RPT GMTP 2015 09 Peek

ECHO BOOM - REVISITED
Emerging Markets Feeling The Pain
FULL GMTP DATA FILE
GLOBAL MACRO TIPPING POINTS - SEPTEMBER 2015
8/30/2015
1 September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved
Restricted & Confidential

general@GordonTLong.com
ECHO BOOM - REVISITED

Emerging Markets Feeling The Pain
GLOBAL MACRO TIPPING POINTS - SEPTEMBER 2015
GLOBAL RISK ......................................................................................................................................... 37

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 37
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 37
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 38
Our Assessment ................................................................................................................................................................................................ 38
James Rickards Global Risk Assessment ........................................................................................................................................................ 51
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 99
LATEST FROM THE MONITORS ..................................................................................................................................................................... 99
RESEARCH OF NOTE ................................................................................................................................................................................ 103
NEW-MONITORS World Bank - Global Economic Prospects Report.................................................................................................. 103
NEW-MONITORS World Bank Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ..................................... 104
NEW-MONITORS OECD Leading Indicator Casts Doubt on US Economic Rebound ..................................................................... 106
NEW-MONITORS OECD Warns 40 Million People Will Be Out of Work Next Year ....................................................................... 106
NEW-MONITORS IMF Tells Regulators to Brace for Global Liquidity Shock ................................................................................... 109
MONITORS - Lagarde warns of lopsided global growth ........................................................................................................................ 113
MONITORS - OECD Cuts Global Growth Projections Again .................................................................................................................. 114
MONITORS World Bank Global Growth Outlook .............................................................................................................................. 115
MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 116
MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 117
MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 118
BIS ................................................................................................................................................................................................................... 120
NEW-BIS - BIS Quarterly Report ................................................................................................................................................................. 120
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 120
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 121
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 123
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 127
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 130
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 131
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 136
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 140
CHARTS OF NOTE ..................................................................................................................................................................................... 140
WEF Global Business Risks ................................................................................................................................................................. 142
WEF The 2015 Global Risk Landscape ................................................................................................................................................ 143
WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 144
WEF Global Risk Exposures By Region ............................................................................................................................................... 145
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 146
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 146
CHARTS OF NOTE ......................................................................................................................................................................................... 148
NEW-Total Global Credit-Market Debt Owed as % of GDP ........................................................................................................................ 148
NEW-$57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ........................................................... 149
NEW-Global Risk Landscape Grid .............................................................................................................................................................. 150
NEW-Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .................................................................................... 151
NEW-Global Risks of Highest Concern ....................................................................................................................................................... 151
NEW-Global Risks Versus Impact ............................................................................................................................................................... 152
The economic balance of the world is shifting ............................................................................................................................................. 153
Global Conflict Intensity is heating up.......................................................................................................................................................... 154
World Conflict Map ....................................................................................................................................................................................... 155
World Conflict Map Details........................................................................................................................................................................ 156
Global Conflict & Protest Intensity ............................................................................................................................................................... 157
Deutsche Banks Key Global Risk ............................................................................................................................................................... 157
Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 158
RESEARCH OF NOTE .................................................................................................................................................................................... 159
NEW- McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE ................................................................................... 159
NEW- Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 .................................................................................... 163
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 166
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 167
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 169
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 172
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 173
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 174
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 177
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 177
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 188
September 2015 Edition

2

THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 191

THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 192
THE RISK CONTINUUM ............................................................................................................................................................................. 195
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 197
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 199
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 201
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 203
GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 210

GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 212
NEW-GREECE - Greek Lawmakers Won't Back Deal; Finnish FinMin Says "Can't Agree" To New Greek Loans ...................................... 212
NEW-GREECE - Goldman: The Greek Solution "Exposes The Whole System To Collapse" ....................................................................... 212
NEW-GREECE - Munchau: "The Eurozone As We Know It Is Destroyed" .................................................................................................... 212
NEW-GREECE - What Assets Did Greece Just Hand Over To Europe: "Airports, Airplanes, Infrastructure And Most Certainly Banks" .... 212
NEW-GREECE - New Government Likely In Greece, Depositor Bail-In Still Possible, Deutsche Bank Says ............................................... 212
NEW-GREECE - Yanis Varoufakis: "Merkel's Control Over The Eurogroup Is Absolute, They Are Beyond The Law" ................................ 213
NEW-GREECE - How German Media See The New Greek 'Deal'................................................................................................................. 213
NEW-GREECE - Greece Banks Not Out Of The Woods, May Impose Tougher Capital Controls, Barclays Says ....................................... 213
NEW-GREECE - Even The Players Are Losing Faith In Their Own Shenanigans ........................................................................................ 213
NEW-GREECE - After "Deal", Here's What's Next For Greece ...................................................................................................................... 213
NEW-GREECE - EU Exit Will Now Be "Threat To Those Who Don't Behave The German Way," BofA Says ............................................. 215
NEW-GREECE - Tsipras Releases Statement Following Greek "Deal", Will "Fight To Regain Lost National Sovereignty" ......................... 215
NEW-GREECE - Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms ............ 216
NEW-GREECE - How The Greek Deal Almost Collapsed At 6am In The Morning ....................................................................................... 216
NEW-GREECE - The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out" ........................................................... 217
NEW-GREECE - Eurogroup Officially Threatens Greece With 5 Year Grexit "Time Out" ............................................................................. 217
NEW-GREECE - Eurogroup Fails To Reach Deal, Gives Greece 24 Hours To Accept Draconian Terms ................................................... 218
NEW-GREECE - A Broken Greek PM Says He Is "Ready For An Honest Compromise".............................................................................. 218
NEW-GREECE - Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option ........................... 219
NEW-GREECE - Someone Told Merkel... ...................................................................................................................................................... 219
NEW-GREECE - Schauble Proposes "5 Year Grexit With Humanitarian Support" ....................................................................................... 219
NEW-GREECE - Eurogroup Meeting Ends Without Agreement: "Huge Problems", "Issue Of Greek Trust Very Difficult" ........................... 219
NEW-GREECE - Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit ............................................................... 219
GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ............................... 220
GREECE - Greece Prepares To Leave ........................................................................................................................................................... 222
GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ................................................................................ 224
GREECE - Will Greece Call A Referendum On Euro Membership? .............................................................................................................. 225
GREECE - What Greece Owes, And More Importantly - When! .................................................................................................................... 228
GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ........................................................................... 231
GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ................................................................................... 234
GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 237
IRAN ................................................................................................................................................................................................................. 237
RESEARCH OF NOTE ................................................................................................................................................................................ 237
NEW-IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ......................................................................................................... 237
NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 240
YEMEN ............................................................................................................................................................................................................ 241
CHARTS OF NOTE ..................................................................................................................................................................................... 241
YEMEN Strategic Position .................................................................................................................................................................... 241
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 242
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 242
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 243
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 243
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 245
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 246
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 247
RESEARCH OF NOTE ................................................................................................................................................................................ 248
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 248
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 250
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 253
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 254
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 256
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 261
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 263
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 268
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 269
RESEARCH OF NOTE ................................................................................................................................................................................ 275
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 275
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 276
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 280
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 284
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 285
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 288
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 291
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 292
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 294
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 308

3

ISIS .................................................................................................................................................................................................................. 310

ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 311
ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 315
ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 315
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 316
SYRIA .............................................................................................................................................................................................................. 319
SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 320
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 321
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 322
SYRIA - 25 Quotes ................................................................................................................................................................................... 323
SYRIA - What Coalition? .......................................................................................................................................................................... 326
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 328
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 330
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 338
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 340
GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 343
ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 343
CHARTS OF NOTE ..................................................................................................................................................................................... 346
AIIB Demanding Infrastructure .............................................................................................................................................................. 346
RESEARCH OF NOTE ................................................................................................................................................................................ 347
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 347
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 349
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 350
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 352
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 355
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 357
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 359
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 362
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 362
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 364
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 366
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 369
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 371
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 371
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 374

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 374
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 375
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 375
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 376
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 376
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 377
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 377
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 379
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 379
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 380
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 380
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 381
GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 383

CHANGES TO RANKINGS Q3 2015 ................................................................................................................................................................. 383
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 385
CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 386
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 387
TIPPING POINTS: TOP 5 FOCUS - AUGUST 2015 ............................................................................................................................................. 390
NEW-I BOND BUBBLE................................................................................................................................................................................. 390
$140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse"............................................................................ 390
NEW-II - RISK REVERSAL ............................................................................................................................................................................. 392
What Happened The Last Time The Fed's Balance Sheet Hit 25% Of GD ................................................................................................ 392
NEW-III - GEO-POLITICAL EVENT RISK ....................................................................................................................................................... 398
The REAL Reason Greece Matters For Investors ....................................................................................................................................... 401
NEW-IV - CHINA HARD LANDING ................................................................................................................................................................. 408
Chinese Stock Markets - 1929 In Chinese Markets .................................................................................................................................. 410
NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 419
Abenomic's QQE Phiosophically Unsound ............................................................................................................................................ 419
GLOBAL MACRO ................................................................................................................................. 427

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 427
ECONOMIC WARNINGS....................................................................................................................................................................................... 427
IMF WARNS .................................................................................................................................................................................................... 427

4

NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 427

IMF sees risk of new eurozone .................................................................................................................................................................... 429
IMF Tells Central Europe to Spend More .................................................................................................................................................... 432
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 435
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 437
BIS WARNS ..................................................................................................................................................................................................... 439
NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................... 439
Monetary Policy At Its Limits ........................................................................................................................................................................ 451
WORLD BANK WARNS ................................................................................................................................................................................. 452
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 454
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 456
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 457
CHARTS OF NOTE ............................................................................................................................................................................................... 460
NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis .................................................................... 460
NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................. 461
NEW-CHART: Global Business Equipment Investment ............................................................................................................................ 462
NEW-CHART: EM versus DM Credit Risk ................................................................................................................................................... 463
NEW-CHART: MSCI World P/E versus EM P/E ........................................................................................................................................... 463
NEW-CHART: Emerging Capital Flows & Currency Moves ...................................................................................................................... 464
NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................ 464
NEW-CHART: Domestic Bank Credit of EM versus DM ............................................................................................................................ 465
NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ................................................................................. 465
NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................ 467
NEW-CHART: There is a Problem in Global Credit .................................................................................................................................... 467
CHART: Serial Disappointments & Ratcheting Down of Global Growth ................................................................................................. 468
CHART: Continuous Weakening of Global GDP Estimates ...................................................................................................................... 469
CHART: Reduced Demand Pressures on Energy Prices .......................................................................................................................... 469
CHART: Reduced Demand Pressures on Commodities ........................................................................................................................... 470
CHART: Global Corporate Profit Trends ..................................................................................................................................................... 470
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst .................................................................. 471
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ............................................................................... 472
CHART: Growth of Asian Middle Class Dominates Next 20 Years ....................................................................................................... 473
CHART: Global Domestic Demand Growth ................................................................................................................................................ 473
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ............................................................................................ 474
CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 474
CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 475
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 476
CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 476
CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 477
CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 478
CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 478
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 479
CHART: Shifting Global GDP Share ............................................................................................................................................................ 480
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 481
CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 481
CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 482
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 482
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 483
CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 484
RESEARCH OF NOTE .......................................................................................................................................................................................... 485
NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ...................................................................................................... 485
NEW-GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ........................................... 488
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile..................................................................................................... 489
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ........................................................ 492
GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession .......................................................................................... 493
GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ..................................................................................................... 496
GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................ 500
GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ........................................................... 503
GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 505
GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 507
GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 508
GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 513
GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 515
GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 518
GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 521
GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 524
GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 526
GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 529
GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 531
ECONOMIC CUTS ................................................................................................................................................................................................. 535
CHARTS OF NOTE ......................................................................................................................................................................................... 535
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 535
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 538
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 538

5

IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 544

OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 554
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 556
GLOBAL MACRO ................................................................................................................................. 559

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 559
GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 559
ECONOMIC WARNINGS....................................................................................................................................................................................... 559
IMF WARNS .................................................................................................................................................................................................... 559
NEW-IMF Warns of gloomy eurozone outlook ............................................................................................................................................ 559
NEW-IMF Warns U.S.: Your financial system is (still) vulnerable ............................................................................................................... 564
NEW-IMF Warns Japan over Its Staggering National Debt ........................................................................................................................ 566
NEW-IMF Warns Japan to step up reforms ................................................................................................................................................. 566
NEW-IMF Warns Fed on risks of hiking too soon........................................................................................................................................ 567
IMF Warns of Permanent Stagnation .......................................................................................................................................................... 568
IMF Sees risk of new eurozone ................................................................................................................................................................... 570
IMF Tells Central Europe to Spend More .................................................................................................................................................... 573
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 576
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 578
BIS WARNS ..................................................................................................................................................................................................... 580
BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................................... 580
Monetary Policy At Its Limits ........................................................................................................................................................................ 592
WORLD BANK WARNS .................................................................................................................................................................................. 593
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ............................................................................... 595
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 598
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 599
CHARTS OF NOTE ............................................................................................................................................................................................... 602
NEW-CHART: Global Consumer Confidence Turns ....................................................................................................................................... 602
NEW-CHART: Global Consumer Confidence Momentum versus Bond Yields .............................................................................................. 602
NEW-CHART: Bear Grip Felt Around the World ............................................................................................................................................. 603
NEW-CHART: Emerging Market FX in Freefall .............................................................................................................................................. 603
NEW-CHART: Asian Dollar Index Sends Ominous Sign ................................................................................................................................ 604
NEW-CHART: Biggest Currency Losers ......................................................................................................................................................... 604
NEW-CHART: The Great Unwind - A Triple Unwind of EM Credit, Chinas Leverage and US Monetary Easing ......................................... 605
NEW-CHART: Latin Americas Economic Slowdown ..................................................................................................................................... 606
CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 606
CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 607
CHART: Global Business Equipment Investment ........................................................................................................................................... 608
CHART: EM versus DM Credit Risk ................................................................................................................................................................ 609
CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 609
CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 610
CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................................. 610
CHART: Domestic Bank Credit of EM versus DM .......................................................................................................................................... 611
CHART: Regional Resilience Score Differences Since the Financial Crisis................................................................................................... 611
CHART: US Macro index at a New 6 Year Low. ............................................................................................................................................. 613
CHART: There is a Problem in Global Credit .................................................................................................................................................. 613
CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 614
CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 615
CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 615
CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 616
CHART: Global Corporate Profit Trends ......................................................................................................................................................... 616
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 617
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ......................................................................................... 618
CHART: Growth of Asian Middle Class Dominates Next 20 Years .............................................................................................................. 619
CHART: Global Domestic Demand Growth .................................................................................................................................................... 619
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ................................................................................................... 620
CHART: World GDP 2014 Economic Growth Estimates ................................................................................................................................ 620
CHART: World GDP versus World MSCI Stock Index .................................................................................................................................... 621
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ..................................................................................... 622
CHART: World Trade versus Central Bank Balance Sheet Growth ............................................................................................................... 622
CHART: Falling Global LEI (Leading Economic Indicator).............................................................................................................................. 623
CHART: World GDP Economic Forecast 2014 ............................................................................................................................................... 624
CHART: World GDP Economic Expectations versus MSCI Equity Index ...................................................................................................... 624
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 625
CHART: Shifting Global GDP Share ............................................................................................................................................................... 626
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 627
CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 627
CHART: Future Economic Growth a Sub 2% Trend ....................................................................................................................................... 628
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth ........................................................................................... 628
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI ........................................................................................................... 629
CHART: Liquidity Drain in US in 2H 2014 ....................................................................................................................................................... 630
RESEARCH OF NOTE .......................................................................................................................................................................................... 631
GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ................................................................................................................. 631

6

GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
GLOBAL OUTLOOK
Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ...................................................... 634
2015 Macro Outlook Proving to be Volatile ............................................................................................................... 635
2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ................................................................... 638
3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 639
This is the Biggest Risk to the World's Economy ...................................................................................................... 642
What is global market turbulence telling us? ............................................................................................................. 646
Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 649
The Last Days Of The Growth Story? ........................................................................................................................ 651
The Last Days Of The Growth Story? ........................................................................................................................ 653
- THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 654
- 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 659
- Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 661
- Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 664
The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 667
- Credit Fueled Globalization in Retreat ........................................................................................................................ 670
- Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 672
- Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 675
- A 67 Million Jobs Gap ................................................................................................................................................. 677
ECONOMIC CUTS ................................................................................................................................................................................................. 681

CHARTS OF NOTE ......................................................................................................................................................................................... 681
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 684
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 684
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 690
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 700
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 702
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 705

GLOBAL TRENDS ................................................................................................................................................................................................. 705
CHARTS OF NOTE ......................................................................................................................................................................................... 705
NEW-GLOBAL TRENDS World Industrial Production Index ................................................................................................................... 705
NEW-GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ................................................... 705
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index ................................................................................................ 706
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015................................ 706
NEW-GLOBAL TRENDS JAPAN Industrial Production Index ................................................................................................................. 707
NEW-GLOBAL TRENDS EURO AREA Industrial Production Index ....................................................................................................... 707
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 708
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 708
GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 708
GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 709
GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 710
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 710
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 711
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 711
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 712
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 713
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 713
RESEARCH OF NOTE .................................................................................................................................................................................... 714
NEW-GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse ................................................................................ 714
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 714
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 719
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 723
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 724
CHARTS OF NOTE ......................................................................................................................................................................................... 724
CHART Global Employment Rates ........................................................................................................................................................... 724
CHART Global Unemployment ................................................................................................................................................................. 725
CHART Global Unemployment EU Comparison ................................................................................................................................... 725
CHART Unemployment in Advanced Countries ....................................................................................................................................... 726
CHART Global Labor Participation Rates ................................................................................................................................................ 726
CHART Global Youth Unemployment By Country ................................................................................................................................ 727
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 727
RESEARCH OF NOTE .................................................................................................................................................................................... 728
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 728
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 730
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 732
GLOBAL SENTIMENT ........................................................................................................................................................................................... 734
CHARTS OF NOTE ......................................................................................................................................................................................... 734
NEW-GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected .................................................. 734
NEW-GLOBAL SENTIMENT Global Consumer Confidence Turns ............................................................................................................. 735
NEW-GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ......................................... 736
NEW-GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ............................................................................. 737
NEW-GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ............................................. 738
NEW-GLOBAL SENTIMENT Differing Concerns Around the World By Region ................................................................................... 739
NEW-GLOBAL SENTIMENT Growing Recessionary Sentiment ............................................................................................................. 740

7

NEW-GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ........................................................................ 741
GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 742
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 743
GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 744
GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 745
GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 746
GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 747
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 748
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 749
GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 750
GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 751
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 752
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 752
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 754
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 755
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 756
RESEARCH OF NOTE .................................................................................................................................................................................... 757
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 757
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 759
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 763
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 764
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 766
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 767
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 778
CHARTS OF NOTE ......................................................................................................................................................................................... 779
NEW-GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region ..................................................................... 779
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 779
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 780
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 781
RESEARCH OF NOTE .................................................................................................................................................................................... 782
GLOBAL GROWTH ............................................................................................................................................................................................... 782
CHARTS OF NOTE ......................................................................................................................................................................................... 782
NEW-GLOBAL GROWTH World Trade Values in US$ ........................................................................................................................... 782
NEW-GLOBAL GROWTH World Industrial Production ............................................................................................................................ 783
NEW-GLOBAL GROWTH World Trade (Values in US$) Index ............................................................................................................... 784
NEW-GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 ..................................................................... 785
NEW-GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................................... 786
NEW-GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ...................................................................... 786
NEW-GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 787
NEW-GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ................................................................................. 787
NEW-GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................... 788
NEW-GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ................................................................... 788
NEW-GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ........................................... 789
NEW-GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ........................................................... 789
NEW-GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................ 790
NEW-GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ............................................................ 790
NEW-GLOBAL GROWTH CHINAS Imports, Annual % Change ............................................................................................................ 791
NEW-GLOBAL GROWTH CHINAS Exports, Annual % Change ............................................................................................................ 791
GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 792
GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 793
GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 794
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 795
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 796
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 796
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 797
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 798
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 798
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 798
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 799
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 800
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 800
RESEARCH OF NOTE .................................................................................................................................................................................... 801
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 801
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 802
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 804
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 805
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 809
GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 811
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 813
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 814
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 815
GLOBAL CREDIT .................................................................................................................................................................................................. 816
NEW- CREDIT CYCLE - HG Spread Widening .......................................................................................................................................... 816
NEW- CREDIT CYCLE - Widening Gap Between Debt & Equity ............................................................................................................... 816
CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 816
CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 820

8

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 823

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 823
RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 823
CHARTS OF NOTE ......................................................................................................................................................................................... 826
NEW-CHARTS Saudi + China Reserves versus 10Y UST Yield ............................................................................................................. 826
NEW-CHARTS Total World Reserve Foreign Exchange Reserves......................................................................................................... 826
NEW-CHARTS Why Canada May Become a Problem For Janet Yellen ................................................................................................ 827
CHARTS Consensus Fed and ECB Rate Hike Projections ..................................................................................................................... 828
CHARTS Global Monetary Policy Stance & Bias ..................................................................................................................................... 829
CHARTS Global Government Bonds Trading With Negative Yields........................................................................................................ 830
CHARTS Lack of Inflation in Europe ........................................................................................................................................................ 830
CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s)............................................................. 831
CHARTS Quantitative e Easing No Longer Drives Commodity Prices .................................................................................................... 832
CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................................ 832
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 833
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 833
CHARTS Falling Global Bond Rates Continue in Q1 2015 ...................................................................................................................... 834
CHARTS The Road to NIR (Negative Rates) ........................................................................................................................................... 834
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 835
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 835
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 837
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 837
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 838
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 838
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 839
RESEARCH OF NOTE .................................................................................................................................................................................... 840
NEW-CENTRAL BANKS - xxxx ................................................................................................................................................................... 840
NEW-CENTRAL BANKS - 8 Capital Markets 'Threats' To The Central Bank Narrative ............................................................................. 840
NEW-CENTRAL BANKS - How Much More Faith In Central Banks Is Left? .............................................................................................. 842
CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................................ 844
CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode .............................................................................................. 845
CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................................ 846
CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage ......................................................................................... 849
CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ................................................................................ 850
CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation .......................................................... 852
CENTRAL BANKS - The year of Dollar Danger for the world ..................................................................................................................... 854
CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ........................................................ 859
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 863
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 865
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 866
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 869
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 870
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 871
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 873
WAR ON CASH ............................................................................................................................................................................................... 878
WAR ON CASH Elliott Waves Report on the War on Cash .................................................................................................................. 878
WAR ON CASH The "War On Cash" Migrates To Switzerland ............................................................................................................... 883
WAR ON CASH Chase Joins the War on Cash ....................................................................................................................................... 886
WAR ON CASH Largest Bank In America Joins War On Cash ............................................................................................................... 888
WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban .......................................................................................................... 890
SWISS PEG ..................................................................................................................................................................................................... 894
SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .................................................................................................... 895
SWISS PEG Swiss Peg Failure The Financial System Broke Last Week ............................................................................................ 897
SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ............................................................ 898
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 902
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 902
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 903
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 906
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 908
BOE - UK ................................................................................................................................................................................................................ 909
CHARTS OF NOTE ......................................................................................................................................................................................... 909
UK Sterling/ US Dollar Exchange Rate after UK Super Thursday ......................................................................................................... 909
UK Dissent within BOE Set to Continue ................................................................................................................................................... 909
RESEARCH OF NOTE .................................................................................................................................................................................... 910
NEW-UK - Neutral Report Leaves BOE on Track for February Liftoff ........................................................................................................ 910
NEW-UK - Did The Bank Of England Just Admit Financial Markets Aren't "Real"? ................................................................................... 912
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 913
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 914
FED - US ................................................................................................................................................................................................................ 916
CHARTS OF NOTE ......................................................................................................................................................................................... 917
NEW-CHARTS Inflation Expectations versus Fed QE Easing Operations .............................................................................................. 917
NEW-CHARTS Depth of US Treasury Markets Has Declined from Recent Highs .................................................................................. 917
NEW-CHARTS China Dumping US Treasuries as Chinese Forex Reserves Fall .................................................................................. 918
NEW-CHARTS US Defenses Down ......................................................................................................................................................... 919
NEW-CHARTS September Rate Hike Forecast History .......................................................................................................................... 920

9

NEW-CHARTS Only One Thing Can Stop the Fed from a September Rate Hike Emerging Market Weakness ................................. 920
CHARTS Feds QE History versus UST 10 Year Yields .......................................................................................................................... 921
CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 921
CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 921
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 922
RESEARCH OF NOTE .................................................................................................................................................................................... 923
NEW-US MONETARY Why We Have Low Level Equilibria .................................................................................................................. 923
NEW-US MONETARY Crashing Inflation Expectations Suggest Imminent Launch Of QE4 ................................................................... 925
NEW-US MONETARY Why Goldman Is Confident the Fed Will Wait To Hike Until December (At Least) ............................................ 926
NEW-US MONETARY Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End of Debt Supercycle..... 928
NEW-US MONETARY What Options Are Saying About A Possible September Rate Hike ................................................................... 929
NEW-US MONETARY The Fed Is Scared To Raise Rates, Ron Paul Warns "Everything Is Too Vulnerable" ...................................... 931
NEW-US MONETARY Hilsenrath Warns Fed Is Out Of Ammo, "Policy Makers Resorting To Backup, Backup Plans" ........................ 932
NEW-US MONETARY China's Record Dumping Of US Treasuries Leaves Goldman Speechless ....................................................... 934
NEW-US MONETARY Fed Goes Looking For Evidence of Broken Treasury Market, Decides Everything Is Fine ............................... 939
NEW-US MONETARY The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts ...................................................... 944
US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ....................................................... 944
US MONETARY - Audit the Fed Yellens Testimony ................................................................................................................................ 947
US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy .......................................................................... 956
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 959
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 962
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 965
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 967
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 969
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 975
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 976
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 978
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 980
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 983
CHARTS OF NOTE ......................................................................................................................................................................................... 983
JAPAN Japan Heads Back towards Deflation .......................................................................................................................................... 983
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 984
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 985
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 986
RESEARCH OF NOTE .................................................................................................................................................................................... 987
NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 987
NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 989
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 990
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 993
BOJ JAPAN ......................................................................................................................................................................................................... 995
CHARTS OF NOTE ......................................................................................................................................................................................... 995
JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 995
JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 996
JAPAN Japanese Trade Balance ............................................................................................................................................................. 997
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 997
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 998
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 998
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 998
JAPAN Real Wages Plummet as Financial Repression Takes Hold ....................................................................................................... 999
RESEARCH OF NOTE .................................................................................................................................................................................. 1000
JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game .................................................................................... 1001
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ............................................................................... 1003
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target ............................................................................................ 1006
JAPAN - No Way Out But to Expand the Monetary Base ......................................................................................................................... 1008
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years..................................................................................................................................... 1009
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................. 1012
JAPAN - Some Policies Have Clearly Hit the Limit ................................................................................................................................... 1014
JAPAN - Foreshadows Next Global Crisis ................................................................................................................................................ 1015
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ..................................................................... 1020
JAPAN - Shinzo Abes Monetary-Policy Delusions ................................................................................................................................... 1021
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" ................................................................................ 1024
JAPAN - Japanese Economic Policy Goes The Full Ponzi ....................................................................................................................... 1025
PBOC - CHINA ..................................................................................................................................................................................................... 1027
CHARTS OF NOTE ....................................................................................................................................................................................... 1028
NEW-CHARTS Chinas Capital Inflow / Outflow .................................................................................................................................... 1028
NEW-CHARTS Chinas Falling Holdings of US Treasuries ................................................................................................................... 1028
NEW-CHARTS Cumulative % Increases in Pork Since the Start of the Cycle ...................................................................................... 1029
NEW-CHARTS Severe Supply of Food Staple - Pork ............................................................................................................................ 1029
NEW-CHARTS Chinese CPI (Minus Pork) ............................................................................................................................................. 1030
CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ....................................................................... 1030
CHARTS China Reduces Bank Reserve Ratio ...................................................................................................................................... 1030
CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ......................................................................................... 1031
CHARTS Falling Chinese Government Revenue Growth ...................................................................................................................... 1033
CHARTS Falling National New Residential Housing Starts ................................................................................................................... 1033
CHARTS China and Asia Residential Property Tracking US Housing Bubble ...................................................................................... 1034
CHARTS Real Chinese Rates versus Cuts ............................................................................................................................................ 1034

10

RESEARCH OF NOTE .................................................................................................................................................................................. 1035

NEW CHINA MONETARY - Devaluation Stunner: China Has Dumped $100 Billion In Treasuries In The Past Two Week ................... 1035
NEW CHINA MONETARY - China's Record Dumping Of US Treasuries Leaves Goldman Speechless ................................................ 1037
NEW CHINA MONETARY - Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts ................ 1042
CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says .................................... 1048
CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ..................................................................................... 1050
CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears ................................................................................................ 1052
ECB EU ............................................................................................................................................................................................................. 1058
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1058
CHARTS OF NOTE ....................................................................................................................................................................................... 1059
NEW-CHARTS EU QE Results An Abject Failure .............................................................................................................................. 1059
CHARTS Welcome to the EUs NIRP .................................................................................................................................................. 1059
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1060
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1060
CHARTS UK & German Total Return Indices ........................................................................................................................................ 1061
CHARTS ECBs Dilemma of Digging Up Enough Debt .......................................................................................................................... 1061
CHARTS Nearly $2T European Nonds Trading With Negative Yields .................................................................................................. 1062
CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ............................................................... 1062
CHARTS The Fastest Growing Asset Class NIR Products ................................................................................................................. 1063
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ......................................................................................................... 1064
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU ............................................................................................................ 1065
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 .............................................................................................................. 1065
CHARTS Euro-Area Inflation Expectations Decline ............................................................................................................................... 1066
CHARTS Euro-Area Private Sector Loan Creation ................................................................................................................................ 1067
CHARTS Euro-Area Money Supply, Private Sector Lending Growth .................................................................................................... 1067
CHARTS Euro-Area 10 Yr Sovereign Bond Yields ................................................................................................................................ 1068
CHARTS Slovenia May BE the Next EU Debt Hotspot .......................................................................................................................... 1068
CHARTS Spain & Portugal NPL ............................................................................................................................................................. 1069
CHARTS ECBs Turn to Expand Its Balance Sheet ............................................................................................................................... 1070
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................. 1070
CHARTS Expect Major ECB Policy Announcement in Q2 2014 ............................................................................................................ 1071
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................. 1072
RESEARCH OF NOTE .................................................................................................................................................................................. 1073
NEW-EU MONETARY - Draghi Failed: European Inflation Expectations Slide To Pre-QE Level ........................................................... 1074
EU MONETARY - NIRP Is A Flawed Economic Concept ......................................................................................................................... 1075
EU MONETARY - NIRP ............................................................................................................................................................................. 1077
EU MONETARY NIRP - Yield scarce as the world turns negative ........................................................................................................ 1081
EU MONETARY - Draghi Key Statements ................................................................................................................................................ 1084
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................. 1085
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action .................................................................................... 1087
EU MONETARY - Euro-Area Data Deterioration Points toward QE ......................................................................................................... 1089
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down .......................................................................... 1091
MACRO MONETARY INFLATION ................................................................................................................................................................... 1093
CHARTS OF NOTE ............................................................................................................................................................................................. 1093
CHARTS The Fall of Hyperinflation & the Rise of Deflation ...................................................................................................................... 1093
CHARTS Falling US Consumer Price Index .............................................................................................................................................. 1093
CHARTS Global Consumer Prices are Rising Significantly ....................................................................................................................... 1094
CHARTS Global Country Inflation Rates ................................................................................................................................................ 1094
CHARTS Two Worlds if Inflation EM and DM ..................................................................................................................................... 1094
CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1096
RESEARCH OF NOTE .................................................................................................................................................................................. 1097
INFLATION Martin Armstrongs Explanation of Monetary Inflation ........................................................................................................ 1097
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ........................................... 1099
GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1101

GEO-ECONOMIC INDEX .................................................................................................................................................................................... 1101
EMERGING & FRONTIER MARKETS - Emerging Markets Growth, Credit & Forex Problems - Fx Plummet ................................................ 1102
CHARTS OF NOTE ....................................................................................................................................................................................... 1106
NEW-CHARTS Emerging Market 10 Year Shift in Share of World GDP 2004 to 2014 ..................................................................... 1106
NEW-CHARTS Emerging Market Fx in Freefall ..................................................................................................................................... 1106
NEW-CHARTS Total Economy Debt as a % of GDP India, Poland, Ireland and Spain ..................................................................... 1107
NEW-CHARTS Global FX Reserves 2000 versus 2005 versus 2015 ................................................................................................ 1107
NEW-CHARTS GDP per Capita Income ................................................................................................................................................ 1108
NEW-CHARTS EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 .......................................................................... 1109
NEW-CHARTS Brazil in or Near a Serious Recession .......................................................................................................................... 1109
NEW-CHARTS Collapsing Currencies in Columbia and Chile ............................................................................................................... 1110
NEW-CHARTS The Unwind of EM Credit, Chinas Leverage and US Monetary Easing ...................................................................... 1111
NEW-CHARTS The Tale of Two Economies Chile versus Portugal ................................................................................................... 1112
NEW-CHARTS Emerging & Developed Economy Growth Rates Converge ......................................................................................... 1113
NEW-CHARTS Emerging Market Currency Sell-Off .............................................................................................................................. 1113
NEW-CHARTS Emerging Markets Stocks versus Developed Market Stocks ....................................................................................... 1114
NEW-CHARTS Investors Are Pulling Money From Developing Markets ............................................................................................... 1115
NEW-CHARTS Valuation of EM Stocks is Falling Against Developed Markets .................................................................................... 1115
NEW-CHARTS EM Capital Outflows Surge Towards $1T ..................................................................................................................... 1116

11

NEW-CHARTS Developing Nation Currencies Plunge After Chinas Devaluation Rattles Markets...................................................... 1116
CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ........................................................................... 1118
CHARTS Wide Spread Emerging Market Capital Out Flows ................................................................................................................. 1119
CHARTS Emerging Market Debt versus GDP - 2013 ............................................................................................................................ 1120
CHARTS Emerging Market Resilience Indicator Changes .................................................................................................................... 1120
CHARTS BRIC Countries Responsible for 43% of Global Growth ........................................................................................................ 1121
CHARTS BRIC & Emerging Market Inflation Rates ............................................................................................................................... 1121
CHARTS Emerging Market Default Probability ...................................................................................................................................... 1122
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions ................................................ 1122
CHARTS Emerging Market Outflows...................................................................................................................................................... 1123
CHARTS Emerging Market Outflows -2 ................................................................................................................................................. 1123
CHARTS Developed versus Emerging Equity Markets 1990-2014 .................................................................................................... 1124
CHARTS Total GEM Flows..................................................................................................................................................................... 1124
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................. 1125
RESEARCH OF NOTE .................................................................................................................................................................................. 1126
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1126
NEW-EMERGING MARKETS - Emerging Market Currencies To Crash 30-50%, Jen Says ................................................................... 1126
NEW-EMERGING MARKETS - Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse ..................... 1128
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1134
NEW-EMERGING MARKETS - Lost Decade in Emerging Markets: Investors Already Halfway There .................................................. 1141
EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ..................................................................................... 1146
EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" .............................................................. 1149
EMERGING MARKETS - Emerging markets: The great unraveling ......................................................................................................... 1151
EMERGING MARKETS - Moodys warns on EM dollar finance costs ...................................................................................................... 1156
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................. 1157
EMERGING MARKETS - Crisis Redux? ................................................................................................................................................... 1158
EMERGING MARKETS - Losing Their Punch ....................................................................................................................................... 1163
EMERGING MARKETS - Risk-On!........................................................................................................................................................... 1165
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................. 1166
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1168
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................. 1169
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1175
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1180
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ................................................... 1184
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain ........................................ 1187
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1190
US$ RESERVE STATUS & ERODING INFLUENCE.......................................................................................................................................... 1190
RESEARCH WE FOLLOWED DE=DOLLARIZATION ............................................................................................................................ 1190
CHARTS OF NOTE ....................................................................................................................................................................................... 1194
DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ............................................... 1194
DE-DOLLARIZATION - AIIBs Founding Members ................................................................................................................................... 1194
DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ................................................................... 1195
DE-DOLLARIZATION - AIIB Infrastructure Investment ............................................................................................................................. 1196
DE-DOLLARIZATION - The Rise & Fall of Modern Empires .................................................................................................................... 1196
RESEARCH OF NOTE .................................................................................................................................................................................. 1198
DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund..................................................................................... 1198
DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ....................................................................................... 1202
DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ....................................................... 1204
DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ............................................. 1206
DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .................................................................. 1208
DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe .................................................... 1210
DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ..................................... 1210
DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? ..................................................................................................... 1214
DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities .................................... 1216
DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar?..................................................................................... 1217
RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ................................................................ 1218
RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system.......................... 1220
RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ............................................................... 1222
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ..................... 1223
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................. 1224
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ..................................................................... 1225
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order .......................... 1226
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar .................................................................... 1229
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ...................................................... 1230
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar ................................................................................................ 1232
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries .................................................... 1233
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued ........................................................................................................ 1235
CHARTS OF NOTE ....................................................................................................................................................................................... 1238
ENERGY Saudi Crude Oil Production & Brent Price ............................................................................................................................. 1238
ENERGY World Liquids Percent of Production ...................................................................................................................................... 1238
ENERGY Interest Rates & Oil Prices in 2015 Dollars ............................................................................................................................ 1239
ENERGY Oil Production and CAPEX by Operating Environment 2014 ................................................................................................ 1239
ENERGY Global Drilling Intensity Will Increase ..................................................................................................................................... 1240
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 .................................................... 1240
ENERGY Breakeven for All Global Oil Projects ..................................................................................................................................... 1241

12

ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1242
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1243
ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years .......................................................................................... 1244
ENERGY Falling Inflation Adjusted Gasoline Prices .............................................................................................................................. 1245
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ..................................................................................................... 1246
ENERGY US Shale Oil Breakeven Prices .............................................................................................................................................. 1248
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................. 1248
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ............................................................ 1249
ENERGY EM Oil Producers Being Crushed .......................................................................................................................................... 1249
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................. 1250
ENERGY Oil Supply / Demand and Price .............................................................................................................................................. 1251
RESEARCH OF NOTE .................................................................................................................................................................................. 1252
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .................................................... 1252
RUSSIA- OPEC Presents: QE4 And Deflation ...................................................................................................................................... 1255
RUSSIA Energy War ........................................................................................................................................................................... 1257
PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ....................................................................... 1260
PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? ............................................................................ 1264
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ........................... 1269
PETRODOLLAR Collapsing PetroDollar Foundation ......................................................................................................................... 1275
UKRAINE - Pulled between EU v Russia .............................................................................................................................................. 1279
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................. 1279
UKRAINE - Pulled between Economic Inequality Factors ..................................................................................................................... 1280
UKRAINE - Pulled between the Global Military Balance ....................................................................................................................... 1281
UKRAINE - Pulled by Global Financial Markets .................................................................................................................................... 1282
UKRAINE - A Deep State Analysis ........................................................................................................................................................ 1285
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ..................................................................................................... 1289
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ............................................................... 1290
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield .................................................... 1291
ENERGY - The Oil Price Decline ........................................................................................................................................................... 1293
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................. 1300
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1302
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1305
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1310
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1311
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1313
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1316
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1319
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1323
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1328
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1335
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1338
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1340
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1342
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1347
CHARTS OF NOTE ....................................................................................................................................................................................... 1348
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1348
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1349
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1349
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1350
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1350
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1351
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1351
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1352
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1353
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1353
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1354
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1354
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1355
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1356
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1356
RESEARCH OF NOTE .................................................................................................................................................................................. 1358
CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls ........................................................ 1358
CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio ............................................................................ 1362
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1363
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1364
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1365
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1367
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1368
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1369
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1372
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1374
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1377
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1378
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1379
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1382

13

CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1387
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1390
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1392
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1393
GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1395
CHARTS OF NOTE ....................................................................................................................................................................................... 1397
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1397
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1397
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1399
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1399
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1400
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1400
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1401
RESEARCH OF NOTE .................................................................................................................................................................................. 1403
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1403
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1404
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1407
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1409
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1411
DEBT Growth of Financial Services ....................................................................................................................................................... 1414
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1414
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1416
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1418
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1419
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1419
CHARTS OF NOTE ....................................................................................................................................................................................... 1420
CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1420
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1420
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1421
CHARTS Food Importers ........................................................................................................................................................................ 1421
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1422
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1423
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1423
CHARTS CRB Food Index One Year .................................................................................................................................................. 1425
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1426
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1427
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1428
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1428
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1430
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1431
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1432
CHARTS Coffee Futures ........................................................................................................................................................................ 1432
CHARTS Lean Hog Futures ................................................................................................................................................................... 1433
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1433
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1434
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1434
RESEARCH OF NOTE .................................................................................................................................................................................. 1435
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1435
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1438
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1439
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1441
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1441
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1446
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1447
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1449
EUROPE - Euro Exposed .............................................................................................................................................................................. 1449
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1451
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1452
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1452
SWITZERLAND - No Choice ......................................................................................................................................................................... 1452
SINGAPORE - Hot Money ............................................................................................................................................................................. 1453
UK- Pound Joins War .................................................................................................................................................................................... 1454
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1455
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1458
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1461
CYBER SPYING ............................................................................................................................................................................................ 1462
REGIONAL ........................................................................................................................................... 1463

NEW-RESEARCH WE FOLLOWED ON GREECE ............................................................................................................................................ 1463

14

EU WEAK BUT SOME POSITIVE ECONOMIC NEWS ........................................................................................................ 1467

CHARTS OF NOTE ....................................................................................................................................................................................... 1469
NEW-CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ................................................................................ 1469
NEW-CHARTS Eurozone GDP Since 1999 ........................................................................................................................................... 1469
NEW-CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" ........................................... 1470
NEW-CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ........................................... 1471
NEW-CHARTS "Over 1/2 of all government bonds yield less than 1%." ............................................................................................... 1472
NEW-CHARTS A weaker Euro has been good for the STOXX 600 ...................................................................................................... 1473
NEW-CHARTS Eurozone equity inflows continue to rise....................................................................................................................... 1474
NEW-CHARTS YTD flows into European equity funds .......................................................................................................................... 1474
NEW-CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ................................................................................. 1474
NEW-CHARTS Negative Yields Have Become the New Norm in the Euro area ................................................................................. 1475
NEW-CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ..................................................... 1475
NEW-CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. .......................................................................................................... 1476
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre..................................................................................... 1476
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ........................................................................................ 1477
CHARTS Eurozone is the Biggest Drag on Global Profits ..................................................................................................................... 1477
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ....................................................................... 1478
CHARTS EU PMIS Rolling Over ............................................................................................................................................................ 1479
CHARTS Eurozone Banks Too Big To Be Bailed Out! .......................................................................................................................... 1480
CHARTS Eurozone Area Consumer Confidence May Be Misleading ................................................................................................... 1481
CHARTS Eurozone GDP & Recession Pattern ...................................................................................................................................... 1481
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1482
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1482
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1483
CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1484
CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1485
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1485
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1486
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1487
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1487
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1488
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1488
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1489
CHARTS EU Confidence ........................................................................................................................................................................ 1490
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1491
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1492
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1492
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1493
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1494
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1495
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1496
CHARTS - EU Area Weakness ................................................................................................................................................................. 1497
CHARTS - EU Area GDP ........................................................................................................................................................................... 1498
CHARTS - EU Area PMI ............................................................................................................................................................................ 1499
CHARTS - EU Area PMI ............................................................................................................................................................................ 1500
CHARTS - EU Real Rates ......................................................................................................................................................................... 1501
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1502
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1503
CHARTS - EU PMI ..................................................................................................................................................................................... 1503
CHARTS - EU CPI ..................................................................................................................................................................................... 1505
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1506
CHARTS - Europe's "Core" Problem is France .................................................................................................................................... 1507
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ........................................................................... 1510
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................. 1511
CHARTS - EU Credit Downgrades, France and UK On Tap ................................................................................................................... 1513
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1515
CHARTS - Dangerous Delusional Divergences .................................................................................................................................... 1517
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1518
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1519
CHARTS - Eurozone Misery Indices Never Been Higher ..................................................................................................................... 1520
CHARTS - Euro Currency .......................................................................................................................................................................... 1522
RESEARCH OF NOTE .................................................................................................................................................................................. 1530
RESEARCH The Broken Model of the Eurozone ................................................................................................................................... 1530
RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................. 1531
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ............................................................................ 1532
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1534
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1534
RESEARCH ECB Rate Decision .......................................................................................................................................................... 1536
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1539
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1540
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................. 1542
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ........................................................................... 1544
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1546
RESEARCH Emerging Markets Aggravates Festering Banking Problems .................................................................................... 1547

15

RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ...................................................................... 1549
RESEARCH - EFSF Downgraded to AA+ ............................................................................................................................................... 1551
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1552
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece .............................................................. 1555
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1557
PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1557
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1561
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................. 1563
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1569
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1573
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1576
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1577
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ........................................................................................ 1578
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1585
ITALY FALLING BIRTH RATE & "MIGRANT BOAT PEOPLE" MOUNTING PROBLEMS ............................................................................. 1587
CHARTS OF NOTE ....................................................................................................................................................................................... 1588
NEW-CHARTS - ITALY Quarterly GDP Growth ..................................................................................................................................... 1588
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ............................................................................................................... 1588
CHARTS - ITALY Italian Unemployment ................................................................................................................................................ 1590
CHARTS - ITALY Italian Core Inflation ................................................................................................................................................... 1590
CHARTS - ITALY Italian Industrial Porduction ....................................................................................................................................... 1591
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1592
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1593
CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1593
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1594
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1595
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1596
RESEARCH OF NOTE .................................................................................................................................................................................. 1597
NEW-RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low .................................................................... 1597
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ..................................................................................... 1599
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1603
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1604
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1609
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1609
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................. 1611
ITALIAN ELECTION - Message Given By the People ............................................................................................................................ 1613
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1617
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!........................................................................... 1620
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................. 1621
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................. 1623
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................. 1626
FRANCE ASTOUNDING HIGH # OF PEOPLE DON'T HAVE FAITH IN HOLLANDE.................................................................................... 1628
CHARTS OF NOTE ....................................................................................................................................................................................... 1628
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. ........................................................ 1628
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ........................................................................................................... 1628
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ....................................................................... 1629
CHARTS FRANCE French Job Seekers ............................................................................................................................................. 1629
CHARTS FRANCE Inflation Expectations ........................................................................................................................................... 1629
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1631
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1631
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1632
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1633
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1633
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1634
CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1635
CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1636
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1637
CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1638
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1639
RESEARCH OF NOTE .................................................................................................................................................................................. 1640
RESEARCH Economic Malaise Sparks Political Crisis in France ......................................................................................................... 1640
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1642
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1644
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1644
RESEARCH - Steady Breakdown Underway ......................................................................................................................................... 1647
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ................................................................................................... 1651
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1653
NEW-FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ........................................... 1653
NEW-FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ............................................................. 1653
FRANCE - What You Need to Know ......................................................................................................................................................... 1655
FRANCE - Key Indicators .......................................................................................................................................................................... 1656
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1660
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1663
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1664

16

FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1666

FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1667
FRANCE - Uncompetitive .......................................................................................................................................................................... 1668
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1670
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1672
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1674
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1675
GERMANY GERMANY VERSUS GREECE .................................................................................................................................................... 1677
CHARTS OF NOTE ....................................................................................................................................................................................... 1677
NEW-CHARTS - GERMANY GDP Growth ............................................................................................................................................ 1677
NEW-CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ....................................................................... 1678
NEW-CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY .................................................................................... 1679
NEW-CHARTS - GERMANY Germany now leading the way back up in Euro Zone ............................................................................ 1679
NEW-CHARTS - GERMANY On rolling bi-weekly basis, the 10-yr Bund yield rise of 43 bps is about as big as it gets in recent history
.................................................................................................................................................................................................................... 1680
CHARTS - GERMANY - 1.179% 30 Year Bond Yield .............................................................................................................................. 1681
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ............................................................................................................ 1681
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1681
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close .............................................................................. 1682
CHARTS - GERMANY 10 Y European Yields........................................................................................................................................ 1683
CHARTS - GERMANY German Unemployment .................................................................................................................................... 1684
CHARTS - GERMANY German Core Inflation ....................................................................................................................................... 1684
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1684
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1685
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1685
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1686
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1686
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1687
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1688
RESEARCH OF NOTE .................................................................................................................................................................................. 1690
NEW-RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo .......................................................................................... 1690
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian.......................................................... 1691
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1694
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1696
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1697
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1701
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1702
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1707
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1708
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1710
UK UNEXPECTED ELECTION RESULTS - SEEMS EVERYONE WANTS OUT! CHARTS OF NOTE ........................................................ 1712
NEW-CHARTS - UK - U.K. productivity growth remains dismal. .............................................................................................................. 1712
NEW-CHARTS - UK - The UK's increasingly polarized politics ................................................................................................................ 1712
NEW-CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. .......... 1713
NEW-CHARTS - UK The UK's financial sector has the highest exposure to China .............................................................................. 1713
NEW-CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years
.................................................................................................................................................................................................................... 1713
CHARTS - UK - Deficit One of Worst of Developed Economies ............................................................................................................... 1714
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................. 1715
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1716
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1717
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1717
CHARTS - UK CPI Below Target for 7th Month ...................................................................................................................................... 1718
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1719
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1719
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1720
CHARTS - UK GDP ................................................................................................................................................................................ 1721
CHARTS - UK Population Growth .......................................................................................................................................................... 1721
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1722
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1723
CHARTS - UK - Lending ............................................................................................................................................................................ 1724
CHARTS - UK - Unemployment ................................................................................................................................................................ 1725
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1726
CHARTS - UK - GDP ................................................................................................................................................................................. 1726
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1727
RESEARCH OF NOTE .................................................................................................................................................................................. 1728
NEW-RESEARCH What Remains of the UK Middle? ............................................................................................................................ 1728
NEW-RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ........................................................................................... 1729
NEW-RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading ......................... 1731
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................. 1735
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1736
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1739

17

UK - What you need to Know..................................................................................................................................................................... 1740

UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1741
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1742
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1743
UK - Doomsday Debt Machine .................................................................................................................................................................. 1744
UK - QE Extension Coming ....................................................................................................................................................................... 1747
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1749
UK - Technically in a Depression ........................................................................................................................................................... 1750
IBERIAN PENINSULA SPANISH ELECTION & ASCENDING PORTUGAL SOCIALISTS SIGNAL TROUBLES ......................................... 1753
CHARTS OF NOTE ............................................................................................................................................................................................. 1753
NEW-CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ......................................................................... 1753
NEW-CHARTS - PORTUGAL Share of Lower Skilled Workers ............................................................................................................. 1753
NEW-CHARTS - PORTUGAL Non-Performing Loans ............................................................................................................................ 1754
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ................................................................................................................... 1755
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................. 1755
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1756
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1757
RESEARCH OF NOTE .................................................................................................................................................................................. 1758
NEW-RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ..................................................................................... 1758
NEW-RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ..................................................................................... 1760
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1764
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1766
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1767
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1769
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1770
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1771
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1772
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1777
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1779
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1782
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1783
CHINA BEGINS EASING AS CAPITAL FLOWS OUT ......................................................................................................... 1792

NEW-RESEARCH WE FOLLOWED THIS TRI-SEMESTER ....................................................................................................................... 1792
NEW-BIZARRE STOCK MARKET ............................................................................................................................................................ 1792
NEW-GOLD BUYING ................................................................................................................................................................................ 1792
NEW-SOUTH SEA CONFLICT ................................................................................................................................................................. 1792
CHARTS OF NOTE ....................................................................................................................................................................................... 1808
NEW-CHARTS China Plans to Spend Billions on Infrastructure in Pakistan......................................................................................... 1808
NEW-CHARTS Chinas Proposed Silk Road Routes ............................................................................................................................. 1808
NEW-CHARTS China Activity Proxy & Official GDP .............................................................................................................................. 1809
NEW-CHARTS China Relaxes Commercial Bank Reserves ................................................................................................................. 1810
NEW-CHARTS Chinese Balance of Payments ...................................................................................................................................... 1810
NEW-CHARTS Chinese Hot Money Flows ............................................................................................................................................ 1811
NEW-CHARTS Falling Chinese Industrial Production ........................................................................................................................... 1812
NEW-CHARTS Commodity Prices % Change Since July 2014 ............................................................................................................ 1813
NEW-CHARTS Chinese Steel Demand, Iron Ore .................................................................................................................................. 1813
NEW-CHARTS Chinese Rail Freight ...................................................................................................................................................... 1814
NEW-CHARTS Chinese Bank Assets versus US Bank Assets ............................................................................................................. 1815
NEW-CHARTS Chinese Leverage and Underlying Nominal GDP ........................................................................................................ 1815
NEW-CHARTS Measures of Real & Nominal GDP Growth in China .................................................................................................... 1816
NEW-CHARTS Chinese Total Debt & Breakdown ................................................................................................................................. 1816
NEW-CHARTS New Chinese Retail Stock Market Accounts ................................................................................................................ 1817
NEW-CHARTS New Chinese Retail Stock Market Accounts-2 ............................................................................................................. 1818
NEW-CHARTS Plummeting Chinese Consumer Confidence ................................................................................................................ 1818
NEW-CHARTS Chinese PMI .................................................................................................................................................................. 1819
NEW-CHARTS Chinese Exports versus Taiwan-Korea-Japan ............................................................................................................. 1820
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 1821
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 1821
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 1822
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 1822
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 1823
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 1823
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 1824
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 1825
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 1825
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 1826
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 1827
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 1827
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 1827
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 1828
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1829
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1829
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1830

18

CHARTS Industrial Output A Concern.................................................................................................................................................... 1830

CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1831
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1832
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1833
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1834
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1834
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1834
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1835
CHARTS China Equity Flows ................................................................................................................................................................. 1836
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1836
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1837
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1837
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1838
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1839
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1840
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1841
CHARTS Shadow Banking System ........................................................................................................................................................ 1841
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1843
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1844
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1845
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1846
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1847
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1848
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1849
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1850
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1851
RESEARCH OF NOTE .................................................................................................................................................................................. 1852
NEW-CHINA "New Silk Road" Could Change Global Economics Forever ............................................................................................ 1852
NEW-CHINA Beginning to Panic - China Easing to Combat The 'Darkest Period' of 2015 .......................................................... 1855
NEW-CHINA Skewed Heavily To The Downside," BNP Says ........................................................................................................... 1857
NEW-CHINA Economists seek to ease fears on Chinas record capital outflow ........................................................................... 1862
NEW-CHINA China sets up $16B Gold fund as part of Silk Road initiative ........................................................................................... 1865
NEW-CHINA The Real Reason China Is Buying Up the World's Gold............................................................................................. 1865
NEW-CHINA China could crash US dollar with 30,000 tons of gold ...................................................................................................... 1868
NEW-CHINA Hard Landing Clearly Evident........................................................................................................................................ 1870
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1873
CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ................................................................................................. 1873
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1879
CHINA Signs of Madness in the Global Financial System ............................................................................................................... 1882
CHINA Reverses Direction and Begins Easing ................................................................................................................................. 1883
CHINA China's Economic Reporting Possibly a Deception ............................................................................................................. 1884
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1885
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1888
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1890
CHINA - China's Rehypothecation............................................................................................................................................................. 1893
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1895
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 1897
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 1900
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 1901
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 1902
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 1905
CHINA - Falling Yuan ................................................................................................................................................................................. 1907
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 1909
CHINA SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ....................................................................................... 1912
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 1915
CHINA - Has an Inflation Problem ............................................................................................................................................................. 1916
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 1917
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 1920
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 1925
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 1927
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 1932
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 1936
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 1939
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 1943
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 1946
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 1949
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 1952
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 1956
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 1957
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 1958
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 1960
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 1962
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 1964
CHINA - Withdraws Liquidity .................................................................................................................................................................. 1965
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 1967
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 1977
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 1980

19

CHINA - PMI Improvement....................................................................................................................................................................... 1981

CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 1984
CHINA - An Implicit Social Contract .......................................................................................................................................................... 1986
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 1988
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 1989
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 1990
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 1991
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 1994
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 1995
CHINA - Credit to GDP ............................................................................................................................................................................. 1997
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 1998
CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 2000
JAPAN: 43% OF TAX REVENUE ON DEBT INTEREST ................................................................................................................. 2005

CHARTS OF NOTE ....................................................................................................................................................................................... 2012
NEW-CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat...................................................................................................... 2012
NEW-CHARTS - JAPAN 48 Month Trade Balance Deficit ..................................................................................................................... 2012
NEW-CHARTS - JAPAN Y-o-Y Contracting Imports .............................................................................................................................. 2013
NEW-CHARTS - JAPAN Monetary Base versus USDJPY .................................................................................................................... 2013
NEW-CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000 ............................................................................... 2014
CHARTS - JAPAN 1.174% 30 Year Bond Yield .................................................................................................................................... 2015
CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 2015
CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 2015
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 2016
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 2016
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 2017
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 2017
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 2018
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 2019
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 2020
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 2021
CHARTS - JAPAN Demographics .......................................................................................................................................................... 2022
CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 2022
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 2023
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 2024
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 2025
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 2026
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 2026
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 2028
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 2028
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 2029
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 2029
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 2030
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 2031
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 2031
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 2032
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 2032
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 2033
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 2034
CHARTS - GDP Trend ............................................................................................................................................................................... 2034
CHARTS - CPI Trend ................................................................................................................................................................................. 2035
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 2035
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 2036
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 2037
RESEARCH OF NOTE .................................................................................................................................................................................. 2038
NEW-JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ....................................................................... 2038
NEW-JAPAN Japan Still the Worlds Top Credit? ............................................................................................................................. 2039
NEW-JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target .............................................................................. 2040
NEW-JAPAN Japanese trading firms to cut investments, sell assets ............................................................................................ 2041
JAPAN The BOJ Ups The Ante ............................................................................................................................................................ 2042
JAPAN Is Japan Kaput? ........................................................................................................................................................................ 2044
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 2047
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2048
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 2051
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 2053
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2054
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 2056
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 2058
JAPAN - What the Japanese been Buying ............................................................................................................................................. 2059
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 2061
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 2064
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 2065
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 2066
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 2068
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 2069

20

JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 2072

SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 2074
JAPAN - What You Need to Know............................................................................................................................................................. 2076
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 2079
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 2079
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 2083
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 2084
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 2085
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 2086
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 2090
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 2092
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 2095
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 2096
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 2098
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 2099
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 2100
JAPAN - Yen Devaluation ........................................................................................................................................................................ 2101
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 2102
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 2104
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 2106
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 2106
JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 2108
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 2111
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 2113
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 2116
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 2118
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 2120
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 2126
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 2129
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 2133
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 2139
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 2144
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 2145
JAPAN - PMI Breakdown ........................................................................................................................................................................... 2147
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 2149
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 2150
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 2153
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 2153
EMERGING MARKETS CHINA BAILS OUT BRAZIL WITH $50B.............................................................................................. 2155

EMERGING MARKETS ....................................................................................................................................................................................... 2155
CHARTS OF NOTE ....................................................................................................................................................................................... 2155
NEW-CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000............................................................................................ 2155
NEW-CHARTS AFRICA-Foreign Direct Investment & Trade ................................................................................................................ 2156
NEW-CHARTS AFRICA-Geographic Comparisons ............................................................................................................................... 2156
NEW-CHARTS Emerging Markets Corporate Defaults.......................................................................................................................... 2157
NEW-CHARTS Emerging Markets Economic Surprise Index ................................................................................................................ 2157
NEW-CHARTS Emerging Markets Currency Change versus USD ....................................................................................................... 2158
NEW-CHARTS Emerging Markets Change in Nominal Policy Rate ...................................................................................................... 2158
NEW-CHARTS EM Vulnerability to an external shock Resilience Indicator..................................................................................... 2159
NEW-CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ......................................... 2160
CHARTS Falling EM Currencies ............................................................................................................................................................. 2161
CHARTS Post-China 16 ......................................................................................................................................................................... 2162
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 2163
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 2163
CHARTS - Reserves versus World ............................................................................................................................................................ 2163
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 2165
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 2166
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 2167
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 2168
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 2169
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 2170
RESEARCH OF NOTE .................................................................................................................................................................................. 2171
NEW-EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" ................................ 2171
NEW-EMERGING MARKETS - North Korea: Chinese Outsourcing Giant .......................................................................................... 2173
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 2175
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 2176
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 2177
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 2182
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 2182
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 2184
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 2186
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 2192
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 2193
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 2195
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 2197

21

EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 2200

EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 2204
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 2206
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 2207
ASEAN ........................................................................................................................................................................................................... 2210
ASEAN: A New Common Market .............................................................................................................................................................. 2210
ASIA ............................................................................................................................................................................................................... 2214
NEW-ASIA: CHARTS Demographic Peaks of Working Age Populations .............................................................................................. 2214
NEW-ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth .................................................................................. 2215
NEW-ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports .............................................................................................. 2216
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 2217
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 2217
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 2219
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 2219
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 2221
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 2222
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 2222
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 2223
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 2224
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 2224
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 2225
ASIA - Regional Risk-Reward .................................................................................................................................................................... 2227
ASIA - Credit Contraction Problems ...................................................................................................................................................... 2228
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 2230
ASIA - Synchronized Markets .................................................................................................................................................................... 2232
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 2234
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 2235
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 2239
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 2240
ASIA - Demographic Headwinds ............................................................................................................................................................ 2243
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 2244
LATIN AMERICA ........................................................................................................................................................................................... 2246
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 2246
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 2246
MIDDLE EAST ............................................................................................................................................................................................... 2248
TURKEY ..................................................................................................................................................................................................... 2248
BRICS................................................................................................................................................................................................................... 2255
BRICS Population, GDP,GDP per Capita ............................................................................................................................................ 2255
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 2256
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 2256
BRICS Inflation Problems Abound ...................................................................................................................................................... 2258
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 2259
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 2260
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 2262
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 2263
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 2266
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 2269
BRAZIL........................................................................................................................................................................................................... 2271
NEW-BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ............................................................................................. 2271
NEW-BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ................................................................................... 2278
NEW-BRAZIL - Brazils Depressed Consumer Confidence Index ............................................................................................................ 2278
NEW-BRAZIL - Brazils Collapsing Confidence in the Construction Sector .............................................................................................. 2279
NEW-BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ..................................................................................................... 2279
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 2281
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 2284
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 2287
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 2288
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 2291
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 2292
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 2292
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 2293
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 2293
RUSSIA Inflation Rate ............................................................................................................................................................................ 2294
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 2294
RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 2295
RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 2295
RUSSIA Russian CDS Spreads ............................................................................................................................................................. 2296
RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 2297
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 2298
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 2299
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 2300
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 2300
RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 2301
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 2302

22

RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 2303
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 2304
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 2305
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 2306
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 2307
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 2307
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 2309
NEW-RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ..................................................................................................... 2309
INDIA.............................................................................................................................................................................................................. 2310
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 2310
INDIA Real GDP and Car Sales ............................................................................................................................................................. 2311
INDIA Inflation ......................................................................................................................................................................................... 2312
INDIA - Inflation .......................................................................................................................................................................................... 2313
INDIA - WPI ................................................................................................................................................................................................ 2314
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 2315
INDIA - Panic in India ................................................................................................................................................................................. 2316
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 2318
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 2319
SOUTH AFRICA ............................................................................................................................................................................................ 2321
US ECONOMY ..................................................................................................................................... 2323

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 2325
MACRO - US Macro Data .................................................................................................................................................................................... 2325
CHARTS OF NOTE ....................................................................................................................................................................................... 2325
NEW-MACRO June US Macro versus S&P 500 .................................................................................................................................... 2325
NEW-MACRO 10 Year View of US Macro versus S&P 500 Historic Divergence .............................................................................. 2326
NEW-MACRO US Macro Not This Low Since 2008 Financial Crisis ...................................................................................................... 2326
NEW-MACRO S&P 500 versus High Yield (HY) Bond Yield ................................................................................................................. 2327
MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ............................................................................................. 2328
MACRO Goldman Sachs Global Leading Indicator Has Plummeted..................................................................................................... 2329
MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ........................................................ 2329
MACRO 2015 World GDP Growth versus World Stocks ....................................................................................................................... 2330
MACRO World GDP Annual Estimates versus World Stocks ................................................................................................................ 2330
MACRO World Economies Cutting Rates to Avoid Economic Contraction ........................................................................................... 2331
MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ..................................................................... 2331
MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ..................................................................... 2332
MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ................................................................... 2332
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 2333
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 2333
MACRO US Macro Surprise Index ......................................................................................................................................................... 2333
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 2334
MACRO World Trade Volumes ............................................................................................................................................................... 2336
MACRO Marginal Utility .......................................................................................................................................................................... 2336
MACRO Global Manufacturing PMI ........................................................................................................................................................ 2337
MACRO Credit Markets Diverging .......................................................................................................................................................... 2337
MACRO US Macro Complacency ........................................................................................................................................................... 2338
MACRO Macro Implied Vols ................................................................................................................................................................... 2338
MACRO Markets Stretched .................................................................................................................................................................... 2339
RESEARCH OF NOTE ........................................................................................................................................................................................ 2340
MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population ..................................................................... 2340
MACRO A World Recession? ..................................................................................................................................................................... 2342
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 2343
MACRO The Ambivalent Superpower ..................................................................................................................................................... 2345
MACRO Things Worse than Slow Growth ................................................................................................................................................. 2347
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 2350
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 2352
MACRO - Output Gap .................................................................................................................................................................................... 2359
US INVESTMENT CYCLE ...................................................................................................................................................... 2368

CHARTS OF NOTE ............................................................................................................................................................................................. 2369
NEW-CHART Business Cycle Surprise Index ....................................................................................................................................... 2369
NEW-CHART Net Investment as a Share of Net Domestic Product .................................................................................................... 2370
NEW-CHART Net Worth to GDP .............................................................................................................................................................. 2370
NEW-CHART % of Unprofitable IPOs ..................................................................................................................................................... 2371
NEW-CHART US Private Construction Spending ................................................................................................................................. 2372
NEW-CHART SPX versus 12 MMA Due for a Momentum Sell Period .......................................................................................... 2372
CHART Current Economic Cycle Is Getting Old In The Tooth ......................................................................................................... 2373
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ............................................................................................. 2374
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ............................................................................................. 2374
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ............................................................................................ 2375
CHART - Economy in Decline from Consuming More than it Produces ............................................................................................... 2376
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 2376
ECONOMIC INDICATORS .................................................................................................................................................................................. 2378
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 2378

23

NEW-RESEARCH - 8 Charts That Prove The US Is Already In A Recession ..................................................................................... 2378

NEW-RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here ............................ 2383
RESEARCH - The US Economy Continues to Tank under Obama ..................................................................................................... 2386
REFERENCE CHARTS ............................................................................................................................................................................. 2388
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2393
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2393
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2395
SOME HIGHLIGHTS ..................................................................................................................................................................................... 2395
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2399
NEW-CHARTS Full Time Jobs Approach 2007 Highs ........................................................................................................................... 2399
NEW-CHARTS Full Time versus Part Time Jobs................................................................................................................................... 2399
NEW-CHARTS April Jobs Added By Industry ........................................................................................................................................ 2400
NEW-CHARTS Wages of Production & Non-Supervisory Employees Y-0-Y % Change ...................................................................... 2400
NEW-CHARTS US Labor Productivity.................................................................................................................................................... 2402
NEW-CHARTS Wages of All Employees Y-o-Y % Change ................................................................................................................... 2402
CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed.......................................... 2403
CHARTS Non-Farm Payrolls Monthly and Yearly Change ................................................................................................................. 2404
CHARTS Civilian Unemployment Rate................................................................................................................................................... 2404
CHARTS JOLTS-Total Job Openings .................................................................................................................................................... 2405
CHARTS New Jobless Claims w/ 4 Week Moving Average .................................................................................................................. 2405
CHARTS Non-Farm Payrolls .................................................................................................................................................................. 2406
CHARTS US Monthly Job Growth .......................................................................................................................................................... 2407
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 2407
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 2408
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 2408
0B
..................................................... 2408
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 2408

24

.................................................................................................. 2409
CHARTS - Underemployment Gap ............................................................................................................................................................ 2410
1B
6B
.................. 2410
CHARTS - Participation Rate..................................................................................................................................................................... 2411
CHARTS - Part Time Employment ............................................................................................................................................................ 2411
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2412
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2413
RESEARCH OF NOTE .................................................................................................................................................................................. 2420
NEW-RESEARCH - Part-Time Jobs Soar By 437,000; Full-Time Jobs Tumble, Stay Firmly Under Pre-Recession Highs .................... 2420
NEW-RESEARCH - The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report .............................................................. 2421
RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie" ......................................................................................... 2426
RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ................................................................................................................... 2428
RESEARCH - American Express to cut more than 4,000 jobs ................................................................................................................. 2429

25

RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 2430

RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 2433
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 2436
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 2439
SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 2440
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2446
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2446
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 2446
NEW-CHARTS Falling NFIB Small Business Optimism ........................................................................................................................ 2450
NEW-CHARTS Falling Small Business Hiring Plans ............................................................................................................................. 2450
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ..................................................................................................... 2451
CHARTS Consumer Comfort Plunges Most In 10 Months..................................................................................................................... 2451
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 2453
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 2453
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 2454
CHARTS - Orange Book ............................................................................................................................................................................ 2454
RESEARCH OF NOTE .................................................................................................................................................................................. 2455
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 2455
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 2457
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2459
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2459
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2465
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2466
NEW-American Association of Independent Investors ................................................................................................................................. 2467
NEW-Investors Intelligence ........................................................................................................................................................................... 2467
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2468
NEW-Small Business Optimism .................................................................................................................................................................... 2469
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2471
NEW-Margin Levels ....................................................................................................................................................................................... 2472
Real Margin Debt as % of GDP ..................................................................................................................................................................... 2478
Margin Debt versus S&P 500 ........................................................................................................................................................................ 2478
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 2480
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2483
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2483
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2484
NEW-TRIN ..................................................................................................................................................................................................... 2485
NEW-McClellan Oscillator ............................................................................................................................................................................. 2486
CHARTS OF NOTE ............................................................................................................................................................................................. 2487
NEW-CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About? ............................................................ 2487
NEW-CHARTS Investors Intelligence Bulls & Bears ................................................................................................................................. 2487
NEW-CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ................................................................................ 2488
NEW-CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! ......................................................................... 2488
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ......................................................................................................... 2489
CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................................ 2490
2BCHARTS Only 16% Think Future Employment Opportunities Will Be Better ............................................................................................ 2491
3BCHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ........................................................................... 2491
4BCHARTS - NFIB Small Business Sentiment ................................................................................................................................................. 2492
5BCHARTS - Orange Book ................................................................................................................................................................................ 2492
CHARTS Asset Allocation Global Equities .............................................................................................................................................. 2493
CHARTS Asset Allocation Global Bonds ................................................................................................................................................ 2493
CHARTS Active versus Passive Funds Allocation ..................................................................................................................................... 2494
CHARTS Investors Intelligence Survey of % Bears ................................................................................................................................... 2494
CHARTS Sentiment at Post 2008 Crisis Highs .......................................................................................................................................... 2496
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................. 2497
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash ............................................................................................................ 2498
CHARTS Uptick in Feds Financial Stress Index Composite ..................................................................................................................... 2499
CHARTS Fear Barometer Diverges with VIX, CDS IG Index .................................................................................................................... 2500
CHARTS Extreme Complacency Seen Near End of Cycles ...................................................................................................................... 2500
CHARTS Complacency Seen In PE/VIX ..................................................................................................................................................... 2501
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern .................................................................................................... 2501
CHARTS Smart Money Flows .................................................................................................................................................................... 2503
CHARTS Fed Assets versus Bullish Sentiment ......................................................................................................................................... 2503
CHARTS Macro Support Has Technically Broken Down ........................................................................................................................... 2504
CHARTS US Surprise Index Setting Up for Downturn ............................................................................................................................... 2504
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................. 2505
RESEARCH OF NOTE ........................................................................................................................................................................................ 2506
NEW-SENTIMENT: The "Smart Money" Has Never Been More Bearish .................................................................................................... 2506
NEW-SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ....................................................... 2508
NEW-SENTIMENT: We Are All Bulls Now .................................................................................................................................................... 2511
NEW-SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says .................................... 2512
NEW-SENTIMENT: One Heckuva Bull Market but Momentum Weakening!................................................................................................ 2513
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................. 2515
SENTIMENT: Americas Crisis of Trust ......................................................................................................................................................... 2517
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years .......................................................... 2519

26

SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. ..................................................................................................................... 2519
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ..................................................................................... 2521
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ...................................................................................... 2526
SENTIMENT: Elliott Wave's View from the Top ........................................................................................................................................ 2529
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2533
NEW-CHARTS Retail Sales Control Group Y/Y and Sequential Change ............................................................................................. 2537
NEW-CHARTS Retail Sales Y-0-Y ......................................................................................................................................................... 2537
NEW-CHARTS Retail Sales Ex Auto...................................................................................................................................................... 2538
NEW-CHARTS VICE Index and Discretionary Spending....................................................................................................................... 2539
NEW-CHARTS Value of Manufacturers New Orders for Consumer Goods Industries ........................................................................ 2540
NEW-CHARTS y-0-y Chain Store Sales ................................................................................................................................................ 2540
NEW-CHARTS Y-0-Y Factory Orders .................................................................................................................................................... 2541
NEW-CHARTS Annual Growth in Retail Sales ...................................................................................................................................... 2541
CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 .................................................................................................. 2542
CHARTS Retails Sales Mo-o-Mo Drops ................................................................................................................................................. 2542
CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .............................................................................. 2543
CHARTS What Americans Spent Their "Gas Savings" On .................................................................................................................... 2544
CHARTS Retail Sales-Previous Month Comparisons ............................................................................................................................. 2546
CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas ............................................................................................................ 2547
CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ............................................................................................................... 2547
CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .................................................................................................... 2548
CHARTS Total Household Debt Added Since the Great Financial Crisis .............................................................................................. 2548
CHARTS Total Household Debt Added in Q4 2014 ............................................................................................................................... 2549
CHARTS Real Personal Consumption ................................................................................................................................................... 2549
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 2550
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 2552
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 2553
CHARTS Retail Sales ............................................................................................................................................................................. 2553
CHARTS Retail Sales - Details ............................................................................................................................................................... 2555
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 2556
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 2556
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 2557
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 2557
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 2558
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 2560
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 2561
CHARTS - Core Retail Growth .................................................................................................................................................................. 2562
RESEARCH OF NOTE .................................................................................................................................................................................. 2563
RESEARCH - Headwinds for US Consumers & Home Buyers ................................................................................................................ 2563
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2564
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2565
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ................................................................... 2567
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 2569
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ........................................................................... 2572
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .................................................................... 2573
RESEARCH - A Sequential Decline in Wages ....................................................................................................................................... 2574
RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ............................................................................. 2575
RESEARCH - Consumers Using Savings to Maintain Life Style ........................................................................................................ 2575
RESEARCH - The Destruction of America's Middle Class .................................................................................................................. 2578
RESEARCH - Dramatic Slowing in Restaurant Business .................................................................................................................... 2578
RESEARCH - Signs of Serious Troubles .................................................................................................................................................. 2579
RESEARCH - Falling Real Disposable Income means Falling Consumption ................................................................................... 2582
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2590
NEW-CHARTS US Q2 GDP Consensus Forecast versus Atlanta Feds 0.7% ..................................................................................... 2594
NEW-CHARTS Q1 2015 US GDP Growth Consensus Estimate ........................................................................................................... 2596
NEW-CHARTS US Business Investment Current versus Previous Recoveries ................................................................................. 2596
NEW-CHARTS US Vehicle Miles 12 Month Total All Roads ........................................................................................................... 2597
NEW-CHARTS CAPEX Use of Cash .................................................................................................................................................. 2598
NEW-CHARTS Change in Total Private Industries ................................................................................................................................ 2598
NEW-CHARTS US Private Construction Spending ............................................................................................................................... 2599
CHARTS Ratio of Coincident-to-Lagging Conference Board Indices .................................................................................................... 2600
CHARTS GDP Q4 2014 Revised Components Table ............................................................................................................................ 2601
CHARTS Quarterly Change in % Contributions to GDP ........................................................................................................................ 2601
CHARTS Three Reasons CAPEX is Faltering ....................................................................................................................................... 2601
CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ................................................................................................. 2602
CHARTS Philly Fed Rolling Over ........................................................................................................................................................... 2603
CHARTS US Profits & Sales Have Stalled ............................................................................................................................................. 2604
CHARTS Real GDP versus CAPEX ....................................................................................................................................................... 2604
CHARTS Change In Inventories Inflated from Lack of Demand ......................................................................................................... 2605
CHARTS US GDP Revision for Q4-2014 ............................................................................................................................................... 2606
CHARTS Quarterly GDP by Component Breakdown ............................................................................................................................. 2606

27

CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 2608
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 2608
CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 2610
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 2611
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 2611
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 2612
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 2613
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 2613
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 2614
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 2615
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 2615
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 2616
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 2617
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 2617
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 2618
CHARTS - Manufacturing .......................................................................................................................................................................... 2619
CHARTS - Exports ..................................................................................................................................................................................... 2619
CHARTS - Durable Goods ......................................................................................................................................................................... 2620
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 2620
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 2621
RESEARCH OF NOTE .................................................................................................................................................................................. 2622
NEW-RESEARCH - Biggest Inventory Build In History Prevents Total Collapse Of The US Economy .................................................. 2622
RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ................................................................................... 2623
RESEARCH - The U.S. Economy is Dead ................................................................................................................................................ 2625
RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ......................................................................................... 2627
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 2630
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 2635
RESEARCH - Economic Recoveries Don't Look Like This! ................................................................................................................ 2635
RESEARCH - 2nd Worst Decade in Over 220 Years (And Getting Worse) ........................................................................................ 2636
RESEARCH - US Economy is being fundamentally transformed ............................................................................................................. 2638
RESEARCH - Shrinking CAPEX, Expanding Buybacks and Dividends ............................................................................................. 2641
REFERENCE - Prior Posts .......................................................................................................................................................................... 2645
RESEARCH - US Economic Recovery Has Peaked ............................................................................................................................. 2645
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2654
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2662
US PUBLIC POLICY THE SINISTER TPP AGREEMENT.................................................................................................... 2669

NEW-TRANS PACIFIC PARTNERSHIP (TPP) ......................................................................................................................................... 2670
NEW-BALTIMORE RIOTS ......................................................................................................................................................................... 2671
NEW-CHARLESTOWN SHOOTING ......................................................................................................................................................... 2671
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 2672
CORPORATE INVERSIONS ..................................................................................................................................................................... 2672
FERGUSON ............................................................................................................................................................................................... 2673
MILITARIZATION OF POLICE .................................................................................................................................................................. 2674
POLLS ........................................................................................................................................................................................................ 2675
INCARCERATION ..................................................................................................................................................................................... 2675
FLAWED TAX POLICY .............................................................................................................................................................................. 2675
MINIMUM WAGE ....................................................................................................................................................................................... 2675
SOCIAL CANCERS ................................................................................................................................................................................... 2676
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 2676
INEQUALITY .............................................................................................................................................................................................. 2676
CREEPING SOCIALISM ............................................................................................................................................................................ 2676
POLICIAL PARALYSIS .............................................................................................................................................................................. 2677
STATE OF THE UNION ............................................................................................................................................................................. 2677
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 2677
OBAMACARE ............................................................................................................................................................................................ 2678
GENERAL PUBLIC POLICY...................................................................................................................................................................... 2680
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 2681
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 2681
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 2682
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 2683
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 2684
CHARTS Size of US Army Since 1946................................................................................................................................................... 2684
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2685
CHARTS Changing Presidential Stance ................................................................................................................................................ 2686
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2686
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2687
RESEARCH OF NOTE .................................................................................................................................................................................. 2688
POLICY - A 'Shadow" State of the Union .................................................................................................................................................. 2688
POLICY - Banks Remove the "Heart" of Dodd-Frank ............................................................................................................................... 2691
POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ............................................................................... 2695
POLICY - The Death Cross of American Business ............................................................................................................................... 2698
POLICY - The State of the Union I have a Dream! .......................................................................................................................... 2700

28

POLICY - A self-destructive path toward oblivion ................................................................................................................................ 2704

POLICY - Indictment of US Public, Fiscal & Monetary Policy ............................................................................................................... 2709
POLICY - The Crisis of Trust Continues to Worsen ............................................................................................................................. 2722
POLICY - The Stunning Truth about Inequality In America ................................................................................................................. 2723
POLICY - Pointing US towards Government Dependence .................................................................................................................. 2724
POLICY - Yet another Game of Deception ............................................................................................................................................. 2728
POLICY - Obamacare A Flawed Public Policy Implementation ........................................................................................................... 2732
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 2735
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ............................................................................................ 2739
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed .................................................................... 2742
POLICY - "What is good for GM is good for America" is no longer correct...................................................................................... 2744
POLICY - Where is the Logic In US Public Policy ................................................................................................................................ 2745
POLICY - What is the Real Driving Force Behind the New Immigration Law? ................................................................................. 2748
POLICY - Crony Capitalism and How America Lost its Way! .............................................................................................................. 2751
STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 2755
th
STATE OF THE UNION Remarks by the President in State of the Union Address January 20 , 2015 ............................................ 2755
STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon ................................................................... 2765
MONETARY POLICY FED IS PUSHING ON A STRING ............................................................................................................ 2773

CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2774
NEW-CHARTS: ZIRP Policy Results Compared to Previous Falling or Steady Rate Targets ..................................................................... 2774
NEW-CHARTS: Producer Price Index is Plummeting Complete Lack of Pricing Power ........................................................................... 2775
NEW-CHARTS: Liquidity Problems in Bond Market Are Only Getting Worse .............................................................................................. 2775
NEW-CHARTS: Lending is Coming From the Fed Not the Banks ............................................................................................................ 2776
NEW-CHARTS: Debt Service Ratio for Prior Expansions ............................................................................................................................ 2776
NEW-CHARTS: Why Interest Rates Cant Come Up Derivative Collateral Underpinnings ...................................................................... 2777
NEW-CHARTS: Total Credit Market Debt + Fed B/S versus Nominal GDP Growth .................................................................................... 2777
CHARTS: Fed is Allowing Adjusted Monetary Base to Fall .......................................................................................................................... 2778
CHARTS: Federal Reserve Monetary Base Since 1918............................................................................................................................... 2778
CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ......................................................................................................... 2779
CHARTS: Fed Balance Sheet & Policy Rate Target ..................................................................................................................................... 2779
CHARTS: Cash Balances versus Total Reserve Balances .......................................................................................................................... 2780
CHARTS: Fed Balance Sheet and QE Versions ........................................................................................................................................... 2780
CHARTS: Major US Financial Institutional Leverage Ratios ........................................................................................................................ 2782
CHARTS: Fed Balance Sheet Composition .................................................................................................................................................. 2783
CHARTS: Cash Bank Holdings ..................................................................................................................................................................... 2784
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2785
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2785
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2786
CHARTS: Repo Volumes .............................................................................................................................................................................. 2786
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2787
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2787
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2788
CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2789
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2790
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2790
CHARTS: Net National Savings Rate............................................................................................................................................................ 2791
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2791
CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2792
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2793
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2794
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2794
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2795
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2797
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2797
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2798
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2799
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2800
NEW-RATES: Almost a Third of All Trades Have Known Only ZIRP ........................................................................................................... 2801
RATES: Is There a Zero Bound for US Rates? ............................................................................................................................................. 2802
RATES: Historical Policy Rates ..................................................................................................................................................................... 2803
RATES: Debt ................................................................................................................................................................................................. 2804
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2804
RATES: Real Interest Rates .......................................................................................................................................................................... 2805
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2806
NEW-INFLATION: Inflation Targeting is Clearly Not Working ...................................................................................................................... 2807
INFLATION: Market-Based Inflation Expectations on the Rebound ............................................................................................................. 2807
INFLATION: US Inflation Education-Medical-Food-Housing versus CPI .................................................................................................. 2808
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2809
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2809
INFLATION: Cost of Eating ........................................................................................................................................................................... 2810
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 2811
INFLATION: July 4th Cost of Beef Burger ...................................................................................................................................................... 2812
INFLATION: Bloombergs July 4th Barbecue Index ....................................................................................................................................... 2812

29

INFLATION: Butter on a Roll ......................................................................................................................................................................... 2813

INFLATION: Back to School Shocker............................................................................................................................................................ 2814
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 2815
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 2816
INFLATION: Back to School Shocker............................................................................................................................................................ 2816
RESEARCH OF NOTE ........................................................................................................................................................................................ 2817
NEW-RESEARCH Bank Reserves & Loans: The Fed is pushing On A String ......................................................................................... 2817
RESEARCH Global Currency Wars & Deflationary Pressures .................................................................................................................. 2820
RESEARCH Debt is a promise of something of value in the future .......................................................................................................... 2826
RESEARCH Is NIRP Coming To America? ............................................................................................................................................... 2833
RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ......................................................................................... 2836
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2843
REPO FAILS .................................................................................................................................................................................................. 2844
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 2845
FISCAL POLICY US NOW HAS NATIONAL PRODUCTIVITY & STATE AND LOCAL FISCAL PROBLEMS ......................................... 2846
NEW-PEURTO RICO .................................................................................................................................................................................... 2848
NEW-ILLINOIS & CHICAGO ......................................................................................................................................................................... 2848
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 2849
FISCAL MATTERS ........................................................................................................................................................................................ 2851
FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 2853
CHARTS OF NOTE ....................................................................................................................................................................................... 2853
NEW-FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .................................................... 2853
NEW-FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ................................................................. 2853
NEW-FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ................................................................. 2854
NEW-FINANCING CHINA SELLING China & Belgium Holdings Change............................................................................................... 2854
NEW-FINANCING Breakdown of US Debt Holdings as of 2014 ................................................................................................................ 2855
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 2855
CHARTS Drivers of US Debt ...................................................................................................................................................................... 2856
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 2857
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 2857
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 2858
RESEARCH - $70T Off-Balance Sheet Federal Liabilities ....................................................................................................................... 2859
FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 2862
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 2862
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 2862
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 2863
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 2864
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 2865
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 2865
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 2865
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 2866
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 2867
BUDGET - President Obama's Entire Budget In One Chart .................................................................................................................... 2868
BUDGET - A Budget That Institutionalizes Big Government .................................................................................................................. 2869
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 2874
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 2875
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 2877
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 2881
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 2885
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 2895
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 2895
NEW-RESEARCH - Almost Half of US States Are Officially Broke ........................................................................................................ 2895
RESEARCH - State & Local Government Crisis ....................................................................................................................................... 2900
RESEARCH - State & Local Government Drag ............................................................................................................................................ 2906
UNFUNDED LIABILITIES .................................................................................................................................................................................... 2911
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 2911
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 2915
NEW-US REGULATORY COSTS ....................................................................................................................................................................... 2918
NEW-CHARTS Annual Cost of Federal Regulation 2012, $1.863T ....................................................................................................... 2918
NEW-RESEARCH Investor Uncertainty ..................................................................................................................................................... 2918
US TAX POLICY & ISSUES ................................................................................................................................................................................ 2920
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 2920
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 2922
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 2924
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 2924
CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 2925
RESEARCH - Tax Rate Comparisons ........................................................................................................................................................ 2926
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 2926
RESEARCH - Taxes & Spending .................................................................................................................................................................. 2927
RESEARCH - Avoiding Taxes ..................................................................................................................................................................... 2931
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 2934

30

CHARTS Competing Visions of Government ............................................................................................................................................. 2934

CHARTS - Sovereign Debt ............................................................................................................................................................................ 2935
CHARTS - Growing Government Dependence ............................................................................................................................................. 2936
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 2936
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 2940
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2942
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 2944

EMPLOYMENT .................................................................................................................................................................................................... 2950
LATEST ..................................................................................................................................................................................................... 2951
CHARTS & TABLES ...................................................................................................................................................................................... 2954
NEW-CHARTS DOW Industrials versus Employed Population ............................................................................................................. 2954
NEW-CHARTS Employment to Working Age Population ...................................................................................................................... 2954
NEW-CHARTS The Real American Economy ....................................................................................................................................... 2955
NEW-CHARTS Full Time versus Part Time ........................................................................................................................................... 2955
NEW-CHARTS Cumulative Workers Added by Age Group ................................................................................................................... 2955
NEW-CHARTS Wages of Production and Non-Supervisory Employees ............................................................................................... 2956
NEW-CHARTS Wages of Supervisory Employees Y-0-Y % Change .................................................................................................... 2956
CHARTS Industries That Have Been Hiring ........................................................................................................................................... 2957
CHARTS Top 5 Industry Cuts ................................................................................................................................................................. 2957
CHARTS Employees in the US by Industry ............................................................................................................................................ 2958
CHARTS Workers Aged 55 and Over .................................................................................................................................................... 2958
CHARTS Percentage of Over 65 in Labor Force ................................................................................................................................... 2959
CHARTS Non Participation Has Stabilized? .......................................................................................................................................... 2959
CHARTS Share of Population Retired .................................................................................................................................................... 2960
CHARTS Goods Producing Workers versus Government Payroll ....................................................................................................... 2960
CHARTS Not in the Labor Force ............................................................................................................................................................ 2961
CHARTS Labor Force Participation versus Not in the Labor Force ....................................................................................................... 2961
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 2963
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 2963
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 2964
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 2964
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 2965
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 2965
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 2966
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 2966
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 2967
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 2967
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 2968
CHARTS Labor Participation Rate ......................................................................................................................................................... 2968
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 2969
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 2969
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 2970
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 2971
CHARTS Labor Force Participation by Age ........................................................................................................................................... 2972
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 2973
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 2974
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 2974
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 2975
CHARTS - Part-Time Employment ............................................................................................................................................................ 2975
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 2975
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 2976
CHARTS - The Under-Employment Gap ................................................................................................................................................... 2976
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 2977
RESEARCH OF NOTE .................................................................................................................................................................................. 2978
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 2978
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 2981
EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 2983
EMPLOYMENT - With and Without Obama's Recovery Plan .............................................................................................................. 2985
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ........................................................ 2986
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30 ..................................................................... 2988
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting ...... 2991
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 2992
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ....................................................................................................... 2993
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs ....................................................................................... 3000
REFERENCE - Prior Posts ............................................................................................................................................................................ 3003
1- CAPITAL SPENDING ........................................................................................................................................................................... 3003
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................ 3006
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 3010
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 3021
RESEARCH WE FOLLOWED ...................................................................................................................................................................... 3021
LATEST ..................................................................................................................................................................................................... 3021
STUDENT LOANS ..................................................................................................................................................................................... 3022
CHARTS & TABLES ..................................................................................................................................................................................... 3025
NEW-CHARTS US Personal Savings Rate as a % of Disposable Income ........................................................................................... 3025

31

NEW-CHARTS US Corporate Profits versus US Median Household Income ....................................................................................... 3025

NEW-CHARTS Death of the American Middle Class ............................................................................................................................. 3026
NEW-CHARTS Income Gap being Filled With Credit ............................................................................................................................ 3027
NEW-CHARTS Peak Spending Years.................................................................................................................................................... 3028
NEW-CHARTS Real Per Capita Sum of Corporate Profits After Tax, Disposable Personal Income and Government Receipts .... 3029
CHARTS Real Median Household Income in the United States ............................................................................................................ 3030
CHARTS Food Stamps Number of Participants .................................................................................................................................. 3031
CHARTS Food Stamps Number of Participants per Employed .......................................................................................................... 3031
CHARTS Food Stamps Cost Per Participant per Month ..................................................................................................................... 3032
CHARTS Food Stamps Annual Program Cost .................................................................................................................................... 3032
CHARTS Education, Medical, Food, Housing Costs versus CPI ........................................................................................................... 3033
CHARTS Rising Sub-Prime .................................................................................................................................................................... 3033
CHARTS Early Delinquencies on US Car Loans Has Been Rising ....................................................................................................... 3035
CHARTS Student Loan Default Rates By Graduating Year ................................................................................................................... 3036
CHARTS Student Loan Graduating Debt Levels Class 2009 ............................................................................................................. 3036
CHARTS Student Loan Borrowing Trends ............................................................................................................................................. 3037
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3037
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3038
CHARTS US Household Balance Sheet ................................................................................................................................................ 3038
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 3039
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 3040
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 3041
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 3041
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 3042
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 3043
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 3044
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 3044
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 3045
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 3045
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 3046
CHARTS This is a Structural .................................................................................................................................................................. 3046
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 3047
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 3048
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ................................................................................................ 3048
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................. 3049
RESEARCH OF NOTE .................................................................................................................................................................................. 3050
RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery" ....................................................... 3050
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 3052
RESEARCH - The Facts are clear. The US Standard of Living is Falling ........................................................................................... 3054
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 3055
RESEARCH - Standards of Living and Artificial Expectations ........................................................................................................... 3058
RESEARCH - A Lack of Demand in US Economy ................................................................................................................................ 3060
RESEARCH - Full Time Jobs or Food Stamps & Disability? .............................................................................................................. 3061
REFERENCE - Prior Posts ............................................................................................................................................................................ 3063
STANDARD OF LIVING - Salary Compression ...................................................................................................................................... 3063
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level........................................................................................ 3064
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ................................................................... 3065
DISPOSABLE INCOME - Bad Even in Nominal Terms ......................................................................................................................... 3067
INFLATION - It's There but the Government Doesn't Account for it. .................................................................................................. 3067
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 3069
LATEST ..................................................................................................................................................................................................... 3069
CHARTS & TABLES ...................................................................................................................................................................................... 3073
NEW-POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ....................... 3073
NEW-POLICY Mortgage Purchase Application Index versus Fed Balance Sheet ......................................................................... 3074
NEW-POLICY Total News Home Sales v Median New Home Sale Price ......................................................................................... 3075
POLICY San Francisco Y/Y Price Increase Indicator ........................................................................................................................ 3075
POLICY Meaningful Housing Recovery On Hold Until Spring ......................................................................................................... 3077
POLICY Housing Starts ........................................................................................................................................................................ 3077
POLICY Existing & New Home Sales .................................................................................................................................................. 3078
POLICY Home Ownership Rate versus Rental Rate ......................................................................................................................... 3078
POLICY Mortgages Past Due and Foreclosure Starts ................................................................................................................... 3079
POLICY Mortgage Spreads .................................................................................................................................................................. 3079
POLICY Lumber Sales .......................................................................................................................................................................... 3080
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 3082
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 3083
CHARTS National Home Price Medians & Indexes ............................................................................................................................... 3084
CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 3084
CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 3085
CHARTS New Home Prices ................................................................................................................................................................... 3085
CHARTS Housing Starts and Completions ............................................................................................................................................ 3086
CHARTS DJ Home Construction Index .................................................................................................................................................. 3086
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 3087
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 3088
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 3088
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 3089

32

CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 3089

CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 3090
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 3090
CHARTS - Double Top in Construction Index ........................................................................................................................................... 3090
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary .................................................................................................... 3091
CHARTS - Household Formations ............................................................................................................................................................. 3091
CHARTS Falling Originations ................................................................................................................................................................. 3092
CHARTS Falling Credit Scores ............................................................................................................................................................... 3093
CHARTS Falling Down payments ........................................................................................................................................................... 3093
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 3094
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 3094
CHARTS - Housing Starts ......................................................................................................................................................................... 3095
CHARTS - Composition of Housing Sales ................................................................................................................................................ 3095
CHARTS - New Home Sales ..................................................................................................................................................................... 3096
CHARTS - Existing Residential Supply ..................................................................................................................................................... 3096
CHARTS - Housing Starts ......................................................................................................................................................................... 3097
RESEARCH OF NOTE .................................................................................................................................................................................. 3099
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 3099
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 3100
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 3102
RESEARCH - Household Formation Drives Residential Real Estate ................................................................................................. 3104
OVERVIEW ................................................................................................................................................................................................ 3107
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 3113
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 3116
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 3117
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 3119
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 3121
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ......................................................................... 3122
HOUSING: Soaring FHA Delinquencies ................................................................................................................................................. 3124
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 3129
LATEST ..................................................................................................................................................................................................... 3129
CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 3133
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 3133
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 3134
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 3134
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 3135
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 3136
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 3136
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 3137
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 3138
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 3139
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 3140
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 3140
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 3141
RESEARCH OF NOTE .................................................................................................................................................................................. 3143
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 3143
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 3144
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 3144
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 3149
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ............................................................................ 3150
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level............................................. 3152
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 3155
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 3158
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 3159
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 3160
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 3161
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 3162
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ................................................................ 3163
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 3169
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 3170
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 3171
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 3174
COMMERCIAL REAL ESTATE - Rising Beef Costs ............................................................................................................................... 3175
COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 3179
COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete .............................................................................................. 3181
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 3183
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 3184
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 3185
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous ...................................... 3187
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ........................... 3194
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode .................................................................................... 3196
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ........................................ 3197
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements .................................................................................. 3199

33

COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ................................................................. 3202
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ...................................................................... 3205
COMMERCIAL REAL ESTATE - Getting Worse Fast ............................................................................................................................ 3206
COMMERCIAL REAL ESTATE - Unfolding Implosion ........................................................................................................................... 3208
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ..................................................................................................................... 3209
COMMERCIAL REAL ESTATE - Financial Crisis II Coming ................................................................................................................. 3214
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ............................................................................................................. 3221
COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 3224
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 3226
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 3228
COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 3232
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 3238
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 3239
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 3242
OVERVIEW ................................................................................................................................................................................................ 3246
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 3247
SPECIAL FOCUS PENSION POVERTY ............................................................................................................................. 3253

NEW-PENSION POVERTY Too Few Contributor versus Beneficiaries .......................................................................................................... 3253
NEW-PENSION POVERTY Its about Public Policy Denial ............................................................................................................................. 3253
NEW-RESEARCH WE FOLLOWED ................................................................................................................................................................... 3254
CHARTS OF NOTE ....................................................................................................................................................................................... 3254
NEW-PENSIONS Social Security Deficit Near Term .......................................................................................................................... 3254
NEW-PENSIONS Social Security Deficit Longer Term ....................................................................................................................... 3254
NEW-PENSIONS Household Retirement Accounts ............................................................................................................................... 3255
NEW-PENSIONS Social Security Beneficiaries ..................................................................................................................................... 3255
NEW-PENSIONS PBGCs Safety Net Exposure ................................................................................................................................... 3257
NEW-PENSIONS Public Worries Media Begins To Focus -1 ............................................................................................................. 3257
RESEARCH OF NOTE .................................................................................................................................................................................. 3260
NEW-PENSIONS Why are Pensions and Benefits promised to public employees unsustainable? ..................................................... 3260
NEW-PENSIONS Demographics & Low Yield ZIRP Economics ....................................................................................................... 3260
NEW-PENSIONS Investment Risk ..................................................................................................................................................... 3260
NEW-PENSIONS Politics .................................................................................................................................................................... 3261
NEW-PENSIONS Disposable Income ................................................................................................................................................ 3261
NEW-PENSIONS Why is the Social Security System at risk? ............................................................................................................... 3262
NEW-PENSIONS PAYGO and Demographics................................................................................................................................... 3262
NEW-PENSIONS Existing Deficits ..................................................................................................................................................... 3262
NEW-PENSIONS Non-Retirees .......................................................................................................................................................... 3263
NEW-PENSIONS Demographics and Financial Assumptions ........................................................................................................... 3265
SPECIAL SUPPLEMENT US RETAIL ................................................................................................................................. 3266

US RETAIL ........................................................................................................................................................................................................... 3266
RETAIL - Gap to Fire Thousands ............................................................................................................................................................... 3267
RETAIL - Consumers Are Not Following Orders ...................................................................................................................................... 3269
RETAIL - "Double" Seasonal Adjustments ............................................................................................................................................... 3276
RETAIL - Why McDonalds Is Ending Monthly Sales Reports ................................................................................................................. 3279
RETAIL - May Consumer Spending Has Biggest Annual Drop Since Great Financial Crisis ............................................................. 3281
RETAIL - Factory Orders Contract ............................................................................................................................................................. 3284
RETAIL - McDonalds ................................................................................................................................................................................... 3285
RETAIL - Gaming ......................................................................................................................................................................................... 3287
RETAIL - WalMart ......................................................................................................................................................................................... 3289
RETAIL - Consumer Recession .................................................................................................................................................................. 3291
RETAIL - Vice Index Reflects Plummeting Discretionary Spending ...................................................................................................... 3302
RETAIL - Major U.S. Retailers Are Closing More Than 6,000 Stores ..................................................................................................... 3303
RETAIL - "We Have a Demand Problem Here!" ........................................................................................................................................ 3306
RETAIL - Retail Sales Miss For 4th Month In A Row: First Time Since Lehman .................................................................................. 3312
RETAIL - 14 big stores shrink fastest ........................................................................................................................................................ 3316
RETAIL - McDonald's Franchise Retail CRE is Vulnerable ..................................................................................................................... 3319
RETAIL - U.S. Department Stores a Wider Economic Threat ................................................................................................................. 3323
RETAIL - Value In the Real Estate Assets? ............................................................................................................................................... 3325
RETAIL - Chain Store Sales Growth Worst Since 2010 ........................................................................................................................... 3327
RETAIL - Retail Ex-Debt Fueled Autos-2nd Weakest Year This Century ........................................................................................... 3328
RETAIL - Wal-Mart Cuts Sales Forecast by Nearly 50% .......................................................................................................................... 3331
RETAIL - Wal-Mart Cuts Sales Forecast by Nearly 50% .......................................................................................................................... 3332
RETAIL - Capture market share and get the most out of the consumers that are in our stores ........................................................ 3335
RETAIL - McDonalds Has Worst Month In A Decade ............................................................................................................................... 3336
RETAIL - August Retail Sales: Post-Winter Bounce Fading Fast .......................................................................................................... 3337
RETAIL - Weakness reported in restaurants, food service and processors and some retailers ........................................................ 3342
RETAIL - Why Aren't "Confident" Consumers Spending? ..................................................................................................................... 3342
RETAIL - Retail Sales Have not Recovered to the 2007 Pre-Recession Level ...................................................................................... 3345
RETAIL - Why Retail Sales Are Faltering - 60% Of Households Have No Real Income Gains ........................................................... 3348

34

RETAIL - WalMart Reduces Guidance - Again! ........................................................................................................................................ 3350

RETAIL - 35,000Franchise Operators in Trouble ..................................................................................................................................... 3351
RETAIL - Retail Furniture Sales Collapse ................................................................................................................................................. 3353
RETAIL - Lower Prices & Discounting Taking a Toll ............................................................................................................................... 3354
RETAIL - Retail Sales Weaken on Price Discounting............................................................................................................................... 3355
RETAIL - Wal-Mart Looks to Grow by Embracing Smaller Stores .......................................................................................................... 3357
RETAIL - A Bad Start to the Q Earnings Season ...................................................................................................................................... 3360
RETAIL - Gallup Highlights Consumers are straining against rising prices................................................................................................. 3361
RETAIL - Markets Being "Duped" by Misinterpreting Misleading Data ................................................................................................. 3365
RETAIL - Rising Beef Costs ........................................................................................................................................................................ 3365
RETAIL - Rising "Prime" Retail Rents ....................................................................................................................................................... 3369
RETAIL - Tablets Are Making Waiters Obsolete ....................................................................................................................................... 3371
RETAIL - Weakness in RETAIL Broadens ................................................................................................................................................. 3373
RETAIL - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary................................................ 3375
RETAIL - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................................................. 3375
RETAIL - More Loans Come With Few Strings Attached ........................................................................................................................ 3378
RETAIL - McDonalds Has Longest Stretch Without Rising US Sales In History .................................................................................. 3383
RETAIL - Retail Furniture Sales Collapse.................................................................................................................................................. 3386
RETAIL - Profound Shift to On-Line Retailing .......................................................................................................................................... 3390
RETAIL - Retail Death Rattle Grows Louder ............................................................................................................................................. 3394
RETAIL - E-Commerce Industry Is About To Explode ............................................................................................................................. 3412
RETAIL - ailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ....................................................................................... 3413
RETAIL - Dick's Sporting Goods ................................................................................................................................................................ 3415
RETAIL - April Surprised Most Investors who were looking for a stronger reading! .......................................................................... 3417
RETAIL - A 71% Consumption Economy Living off Government Deficits (Temporarily) .................................................................... 3421
RETAIL - Exploding Shift to Online Sales ................................................................................................................................................. 3423
RETAIL - Loss of Anchor Tenants Can Accelerate Downward Spiral .................................................................................................... 3423
RETAIL - Exploding Shift to Online Sales ................................................................................................................................................. 3427

35

MONTHLY PROCESS OF ABSTRACTION

The Global Macro Tipping Points (GMTP) Service is an integral part of our monthly Process of Abstraction research
methodology. The process starts monthly with the Tipping Points and completes with a final Synthesis. The
sequence is optimized to align with the established Macro Economic Data releases.
Plan
Release
Date
III.
Monday following
3rd Saturday
of the Month
IV.
II.
1st Day of the

Month
Day Following
Monthly Labor
Report
(~ 1st Saturday)
Service
Coverage
Tipping Points
Tipping Points
Abstraction
Global Macro
Abstraction
US Economy
Technical Analysis
Technical Analysis
Market Analytics
Fundamental Analysis
Market Analytics
Risk Analysis
Synthesis
Commentary
Synthesis
Commentary
Thesis
Conclusions
Global Macro Tipping Points

(GMTP)
Market Analytics & Technical

Analysis (MTA)
Monthly Market Commentary

(MMC)

36
Focus


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ECHO BOOM - REVISITED

Emerging Markets Feeling The Pain

FULL GMTP DATA FILE

GLOBAL MACRO TIPPING POINTS - SEPTEMBER 2015

1 September 2015 Edition

Restricted & Confidential

ECHO BOOM - REVISITED

GLOBAL RISK ......................................................................................................................................... 37

September 2015 Edition

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Restricted & Confidential

THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 191

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 210

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

ISIS .................................................................................................................................................................................................................. 310

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 374

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 383

GLOBAL MACRO ................................................................................................................................. 427

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 427

September 2015 Edition

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Restricted & Confidential

IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 544

GLOBAL MACRO ................................................................................................................................. 559

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

ECONOMIC CUTS ................................................................................................................................................................................................. 681

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 705

September 2015 Edition

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Restricted & Confidential

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 823

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

RESEARCH OF NOTE .................................................................................................................................................................................. 1035

GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1101

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Restricted & Confidential

September 2015 Edition

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September 2015 Edition

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Restricted & Confidential

REGIONAL ........................................................................................................................................... 1463

September 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

EU WEAK BUT SOME POSITIVE ECONOMIC NEWS ........................................................................................................ 1467