rpt-gmtp-2015-10-peek

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

THE COMING GLOBAL AUTO ABYSS Too Much Supply & Too Many Brands Combine with Too Much

Credit

FULL GMTP DATA FILE

GLOBAL MACRO TIPPING POINTS - OCTOBER 2015

9/28/2015


THE COMING GLOBAL AUTO ABYSS Too Much Supply & Too Many Brands Combine with Too Much Credit

GLOBAL MACRO TIPPING POINTS - OCTOBER 2015

GLOBAL RISK ......................................................................................................................................... 38

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 38 POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 38 LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 39

Our Assessment ................................................................................................................................................................................................ 39 ........................................................................................................................................................ 52

MACRO MONITORING INSTITUTIONS ............................................................................................................................................................... 100 LATEST FROM THE MONITORS ................................................................................................................................................................... 100

RESEARCH OF NOTE ................................................................................................................................................................................ 104 NEW-MONITORS World Bank - Global Economic Prospects Report.................................................................................................. 104 NEW-MONITORS World Bank 2.8% Global 2015 Growth ..................................... 105 NEW-MONITORS OECD Leading Indicator Casts Doubt on US Economic Rebound ..................................................................... 107 NEW-MONITORS OECD Warns 40 Million People Will Be Out of Work Next Year ....................................................................... 107 NEW-MONITORS IMF Tells Regulators to Brace for Global Liquidity Shock ................................................................................... 110 MONITORS - ........................................................................................................................ 114 MONITORS - OECD Cuts Global Growth Projections Again .................................................................................................................. 115 MONITORS World Bank Global Growth Outlook .............................................................................................................................. 116 MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 117 MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 118 MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 119

BIS ................................................................................................................................................................................................................... 121 NEW-BIS - BIS Quarterly Report ................................................................................................................................................................. 121 BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 121 BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 122 BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 124 BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 128 BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 131 BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 132 BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 137

WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 141 CHARTS OF NOTE ..................................................................................................................................................................................... 141

WEF Global Business Risks ................................................................................................................................................................. 143 WEF The 2015 Global Risk Landscape ................................................................................................................................................ 144 WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 145 WEF Global Risk Exposures By Region ............................................................................................................................................... 146

SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 147 RESEARCH WE FOLLOWED ......................................................................................................................................................................... 147 CHARTS OF NOTE ......................................................................................................................................................................................... 149

NEW-Total Global Credit-Market Debt Owed as % of GDP ........................................................................................................................ 149 NEW-$57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ........................................................... 150 NEW-Global Risk Landscape Grid .............................................................................................................................................................. 151 NEW-Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .................................................................................... 152 NEW-Global Risks of Highest Concern ....................................................................................................................................................... 152 NEW-Global Risks Versus Impact ............................................................................................................................................................... 153 The economic balance of the world is shifting ............................................................................................................................................. 154 Global Conflict Intensity is heating up.......................................................................................................................................................... 155 World Conflict Map ....................................................................................................................................................................................... 156 World Conflict Map Details........................................................................................................................................................................ 157 Global Conflict & Protest Intensity ............................................................................................................................................................... 158

Key Global Risk ............................................................................................................................................................... 158 Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 159

RESEARCH OF NOTE .................................................................................................................................................................................... 160 NEW- McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE ................................................................................... 160 NEW- Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 .................................................................................... 164 Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 167 These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 168 "Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 170

................................................................................................................... 173 Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 174 Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 175

REFERENCE PAPERS ................................................................................................................... 178 FOURTH TURNING ACCELERATING ....................................................................................................................................................... 178

................................................................................................................................................................ 189


THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 192 THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 193 THE RISK CONTINUUM ............................................................................................................................................................................. 196 GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 198 GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 200 DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 202 WINTER 2015 ........................................................................................................................................... 204

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 211 GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 213

NEW-GREECE - Greek Lawmakers Won't Back Deal; Finnish FinMin Says "Can't Agree" To New Greek Loans ...................................... 213 NEW-GREECE - Goldman: The Greek Solution "Exposes The Whole System To Collapse" ....................................................................... 213 NEW-GREECE - Munchau: "The Eurozone As We Know It Is Destroyed" .................................................................................................... 213 NEW-GREECE - What Assets Did Greece Just Hand Over To Europe: "Airports, Airplanes, Infrastructure And Most Certainly Banks" .... 213 NEW-GREECE - New Government Likely In Greece, Depositor Bail-In Still Possible, Deutsche Bank Says ............................................... 213 NEW-GREECE - Yanis Varoufakis: "Merkel's Control Over The Eurogroup Is Absolute, They Are Beyond The Law" ................................ 214 NEW-GREECE - How German Media See The New Greek 'Deal'................................................................................................................. 214 NEW-GREECE - Greece Banks Not Out Of The Woods, May Impose Tougher Capital Controls, Barclays Says ....................................... 214 NEW-GREECE - Even The Players Are Losing Faith In Their Own Shenanigans ........................................................................................ 214 NEW-GREECE - After "Deal", Here's What's Next For Greece ...................................................................................................................... 214 NEW-GREECE - EU Exit Will Now Be "Threat To Those Who Don't Behave The German Way," BofA Says ............................................. 216 NEW-GREECE - Tsipras Releases Statement Following Greek "Deal", Will "Fight To Regain Lost National Sovereignty" ......................... 216 NEW-GREECE - Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms ............ 217 NEW-GREECE - How The Greek Deal Almost Collapsed At 6am In The Morning ....................................................................................... 217 NEW-GREECE - The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out" ........................................................... 218 NEW-GREECE - Eurogroup Officially Threatens Greece With 5 Year Grexit "Time Out" ............................................................................. 218 NEW-GREECE - Eurogroup Fails To Reach Deal, Gives Greece 24 Hours To Accept Draconian Terms ................................................... 219 NEW-GREECE - A Broken Greek PM Says He Is "Ready For An Honest Compromise".............................................................................. 219 NEW-GREECE - Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option ........................... 220 NEW-GREECE - Someone Told Merkel... ...................................................................................................................................................... 220 NEW-GREECE - Schauble Proposes "5 Year Grexit With Humanitarian Support" ....................................................................................... 220 NEW-GREECE - Eurogroup Meeting Ends Without Agreement: "Huge Problems", "Issue Of Greek Trust Very Difficult" ........................... 220 NEW-GREECE - Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit ............................................................... 220 GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ............................... 221 GREECE - Greece Prepares To Leave ........................................................................................................................................................... 223 GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ................................................................................ 225 GREECE - Will Greece Call A Referendum On Euro Membership? .............................................................................................................. 226 GREECE - What Greece Owes, And More Importantly - When! .................................................................................................................... 229 GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ........................................................................... 232 GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ................................................................................... 235

GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 238 IRAN ................................................................................................................................................................................................................. 238

RESEARCH OF NOTE ................................................................................................................................................................................ 238 NEW-IRAN u ......................................................................................................... 238 NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 241

YEMEN ............................................................................................................................................................................................................ 242 CHARTS OF NOTE ..................................................................................................................................................................................... 242

YEMEN Strategic Position .................................................................................................................................................................... 242 YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 243 YEMEN ............................................................................................................................................... 243 YEMEN Global Oil Chokepoints ........................................................................................................................................................... 244 YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 244 YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 246 YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 247 YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 248

RESEARCH OF NOTE ................................................................................................................................................................................ 249 YEMEN .......................... 249 YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 251 YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 254 YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 255 YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 257 YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 262 YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 264

UKRAINE EAST/WEST CONFLICT ..................................................................................................................... 269 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 270 RESEARCH OF NOTE ................................................................................................................................................................................ 276

UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 276 UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 277 UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 281 UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 285 UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 286 UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 289 UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 292 UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 293 UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 295 UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US -Russian Cold War ....................... 309


ISIS .................................................................................................................................................................................................................. 311 ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 312

ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 316 ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 316 ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 317

SYRIA .............................................................................................................................................................................................................. 320 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 320

SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 321 SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 322 SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 323 SYRIA - 25 Quotes ................................................................................................................................................................................... 324 SYRIA - What Coalition? .......................................................................................................................................................................... 327 SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 329 SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 331 SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 339

SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 341 GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 344

ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 344 RESEARCH WE FOLLOWED ..................................................................................................................................................................... 344 CHARTS OF NOTE ..................................................................................................................................................................................... 347

AIIB Demanding Infrastructure .............................................................................................................................................................. 347 RESEARCH OF NOTE ................................................................................................................................................................................ 348

AIIB - The Nepo -Cold War, The World Bank and the AIIB Threat .............................................................................................. 348 AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 350 AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 351 AIIB - Obama administration proposes co - financing projects with new Asian Infrastructure Investment Bank ............. 353 AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 356 AIIB - Obama continues to be humiliated by the rising anti -dollar alliance ............................................................................. 358 AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 360

EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 363 MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 363 MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 365 MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 367

ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 370 HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 372

KISSINGER- ............................................................................................................................................. 372

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 375 AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 375

NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 376 NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 376 NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 377 NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 377 NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 378 NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 378 NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 380 NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 380 MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 381 NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 381

AGGREGATED RISK LEVEL ................................................................................................................................................................................ 382

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 384 CHANGES TO RANKINGS Q3 2015 ................................................................................................................................................................. 384 CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 386 CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 387 CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 388 TIPPING POINTS: TOP 5 FOCUS - AUGUST 2015 ............................................................................................................................................. 391

NEW-I BOND BUBBLE................................................................................................................................................................................. 391 $140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse"............................................................................ 391

NEW-II - RISK REVERSAL ............................................................................................................................................................................. 393 What Happened The Last Time The Fed's Balance Sheet Hit 25% Of GD ................................................................................................ 393

NEW-III - GEO-POLITICAL EVENT RISK ....................................................................................................................................................... 399 The REAL Reason Greece Matters For Investors ....................................................................................................................................... 402

NEW-IV - CHINA HARD LANDING ................................................................................................................................................................. 409 Chinese Stock Markets - 1929 In Chinese Markets .................................................................................................................................. 411

NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 420 Abenomic's QQE Phiosophically Unsound ............................................................................................................................................ 420

GLOBAL MACRO ................................................................................................................................. 428

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 428 ECONOMIC WARNINGS....................................................................................................................................................................................... 428

IMF WARNS .................................................................................................................................................................................................... 428


NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 428 IMF sees risk of new eurozone .................................................................................................................................................................... 430 IMF Tells Central Europe to Spend More .................................................................................................................................................... 433 Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 436 Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 438

BIS WARNS ..................................................................................................................................................................................................... 440 NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................... 440 Monetary Policy At Its Limits ........................................................................................................................................................................ 452

WORLD BANK WARNS ................................................................................................................................................................................. 453 Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 455

G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 457 RESEARCH WE FOLLOWED .............................................................................................................................................................................. 458 CHARTS OF NOTE ............................................................................................................................................................................................... 461

NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis .................................................................... 461 NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................. 462 NEW-CHART: Global Business Equipment Investment ............................................................................................................................ 463 NEW-CHART: EM versus DM Credit Risk ................................................................................................................................................... 464 NEW-CHART: MSCI World P/E versus EM P/E ........................................................................................................................................... 464 NEW-CHART: Emerging Capital Flows & Currency Moves ...................................................................................................................... 465 NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................ 465 NEW-CHART: Domestic Bank Credit of EM versus DM ............................................................................................................................ 466 NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ................................................................................. 466 NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................ 468 NEW-CHART: There is a Problem in Global Credit .................................................................................................................................... 468 CHART: Serial Disappointments & Ratcheting Down of Global Growth ................................................................................................. 469 CHART: Continuous Weakening of Global GDP Estimates ...................................................................................................................... 470 CHART: Reduced Demand Pressures on Energy Prices .......................................................................................................................... 470 CHART: Reduced Demand Pressures on Commodities ........................................................................................................................... 471 CHART: Global Corporate Profit Trends ..................................................................................................................................................... 471 CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst .................................................................. 472

............................................................................... 473 ....................................................................................................... 474

CHART: Global Domestic Demand Growth ................................................................................................................................................ 474 CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ............................................................................................ 475 CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 475 CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 476 CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 477 CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 477 CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 478 CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 479 CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 479 CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 480 CHART: Shifting Global GDP Share ............................................................................................................................................................ 481 CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 482 CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 482 CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 483 CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 483 CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 484 CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 485

RESEARCH OF NOTE .......................................................................................................................................................................................... 486 NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ...................................................................................................... 486 NEW-GLOBAL OUTLOOK ........................................... 489 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile..................................................................................................... 490 NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ........................................................ 493 GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession .......................................................................................... 494 GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ..................................................................................................... 497 GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................ 501 GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ........................................................... 504 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 506 GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 508 GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 509 GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 514 GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 516 GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 519 GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 522 GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 525 GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 527 GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 530 GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 532

ECONOMIC CUTS ................................................................................................................................................................................................. 536 CHARTS OF NOTE ......................................................................................................................................................................................... 536

CHART 3 ................................................................................................................................... 536 CHART 2 ................................................................................................................................... 539 CHART - 1 .................................................................................................................................... 539

IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 539


IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 545 OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 555

OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 557

GLOBAL MACRO ................................................................................................................................. 560

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 560

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 560 ECONOMIC WARNINGS....................................................................................................................................................................................... 560

IMF WARNS .................................................................................................................................................................................................... 560 NEW-IMF Warns of gloomy eurozone outlook ............................................................................................................................................ 560 NEW-IMF Warns U.S.: Your financial system is (still) vulnerable ............................................................................................................... 565 NEW-IMF Warns Japan over Its Staggering National Debt ........................................................................................................................ 567 NEW-IMF Warns Japan to step up reforms ................................................................................................................................................. 567 NEW-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: Global Consumer Confidence Turns ....................................................................................................................................... 603 NEW-CHART: Global Consumer Confidence Momentum versus Bond Yields .............................................................................................. 603 NEW-CHART: Bear Grip Felt Around the World ............................................................................................................................................. 604 NEW-CHART: Emerging Market FX in Freefall .............................................................................................................................................. 604 NEW-CHART: Asian Dollar Index Sends Ominous Sign ................................................................................................................................ 605 NEW-CHART: Biggest Currency Losers ......................................................................................................................................................... 605 NEW-CHART: The Great Unwind - ng ......................................... 606 NEW- ..................................................................................................................................... 607 CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 607 CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 608 CHART: Global Business Equipment Investment ........................................................................................................................................... 609 CHART: EM versus DM Credit Risk ................................................................................................................................................................ 610 CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 610 CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 611 CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................................. 611 CHART: Domestic Bank Credit of EM versus DM .......................................................................................................................................... 612 CHART: Regional Resilience Score Differences Since the Financial Crisis................................................................................................... 612 CHART: US Macro index at a New 6 Year Low. ............................................................................................................................................. 614 CHART: There is a Problem in Global Credit .................................................................................................................................................. 614 CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 615 CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 616 CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 616 CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 617 CHART: Global Corporate Profit Trends ......................................................................................................................................................... 617 CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 618

oductive Assets ......................................................................................... 619 .............................................................................................................. 620

CHART: Global Domestic Demand Growth .................................................................................................................................................... 620 CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ................................................................................................... 621 CHART: World GDP 2014 Economic Growth Estimates ................................................................................................................................ 621 CHART: World GDP versus World MSCI Stock Index .................................................................................................................................... 622 CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ..................................................................................... 623 CHART: World Trade versus Central Bank Balance Sheet Growth ............................................................................................................... 623 CHART: Falling Global LEI (Leading Economic Indicator).............................................................................................................................. 624 CHART: World GDP Economic Forecast 2014 ............................................................................................................................................... 625 CHART: World GDP Economic Expectations versus MSCI Equity Index ...................................................................................................... 625 CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 626 CHART: Shifting Global GDP Share ............................................................................................................................................................... 627 CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 628 CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 628 CHART: Future Economic Growth a Sub 2% Trend ....................................................................................................................................... 629 CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth ........................................................................................... 629 CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI ........................................................................................................... 630 CHART: Liquidity Drain in US in 2H 2014 ....................................................................................................................................................... 631

RESEARCH OF NOTE .......................................................................................................................................................................................... 632 GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ................................................................................................................. 632


GLOBAL OUTLOOK ...................................................... 635 GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile ............................................................................................................... 636 GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ................................................................... 639 GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 640 GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ...................................................................................................... 643 GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................. 647 GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 650 GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 652 GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 654 GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 655 GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 660 GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 662 GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 665 GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 668 GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat ........................................................................................................................ 671 GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 673 GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 676 GLOBAL OUTLOOK - A 67 Million Jobs Gap ................................................................................................................................................. 678

ECONOMIC CUTS ................................................................................................................................................................................................. 682 CHARTS OF NOTE ......................................................................................................................................................................................... 682

CHART 3 ................................................................................................................................... 682 CHART 2 ................................................................................................................................... 685 CHART - 1 .................................................................................................................................... 685

IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 685 IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 691

OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 701 OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 703

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 706 GLOBAL TRENDS ................................................................................................................................................................................................. 706

CHARTS OF NOTE ......................................................................................................................................................................................... 706 NEW-GLOBAL TRENDS World Industrial Production Index ................................................................................................................... 706 NEW-GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ................................................... 706 NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index ................................................................................................ 707 NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015................................ 707 NEW-GLOBAL TRENDS JAPAN Industrial Production Index ................................................................................................................. 708 NEW-GLOBAL TRENDS EURO AREA Industrial Production Index ....................................................................................................... 708 NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 709 NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 709 GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 709 GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 710 GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 711 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 711 GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 712 GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 712 GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 713 GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 714 GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 714

RESEARCH OF NOTE .................................................................................................................................................................................... 715 NEW-GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse ................................................................................ 715 GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 715 GLOBAL TRENDS ........................................................... 720 GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 724

GLOBAL EMPLOYMENT....................................................................................................................................................................................... 725 CHARTS OF NOTE ......................................................................................................................................................................................... 725

CHART Global Employment Rates ........................................................................................................................................................... 725 CHART Global Unemployment ................................................................................................................................................................. 726 CHART Global Unemployment EU Comparison ................................................................................................................................... 726 CHART Unemployment in Advanced Countries ....................................................................................................................................... 727 CHART Global Labor Participation Rates ................................................................................................................................................ 727 CHART Global Youth Unemployment By Country ................................................................................................................................ 728 CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 728

RESEARCH OF NOTE .................................................................................................................................................................................... 729 GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 729 GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 731 GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 733

GLOBAL SENTIMENT ........................................................................................................................................................................................... 735 CHARTS OF NOTE ......................................................................................................................................................................................... 735

NEW-GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected .................................................. 735 NEW-GLOBAL SENTIMENT Global Consumer Confidence Turns ............................................................................................................. 736

NEW-GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ......................................... 737 NEW-GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ............................................................................. 738 NEW-GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ............................................. 739 NEW-GLOBAL SENTIMENT Differing Concerns Around the World By Region ................................................................................... 740 NEW-GLOBAL SENTIMENT Growing Recessionary Sentiment ............................................................................................................. 741


NEW-GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ........................................................................ 742 GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 743 GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 744 GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 745 GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 746 GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 747 GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 748 GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 749 GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 750 GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 751 GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 752 GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 753 GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 753 GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 755 GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 756 GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 757

RESEARCH OF NOTE .................................................................................................................................................................................... 758 GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 758 GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 760 GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 764 GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 765 GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 767 GLOBAL SENTIMENT - ........................................................ 768

GLOBAL CONSUMPTION ..................................................................................................................................................................................... 779 CHARTS OF NOTE ......................................................................................................................................................................................... 780

NEW-GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region ..................................................................... 780 GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 780 GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 781 GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 782

RESEARCH OF NOTE .................................................................................................................................................................................... 783 GLOBAL GROWTH ............................................................................................................................................................................................... 783

CHARTS OF NOTE ......................................................................................................................................................................................... 783 NEW-GLOBAL GROWTH World Trade Values in US$ ........................................................................................................................... 783 NEW-GLOBAL GROWTH World Industrial Production ............................................................................................................................ 784 NEW-GLOBAL GROWTH World Trade (Values in US$) Index ............................................................................................................... 785 NEW-GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 ..................................................................... 786 NEW-GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................................... 787 NEW-GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ...................................................................... 787 NEW-GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 788 NEW-GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ................................................................................. 788 NEW-GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................... 789 NEW-GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ................................................................... 789 NEW-GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ........................................... 790 NEW-GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ........................................................... 790 NEW-GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................ 791 NEW-GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ............................................................ 791 NEW-GLOBAL GROWTH ............................................................................................................ 792 NEW-GLOBAL GROWTH ............................................................................................................ 792 GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 793 GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 794 GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 795 GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 796 GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 797 GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 797 GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 798 GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 799 GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 799 GLOBAL GROWTH Global Leading Indicator ......................................................... 799 GLOBAL GROWTH ............................................................................................................. 800 GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 801 GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 801

RESEARCH OF NOTE .................................................................................................................................................................................... 802 GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 802 GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 803 GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 805 GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 806 GLOBAL GROWTH ............................................................................. 810 GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 812 GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 814 GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 815 GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 816

GLOBAL CREDIT .................................................................................................................................................................................................. 817 NEW- CREDIT CYCLE - HG Spread Widening .......................................................................................................................................... 817 NEW- CREDIT CYCLE - Widening Gap Between Debt & Equity ............................................................................................................... 817 CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 817 CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 821


GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 824 GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 824

RESEARCH WE F

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