1589
RESEARCH Migrant Crisis Sparks Balkan Border Battles As EU Buckles Under Overwhelming Refugee Flow ................................ 1589
RESEARCH Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU ........................................................................... 1593
RESEARCH "The End of The EU": Merkel's "Heroic" Refugee Response May Destroy Union, Slovakia Warns ................................ 1594
RESEARCH Europe's Refugee Crisis "Out of Control", Hungary PM Rages "This Is A German Problem, Not An EU Problem" ....... 1601
RESEARCH The Broken Model of the Eurozone ................................................................................................................................... 1604
RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................. 1606
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ............................................................................ 1607
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1609
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1609
RESEARCH ECB Rate Decision .......................................................................................................................................................... 1611
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1614
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1615
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................. 1617
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ........................................................................... 1619
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1621
RESEARCH Emerging Markets Aggravates Festering Banking Problems .................................................................................... 1622
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ...................................................................... 1624
RESEARCH - EFSF Downgraded to AA+ ............................................................................................................................................... 1626
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1627
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece .............................................................. 1630
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1632
PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1632
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1636
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................. 1638
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1644
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1648
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1651
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1652
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ........................................................................................ 1653
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1660
UK WHAT DOES BREXIT MEAN TO THE UK? .............................................................................................................................................. 1662
CHARTS OF NOTE ............................................................................................................................................................................................. 1662
NEW-CHARTS - UK Brexit Polls ............................................................................................................................................................ 1662
NEW-CHARTS - UK Current Account Deficit & Sterling Trade-Weighted Exchange Rate ................................................................... 1662
NEW-CHARTS - UK Since the Post GFC Stimulus Recovery, A Steady GDP Decline ......................................................................... 1663
NEW-CHARTS - UK Steady Long Term GDP Erosion .......................................................................................................................... 1663
NEW-CHARTS - UK Net Trade an Economic Drag ............................................................................................................................... 1664
NEW-CHARTS - UK US versus UK Productivity Growth ....................................................................................................................... 1665

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NEW-CHARTS - UK Global Leader in Financial Services Net Exports ................................................................................................. 1665


NEW-CHARTS - UK Global Leader in Exports as % of GDP ................................................................................................................ 1666
CHARTS - UK - U.K. Productivity growth remains dismal......................................................................................................................... 1667
CHARTS - UK - The UK's increasingly polarized politics .......................................................................................................................... 1667
CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. .................... 1668
CHARTS - UK The UK's financial sector has the highest exposure to China ........................................................................................ 1668
CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years ..... 1669
CHARTS - UK - Deficit One of Worst of Developed Economies ............................................................................................................... 1669
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................. 1670
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1671
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1672
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1672
th
CHARTS - UK CPI Below Target for 7 Month ...................................................................................................................................... 1673
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1674
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1674
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1675
CHARTS - UK GDP ................................................................................................................................................................................ 1676
CHARTS - UK Population Growth .......................................................................................................................................................... 1676
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1677
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1678
CHARTS - UK - Lending ............................................................................................................................................................................ 1679
CHARTS - UK - Unemployment ................................................................................................................................................................ 1680
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1681
CHARTS - UK - GDP ................................................................................................................................................................................. 1681
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1682
RESEARCH OF NOTE .................................................................................................................................................................................. 1683
NEW-RESEARCH The Brexit Delusion .................................................................................................................................................. 1683
NEW-RESEARCH Brexit: 5 Things Investors Need to Know ................................................................................................................ 1687
NEW-RESEARCH Brexit vote would affect UK's top credit score, says Standard & Poor's ................................................................. 1691
NEW-RESEARCH Mark Carney issues stark warning on global growth as storm clouds gather ......................................................... 1693
RESEARCH British General Threatens Military Coup If Corbyn Elected .............................................................................................. 1694
RESEARCH The End of Britain? Martin Armstrong On Jeremy Corbyn's Resurrection Of Marx ......................................................... 1696
RESEARCH What is Jeremy Corbyn's programme for government? .................................................................................................... 1699
RESEARCH What does Jeremy Corbyn stand for? Jeremy Corbyn's policies and views explained .................................................... 1705
RESEARCH Who is Jeremy Bernard Corbyn? ...................................................................................................................................... 1709
RESEARCH The City Of London Has Turned Britain into A "Civilized Mafia State" ............................................................................. 1714
RESEARCH What Remains of the UK Middle? ..................................................................................................................................... 1715
RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ..................................................................................................... 1716
RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading .................................. 1719
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................. 1722
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1724
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1727
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1728
UK - What you need to Know..................................................................................................................................................................... 1728
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1729
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1730
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1731
UK - Doomsday Debt Machine .................................................................................................................................................................. 1732
UK - QE Extension Coming ....................................................................................................................................................................... 1735
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1737
UK - Technically in a Depression ........................................................................................................................................................... 1738
ITALY POTENTIAL FOR ITALY TO FAIL & DRAG DOWN THE EUROOPEAN PROJECT .......................................................................... 1741
CHARTS OF NOTE ....................................................................................................................................................................................... 1742
NEW-CHARTS - ITALY Lack of Capital Expenditure Has Inevitably Lead to Italian Budget Shortfalls ................................................ 1742
NEW-CHARTS - ITALY Debt & NGDP Diverge ..................................................................................................................................... 1742
NEW-CHARTS - ITALY Italian Bank Assets versus NGDP ................................................................................................................... 1743
NEW-CHARTS - ITALY Italian Bank Loans Outstanding By Sector Households, Government & Non-Financial .............................. 1744
NEW-CHARTS - ITALY Italian Gross Investment versus France .......................................................................................................... 1744
NEW-CHARTS - ITALY Falling Real Labor Productivity Per Person Italy versus France .................................................................. 1745
NEW-CHARTS - ITALY Measuring Italian Bad Debt ............................................................................................................................. 1745
NEW-CHARTS - ITALY Italian Debt Maturity Profile w/ Implied Roll-Over and Estimated Deficits....................................................... 1746
NEW-CHARTS - ITALY Italian Interest Paid on the Public Debt ........................................................................................................... 1746
NEW-CHARTS - ITALY Target2 Liabilities Held By Banca dItalia ........................................................................................................ 1747
NEW-CHARTS - ITALY Marketable Securities Held by Banca dItalia .................................................................................................. 1747
NEW-CHARTS - ITALY Italian Real Annual Gross Wages .................................................................................................................... 1748
NEW-CHARTS - ITALY Italian Government Gross and Net Debt Comparisons as % of NGDP .......................................................... 1749
CHARTS - ITALY Non-Performing Loans by Region ............................................................................................................................. 1750
CHARTS - ITALY Gross Italian Impaired Loans..................................................................................................................................... 1751
CHARTS - ITALY Italian Government Debt ............................................................................................................................................ 1751
CHARTS - ITALY Banks Non-Performing Loans .................................................................................................................................. 1752
CHARTS - ITALY Quarterly GDP Growth .............................................................................................................................................. 1753
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ............................................................................................................... 1753
CHARTS - ITALY Italian Unemployment ................................................................................................................................................ 1755
CHARTS - ITALY Italian Core Inflation ................................................................................................................................................... 1755
CHARTS - ITALY Italian Industrial Porduction ....................................................................................................................................... 1756
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1757

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CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1758


CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1758
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1759
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1760
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1761
RESEARCH OF NOTE .................................................................................................................................................................................. 1762
NEW-RESEARCH How Italy Will Fail And Drag Down The European Project ..................................................................................... 1762
RESEARCH Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable"........... 1773
RESEARCH Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis 09-02-15 Zero Hedge ................ 1776
RESEARCH Italy Non-Performing Loans Hit A New Record High ..................................................................................................... 1781
RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low ............................................................................. 1786
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ..................................................................................... 1788
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1792
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1794
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1798
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1798
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................. 1800
ITALIAN ELECTION - Message Given By the People ............................................................................................................................ 1802
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1806
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!........................................................................... 1809
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................. 1810
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................. 1812
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................. 1815
FRANCE HOLLANDE SAYS FRANCE IN STATE OF ECONOMIC EMERGENCY AS STATE OF EMERGENCY ENSHRINED INTO
CONSTITUTION .................................................................................................................................................................................................. 1817
CHARTS OF NOTE ....................................................................................................................................................................................... 1817
CHARTS FRANCE Total Net Government Liabilities .......................................................................................................................... 1817
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. ........................................................ 1817
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ........................................................................................................... 1818
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ....................................................................... 1818
CHARTS FRANCE French Job Seekers ............................................................................................................................................. 1819
CHARTS FRANCE Inflation Expectations ........................................................................................................................................... 1819
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1820
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1820
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1821
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1822
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1822
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1823
CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1824
CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1825
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1826
CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1827
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1828
RESEARCH OF NOTE .................................................................................................................................................................................. 1829
NEW-RESEARCH Hollande says France in state of economic emergency .......................................................................................... 1829
NEW-RESEARCH France Just Enshrined Its "State Of Emergency" In the Constitution ..................................................................... 1829
NEW-RESEARCH France Changes Constitution to Protect "Emergency" Police Powers from Court Challenges .............................. 1830
NEW-RESEARCH France's Far-Right Party Calls For Nation To "Re-Arm Itself", Revoke Muslims' Passports .................................. 1832
RESEARCH Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction in Debt Burden ................. 1833
RESEARCH When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) ................................. 1837
RESEARCH Economic Malaise Sparks Political Crisis in France ......................................................................................................... 1838
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1840
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1842
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1842
RESEARCH - Steady Breakdown Underway ......................................................................................................................................... 1845
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ................................................................................................... 1849
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1851
FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ..................................................... 1851
FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ....................................................................... 1851
FRANCE - What You Need to Know ......................................................................................................................................................... 1853
FRANCE - Key Indicators .......................................................................................................................................................................... 1854
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1858
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1861
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1862
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1864
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1865
FRANCE - Uncompetitive .......................................................................................................................................................................... 1866
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1868
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1870
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1872
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1873
GERMANY GERMAN FINANCE MINISTER WARNS OF FOUNDATION BEING LAID FOR AN ECONOMIC CRISIS ............................... 1875
CHARTS OF NOTE ....................................................................................................................................................................................... 1875
CHARTS - GERMANY GDP Growth ...................................................................................................................................................... 1875
CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ................................................................................. 1876
CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY .............................................................................................. 1877

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CHARTS - GERMANY Germany now leading the way back up in Euro Zone ...................................................................................... 1877
CHARTS - GERMANY On rolling bi-weekly basis, the 10-yr Bund yield rise of 43 bps is about as big as it gets in recent history ..... 1878
CHARTS - GERMANY - 1.179% 30 Year Bond Yield .............................................................................................................................. 1879
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ............................................................................................................ 1879
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1879
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close .............................................................................. 1880
CHARTS - GERMANY 10 Y European Yields........................................................................................................................................ 1881
CHARTS - GERMANY German Unemployment .................................................................................................................................... 1882
CHARTS - GERMANY German Core Inflation ....................................................................................................................................... 1882
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1882
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1883
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1883
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1884
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1884
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1885
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1886
RESEARCH OF NOTE .................................................................................................................................................................................. 1888
NEW-RESEARCH - German Finance Minister: Expansive policies may have laid foundation of next crisis........................................... 1888
NEW-RESEARCH - Furious Germans Stage Massive Anti-Islam Protest ............................................................................................... 1888
NEW-RESEARCH - Germany Has Repatriated Over 366 Tonnes Of Gold From New York And Paris .................................................. 1896
RESEARCH - U.S. Will Station New Nuclear Weapons in Germany against Russia ............................................................................... 1903
RESEARCH - Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience ............................... 1904
RESEARCH - Why Volkswagen Is Systematically Important For Germany And Europe ......................................................................... 1908
RESEARCH - Europe's Woes: The Escalating Cost to Germany ............................................................................................................. 1911
RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo .................................................................................................... 1914
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian.......................................................... 1915
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1918
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1920
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1921
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1925
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1926
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1930
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1931
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1932
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1934
IBERIAN PENINSULA LEFT BLOC ASCENDING AGAINST PORTUGALS SOCIALISTS ........................................................................... 1936
CHARTS OF NOTE ............................................................................................................................................................................................. 1936
CHARTS - SPAIN Spains Debt-to-GDP ................................................................................................................................................. 1936
CHARTS - SPAIN Spains & Portugals Unemployment Rate June 2015 Seasonally Adjusted ......................................................... 1936
CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ................................................................................... 1936
CHARTS - PORTUGAL Share of Lower Skilled Workers ....................................................................................................................... 1937
CHARTS - PORTUGAL Non-Performing Loans...................................................................................................................................... 1938
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ............................................................................................................... 1939
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................. 1939
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1940
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1941
RESEARCH OF NOTE .................................................................................................................................................................................. 1942
NEW-RESEARCH - Did Austerity Really Win Out in Portugal? ........................................................................................................... 1942
RESEARCH - Spain's Economic Recovery Is "One Big Lie" ............................................................................................................... 1942
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1946
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1949
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1953
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1955
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1956
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1958
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1958
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1959
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1960
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1961
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1966
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1968
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1971
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1972

CHINA: CAPITAL OUTFLOWS, FALLING FOREIGN DIRECT INVESTMENT & NOW US TREASURY SALES ................... 1981
CHINA .................................................................................................................................................................................................................. 1981
CHARTS OF NOTE ....................................................................................................................................................................................... 1981
NEW-CHARTS Chinas Hot Money Flows ............................................................................................................................................. 1981
NEW-CHARTS Capital Outflows and Falling Foreign Direct Investment ............................................................................................... 1982
NEW-CHARTS Exchange Rates & Foreign Exchange Reserves .......................................................................................................... 1982
NEW-CHARTS China & Belgium Treasury Holdings v-China FX Reserves ....................................................................................... 1983
NEW-CHARTS Belgiums US Treasury Holdings .................................................................................................................................. 1983
NEW-CHARTS China Containerized Freight Index ............................................................................................................................... 1984
NEW-CHARTS China Fiscal Spending Y-o-Y Increase ......................................................................................................................... 1984
NEW-CHARTS GDP Growth Steady At 6.9% in Q3 2015 ..................................................................................................................... 1985
NEW-CHARTS Debt Fueled But Not Much Growth ............................................................................................................................... 1985

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NEW-CHARTS Chinese New Loan Breakdown ..................................................................................................................................... 1986


NEW-CHARTS CAI Suggests China Economic Activity Below Reported GDP .................................................................................... 1986
NEW-CHARTS Chinese Bank NPLs Are Gradually Rising Every Quarter ............................................................................................ 1987
NEW-CHARTS A Tale of Two Economies ............................................................................................................................................. 1987
NEW-CHARTS Chinas Investment Share of GDP Higher than Ever in Japan or Korea ...................................................................... 1989
NEW-CHARTS China Treasury Holding Have Peaked But US Commercial Banks Taking Uo the Slack ............................................ 1990
NEW-CHARTS China 2014 Labor Force Declines First Time in at Least Two Decades ...................................................................... 1990
NEW-CHARTS Ponzi Finance: Chinese Firms Are Issuing More Debt Just to Pay Interest ................................................................. 1991
NEW-CHARTS Chinese Global Trade Index 2001 ............................................................................................................................. 1991
NEW-CHARTS Chinese Imports Exports ........................................................................................................................................... 1993
NEW-CHARTS Chinas Economic Weakness Wider Deeper In September ...................................................................................... 1994
CHARTS Sinking Li Keqiamg Index Contrasts With Stable GDP .......................................................................................................... 1995
CHARTS China is the Undisputed Engine of Global Growth ................................................................................................................. 1996
CHARTS China Has Been Consuming Mind-Boggling Amounts of Raw Materials ............................................................................... 1996
CHARTS Fixed Asset Investment & Consumption in China Y-o-Y Growth ........................................................................................ 1997
CHARTS Fixed Asset Investment Rises Least Since 2000 ................................................................................................................... 1998
CHARTS Economic Indicators Point to Lower Growth than the Headline Figures ................................................................................ 1998
th
CHARTS Gains of Real Estate Development Investment 1/10 of 2010 Pace ..................................................................................... 1999
CHARTS Foreign Exports to China as a % of GDP ............................................................................................................................... 1999
CHARTS Foreign Exports to China for Chinas Domestic Use as a % of GDP ..................................................................................... 2000
CHARTS China & Belgium Treasury Holdings vs China FX Reserves ................................................................................................. 2001
CHARTS Breakdown of Chinese Imports ............................................................................................................................................... 2002
CHARTS Chinese Imports Slow to 5 Year Low...................................................................................................................................... 2003
CHARTS Chinas Increasing Substitution of Imports for Made in China Products .............................................................................. 2003
CHARTS Developing Economies Exposure to Chinese Domestic Demand ......................................................................................... 2004
CHARTS Chinas GDP Monthly Tracker and Target .............................................................................................................................. 2005
CHARTS China Matters Less for US Consumers than for Stock Investors ........................................................................................... 2005
CHARTS Monthly Change in Foreign Reserves .................................................................................................................................... 2006
CHARTS Monthly FX Purchases ............................................................................................................................................................ 2007
CHARTS Chinas Estimated Productivity Growth Based on IP & Employment Shifts ........................................................................... 2007
CHARTS Shanghai Composite Index Profits% Y-o-Y ......................................................................................................................... 2008
CHARTS Corporate & Household Debt as % GDP ................................................................................................................................ 2008
CHARTS Weak Yuan Supported Much of 21-Year Export Rise to U.S. ................................................................................................ 2009
CHARTS Outstanding Balance of Margin Finance Shanghai Composite ........................................................................................... 2010
CHARTS Currency Rout Goes Global as Risk Seen of 50% Loss ........................................................................................................ 2010
CHARTS Yuan Trading Band ................................................................................................................................................................. 2011
CHARTS Historical Yuan FX Pattern...................................................................................................................................................... 2012
CHARTS China Plans to Spend Billions on Infrastructure in Pakistan .................................................................................................. 2013
CHARTS Chinas Proposed Silk Road Routes....................................................................................................................................... 2014
CHARTS China Activity Proxy & Official GDP........................................................................................................................................ 2015
CHARTS China Relaxes Commercial Bank Reserves ........................................................................................................................... 2016
CHARTS Chinese Balance of Payments ................................................................................................................................................ 2016
CHARTS Chinese Hot Money Flows ...................................................................................................................................................... 2017
CHARTS Falling Chinese Industrial Production ..................................................................................................................................... 2017
CHARTS Commodity Prices % Change Since July 2014 ...................................................................................................................... 2018
CHARTS Chinese Steel Demand, Iron Ore ............................................................................................................................................ 2018
CHARTS Chinese Rail Freight ............................................................................................................................................................... 2019
CHARTS Chinese Bank Assets versus US Bank Assets ....................................................................................................................... 2020
CHARTS Chinese Leverage and Underlying Nominal GDP .................................................................................................................. 2020
CHARTS Measures of Real & Nominal GDP Growth in China .............................................................................................................. 2021
CHARTS Chinese Total Debt & Breakdown........................................................................................................................................... 2021
CHARTS New Chinese Retail Stock Market Accounts .......................................................................................................................... 2022
CHARTS New Chinese Retail Stock Market Accounts-2 ....................................................................................................................... 2023
CHARTS Plummeting Chinese Consumer Confidence .......................................................................................................................... 2023
CHARTS Chinese PMI ............................................................................................................................................................................ 2024
CHARTS Chinese Exports versus Taiwan-Korea-Japan ....................................................................................................................... 2025
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 2026
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 2026
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 2027
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 2027
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 2028
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 2028
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 2029
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 2030
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 2030
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 2031
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 2032
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 2032
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 2032
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 2033
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 2034
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 2034
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 2035
CHARTS Industrial Output A Concern.................................................................................................................................................... 2035
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 2036
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 2037
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 2038

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CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 2039


CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 2039
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 2039
CHARTS Chinese Investment Peaking .................................................................................................................................................. 2040
CHARTS China Equity Flows ................................................................................................................................................................. 2041
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 2041
CHARTS Chinese Credit Growth ............................................................................................................................................................ 2042
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 2042
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 2043
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 2044
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 2045
CHARTS Slowing Steel Consumption .................................................................................................................................................... 2046
CHARTS Shadow Banking System ........................................................................................................................................................ 2046
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 2048
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 2049
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 2050
CHARTS - CHINA - PMI ............................................................................................................................................................................ 2051
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 2052
CHARTS - CHINA - GDP ........................................................................................................................................................................... 2053
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 2054
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 2055
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 2056
RESEARCH OF NOTE .................................................................................................................................................................................. 2057
NEW-CHINA "China Is A Monumental Doomsday Machine" Stockman Warns .................................................................................... 2057
NEW-CHINA China Faces Capital Flight Punishment ........................................................................................................................... 2060
NEW-CHINA China's Credit Conundrum................................................................................................................................................ 2064
CHINA China's Economy Continues To Crumble As Key Data Is Worst In 15 Years ........................................................................... 2066
CHINA China Outflows Said To Surpass A Staggering $300 Billion in Under Three Months ............................................................... 2069
CHINA China FX Reserve Drop Is Collateral Damage from Yuan Fall .................................................................................................. 2072
CHINA This Isn't 1994: China and That First U.S. Rate Hike ................................................................................................................ 2074
CHINA Expect Regional Ripples, Not Global Waves, From China Selloff ............................................................................................. 2076
CHINA China Risks Downward Spiral of Falling Markets, Growth......................................................................................................... 2077
CHINA China to the Rescue ................................................................................................................................................................... 2079
CHINA Yuan Devaluation Helps Attain U.S. Monetary Tightening Without Fed Rate Hikes ................................................................. 2080
CHINA Devaluation Promises to Boost Exports, But Adds Stability Risk .............................................................................................. 2082
CHINA Risk of a Vicious Circle on Market, Profit Declines .................................................................................................................... 2084

JAPAN: ABENOMICS GOES FULL IN WITH NIRP ............................................................................................................... 2086


JAPAN .................................................................................................................................................................................................................. 2086
CHARTS OF NOTE ....................................................................................................................................................................................... 2087
NEW-CHARTS - JAPAN Eire Similarities with Abenomics Period and 2007-2009 Crisis ..................................................................... 2087
NEW-CHARTS - JAPAN Nikkei 225 versus Kuroda's regime shift to NIRP .......................................................................................... 2087
NEW-CHARTS - JAPAN Largest unrealized losses on Margin Buying since Lehman ......................................................................... 2087
NEW-CHARTS - JAPAN Exports Y-o-Y versus USDJPY ...................................................................................................................... 2088
NEW-CHARTS - JAPAN Imports Y-o-Y ................................................................................................................................................. 2088
NEW-CHARTS - JAPAN BOJ Holding of Outstanding Japanese Debt ................................................................................................. 2089
NEW-CHARTS - JAPAN NIKKEI In Near Free-Fall ............................................................................................................................... 2089
NEW-CHARTS - JAPAN Japanese Bank Stocks Collapsing as they Follow JGB 2-10 Yield Curve Spread ....................................... 2090
NEW-CHARTS - JAPAN Japanese Buying of Foreign Stock ................................................................................................................ 2090
NEW-CHARTS - JAPAN BOJ Owns 52% of Entire Japanese ETF Market Assets ............................................................................... 2091
NEW-CHARTS - JAPAN GDP Q-o-Q Quintuple Dip Recession......................................................................................................... 2091
CHARTS - JAPAN Real Y-o-Y Cash Earnings with Abenomics ............................................................................................................ 2092
CHARTS - JAPAN BOJs Accelerating Purchases of Equity Funds Seen as Driving Force of Tokyo Share Markets ......................... 2092
CHARTS - JAPAN More than a Fourth of Japans Population is Over the Age of 65 ........................................................................... 2093
CHARTS - JAPAN IMFs Forecast of Japanese Population Growth...................................................................................................... 2093
CHARTS - JAPAN Prefectures with More Seniors Saw Steeper GDP Losses ..................................................................................... 2094
CHARTS - JAPAN Aging Population Will Continue Dragging Down Growth......................................................................................... 2094
CHARTS - JAPAN Fewer, Older Citizens Facing Larger Debt Burden ................................................................................................. 2095
CHARTS - JAPAN 20 Years Later China Follows Japans Pattern ....................................................................................................... 2096
CHARTS - JAPAN Financial Repression Gets Heavier in Japan .......................................................................................................... 2096
CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat ............................................................................................................... 2097
CHARTS - JAPAN 48 Month Trade Balance Deficit .............................................................................................................................. 2098
CHARTS - JAPAN Y-o-Y Contracting Imports ....................................................................................................................................... 2098
CHARTS - JAPAN Monetary Base versus USDJPY .............................................................................................................................. 2099
CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000......................................................................................... 2099
CHARTS - JAPAN 1.174% 30 Year Bond Yield ..................................................................................................................................... 2101
CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 2101
CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 2101
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 2102
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 2102
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 2103
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 2103
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 2104
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 2105
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 2106
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 2107

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CHARTS - JAPAN Demographics .......................................................................................................................................................... 2108


CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 2108
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 2109
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 2110
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 2111
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 2112
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 2112
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 2114
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 2114
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 2115
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 2115
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 2116
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 2117
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 2117
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 2118
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 2118
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 2119
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 2120
CHARTS - GDP Trend ............................................................................................................................................................................... 2120
CHARTS - CPI Trend ................................................................................................................................................................................. 2121
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 2121
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 2122
RESEARCH OF NOTE .................................................................................................................................................................................. 2123
NEW-JAPAN Safes Sell Out In Japan, 1,000 Franc Note Demand Soars As NIRP Triggers Cash Hoarding .............................. 2123
NEW-JAPAN "There Will Be Hyperinflation" Japanese Lawmaker Warns "Kuroda Got It Wrong" With NIRP .......................... 2125
NEW-JAPAN Abenomics Fails Miserably As Japan's Workers "Get Nothing" In 2015 ................................................................. 2128
JAPAN Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan ........................................................ 2131
JAPAN S&P Downgrades Japan from AA- To A+ On Doubts Abenomics Will Work - Full Text .................................................. 2134
JAPAN Elderly Japanese Population Hits New Record - Demographic Death-Rattle Continues ................................................ 2136
JAPAN Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!" ............................. 2140
JAPAN Abe Ratings Crash to Record Lows, Japan Lowers Minimum Voting Age ....................................................................... 2142
JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ................................................................................. 2145
JAPAN Japan Still the Worlds Top Credit? ....................................................................................................................................... 2146
JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target ........................................................................................ 2147
JAPAN Japanese trading firms to cut investments, sell assets ...................................................................................................... 2148
JAPAN The BOJ Ups The Ante ............................................................................................................................................................ 2150
JAPAN Is Japan Kaput? ........................................................................................................................................................................ 2151
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 2154
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2156
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 2159
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 2161
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2162
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 2164
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 2166
JAPAN - What the Japanese been Buying ............................................................................................................................................. 2167
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 2169
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 2172
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 2173
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 2174
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 2176
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 2177
JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 2180
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 2182
JAPAN - What You Need to Know............................................................................................................................................................. 2184
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 2187
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 2187
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 2191
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 2192
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 2193
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 2194
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 2198
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 2200
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 2203
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 2204
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 2206
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 2207
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 2208
JAPAN - Yen Devaluation ........................................................................................................................................................................ 2209
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 2210
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 2212

EMERGING MARKETS PROBLEMS IN EM & BRAZIL....................................................................................................... 2214


EMERGING MARKETS ....................................................................................................................................................................................... 2214
CHARTS OF NOTE ....................................................................................................................................................................................... 2214
NEW-CHARTS EM Wave is the Third Wave in the Global Financial Crisis (GFC) ............................................................................... 2214
NEW-CHARTS Countries Scaled to the Un sustainablilty of Their Debt ............................................................................................... 2214

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NEW-CHARTS Emerging Market CAPEX A Dominate Part of their Economies ................................................................................... 2215
NEW-CHARTS Estimated Assets in Sovereign Wealth Funds versus Oil & Gas Related -1 ................................................................ 2216
NEW-CHARTS Emerging Market CAPEX A Dominate Part of their Economies-2 ............................................................................... 2216
NEW-CHARTS Emerging Market Collapse Accelerated in May When Global Market Peaked ............................................................ 2217
NEW-CHARTS Emerging Market USD Corporate Bond Maturities ....................................................................................................... 2218
CHARTS MSCI EM FX Index - New 6 Year Lows ................................................................................................................................ 2218
CHARTS EM FX Loses Since FOMC Meeting Brazil Noticeably Worse ............................................................................................ 2219
CHARTS EM FX Debasement By Country Since FOMC ....................................................................................................................... 2220
CHARTS EM FX Debasement By Country Since 9/7/09 ....................................................................................................................... 2220
CHARTS Brazilians Scramble to Protect their Store of Value (Coming to Other Countries) ................................................................. 2220
CHARTS Brazil Real GDP Y-o-Y% ........................................................................................................................................................ 2221
CHARTS Brazil Real / US$ versus Brazil 5Y CDS ................................................................................................................................ 2222
CHARTS Brazil Change in Yields Compared to Turkey and Mexico .................................................................................................. 2223
CHARTS Brazil Sovereign Gross Debt/GDP Government versus BI Simulation ............................................................................ 2223
CHARTS Brazil Number of days to start a business Worst in the Major Countries! ........................................................................ 2224
CHARTS Brazil Real Reaches Record Low as Budget Pessimism Rises .......................................................................................... 2224
CHARTS 5Y CDS Spreads Brazil, Russia, Turkey, Indonesia, Colombia & Peru .............................................................................. 2225
CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000 ..................................................................................................... 2225
CHARTS AFRICA-Foreign Direct Investment & Trade .......................................................................................................................... 2226
CHARTS AFRICA-Geographic Comparisons ......................................................................................................................................... 2227
CHARTS Emerging Markets Corporate Defaults ................................................................................................................................... 2227
CHARTS Emerging Markets Economic Surprise Index ......................................................................................................................... 2228
CHARTS Emerging Markets Currency Change versus USD ................................................................................................................. 2228
CHARTS Emerging Markets Change in Nominal Policy Rate ............................................................................................................... 2229
CHARTS EM Vulnerability to an external shock Resilience Indicator .............................................................................................. 2230
CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ................................................... 2231
CHARTS Falling EM Currencies ............................................................................................................................................................. 2232
CHARTS Post-China 16 ......................................................................................................................................................................... 2233
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 2234
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 2234
CHARTS - Reserves versus World ............................................................................................................................................................ 2234
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 2236
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 2237
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 2238
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 2239
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 2240
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 2241
RESEARCH OF NOTE .................................................................................................................................................................................. 2242
EMERGING MARKETS - Why Asian Markets Are Collapsing .............................................................................................................. 2242
EMERGING MARKETS - History Suggests Asia Can Handle Fed Tightening ................................................................................... 2244
EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" .......................................... 2246
EMERGING MARKETS - North Korea: Chinese Outsourcing Giant ................................................................................................... 2248
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 2250
EMERGING MARKETS - Crisis Temporarily Halted.............................................................................................................................. 2252
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 2252
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 2258
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 2258
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 2260
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 2262
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 2268
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 2269
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 2271
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 2273
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 2276
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 2280
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 2280
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 2282
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 2283
ASEAN ........................................................................................................................................................................................................... 2286
ASEAN: A New Common Market .............................................................................................................................................................. 2286
ASIA ............................................................................................................................................................................................................... 2290
ASIA: CHARTS Entering More Adverse Part of the Credit Cycle .......................................................................................................... 2290
ASIA: CHARTS Real GDP Slowing, Real Funding Costs Are Rising .................................................................................................... 2291
ASIA: CHARTS Demographic Peaks of Working Age Populations ....................................................................................................... 2292
ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth............................................................................................ 2293
ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports ........................................................................................................ 2294
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 2295
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 2295
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 2297
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 2297
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 2299
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 2300
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 2300
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 2301
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 2302
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 2302
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 2303

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ASIA - Regional Risk-Reward .................................................................................................................................................................... 2305


ASIA - Credit Contraction Problems ...................................................................................................................................................... 2306
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 2308
ASIA - Synchronized Markets .................................................................................................................................................................... 2310
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 2312
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 2313
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 2317
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 2318
ASIA - Demographic Headwinds ............................................................................................................................................................ 2321
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 2322
LATIN AMERICA ........................................................................................................................................................................................... 2324
LATIN AMERICA Latin America Shouldn't Blame the Federal Reserve .......................................................................................... 2324
COLUMBIA Colombian Peso Leads Currency Declines as Crude Falls ......................................................................................... 2326
ARGENTINA Fewer Reserves Are a Plus for Argentine Bondholders ............................................................................................ 2326
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 2327
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 2328
MIDDLE EAST ............................................................................................................................................................................................... 2330
TURKEY ..................................................................................................................................................................................................... 2330
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 2331
BRICS................................................................................................................................................................................................................... 2337
NEW-BRICS BRIC GDP versus World GDP Contribution Contracting ............................................................................................. 2337
BRICS Population, GDP,GDP per Capita ............................................................................................................................................ 2338
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 2339
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 2339
BRICS Inflation Problems Abound ...................................................................................................................................................... 2341
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 2342
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 2343
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 2345
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 2346
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 2349
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 2352
BRAZIL........................................................................................................................................................................................................... 2354
NEW-BRAZIL Brazils 2016 Recession Outlook Worsens ..................................................................................................................... 2354
NEW-BRAZIL Recession from 2015-2017 to be the Deepest Since 1901 Borders on Depression ................................................... 2354
NEW-BRAZIL - Brazil GDP Growth Y-o-Y ................................................................................................................................................. 2355
NEW-BRAZIL Bankruptcy Escalates In Brazil 5525 In 2015 .............................................................................................................. 2355
NEW-BRAZIL Falling Currency against the USD - USDBRL ................................................................................................................. 2356
NEW-BRAZIL Rising Yields for Brazilian Companies ............................................................................................................................ 2356
NEW-BRAZIL Sharp Retail Decline ........................................................................................................................................................ 2357
NEW-BRAZIL GDP Contraction of -3.5% in 2016 and -0.5% in 2017 ................................................................................................... 2357
NEW-BRAZIL Longest Sequence of Drops in Quarterly GDP Since 1996 ............................................................................................ 2358
NEW-BRAZIL Sharp Decline in Quarterly GDP Growth in Recent Years .............................................................................................. 2358
NEW-BRAZIL High Contribution of External Sector to Growth in 2016 ................................................................................................. 2359
NEW-BRAZIL - Brazil Cut to Junk by All Three Ratings Agencies After Moody's Joins The Fray ........................................................... 2360
NEW-BRAZIL 5,525 Companies Went Bankrupt In Brazil Last Year: "It's A Legitimate Credit Crisis" ................................................. 2362
NEW-BRAZIL - xxxxx ................................................................................................................................................................................. 2365
NEW-BRAZIL - xxxxx ................................................................................................................................................................................. 2366
BRAZIL - Brazil Budget Cuts Not Enough to Avoid More Downgrades .................................................................................................... 2366
BRAZIL - Brazil's Economy Is Now A Job Destruction Machine ............................................................................................................... 2367
BRAZIL - Local Rates Hit Hardest by Swift S&P Sovereign Downgrade to Junk ..................................................................................... 2370
BRAZIL - Recession and High Rates Doomed Brazils Investment-Grade Rating ................................................................................... 2372
BRAZIL - Why Brazil Is Not Coming Back Anytime Soon ......................................................................................................................... 2374
BRAZIL - Brazil Returns to Junk as Developing Nations Feel the Squeeze ............................................................................................. 2374
BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ...................................................................................................... 2377
BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ............................................................................................. 2384
BRAZIL - Brazils Depressed Consumer Confidence Index ...................................................................................................................... 2384
BRAZIL - Brazils Collapsing Confidence in the Construction Sector ....................................................................................................... 2385
BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ............................................................................................................... 2385
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 2387
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 2390
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 2393
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 2395
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 2396
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 2396
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 2397
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 2397
RUSSIA Inflation Rate ............................................................................................................................................................................ 2398
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 2398
RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 2399
RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 2399
RUSSIA Russian CDS Spreads ............................................................................................................................................................. 2400
RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 2401
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 2402
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 2403
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 2404
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 2404

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RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 2405
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 2406
RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 2407
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 2408
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 2409
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 2410
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 2411
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 2411
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 2413
RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ............................................................................................................... 2413
INDIA.............................................................................................................................................................................................................. 2414
NEW-INDIA India Imports- Exports Y-o-Y .............................................................................................................................................. 2414
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 2415
INDIA Real GDP and Car Sales ............................................................................................................................................................. 2416
INDIA Inflation ......................................................................................................................................................................................... 2417
INDIA - Inflation .......................................................................................................................................................................................... 2418
INDIA - WPI ................................................................................................................................................................................................ 2419
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 2420
INDIA - Panic in India ................................................................................................................................................................................. 2421
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 2423
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 2424
SOUTH AFRICA ............................................................................................................................................................................................ 2426

US ECONOMY ..................................................................................................................................... 2428


THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 2430
MACRO - US Macro Data .................................................................................................................................................................................... 2430
CHARTS OF NOTE ....................................................................................................................................................................................... 2430
NEW- MACRO QE Correlation with Global Growth Barometer & S&P 500 .......................................................................................... 2430
NEW- MACRO Total Y-o-Y Global Export .............................................................................................................................................. 2431
NEW- MACRO MSCI World Index A Rounded Top or Consolidation? ............................................................................................... 2433
NEW- MACRO Central Bank Total Assets Fed,BoJ,BOE,ECB,PBoC ................................................................................................ 2433
NEW- MACRO Global Debt Growth ....................................................................................................................................................... 2434
NEW- MACRO 10 Fold Increase in Central Banks Assets in 20 Years. ................................................................................................ 2434
NEW- MACRO Global PMI ..................................................................................................................................................................... 2436
NEW- MACRO Global GDP % under Negative Rates ........................................................................................................................... 2436
NEW- MACRO Global Y-o-Y CPI Percentage Change .......................................................................................................................... 2437
NEW- MACRO Benchmark NIRP Rates ................................................................................................................................................ 2438
NEW- MACRO Baltic Dry Index At levels Not Seen Since the 1980s ................................................................................................ 2438
MACRO EM Wave is the Third Wave in the Global Financial Crisis...................................................................................................... 2439
MACRO Deteriorating EM FX, Equity and Debt .................................................................................................................................. 2439
MACRO Global Slowdown Only Getting Worse - China ........................................................................................................................ 2440
MACRO Global Slowdown Only Getting Worse - India .......................................................................................................................... 2441
MACRO Global Import-Export Trends .................................................................................................................................................... 2442
MACRO Developed World Import-Export Trends Has Nearly Halved Since 2000 ................................................................................ 2444
MACRO Emerging Market Import-Export Trends Has Also Fallen ........................................................................................................ 2445
RESEARCH OF NOTE .................................................................................................................................................................................. 2446
NEW-MACRO- The 8 Major Macro Economic Problems The Next President Will Face .......................................................................... 2446
Problem #1: Japan ............................................................................................................................................................................... 2446
Problem #2: China ................................................................................................................................................................................ 2446
Problem #3: Australia .......................................................................................................................................................................... 2447
Problem #4: The Middle East .............................................................................................................................................................. 2447
Problem #5: Russia .............................................................................................................................................................................. 2447
Problem #6: Europe ............................................................................................................................................................................. 2447
Problem #7: The Americas .................................................................................................................................................................. 2448
Problem #8: The United States ........................................................................................................................................................... 2448
A Recession is Inevitable .................................................................................................................................................................... 2448
NEW-MACRO- Deutsche Bank's Dire Warning On Global Trade: "The Currency War Is Futile" ............................................................ 2448

US INVESTMENT CYCLE ...................................................................................................................................................... 2452


CHARTS OF NOTE ....................................................................................................................................................................................... 2453
NEW-CHART Professionals Moving to the Sidelines in a Significant Fashion in US Equities .................................................... 2453
CHART Financial Cycles and Crisis Are Becoming Longer & Deeper ........................................................................................... 2454
CHART The Business, Credit and Rate Cycles ................................................................................................................................. 2454
CHART The Business, Credit and Rate Cycles ................................................................................................................................. 2455
CHART A Secular Problem on the Verge of Also Being a Business /Credit /Rate Cycle Problem .............................................. 2455
CHART Business Cycle Surprise Index ............................................................................................................................................. 2456
CHART Boom-Bust Cycle In Stocks ................................................................................................................................................... 2456
RESEARCHOF NOTE ................................................................................................................................................................................... 2457
NEW-INVESTMENT Bonds & Stocks Unhinged from Reality- Financial reversal will fuel backlash against governments and
central banks ............................................................................................................................................................................................ 2457
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 2459
ECONOMIC INDICATORS .................................................................................................................................................................................. 2460
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 2460
NEW-RESEARCH End of the Benign Cycle. ................................................................................................................................... 2460

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RESEARCH - 8 Charts That Prove the US Is Already In A Recession ............................................................................................... 2461


RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here ..................................... 2466
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2470
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2470
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2471
SOME HIGHLIGHTS ..................................................................................................................................................................................... 2471
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2475
NEW-CHARTS Waiter / Bartender versus Manufacturing Jobs Post Dec 2007 ................................................................................. 2475
NEW-CHARTS NRA Restaurant Performance Index Post 2010 ........................................................................................................ 2475
CHARTS October NFP 60K below Estimates at 142K ........................................................................................................................... 2476
CHARTS Change in Civilian Employment: August 2015 ....................................................................................................................... 2476
CHARTS Peaks In LMCI Leads Declines in Employment...................................................................................................................... 2477
CHARTS September 2015 Monthly Job Change by State Bottoms up Says 22K Jobs Lost ............................................................. 2477
CHARTS Initial Jobless Claims .............................................................................................................................................................. 2478
CHARTS Increased Job Openings not a Sign of Better Employment ................................................................................................... 2480
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2481
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2481
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2488
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 2488
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2489
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2489
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2492
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2494
NEW-American Association of Independent Investors ................................................................................................................................. 2496
NEW-Investors Intelligence ........................................................................................................................................................................... 2496
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2497
NEW-Small Business Optimism .................................................................................................................................................................... 2499
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2501
NEW-Margin Levels ....................................................................................................................................................................................... 2502
Real Margin Debt as % of GDP ..................................................................................................................................................................... 2508
Margin Debt versus S&P 500 ........................................................................................................................................................................ 2508
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 2510
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2513
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2513
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2514
NEW-TRIN ..................................................................................................................................................................................................... 2515
NEW-McClellan Oscillator ............................................................................................................................................................................. 2516
CHARTS OF NOTE ............................................................................................................................................................................................. 2517
CHARTS Small Business Sentiment Trending Down Strongly .................................................................................................................. 2517
CHARTS Small Business Sentiment Margin Squeeze ........................................................................................................................... 2517
CHARTS Bloomberg Consumer Comfort versus Nasdaq ......................................................................................................................... 2518
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 2519
CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce ............................................................................ 2519
CHARTS Nominal & Real Household Spending Expectations .................................................................................................................. 2520
CHARTS Household Spending Expectations by Income Bucket .............................................................................................................. 2520
CHARTS A Very Neutral (Highly Unusual) Bull Market ............................................................................................................................. 2521
CHARTS Historical Swings in Sentiment ................................................................................................................................................... 2521
CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About?...................................................................... 2523
CHARTS Investors Intelligence Bulls & Bears ........................................................................................................................................... 2523
CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ......................................................................................... 2524
RESEARCH OF NOTE ........................................................................................................................................................................................ 2525
SENTIMENT Oblivious To Risk - Complacency Still Reigns .................................................................................................................. 2525
SENTIMENT UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record................................................... 2529
SENTIMENT Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ......................................... 2530
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2532
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 2532
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2533
NEW-CHARTS US Spending Consumption in 2015 Was in Healthcare Up Dramatically ................................................................. 2533
NEW-CHARTS US Spending Unaffordable Housing Shifting to Unaffordable Rentals...................................................................... 2533
NEW-CHARTS US Spending Gap Between Earnings and House Prices Now Larger than During Housing Bubble........................ 2534
CHARTS October Retail Sales Control Group Y-o-Y & Sequential Change ......................................................................................... 2535
CHARTS October Retail Y-o-Y Sales ..................................................................................................................................................... 2535
CHARTS Retail Sales Ex Autos M-o-M .................................................................................................................................................. 2536
CHARTS Monetary Velocity Declines as Excess Leverage Weighs on Consumption .......................................................................... 2536
CHARTS Consumer Credit Car Loans ................................................................................................................................................... 2537
CHARTS Consumer Loans Owned by the Government ........................................................................................................................ 2537
CHARTS Student & Car Loans ............................................................................................................................................................... 2539
CHARTS Total Non-Revolving Credit ..................................................................................................................................................... 2539
CHARTS August Sequential Change in Revolving and Non-Revolving Credit ..................................................................................... 2540
CHARTS Gas Prices Below $2/Gallon by December? .......................................................................................................................... 2540
CHARTS Aggregate Income Proxy versus Retail Sales ex Auto and Gas ............................................................................................ 2541
CHARTS Consumption Items Sampling - Y-o-Y Growth........................................................................................................................ 2541
RESEARCH OF NOTE .................................................................................................................................................................................. 2543

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NEW-CONSUMPTION This Is What Americans Spent Most Money On In 2015 Spoiler Alert: Obamacare ..................................... 2543
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2544
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 2544
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2548
NEW-CHARTS Atlanta Fed Q1 GDP Forecast Tumbles to 1.4% .......................................................................................................... 2548
NEW-CHARTS Atlanta Fed Q1 GDP Forecast Trend is steadily down ................................................................................................. 2549
NEW-CHARTS Durable Goods Orders Ex-Transports Y-o-Y ................................................................................................................ 2549
NEW-CHARTS Markit PMI Both Services and Manufacturing falling Since June 2014 ..................................................................... 2550
NEW-CHARTS Markit Composite PMI and US GDP ............................................................................................................................. 2550
NEW-CHARTS US Economic Growth in 2015 Was in Healthcare Consumption .................................................................................. 2551
CHARTS Strong Dollar, High Inventories to Slow US Factory Output ................................................................................................... 2552
CHARTS US ISMs 3 Mo MA................................................................................................................................................................... 2552
CHARTS September Survey Data versus Non Farm Payrolls ............................................................................................................... 2553
CHARTS Regional Surveys for September versus ISM PMI (August) .................................................................................................. 2554
CHARTS Regional Manufacturing Surveys versus Forward EPS Estimates ........................................................................................ 2555
CHARTS Historical Regional Index Comparisons Last Seen in 2008 ................................................................................................ 2555
CHARTS Predicted US Quarterly GDP Grow Q-o-Q Annualized ....................................................................................................... 2556
CHARTS Predicted US Annual Growth % Through 2024 ...................................................................................................................... 2556
CHARTS Predicted US Growth Compared to UK and Eurozone .......................................................................................................... 2557
RESEARCH OF NOTE .................................................................................................................................................................................. 2558
NEW-GROWTH Core Durable Goods Tumble For 13th Month, Longest Non-Recessionary Stretch In 70 Years ............................... 2558
NEW-GROWTH PMI Services Signals "Softest Expansion of New Business Since 2009 .................................................................... 2560
NEW-GROWTH Healthcare Is About To Surpass Housing As The Biggest Source Of American "Growth" ............................... 2562
NEW-GROWTH X .................................................................................................................................................................................... 2564
NEW-GROWTH X .................................................................................................................................................................................... 2564
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2565

US PUBLIC POLICY OBAMACARE IN REALITY A STEALTH TAX ................................................................................... 2573


CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2574
NEW-CHARTS The Changing Shape of US Income Distribution .......................................................................................................... 2574
NEW-CHARTS US infrastructure spending as a % of GDP is the lowest it has been since 1950 ........................................................ 2575
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 2576
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 2576
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 2577
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 2578
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 2579
CHARTS Size of US Army Since 1946................................................................................................................................................... 2579
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2580
CHARTS Changing Presidential Stance ................................................................................................................................................ 2581
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2581
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2582
RESEARCH OF NOTE .................................................................................................................................................................................. 2583
NEW-POLICY - These Are the 8 Biggest Barriers to Economic Growth .................................................................................................. 2583
NEW-POLICY Obamacare: Written by Insurance companies to benefit Insurance companies............................................................ 2584
NEW-POLICY Former UK Ambassador To Syria: US/UK Foreign Policy Is Doomed, Even Corrupt ........................................... 2586

MONETARY POLICY GLOBAL SLOW DOWN FORCES FED TO HOLD ON RATE INCREASE ......................................................... 2590
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2590
NEW-CHARTS: US Monetary Base Growth versus S&P 500 ...................................................................................................................... 2591
NEW-CHARTS: Post QE-3- US Dollar Index ................................................................................................................................................ 2591
NEW-CHARTS: Post QE-3- S&P 500 ........................................................................................................................................................... 2592
NEW-CHARTS: Post QE-3- S&P 500 PE Ratio ............................................................................................................................................ 2592
NEW-CHARTS: Post QE-3- MSCI World Index ............................................................................................................................................ 2593
NEW-CHARTS: Post QE-3- HYG .................................................................................................................................................................. 2594
NEW-CHARTS: Post QE-3- LQD .................................................................................................................................................................. 2595
NEW-CHARTS: Post QE-3- LQD .................................................................................................................................................................. 2595
NEW-CHARTS: Feds US PCE Y-o-Y ........................................................................................................................................................... 2596
NEW-CHARTS: US Industrial Production ..................................................................................................................................................... 2596
NEW-CHARTS: US Industrial Production ..................................................................................................................................................... 2597
NEW-CHARTS: US Durable Goods New Orders ......................................................................................................................................... 2597
CHARTS: US Monetary Velocity Declines as Excess Leverage Weighs on Consumption .......................................................................... 2598
CHARTS: Velocity of Money Shows Transmission System Broken ............................................................................................................. 2598
CHARTS: Interest Rates Reflect Economic Growth & Inflation .................................................................................................................... 2599
CHARTS: Fed Balance Sheet Change versus S&P 500 .............................................................................................................................. 2599
CHARTS: Fed Policy Initiatives versus S&P 500 Actions ............................................................................................................................. 2600
CHARTS: Total US Credit Old versus New Series .................................................................................................................................... 2600
CHARTS: Banks Treasuries Stash Boosts Case for Fed Delay .................................................................................................................. 2601
CHARTS: US Treasuries Purchased by Domestic Mutual Funds ................................................................................................................ 2601
CHARTS: Total Debt and Loans versus US GDP ......................................................................................................................................... 2602
CHARTS: Credit Markets Instruments All Sectors- Liability Levels ........................................................................................................... 2602
CORE CHARTS ................................................................................................................................................................................................... 2603
QUANTITATIVE EASING .............................................................................................................................................................................. 2603
NEW-CORE: QE Stages versus US Treasury Market .............................................................................................................................. 2603
NEW-CORE: QE Stages versus US Equity Market................................................................................................................................... 2603
NEW-CORE: QE Correlation with US Equity Market ................................................................................................................................ 2604

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NEW-CORE: US Monetary Base Growth Correlation with US Equity Market .......................................................................................... 2604
NEW-CORE: QE Correlation with Global Growth Barometer & S&P 500 ................................................................................................ 2605
NEW-CORE: Expect Exponential Growth in the Fed Balance Sheet ....................................................................................................... 2605
NEW-CORE: Total Assets Held by the Federal Reserve .......................................................................................................................... 2607
NEW-CORE: Exponential Growth in US Credit a Requirement ................................................................................................................ 2607
RESEARCH OF NOTE ........................................................................................................................................................................................ 2608
NEW-RESEARCH BEN BERNANKE: What tools does the Fed have left? Part 1: Negative interest rates ............................................. 2608
NEW-RESEARCH BEN BERNANKE: What tools does the Fed have left? Part 2: Targeting longer-term interest rates ........................ 2614
NEW-RESERCH Why Lower Gasoline Prices Are Not Stimulating The Economy ................................................................................... 2617

FISCAL POLICY RECIPE FOR COLLAPSE: RISING MILITARY & SOCIAL WELFARE SPENDING ................................................... 2619
FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 2621
CHARTS OF NOTE ....................................................................................................................................................................................... 2621
FINANCING The Debt Ceiling Debt Limit is Likely to Fall in November ..................................................................................................... 2621
FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .............................................................. 2621
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ........................................................................... 2622
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ........................................................................... 2622
FINANCING CHINA SELLING China & Belgium Holdings Change ........................................................................................................ 2623
FINANCING Breakdown of US Debt Holdings as of 2014 .......................................................................................................................... 2623
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 2624
CHARTS Drivers of US Debt ...................................................................................................................................................................... 2625
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 2626
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 2626
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 2627
FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 2628
NEW-CHARTS Where Did Every Dollar in Spending Go? ........................................................................................................................ 2628
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 2628
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 2629
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 2630
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 2630
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 2631
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 2631
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 2632
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 2632
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 2634
BUDGET - President Obama's Entire Budget In One Chart .................................................................................................................... 2635
BUDGET - A Budget That Institutionalizes Big Government .................................................................................................................. 2636
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 2641
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 2642
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 2644
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 2648
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 2653
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 2663
NEW-CHARTS Connecticut Bond Yield Spreads Over AAA Munis .......................................................................................................... 2663
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 2663
NEW-RESEARCH - Countdown To Insolvency Begins For Chicago Pensions As State Supreme Court Rejects Reform Bid ...... 2664
NEW-RESEARCH - Connecticut Credit Risk Spikes to Record High ..................................................................................................... 2666
RESEARCH - Almost Half of US States Are Officially Broke .................................................................................................................. 2668
RESEARCH - State & Local Government Crisis ....................................................................................................................................... 2672
RESEARCH - State & Local Government Drag ............................................................................................................................................ 2678
UNFUNDED LIABILITIES .................................................................................................................................................................................... 2683
NEW-Charts Revenues Completely Consumed By Major Entitlements & Interest by 2025 ..................................................................... 2683
NEW-Charts In FY 2014 Medicaid Accounted for 8% of Federal Outlays ................................................................................................. 2683
NEW-Charts Medicare Spending is a Growing Share of the Federal Budget ........................................................................................... 2685
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 2686
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 2690
US REGULATORY COSTS ................................................................................................................................................................................. 2693
CHARTS Annual Cost of Federal Regulation 2012, $1.863T ................................................................................................................. 2693
RESEARCH Investor Uncertainty............................................................................................................................................................... 2693
US TAX POLICY & ISSUES ................................................................................................................................................................................ 2695
NEW-CHARTS Marginal Tax Rates Must Nearly Double to Fund Entitlement Spending ......................................................................... 2695
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 2696
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 2697
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 2700
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 2700
CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 2701
RESEARCH - Tax Rate Comparisons ........................................................................................................................................................ 2702
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 2702
RESEARCH - Taxes & Spending .................................................................................................................................................................. 2703
RESEARCH - Avoiding Taxes ..................................................................................................................................................................... 2707
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 2710
NEW-CHARTS Size of US military Spending Dwarfs all others- Spends more than the Next 15 Combined ........................................... 2710
CHARTS Competing Visions of Government ............................................................................................................................................. 2710

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CHARTS - Sovereign Debt ............................................................................................................................................................................ 2712


CHARTS - Growing Government Dependence ............................................................................................................................................. 2713
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 2713
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 2717

KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 2719


EMPLOYMENT .................................................................................................................................................................................................... 2719
CHARTS & TABLES ...................................................................................................................................................................................... 2720
NEW-CHARTS Waiter / Bartender versus Manufacturing Jobs Post Dec 2007 ................................................................................. 2720
NEW-CHARTS NRA Restaurant Performance Index Post 2010 ........................................................................................................ 2721
NEW-CHARTS NRA Restaurant Performance Index Pre 2010.......................................................................................................... 2722
CHARTS Labor Force Participation Rate versus Food Stamp Participants .......................................................................................... 2722
CHARTS World Youth Unemployment A Crisis .................................................................................................................................. 2722
CHARTS Change in Civilian Employment since December 2007 ......................................................................................................... 2723
CHARTS Total Foreign-Born versus Native-Born Workers since Dec 2007 ......................................................................................... 2724
CHARTS Manufacturers versus Waiter/Bartenders Since 2007 ............................................................................................................ 2725
RESEARCH OF NOTE .................................................................................................................................................................................. 2726
NEW-EMPLOYMENT The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month ......................... 2726
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 2729
CHARTS & TABLES ..................................................................................................................................................................................... 2729
NEW-CHARTS Wages as a percentage of GDP have been falling for decades ................................................................................... 2729
NEW-CHARTS Middle class wealth is based not in stocks but in the family home ............................................................................... 2729
NEW-CHARTS Inflation-adjusted household income has dropped back to levels first reached in the 1980s ...................................... 2731
NEW-CHARTS Wages have declined regardless of educational attainment ........................................................................................ 2731
NEW-CHARTS US Productivity versus Wage Growth 1947-Now ...................................................................................................... 2732
NEW-CHARTS US Productivity versus Non-Supervisory Compensation 1947-Now ......................................................................... 2732
NEW-CHARTS Productivity has been slipping since around 2003: Alan Greenspan:"Productivity is dead ........................................ 2733
NEW-CHARTS Middle class household wealth has absolutely cratered since the top of the housing bubble in 2007 ........................ 2733
NEW-CHARTS Income gains have all flowed to the top 10% ............................................................................................................... 2734
NEW-CHARTS Higher education and healthcare have exploded higher .............................................................................................. 2736
CHARTS Average Hourly Earnings of all Employees Total Private .................................................................................................... 2737
CHARTS Individuals Annually Receiving Foods Stamps ....................................................................................................................... 2737
CHARTS Homeless among Students is Growing .................................................................................................................................. 2738
CHARTS Stagnant Middle Class Wages ................................................................................................................................................ 2738
CHARTS Median Earnings by Sex ......................................................................................................................................................... 2739
CHARTS Disconnect Between Productivity and Typical Workers Compensation 1948-2014 ........................................................... 2740
CHARTS Unemployment Rate is close to 24% according to Shadow Stats ......................................................................................... 2741
CHARTS Non-Farm Payrolls less HES Complex ................................................................................................................................... 2741
CHARTS Childcare Costs Surge Past Rent, Tuition in Most of US ....................................................................................................... 2742
CHARTS Illinois the Biggest User of Food Stamps in Mid-West ........................................................................................................... 2743
CHARTS Illinois has Regained Few Manufacturing Jobs Since the Great Recession .......................................................................... 2743
CHARTS Food Stamps Outpace Manufacturing Jobs 25-1 in Illinois .................................................................................................... 2743
CHARTS Debt by Generation ................................................................................................................................................................. 2744
RESEARCH OF NOTE .................................................................................................................................................................................. 2746
DI What Killed The US Middle Class? .................................................................................................................................................... 2746
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 2755
CHARTS & TABLES ...................................................................................................................................................................................... 2755
NEW-POLICY Renter versus Owner Occupied Housing Units Since 1996..................................................................................... 2755
NEW-POLICY Home prices are floating out of reach for average wage earners ........................................................................... 2755
NEW-POLICY US Home Price Growth versus Wage Growth ........................................................................................................... 2756
NEW-POLICY Pending Home Sales Falling ........................................................................................................................................ 2756
NEW-POLICY Existing Home Sales M-o-M ......................................................................................................................................... 2757
NEW-POLICY Pending Home Sales Falling ........................................................................................................................................ 2757
NEW-POLICY New Home Sales Y-o-Y ................................................................................................................................................. 2758
NEW-POLICY Total New Home Sales vs Median New Home Sales Prices ..................................................................................... 2759
POLICY US Cities with Highest Median Prices of Single-Family Homes........................................................................................ 2760
POLICY NAHB Sentiment Much Higher than Permits and Starts? .................................................................................................. 2760
POLICY Flattenening NAHB Sentiment .............................................................................................................................................. 2761
POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ................................ 2762
POLICY Mortgage Purchase Application Index versus Fed Balance Sheet ................................................................................... 2763
POLICY Total News Home Sales v Median New Home Sale Price .................................................................................................. 2764
POLICY San Francisco Y/Y Price Increase Indicator ........................................................................................................................ 2764
POLICY Meaningful Housing Recovery On Hold Until Spring ......................................................................................................... 2766
POLICY Housing Starts ........................................................................................................................................................................ 2766
POLICY Existing & New Home Sales .................................................................................................................................................. 2767
POLICY Home Ownership Rate versus Rental Rate ......................................................................................................................... 2767
POLICY Mortgages Past Due and Foreclosure Starts ................................................................................................................... 2768
POLICY Mortgage Spreads .................................................................................................................................................................. 2768
POLICY Lumber Sales .......................................................................................................................................................................... 2769
RESEARCH OF NOTE .................................................................................................................................................................................. 2772
NEW-RESIDENTIAL Housing Will Support, Not Lead, U.S. Growth This Time .............................................................................. 2772
NEW-RESIDENTIAL For the Average American, Owning A Home Is Increasingly Unaffordable ................................................ 2774
NEW-RESIDENTIAL New Home Sales Plunge Most Since June 2014 ............................................................................................. 2777
NEW-RESIDENTIAL Existing Home Sales Crash Most In 6 Years: NAR Blames Slowing Economy, Bubbly Home Prices ..... 2779
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 2783

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CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2783


CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 2783
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 2783
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 2784
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 2784
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 2785
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 2786
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 2786
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 2787
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 2788
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 2789
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 2790
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 2790
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 2791

SPECIAL FOCUS US RECESSION RUMBLINGS .............................................................................................................. 2792


US RECESSION RUMBLINGS ........................................................................................................................................................................... 2792
CHARTS OF NOTE ....................................................................................................................................................................................... 2793
NEW-RECESSION Recession Risks Rising as Profits Fall By Most Since 2008 .................................................................................. 2793
NEW-RECESSION Durable Goods Orders Ex-Transports Y-o-Y ......................................................................................................... 2794
NEW-RECESSION Markit Composite PMI and US GDP ...................................................................................................................... 2794
NEW-RECESSION A US Recession is now a VERY Likely Outcome! ................................................................................................. 2795
NEW-RECESSION Manufacturing Indicators & Industrial Production In Recession Territory ............................................................. 2796
NEW-RECESSION The Real Employment Economic Picture & Recessionary Driver ......................................................................... 2796
NEW-RECESSION Inflation Creeping Into Recessionary Statistics ..................................................................................................... 2797
NEW-RECESSION 15-month Continuous Y-o-Y drop in Factory orders Historically Has Signaled A Recession for 60 Years ........... 2798
NEW-RECESSION Productivity Slows As Recoveries Age (Y-o-Y%) ................................................................................................... 2798
NEW-RECESSION St.Louis Recession Probability ............................................................................................................................... 2799
NEW-RECESSION Recession Probability Based on Probit Model ....................................................................................................... 2799
NEW-RECESSION Recession Probability The Economic Output Composite Index .......................................................................... 2800
NEW-RECESSION Recession Probability HY Spreads Have not Traded at Current Levels Outside a US Recession .................... 2800
NEW-RECESSION Recession Probability Market Sentiment Can Become A Driver of Recessions ................................................ 2801
NEW-RECESSION Recession Probability Inflation tends to Rise Into and During a Recession ....................................................... 2801
NEW-RECESSION Wholesale Inventories -to - Sales ........................................................................................................................... 2802
NEW-RECESSION Industrial Production Is Rolling Over ...................................................................................................................... 2802
NEW-RECESSION US Recession Probabilities .................................................................................................................................... 2804
RECESSION We are already in a US GDP Recession ......................................................................................................................... 2804
RECESSION HY Close to 2001 Recession Levels ................................................................................................................................ 2805
RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending......................................... 2806
RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ............................................................................... 2806
RECESSION Current Economic Cycle Is Getting Old In The Tooth ............................................................................................ 2807
RECESSION Average Monthly Job Growth Deteriorating ..................................................................................................................... 2807
RECESSION Annual Percent Change In Real GDP .............................................................................................................................. 2808
RECESSION US Manufacturing Sector Recession ............................................................................................................................... 2808
RECESSION Large Profit Margin Declines Coincides With Recessions ............................................................................................... 2809
RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ............................................... 2809
RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative .......................................................................... 2810
RECESSION US Recession Estimates Pop .......................................................................................................................................... 2810
RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds.............................................................................. 2811
RECESSION Real S&P 500 Index with Historical Recessions .............................................................................................................. 2811
RECESSION September Survey Data versus Non Farm Payrolls ........................................................................................................ 2812
RECESSION Regional Surveys for September versus ISM PMI (August) ............................................................................................ 2812
RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates .................................................................................. 2813
RECESSION Historical Regional Index Comparisons Last Seen in 2008 .......................................................................................... 2813
RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds .............................................. 2814
RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ..................................................................................... 2815
RECESSION CT 2015 Revenue Recession .......................................................................................................................................... 2815
RECESSION Q2 2015 Revenue Recession .......................................................................................................................................... 2816
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................. 2816
RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted.......................................................................... 2817
RECESSION Top 10 US Market Areas Signal Retail Problem Underway ............................................................................................ 2817
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ....................................................... 2818
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................. 2819
RECESSION Wholesale Inventories vs GDP Trends ............................................................................................................................ 2819
RECESSION Auto Inventories to Sales ................................................................................................................................................. 2820
RECESSION Falling Collateral and Residuals Undermine Real Growth ............................................................................................ 2820
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................. 2821
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................. 2821
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ...................................................................... 2822
RECESSION Real Gross Domestic Investment versus Recessions ..................................................................................................... 2822
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................. 2823
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................. 2824
RECESSION ISM Composite Index versus Recessions........................................................................................................................ 2825
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................. 2825
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................. 2826
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions......................................................................... 2826

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RECESSION Major Economic Trends.................................................................................................................................................... 2827


NEW-RESEARCH OF NOTE ........................................................................................................................................................................ 2828
NEW- RECESSION Economists are starting to warn about the risk of a new U.S. recession .............................................................. 2828
NEW- RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................... 2831
RECESSION Retail Sales Slump on Deck ............................................................................................................................................. 2833
RECESSION This Is another "Subprime" Waiting To Blow ................................................................................................................... 2836
RECESSION Record Gap between US Inventories and Sales Screams Recession ............................................................................ 2839
RECESSION August spending was the weakest in nominal dollar terms since 2012 ........................................................................... 2841
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................. 2846

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MONTHLY PROCESS OF ABSTRACTION


The Global Macro Tipping Points (GMTP) Service is an integral part of our monthly Process of Abstraction research
methodology. The process starts monthly with the Tipping Points and completes with a final Synthesis. The
sequence is optimized to align with the established Macro Economic Data releases.

Plan

Release
Date

III.

Monday following
4th Saturday
of the Month

IV.

II.

Monday following
2tnd Saturday of the
Month

Tuesday following
3rd Saturday
of the Month

Service

Coverage

Tipping Points

Tipping Points

Abstraction

Global Macro

Abstraction

US Economy

Technical Analysis

Technical Analysis

Market Analytics

Fundamental Analysis

Market Analytics

Risk Analysis

Synthesis

Commentary

Synthesis

Commentary

Thesis

Conclusions

Global Macro Tipping Points


(GMTP)

Market Analytics & Technical


Analysis (MTA)

Monthly Market Commentary


(MMC)

JUNE 2016 Edition


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Focus

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