rpt-gmtp-2015-07-peek.pdf

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

PENSION POVERTY AHEAD Pensions are Underfunded and No Longer Risk Free

GMTP DATA FILE INDEX

GLOBAL MACRO TIPPING POINTS - JULY 2015

6/30/2015


PENSION POVERTY AHEAD Pensions are Underfunded and No Longer Risk Free

GLOBAL MACRO TIPPING POINTS - JULY 2015

TIPPING POINTS .................................................................................................................................... 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 LATEST FROM THE MONITORS ..................................................................................................................................................................... 95

RESEARCH OF NOTE .................................................................................................................................................................................. 99 NEW-MONITORS - Lagarde warns of lopsided global growth ................................................................................................................ 99 NEW-MONITORS - OECD Cuts Global Growth Projections Again ........................................................................................................ 100 NEW-MONITORS World Bank Global Growth Outlook ..................................................................................................................... 101 MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 102 MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 103 MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 104

BIS ................................................................................................................................................................................................................... 106 NEW-BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ....................................................................................... 106 NEW-BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored................................................................................ 106 NEW-BIS - Even the BIS Is Shocked At How Broken Markets Have Become ........................................................................................... 109 NEW-BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ...................................... 112 NEW-BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency ................ 115 NEW-BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks .................... 116 BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 121

WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 125 CHARTS OF NOTE ..................................................................................................................................................................................... 125

NEW-WEF Global Business Risks ........................................................................................................................................................ 127 NEW-WEF The 2015 Global Risk Landscape ...................................................................................................................................... 128 NEW-WEF Evolving Risk Landscape (2007-2015) .............................................................................................................................. 129 NEW-WEF Global Risk Exposures By Region ..................................................................................................................................... 130

SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 131 RESEARCH WE FOLLOWED ......................................................................................................................................................................... 131 CHARTS OF NOTE ......................................................................................................................................................................................... 133

NEW The economic balance of the world is shifting ................................................................................................................................... 133 NEW Global Conflict Intensity is heating up ................................................................................................................................................ 134 NEW World Conflict Map ............................................................................................................................................................................. 135 NEW World Conflict Map Details .............................................................................................................................................................. 136 NEW Global Conflict & Protest Intensity ...................................................................................................................................................... 137 NEW Deutsche Banks Key Global Risk ...................................................................................................................................................... 137 NEW Political and Financial Risk Now Outnumber Real Economy Risks .................................................................................................. 138

RESEARCH OF NOTE .................................................................................................................................................................................... 139 NEW Global Conflict Intensity Spikes To 7-Year High ................................................................................................................................ 139 NEW These Are 2015's "Black Swans" According To SocGen .................................................................................................................. 140 NEW "Globalization Is Turning In On Itself And It Is Each Man For Himself" ............................................................................................. 141 Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 144 Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 145 Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 146

REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 149 FOURTH TURNING ACCELERATING ....................................................................................................................................................... 149 AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 160 THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 163 THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 164 THE RISK CONTINUUM ............................................................................................................................................................................. 167 GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 169 GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 171 DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 173 WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 175

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 182 GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 184

YEMEN ............................................................................................................................................................................................................ 184 CHARTS OF NOTE ..................................................................................................................................................................................... 184

NEW-YEMEN Strategic Position ........................................................................................................................................................... 184 NEW-YEMEN al-Houthis and Saleh Concentrations ............................................................................................................................ 185 NEW-YEMEN The Decisive Storm Coalition ...................................................................................................................................... 185 NEW-YEMEN Global Oil Chokepoints .................................................................................................................................................. 186


NEW-YEMEN Middle Eastern Oil Production & Chokepoints .............................................................................................................. 186 NEW-YEMEN Chinese Import Countries & Oil Routes ........................................................................................................................ 188 NEW-YEMEN Major Crude Oil Trade Flows in the South China Sea .................................................................................................. 189 NEW-YEMEN Regional Territorial Claims in the South China Sea ...................................................................................................... 190

RESEARCH OF NOTE ................................................................................................................................................................................ 191 NEW-YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day ................ 191 NEW-YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .................................................................................... 193 NEW-YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition.............................................................. 196 NEW-YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ................................................. 197 NEW-YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ............................. 199 NEW-YEMEN Presenting The Theater Of War; Who Controls Yemen? ............................................................................................. 204 NEW-YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War .......................................... 206

UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 211 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 212 RESEARCH OF NOTE ................................................................................................................................................................................ 218

NEW-UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ............................................................................................................. 218 NEW-UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures................................................... 219 NEW-UKRAINE - Congress Approves Funding for Ukraine Arms Shipments ........................................................................................ 223 NEW-UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ..................................................................................... 227 NEW-UKRAINE - Congress Approves Funding for Ukraine Arms .......................................................................................................... 228 NEW-UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ................................................................. 231 NEW-UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ..................... 234 NEW-UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ...................................................................... 235 NEW-UKRAINE- A Russian Viewpoint ................................................................................................................................................ 237 NEW-UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War ............. 251

ISIS .................................................................................................................................................................................................................. 253 ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 254

NEW-ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' ........................................................................ 258 NEW-ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy ....................................................................... 258 ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 259

SYRIA .............................................................................................................................................................................................................. 262 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 262

NEW-SYRIA - Syria "Welcomes" Larger Russia Presence ................................................................................................................ 263 SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .................................................................................. 264 SYRIA - Syrian War You Are Not Being Told About ........................................................................................................................... 265 SYRIA - 25 Quotes .................................................................................................................................................................................. 266 SYRIA - What Coalition? ........................................................................................................................................................................ 269 SYRIA - US Supporting Fully an "Al Qaeda Operation" ..................................................................................................................... 271 SYRIA - Decision Already Taken to Bomb Syria ................................................................................................................................. 273 SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 281

SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 283 GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 286

NEW-GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ...................... 286 NEW-GREECE - Greece Prepares To Leave ................................................................................................................................................. 288 NEW-GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ...................................................................... 290 NEW-GREECE - Will Greece Call A Referendum On Euro Membership?..................................................................................................... 291 NEW-GREECE - What Greece Owes, And More Importantly - When! .......................................................................................................... 294 NEW-GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ................................................................. 297 NEW-GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ......................................................................... 300

GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 303 ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 303

RESEARCH WE FOLLOWED ..................................................................................................................................................................... 303 CHARTS OF NOTE ..................................................................................................................................................................................... 306

NEW-AIIB Demanding Infrastructure .................................................................................................................................................... 306 RESEARCH OF NOTE ................................................................................................................................................................................ 307

NEW-AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .................................................................................... 307 NEW-AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ................................................................. 309 NEW-AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .......................................................................................... 310 NEW-AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank.... 312 NEW-AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .................................................... 315 NEW-AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ................................................................... 317 NEW-AIIB - Did De-Dollarization Just Reach Escape Velocity? ............................................................................................................. 319

EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 323 MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 323 MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 325 MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 327

ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 330 HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ............................................................................................................... 332

KISSINGER- Henry Kissingers World Order ............................................................................................................................................ 332

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 335 AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 335

NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 336 NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 336 NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 337


NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 337 NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 337 NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 338 NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 339 NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 339 MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 340 NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 340

AGGREGATED RISK LEVEL ................................................................................................................................................................................ 341

TIPPING POINTS ..................................................................................................................................................................... 343 NEW-CHANGES TO RANKINGS Q2 2015 ........................................................................................................................................................ 343 NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 345 NEW-CHANGES TO ROADMAPS - Longer Term Trends ................................................................................................................................... 346 NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 347 TIPPING POINTS: TOP 5 FOCUS - APRIL 2015 ................................................................................................................................................. 350

NEW-I - RISK REVERSAL .............................................................................................................................................................................. 350 NEW-II - GEO-POLITICAL EVENT RISK ........................................................................................................................................................ 351 NEW-V - CHINA HARD LANDING .................................................................................................................................................................. 352 NEW-III - JAPAN DEBT DEFLATION ............................................................................................................................................................. 356 NEW-IV - EU BANKING CRISIS ..................................................................................................................................................................... 357

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 364 ECONOMIC WARNINGS....................................................................................................................................................................................... 364

IMF WARNS .................................................................................................................................................................................................... 364 NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 364 IMF sees risk of new eurozone .................................................................................................................................................................... 366 IMF Tells Central Europe to Spend More .................................................................................................................................................... 369 Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 372 Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 374

BIS WARNS ..................................................................................................................................................................................................... 376 NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................... 376 Monetary Policy At Its Limits ........................................................................................................................................................................ 388

WORLD BANK WARNS ................................................................................................................................................................................. 389 Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 391

G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 393 RESEARCH WE FOLLOWED .............................................................................................................................................................................. 394 CHARTS OF NOTE ............................................................................................................................................................................................... 397

NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis .................................................................... 397 NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................. 398 NEW-CHART: Global Business Equipment Investment ............................................................................................................................ 399 NEW-CHART: EM versus DM Credit Risk ................................................................................................................................................... 400 NEW-CHART: MSCI World P/E versus EM P/E ........................................................................................................................................... 400 NEW-CHART: Emerging Capital Flows & Currency Moves ...................................................................................................................... 401 NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................ 401 NEW-CHART: Domestic Bank Credit of EM versus DM ............................................................................................................................ 402 NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ................................................................................. 402 NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................ 404 NEW-CHART: There is a Problem in Global Credit .................................................................................................................................... 404 CHART: Serial Disappointments & Ratcheting Down of Global Growth ................................................................................................. 405 CHART: Continuous Weakening of Global GDP Estimates ...................................................................................................................... 406 CHART: Reduced Demand Pressures on Energy Prices .......................................................................................................................... 406 CHART: Reduced Demand Pressures on Commodities ........................................................................................................................... 407 CHART: Global Corporate Profit Trends ..................................................................................................................................................... 407 CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst .................................................................. 408 CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ............................................................................... 409 CHART: Growth of Asian Middle Class Dominates Next 20 Years ....................................................................................................... 410 CHART: Global Domestic Demand Growth ................................................................................................................................................ 410 CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ............................................................................................ 411 CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 411 CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 412 CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 413 CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 413 CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 414 CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 415 CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 415 CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 416 CHART: Shifting Global GDP Share ............................................................................................................................................................ 417 CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 418 CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 418 CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 419 CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 419 CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 420 CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 421


RESEARCH OF NOTE .......................................................................................................................................................................................... 422 NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ...................................................................................................... 422 NEW-GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ........................................... 425 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile..................................................................................................... 426 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ........................................................ 429 GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession .......................................................................................... 430 GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ..................................................................................................... 433 GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................ 437 GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ........................................................... 440 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 442 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 444 GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 445 GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 450 GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 452 GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 455 GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 458 GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 461 GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 463 GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 466 GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 468

ECONOMIC CUTS ................................................................................................................................................................................................. 472 CHARTS OF NOTE ......................................................................................................................................................................................... 472

CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 472 CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 475 CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 475

IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 475 IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 481

OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 491 OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 493

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 496 GLOBAL TRENDS ................................................................................................................................................................................................. 496

CHARTS OF NOTE ......................................................................................................................................................................................... 496 NEW-GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................... 496 NEW-GLOBAL TRENDS US Macro Continues to Plummet ................................................................................................................. 496 NEW-GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ............................ 497 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ............................................................. 497 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector ............................................................................. 498 GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .............................................................................................. 498 GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ................................................................................. 499 GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies .................................................................................. 500 GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 500

RESEARCH OF NOTE .................................................................................................................................................................................... 501 GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 501 GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 505 GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ................................................................................. 509

GLOBAL EMPLOYMENT....................................................................................................................................................................................... 510 CHARTS OF NOTE ......................................................................................................................................................................................... 510

CHART Global Employment Rates ........................................................................................................................................................ 510 CHART Global Unemployment ................................................................................................................................................................. 511 CHART Global Unemployment EU Comparison ................................................................................................................................... 511 CHART Unemployment in Advanced Countries .................................................................................................................................. 512 CHART Global Labor Participation Rates ............................................................................................................................................ 512 CHART Global Youth Unemployment By Country ........................................................................................................................... 513 CHART Global Chance of Finding a Job Within Year ......................................................................................................................... 513

RESEARCH OF NOTE .................................................................................................................................................................................... 514 GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ........................................................................................ 514 GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................ 516 GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 518

GLOBAL SENTIMENT ........................................................................................................................................................................................... 520 CHARTS OF NOTE ......................................................................................................................................................................................... 520

NEW-GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................. 520 NEW-GLOBAL SENTIMENT Global Consumer Confidence by Country ........................................................................................... 521 NEW-GLOBAL SENTIMENT Global Consumer Confidence Improves the Most In North America ............................................... 522 NEW-GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................... 523 NEW-GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators ................................. 524 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets....................................................... 525 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets ................................................... 526 NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ............................................... 527 NEW-GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls...................................................................... 528 NEW-GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................... 529 GLOBAL SENTIMENT Global Business Activity Future Expectations ............................................................................................. 530 GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ........................................................................... 530 GLOBAL SENTIMENT Global Consumer Confidence by Country .................................................................................................... 532 GLOBAL SENTIMENT Global Consumer Confidence Trends by Country ....................................................................................... 533


GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen ......................................................... 534 RESEARCH OF NOTE .................................................................................................................................................................................... 535

GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 535 GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 537 GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................ 541 GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 542 GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 544 GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 545

GLOBAL CONSUMPTION ..................................................................................................................................................................................... 556 CHARTS OF NOTE ......................................................................................................................................................................................... 556

GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand ........................................................................... 556 GLOBAL CONSUMPTION Global Home Prices Are Rolling Over ..................................................................................................... 556 GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU .............................................................................................. 557

RESEARCH OF NOTE .................................................................................................................................................................................... 558 GLOBAL GROWTH ............................................................................................................................................................................................... 558

CHARTS OF NOTE ......................................................................................................................................................................................... 558 NEW-GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ..................................................................................... 558 GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 559 GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 560 GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 561 GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 562 GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 562 GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 563 GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 564 GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 564 GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 564 GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 565 GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 566 GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 566

RESEARCH OF NOTE .................................................................................................................................................................................... 567 GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 567 GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 568 GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................... 570 GLOBAL GROWTH Potential of a Global Recession Mounting ............................................................................................................ 571 GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates....................................................................... 575 GLOBAL GROWTH - Uneconomic Energy Problematic ......................................................................................................................... 577 GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 579 GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 580 GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 581

GLOBAL CREDIT .................................................................................................................................................................................................. 582 CREDIT CYCLE - HY Leading the Way ........................................................................................................................................................ 582 CREDIT CYCLE - Reversal Ahead ................................................................................................................................................................ 585

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 588 GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 588

RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 588 CHARTS OF NOTE ......................................................................................................................................................................................... 591

NEW-CHARTS Consensus Fed and ECB Rate Hike Projections ....................................................................................................... 591 NEW-CHARTS Global Monetary Policy Stance & Bias ....................................................................................................................... 592 NEW-CHARTS Global Government Bonds Trading With Negative Yields ....................................................................................... 593 NEW-CHARTS Lack of Inflation in Europe ........................................................................................................................................... 593 NEW-CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s) .......................................... 594 NEW-CHARTS Quantitative e Easing No Longer Drives Commodity Prices ................................................................................... 595 NEW-CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................ 595 NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ......................................................................................... 596 NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ......................................................................................... 596 NEW-CHARTS Falling Global Bond Rates Continue in Q1 2015 ....................................................................................................... 597 NEW-CHARTS The Road to NIR (Negative Rates) ............................................................................................................................... 597 CHARTS Central Bank Policy Rates ..................................................................................................................................................... 598 CHARTS Days of Chinese Credit-Driven Growth are numbered ....................................................................................................... 598 CHARTS Major Central Bank Assets versus GDP Forecast .............................................................................................................. 600 CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ............................................................................................................... 600 CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 .................................................................................. 601 CHARTS Global Central Bank Assets versus World Equity Prices .................................................................................................. 601 CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 .................................................................................. 602

RESEARCH OF NOTE .................................................................................................................................................................................... 603 NEW- CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................. 603 NEW- CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode ............................................................................. 604 NEW- CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................ 605 NEW- CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage .......................................................................... 608 NEW- CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ............................................................... 609 NEW- CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation ....................................... 611 NEW- CENTRAL BANKS - The year of Dollar Danger for the world ...................................................................................................... 613 NEW- CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ..................................... 618 CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 622


CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 624 CENTRAL BANKS Axel Merks 2014 Outlook ....................................................................................................................................... 625 CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries .............................................................. 628 CENTRAL BANKS - Austerity Now Officially Dead Public Policy ........................................................................................................... 629 CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ............................................... 630 CENTRAL BANKS - Global Balance Sheet Expansion .......................................................................................................................... 632

NEW-WAR ON CASH ..................................................................................................................................................................................... 637 NEW-WAR ON CASH Elliott Waves Report on the War on Cash ........................................................................................................ 637 NEW-WAR ON CASH The "War On Cash" Migrates To Switzerland...................................................................................................... 642 NEW-WAR ON CASH Chase Joins the War on Cash ............................................................................................................................. 645 NEW-WAR ON CASH Largest Bank In America Joins War On Cash ..................................................................................................... 647 NEW-WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban ................................................................................................. 649

NEW-SWISS PEG ........................................................................................................................................................................................... 653 NEW-SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .......................................................................................... 654 NEW-SWISS PEG Swiss Peg Failure The Financial System Broke Last Week .................................................................................. 656 NEW-SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ................................................... 657

TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 661 TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 661 TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies...................................................................................................................................................................................................................... 662 TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 665 TROUBLING DEVELOPMENTS Global Tax Overhaul .......................................................................................................................... 667

BOE - UK ............................................................................................................................................................................................................... 668 CHARTS OF NOTE ......................................................................................................................................................................................... 668

UK Dissent within BOE Set to Continue ............................................................................................................................................... 668 RESEARCH OF NOTE .................................................................................................................................................................................... 668

UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 668 UK - Mark Carney and "Flexible Inflation Targeting" ............................................................................................................................. 670

FED - US ................................................................................................................................................................................................................ 672 CHARTS OF NOTE ......................................................................................................................................................................................... 673

NEW-CHARTS Feds QE History versus UST 10 Year Yields ............................................................................................................ 673 NEW-CHARTS Fed Balance Sheet Growth .......................................................................................................................................... 673 CHARTS June 2015 Fed Rates Hikes Diminish ................................................................................................................................... 674 CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ..................................................................................................................... 674

RESEARCH OF NOTE .................................................................................................................................................................................... 675 NEW-US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed.................................... 675 NEW-US MONETARY - Audit the Fed Yellens Testimony .................................................................................................................. 677 NEW-US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy ....................................................... 686 US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory ............................................................... 689 US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery ........................................................................... 692 US MONETARY - The Fed is stuck in a QE Trap .................................................................................................................................... 695 US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) ........................................................... 697 US MONETARY - Mathematically, The Fed Can Only Fail ..................................................................................................................... 699 US MONETARY - QE Standing Between Inflated Equity Markets and A Recession .......................................................................... 705 US MONETARY - QE Programs versus S&P 500 Movements ............................................................................................................... 706 US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will ..................................... 708 US MONETARY - Debt Increases $1 Trillion in One Year ...................................................................................................................... 710

GLOBAL ABE-NOMICS The Road Ahead ....................................................................................................................................................... 713 CHARTS OF NOTE ......................................................................................................................................................................................... 713

NEW-JAPAN Japan Heads Back towards Deflation ............................................................................................................................ 713 JAPAN The Third Arrow of ABE-Nomics -I ........................................................................................................................................... 714 JAPAN The Third Arrow of ABE-Nomics II ......................................................................................................................................... 715 JAPAN Japanese Households Remain Pessimistic ............................................................................................................................ 716

RESEARCH OF NOTE .................................................................................................................................................................................... 717 NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 717 NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 720 GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 721 GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 724

BOJ JAPAN ......................................................................................................................................................................................................... 726 CHARTS OF NOTE ......................................................................................................................................................................................... 726

JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 726 JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 727 JAPAN Japanese Trade Balance ............................................................................................................................................................. 728 JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 728 JAPAN CPI Shoots To 3.3% Y-o-Y ......................................................................................................................................................... 729 JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 729 JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 729 JAPAN Real Wages Plummet as Financial Repression Takes Hold .................................................................................................. 730

RESEARCH OF NOTE .................................................................................................................................................................................... 731 JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 732 JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 734 JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 737 JAPAN - No Way Out But to Expand the Monetary Base ....................................................................................................................... 739 JAPAN - BOJ to "Own" 100% Of GDP In 5 Years .................................................................................................................................... 740 JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history .......................................................................................... 743


JAPAN - Some Policies Have Clearly Hit the Limit ................................................................................................................................. 745 JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 746 JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 751 JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 752 JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 755 JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 756

PBOC - CHINA ....................................................................................................................................................................................................... 758 CHARTS OF NOTE ......................................................................................................................................................................................... 759

NEW-CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ............................................................... 759 NEW-CHARTS China Reduces Bank Reserve Ratio .............................................................................................................................. 759 NEW-CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ................................................................................. 760 NEW-CHARTS Falling Chinese Government Revenue Growth .............................................................................................................. 761 NEW-CHARTS Falling National New Residential Housing Starts ........................................................................................................... 761 NEW-CHARTS China and Asia Residential Property Tracking US Housing Bubble .............................................................................. 762 NEW-CHARTS Real Chinese Rates versus Cuts .................................................................................................................................... 762

RESEARCH OF NOTE .................................................................................................................................................................................... 763 NEW-CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says ............................. 763 NEW-CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ............................................................................. 765 NEW-CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears......................................................................................... 767

ECB EU ............................................................................................................................................................................................................... 773 NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................... 773 CHARTS OF NOTE ......................................................................................................................................................................................... 774

NEW-CHARTS Welcome to the EUs NIRP ........................................................................................................................................... 774 NEW-CHARTS Negative Swiss Government Bonds ............................................................................................................................... 775 NEW-CHARTS Negative Swiss Government Bonds ............................................................................................................................... 775 NEW-CHARTS UK & German Total Return Indices ................................................................................................................................ 776 NEW-CHARTS ECBs Dilemma of Digging Up Enough Debt .................................................................................................................. 776 NEW-CHARTS Nearly $2T European Nonds Trading With Negative Yields........................................................................................... 777 NEW-CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ....................................................... 777 NEW-CHARTS The Fastest Growing Asset Class NIR Products ......................................................................................................... 778 CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ........................................................................................................... 779 CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU .............................................................................................................. 780 CHARTS Euro-Area Inflation Rate on the Decline Since 2011 ................................................................................................................ 780 CHARTS Euro-Area Inflation Expectations Decline ................................................................................................................................. 781 CHARTS Euro-Area Private Sector Loan Creation .................................................................................................................................. 782 CHARTS Euro-Area Money Supply, Private Sector Lending Growth ...................................................................................................... 782 CHARTS Euro-Area 10 Yr Sovereign Bond Yields .................................................................................................................................. 783 CHARTS Slovenia May BE the Next EU Debt Hotspot ............................................................................................................................ 783 CHARTS Spain & Portugal NPL ............................................................................................................................................................... 784 CHARTS ECBs Turn to Expand Its Balance Sheet ................................................................................................................................. 785 CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................... 785 CHARTS Expect Major ECB Policy Announcement in Q2 2014 .............................................................................................................. 786 CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................... 787

RESEARCH OF NOTE .................................................................................................................................................................................... 788 NEW-EU MONETARY - NIRP Is A Flawed Economic Concept ................................................................................................................. 789 NEW-EU MONETARY - NIRP ..................................................................................................................................................................... 791 NEW-EU MONETARY NIRP - Yield scarce as the world turns negative ................................................................................................. 795 NEW-EU MONETARY - XXXX .................................................................................................................................................................... 798 NEW-EU MONETARY - XXXX .................................................................................................................................................................... 798 EU MONETARY - Draghi Key Statements .................................................................................................................................................. 799 EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................... 799 EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action ...................................................................................... 802 EU MONETARY - Euro-Area Data Deterioration Points toward QE ........................................................................................................... 803 EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down ............................................................................ 806

MACRO MONETARY INFLATION ..................................................................................................................................................................... 808 CHARTS OF NOTE ............................................................................................................................................................................................... 808

NEW-CHARTS The Fall of Hyperinflation & the Rise of Deflation ............................................................................................................... 808 NEW-CHARTS Falling US Consumer Price Index ....................................................................................................................................... 808 CHARTS Global Consumer Prices are Rising Significantly ......................................................................................................................... 809

CHARTS Global Country Inflation Rates .................................................................................................................................................. 809 CHARTS Two Worlds if Inflation EM and DM ....................................................................................................................................... 809 CHARTS Developed Country Inflation Rates ........................................................................................................................................... 811

RESEARCH OF NOTE .................................................................................................................................................................................... 812 NEW- INFLATION Martin Armstrongs Explanation of Monetary Inflation........................................................................................ 812 INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ............................................. 814

GEO-ECONOMIC INSTABILITIES ........................................................................................................................................... 816 GEO-ECONOMIC INDEX ...................................................................................................................................................................................... 816 US$ RESERVE STATUS & ERODING INFLUENCE................................................................

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