RPT-GM rpt-GMTP-2015-11-Peek - pdfTP-2015-11-Peek

QE FOR THE PEOPLE
Helicopter Money (OMF) Coming During the Next Drawdown
US ECONOMIC UPDATE
GLOBAL MACRO TIPPING POINTS NOVEMBER 2015
10/26/2015
1 November 2015 Edition

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

general@GordonTLong.com
QE FOR THE PEOPLE

Helicopter Money (OMF) Coming During the Next Drawdown
GLOBAL MACRO TIPPING POINTS - NOVEMBER 2015
GLOBAL RISK ......................................................................................................................................... 38

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 38
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 38
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 39
Our Assessment ................................................................................................................................................................................................ 39
James Rickards Global Risk Assessment ........................................................................................................................................................ 52
MACRO MONITORING INSTITUTIONS ............................................................................................................................................................... 100
LATEST FROM THE MONITORS ................................................................................................................................................................... 100
RESEARCH OF NOTE ................................................................................................................................................................................ 104
NEW-MONITORS World Bank - Global Economic Prospects Report.................................................................................................. 104
NEW-MONITORS World Bank Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ..................................... 105
NEW-MONITORS OECD Leading Indicator Casts Doubt on US Economic Rebound ..................................................................... 107
NEW-MONITORS OECD Warns 40 Million People Will Be Out of Work Next Year ....................................................................... 107
NEW-MONITORS IMF Tells Regulators to Brace for Global Liquidity Shock ................................................................................... 110
MONITORS - Lagarde warns of lopsided global growth ........................................................................................................................ 114
MONITORS - OECD Cuts Global Growth Projections Again .................................................................................................................. 115
MONITORS World Bank Global Growth Outlook .............................................................................................................................. 116
MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 117
MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 118
MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 119
BIS ................................................................................................................................................................................................................... 121
NEW-BIS - BIS Quarterly Report ................................................................................................................................................................. 121
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 121
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 122
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 124
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 128
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 131
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 132
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 137
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 141
CHARTS OF NOTE ..................................................................................................................................................................................... 141
WEF Global Business Risks ................................................................................................................................................................. 143
WEF The 2015 Global Risk Landscape ................................................................................................................................................ 144
WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 145
WEF Global Risk Exposures By Region ............................................................................................................................................... 146
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 147
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 147
CHARTS OF NOTE ......................................................................................................................................................................................... 149
NEW-Total Global Credit-Market Debt Owed as % of GDP ........................................................................................................................ 149
NEW-$57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ........................................................... 150
NEW-Global Risk Landscape Grid .............................................................................................................................................................. 151
NEW-Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .................................................................................... 152
NEW-Global Risks of Highest Concern ....................................................................................................................................................... 152
NEW-Global Risks Versus Impact ............................................................................................................................................................... 153
The economic balance of the world is shifting ............................................................................................................................................. 154
Global Conflict Intensity is heating up.......................................................................................................................................................... 155
World Conflict Map ....................................................................................................................................................................................... 156
World Conflict Map Details........................................................................................................................................................................ 157
Global Conflict & Protest Intensity ............................................................................................................................................................... 158
Deutsche Banks Key Global Risk ............................................................................................................................................................... 158
Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 159
RESEARCH OF NOTE .................................................................................................................................................................................... 160
NEW- McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE ................................................................................... 160
NEW- Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 .................................................................................... 164
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 167
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 168
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 170
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 173
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 174
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 175
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 178
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 178
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 189
November 2015 Edition

2

THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 192

THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 193
THE RISK CONTINUUM ............................................................................................................................................................................. 196
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 198
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 200
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 202
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 204
GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 211

GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 213
NEW-GREECE - Greek Lawmakers Won't Back Deal; Finnish FinMin Says "Can't Agree" To New Greek Loans ...................................... 213
NEW-GREECE - Goldman: The Greek Solution "Exposes The Whole System To Collapse" ....................................................................... 213
NEW-GREECE - Munchau: "The Eurozone As We Know It Is Destroyed" .................................................................................................... 213
NEW-GREECE - What Assets Did Greece Just Hand Over To Europe: "Airports, Airplanes, Infrastructure And Most Certainly Banks" .... 213
NEW-GREECE - New Government Likely In Greece, Depositor Bail-In Still Possible, Deutsche Bank Says ............................................... 213
NEW-GREECE - Yanis Varoufakis: "Merkel's Control Over The Eurogroup Is Absolute, They Are Beyond The Law" ................................ 214
NEW-GREECE - How German Media See The New Greek 'Deal'................................................................................................................. 214
NEW-GREECE - Greece Banks Not Out Of The Woods, May Impose Tougher Capital Controls, Barclays Says ....................................... 214
NEW-GREECE - Even The Players Are Losing Faith In Their Own Shenanigans ........................................................................................ 214
NEW-GREECE - After "Deal", Here's What's Next For Greece ...................................................................................................................... 214
NEW-GREECE - EU Exit Will Now Be "Threat To Those Who Don't Behave The German Way," BofA Says ............................................. 216
NEW-GREECE - Tsipras Releases Statement Following Greek "Deal", Will "Fight To Regain Lost National Sovereignty" ......................... 216
NEW-GREECE - Deal Struck Following Total Capitulation By Tsipras: Market Awaits Greek Reaction To Draconian Deal Terms ............ 217
NEW-GREECE - How The Greek Deal Almost Collapsed At 6am In The Morning ....................................................................................... 217
NEW-GREECE - The Greek "Choice": Hand Over Sovereignty Or Take Five Year Euro "Time Out" ........................................................... 218
NEW-GREECE - Eurogroup Officially Threatens Greece With 5 Year Grexit "Time Out" ............................................................................. 218
NEW-GREECE - Eurogroup Fails To Reach Deal, Gives Greece 24 Hours To Accept Draconian Terms ................................................... 219
NEW-GREECE - A Broken Greek PM Says He Is "Ready For An Honest Compromise".............................................................................. 219
NEW-GREECE - Leaked Eurogroup Statement Demands Much More From Greece, Keeps "Temporary Grexit" Option ........................... 220
NEW-GREECE - Someone Told Merkel... ...................................................................................................................................................... 220
NEW-GREECE - Schauble Proposes "5 Year Grexit With Humanitarian Support" ....................................................................................... 220
NEW-GREECE - Eurogroup Meeting Ends Without Agreement: "Huge Problems", "Issue Of Greek Trust Very Difficult" ........................... 220
NEW-GREECE - Finland Echoes Germany, Wants Greece Out; Five Other Nations Back Grexit ............................................................... 220
GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ............................... 221
GREECE - Greece Prepares To Leave ........................................................................................................................................................... 223
GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ................................................................................ 225
GREECE - Will Greece Call A Referendum On Euro Membership? .............................................................................................................. 226
GREECE - What Greece Owes, And More Importantly - When! .................................................................................................................... 229
GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ........................................................................... 232
GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ................................................................................... 235
GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 238
IRAN ................................................................................................................................................................................................................. 238
RESEARCH OF NOTE ................................................................................................................................................................................ 238
NEW-IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ......................................................................................................... 238
NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 241
YEMEN ............................................................................................................................................................................................................ 242
CHARTS OF NOTE ..................................................................................................................................................................................... 242
YEMEN Strategic Position .................................................................................................................................................................... 242
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 243
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 243
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 244
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 244
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 246
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 247
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 248
RESEARCH OF NOTE ................................................................................................................................................................................ 249
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 249
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 251
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 254
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 255
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 257
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 262
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 264
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 269
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 270
RESEARCH OF NOTE ................................................................................................................................................................................ 276
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 276
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 277
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 281
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 285
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 286
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 289
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 292
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 293
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 295
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 309

3

ISIS .................................................................................................................................................................................................................. 311

ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 312
ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 316
ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 316
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 317
SYRIA .............................................................................................................................................................................................................. 320
SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 321
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 322
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 323
SYRIA - 25 Quotes ................................................................................................................................................................................... 324
SYRIA - What Coalition? .......................................................................................................................................................................... 327
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 329
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 331
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 339
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 341
GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 344
ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 344
CHARTS OF NOTE ..................................................................................................................................................................................... 347
AIIB Demanding Infrastructure .............................................................................................................................................................. 347
RESEARCH OF NOTE ................................................................................................................................................................................ 348
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 348
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 350
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 351
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 353
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 356
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 358
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 360
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 363
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 363
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 365
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 367
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 370
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 372
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 372
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 375

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 375
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 376
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 376
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 377
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 377
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 378
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 378
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 380
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 380
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 381
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 381
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 382
GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 384

CHANGES TO RANKINGS Q3 2015 ................................................................................................................................................................. 384
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 386
CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 387
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 388
TIPPING POINTS: TOP 5 FOCUS - AUGUST 2015 ............................................................................................................................................. 391
NEW-I BOND BUBBLE................................................................................................................................................................................. 391
$140 Billion Bond Fund Goes To Cash As It "Braces For Bond-Market Collapse"............................................................................ 391
NEW-II - RISK REVERSAL ............................................................................................................................................................................. 393
What Happened The Last Time The Fed's Balance Sheet Hit 25% Of GD ................................................................................................ 393
NEW-III - GEO-POLITICAL EVENT RISK ....................................................................................................................................................... 399
The REAL Reason Greece Matters For Investors ....................................................................................................................................... 402
NEW-IV - CHINA HARD LANDING ................................................................................................................................................................. 409
Chinese Stock Markets - 1929 In Chinese Markets .................................................................................................................................. 411
NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 420
Abenomic's QQE Phiosophically Unsound ............................................................................................................................................ 420
GLOBAL MACRO ................................................................................................................................. 428

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

4

NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 428

IMF sees risk of new eurozone .................................................................................................................................................................... 430
IMF Tells Central Europe to Spend More .................................................................................................................................................... 433
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 436
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 438
BIS WARNS ..................................................................................................................................................................................................... 440
NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................... 440
Monetary Policy At Its Limits ........................................................................................................................................................................ 452
WORLD BANK WARNS ................................................................................................................................................................................. 453
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 455
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 457
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 458
CHARTS OF NOTE ............................................................................................................................................................................................... 461
NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis .................................................................... 461
NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................. 462
NEW-CHART: Global Business Equipment Investment ............................................................................................................................ 463
NEW-CHART: EM versus DM Credit Risk ................................................................................................................................................... 464
NEW-CHART: MSCI World P/E versus EM P/E ........................................................................................................................................... 464
NEW-CHART: Emerging Capital Flows & Currency Moves ...................................................................................................................... 465
NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................ 465
NEW-CHART: Domestic Bank Credit of EM versus DM ............................................................................................................................ 466
NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ................................................................................. 466
NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................ 468
NEW-CHART: There is a Problem in Global Credit .................................................................................................................................... 468
CHART: Serial Disappointments & Ratcheting Down of Global Growth ................................................................................................. 469
CHART: Continuous Weakening of Global GDP Estimates ...................................................................................................................... 470
CHART: Reduced Demand Pressures on Energy Prices .......................................................................................................................... 470
CHART: Reduced Demand Pressures on Commodities ........................................................................................................................... 471
CHART: Global Corporate Profit Trends ..................................................................................................................................................... 471
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst .................................................................. 472
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ............................................................................... 473
CHART: Growth of Asian Middle Class Dominates Next 20 Years ....................................................................................................... 474
CHART: Global Domestic Demand Growth ................................................................................................................................................ 474
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ............................................................................................ 475
CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 475
CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 476
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 477
CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 477
CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 478
CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 479
CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 479
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 480
CHART: Shifting Global GDP Share ............................................................................................................................................................ 481
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 482
CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 482
CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 483
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 483
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 484
CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 485
RESEARCH OF NOTE .......................................................................................................................................................................................... 486
NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ...................................................................................................... 486
NEW-GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ........................................... 489
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile..................................................................................................... 490
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ........................................................ 493
GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession .......................................................................................... 494
GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ..................................................................................................... 497
GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................ 501
GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ........................................................... 504
GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 506
GLOBAL OUTLOOK The Last Days Of The Growth Story? ....................................................................................................................... 508
GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 509
GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 514
GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 516
GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 519
GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 522
GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 525
GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 527
GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 530
GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 532
ECONOMIC CUTS ................................................................................................................................................................................................. 536
CHARTS OF NOTE ......................................................................................................................................................................................... 536
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 536
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 539
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 539

5

IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 545

OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 555
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 557
GLOBAL MACRO ................................................................................................................................. 560

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 560
GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 560
ECONOMIC WARNINGS....................................................................................................................................................................................... 560
IMF WARNS .................................................................................................................................................................................................... 560
NEW-IMF Warns of gloomy eurozone outlook ............................................................................................................................................ 560
NEW-IMF Warns U.S.: Your financial system is (still) vulnerable ............................................................................................................... 565
NEW-IMF Warns Japan over Its Staggering National Debt ........................................................................................................................ 567
NEW-IMF Warns Japan to step up reforms ................................................................................................................................................. 567
NEW-IMF Warns Fed on risks of hiking too soon........................................................................................................................................ 568
IMF Warns of Permanent Stagnation .......................................................................................................................................................... 569
IMF Sees risk of new eurozone ................................................................................................................................................................... 571
IMF Tells Central Europe to Spend More .................................................................................................................................................... 574
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 577
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 579
BIS WARNS ..................................................................................................................................................................................................... 581
BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................................... 581
Monetary Policy At Its Limits ........................................................................................................................................................................ 593
WORLD BANK WARNS .................................................................................................................................................................................. 594
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ............................................................................... 596
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 599
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 600
CHARTS OF NOTE ............................................................................................................................................................................................... 603
NEW-CHART: Global Consumer Confidence Turns ....................................................................................................................................... 603
NEW-CHART: Global Consumer Confidence Momentum versus Bond Yields .............................................................................................. 603
NEW-CHART: Bear Grip Felt Around the World ............................................................................................................................................. 604
NEW-CHART: Emerging Market FX in Freefall .............................................................................................................................................. 604
NEW-CHART: Asian Dollar Index Sends Ominous Sign ................................................................................................................................ 605
NEW-CHART: Biggest Currency Losers ......................................................................................................................................................... 605
NEW-CHART: The Great Unwind - A Triple Unwind of EM Credit, Chinas Leverage and US Monetary Easing ......................................... 606
NEW-CHART: Latin Americas Economic Slowdown ..................................................................................................................................... 607
CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 607
CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 608
CHART: Global Business Equipment Investment ........................................................................................................................................... 609
CHART: EM versus DM Credit Risk ................................................................................................................................................................ 610
CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 610
CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 611
CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................................. 611
CHART: Domestic Bank Credit of EM versus DM .......................................................................................................................................... 612
CHART: Regional Resilience Score Differences Since the Financial Crisis................................................................................................... 612
CHART: US Macro index at a New 6 Year Low. ............................................................................................................................................. 614
CHART: There is a Problem in Global Credit .................................................................................................................................................. 614
CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 615
CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 616
CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 616
CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 617
CHART: Global Corporate Profit Trends ......................................................................................................................................................... 617
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 618
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ......................................................................................... 619
CHART: Growth of Asian Middle Class Dominates Next 20 Years .............................................................................................................. 620
CHART: Global Domestic Demand Growth .................................................................................................................................................... 620
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ................................................................................................... 621
CHART: World GDP 2014 Economic Growth Estimates ................................................................................................................................ 621
CHART: World GDP versus World MSCI Stock Index .................................................................................................................................... 622
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ..................................................................................... 623
CHART: World Trade versus Central Bank Balance Sheet Growth ............................................................................................................... 623
CHART: Falling Global LEI (Leading Economic Indicator).............................................................................................................................. 624
CHART: World GDP Economic Forecast 2014 ............................................................................................................................................... 625
CHART: World GDP Economic Expectations versus MSCI Equity Index ...................................................................................................... 625
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 626
CHART: Shifting Global GDP Share ............................................................................................................................................................... 627
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 628
CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 628
CHART: Future Economic Growth a Sub 2% Trend ....................................................................................................................................... 629
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth ........................................................................................... 629
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI ........................................................................................................... 630
CHART: Liquidity Drain in US in 2H 2014 ....................................................................................................................................................... 631
RESEARCH OF NOTE .......................................................................................................................................................................................... 632
GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ................................................................................................................. 632

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 ...................................................... 635
2015 Macro Outlook Proving to be Volatile ............................................................................................................... 636
2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ................................................................... 639
3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 640
This is the Biggest Risk to the World's Economy ...................................................................................................... 643
What is global market turbulence telling us? ............................................................................................................. 647
Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 650
The Last Days Of The Growth Story? ........................................................................................................................ 652
The Last Days Of The Growth Story? ........................................................................................................................ 654
- THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 655
- 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 660
- Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 662
- Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 665
The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 668
- Credit Fueled Globalization in Retreat ........................................................................................................................ 671
- Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 673
- Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 676
- A 67 Million Jobs Gap ................................................................................................................................................. 678
ECONOMIC CUTS ................................................................................................................................................................................................. 682

CHARTS OF NOTE ......................................................................................................................................................................................... 682
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 685
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 685
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 691
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 701
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 703
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 706

GLOBAL TRENDS ................................................................................................................................................................................................. 706
CHARTS OF NOTE ......................................................................................................................................................................................... 706
NEW-GLOBAL TRENDS World Industrial Production Index ................................................................................................................... 706
NEW-GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ................................................... 706
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index ................................................................................................ 707
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015................................ 707
NEW-GLOBAL TRENDS JAPAN Industrial Production Index ................................................................................................................. 708
NEW-GLOBAL TRENDS EURO AREA Industrial Production Index ....................................................................................................... 708
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 709
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 709
GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 709
GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 710
GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 711
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 711
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 712
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 712
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 713
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 714
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 714
RESEARCH OF NOTE .................................................................................................................................................................................... 715
NEW-GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse ................................................................................ 715
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 715
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 720
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 724
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 725
CHARTS OF NOTE ......................................................................................................................................................................................... 725
CHART Global Employment Rates ........................................................................................................................................................... 725
CHART Global Unemployment ................................................................................................................................................................. 726
CHART Global Unemployment EU Comparison ................................................................................................................................... 726
CHART Unemployment in Advanced Countries ....................................................................................................................................... 727
CHART Global Labor Participation Rates ................................................................................................................................................ 727
CHART Global Youth Unemployment By Country ................................................................................................................................ 728
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 728
RESEARCH OF NOTE .................................................................................................................................................................................... 729
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 729
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 731
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 733
GLOBAL SENTIMENT ........................................................................................................................................................................................... 735
CHARTS OF NOTE ......................................................................................................................................................................................... 735
NEW-GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected .................................................. 735
NEW-GLOBAL SENTIMENT Global Consumer Confidence Turns ............................................................................................................. 736
NEW-GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ......................................... 737
NEW-GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ............................................................................. 738
NEW-GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ............................................. 739
NEW-GLOBAL SENTIMENT Differing Concerns Around the World By Region ................................................................................... 740
NEW-GLOBAL SENTIMENT Growing Recessionary Sentiment ............................................................................................................. 741

7

NEW-GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ........................................................................ 742
GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 743
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 744
GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 745
GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 746
GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 747
GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 748
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 749
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 750
GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 751
GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 752
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 753
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 753
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 755
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 756
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 757
RESEARCH OF NOTE .................................................................................................................................................................................... 758
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 758
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 760
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 764
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 765
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 767
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 768
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 779
CHARTS OF NOTE ......................................................................................................................................................................................... 780
NEW-GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region ..................................................................... 780
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 780
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 781
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 782
RESEARCH OF NOTE .................................................................................................................................................................................... 783
GLOBAL GROWTH ............................................................................................................................................................................................... 783
CHARTS OF NOTE ......................................................................................................................................................................................... 783
NEW-GLOBAL GROWTH World Trade Values in US$ ........................................................................................................................... 783
NEW-GLOBAL GROWTH World Industrial Production ............................................................................................................................ 784
NEW-GLOBAL GROWTH World Trade (Values in US$) Index ............................................................................................................... 785
NEW-GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 ..................................................................... 786
NEW-GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................................... 787
NEW-GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ...................................................................... 787
NEW-GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 788
NEW-GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ................................................................................. 788
NEW-GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................... 789
NEW-GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ................................................................... 789
NEW-GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ........................................... 790
NEW-GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ........................................................... 790
NEW-GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................ 791
NEW-GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ............................................................ 791
NEW-GLOBAL GROWTH CHINAS Imports, Annual % Change ............................................................................................................ 792
NEW-GLOBAL GROWTH CHINAS Exports, Annual % Change ............................................................................................................ 792
GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 793
GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 794
GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 795
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 796
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 797
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 797
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 798
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 799
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 799
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 799
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 800
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 801
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 801
RESEARCH OF NOTE .................................................................................................................................................................................... 802
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 802
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 803
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 805
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 806
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 810
GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 812
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 814
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 815
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 816
GLOBAL CREDIT .................................................................................................................................................................................................. 817
NEW- CREDIT CYCLE - HG Spread Widening .......................................................................................................................................... 817
NEW- CREDIT CYCLE - Widening Gap Between Debt & Equity ............................................................................................................... 817
CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 817
CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 821

8

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

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 824
RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 824
CHARTS OF NOTE ......................................................................................................................................................................................... 827
NEW-CHARTS Saudi + China Reserves versus 10Y UST Yield ............................................................................................................. 827
NEW-CHARTS Total World Reserve Foreign Exchange Reserves......................................................................................................... 827
NEW-CHARTS Why Canada May Become a Problem For Janet Yellen ................................................................................................ 828
CHARTS Consensus Fed and ECB Rate Hike Projections ..................................................................................................................... 829
CHARTS Global Monetary Policy Stance & Bias ..................................................................................................................................... 830
CHARTS Global Government Bonds Trading With Negative Yields........................................................................................................ 831
CHARTS Lack of Inflation in Europe ........................................................................................................................................................ 831
CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s)............................................................. 832
CHARTS Quantitative e Easing No Longer Drives Commodity Prices .................................................................................................... 833
CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................................ 833
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 834
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 834
CHARTS Falling Global Bond Rates Continue in Q1 2015 ...................................................................................................................... 835
CHARTS The Road to NIR (Negative Rates) ........................................................................................................................................... 835
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 836
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 836
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 838
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 838
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 839
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 839
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 840
RESEARCH OF NOTE .................................................................................................................................................................................... 841
NEW-CENTRAL BANKS - xxxx ................................................................................................................................................................... 841
NEW-CENTRAL BANKS - 8 Capital Markets 'Threats' To The Central Bank Narrative ............................................................................. 841
NEW-CENTRAL BANKS - How Much More Faith In Central Banks Is Left? .............................................................................................. 843
CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................................ 845
CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode .............................................................................................. 846
CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................................ 847
CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage ......................................................................................... 850
CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ................................................................................ 851
CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation .......................................................... 853
CENTRAL BANKS - The year of Dollar Danger for the world ..................................................................................................................... 855
CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ........................................................ 860
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 864
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 866
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 867
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 870
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 871
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 872
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 874
WAR ON CASH ............................................................................................................................................................................................... 879
WAR ON CASH Elliott Waves Report on the War on Cash .................................................................................................................. 879
WAR ON CASH The "War On Cash" Migrates To Switzerland ............................................................................................................... 884
WAR ON CASH Chase Joins the War on Cash ....................................................................................................................................... 887
WAR ON CASH Largest Bank In America Joins War On Cash ............................................................................................................... 889
WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban .......................................................................................................... 891
SWISS PEG ..................................................................................................................................................................................................... 895
SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .................................................................................................... 896
SWISS PEG Swiss Peg Failure The Financial System Broke Last Week ............................................................................................ 898
SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ............................................................ 899
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 903
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 903
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 904
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 907
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 909
BOE - UK ................................................................................................................................................................................................................ 910
CHARTS OF NOTE ......................................................................................................................................................................................... 910
UK Sterling/ US Dollar Exchange Rate after UK Super Thursday ......................................................................................................... 910
UK Dissent within BOE Set to Continue ................................................................................................................................................... 910
RESEARCH OF NOTE .................................................................................................................................................................................... 911
NEW-UK - Neutral Report Leaves BOE on Track for February Liftoff ........................................................................................................ 911
NEW-UK - Did The Bank Of England Just Admit Financial Markets Aren't "Real"? ................................................................................... 913
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 914
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 915
FED - US ................................................................................................................................................................................................................ 917
CHARTS OF NOTE ......................................................................................................................................................................................... 918
NEW-CHARTS Inflation Expectations versus Fed QE Easing Operations .............................................................................................. 918
NEW-CHARTS Depth of US Treasury Markets Has Declined from Recent Highs .................................................................................. 918
NEW-CHARTS China Dumping US Treasuries as Chinese Forex Reserves Fall .................................................................................. 919
NEW-CHARTS US Defenses Down ......................................................................................................................................................... 920
NEW-CHARTS September Rate Hike Forecast History .......................................................................................................................... 921

9

NEW-CHARTS Only One Thing Can Stop the Fed from a September Rate Hike Emerging Market Weakness ................................. 921
CHARTS Feds QE History versus UST 10 Year Yields .......................................................................................................................... 922
CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 922
CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 922
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 923
RESEARCH OF NOTE .................................................................................................................................................................................... 924
NEW-US MONETARY Why We Have Low Level Equilibria .................................................................................................................. 924
NEW-US MONETARY Crashing Inflation Expectations Suggest Imminent Launch Of QE4 ................................................................... 926
NEW-US MONETARY Why Goldman Is Confident the Fed Will Wait To Hike Until December (At Least) ............................................ 927
NEW-US MONETARY Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End of Debt Supercycle..... 929
NEW-US MONETARY What Options Are Saying About A Possible September Rate Hike ................................................................... 930
NEW-US MONETARY The Fed Is Scared To Raise Rates, Ron Paul Warns "Everything Is Too Vulnerable" ...................................... 932
NEW-US MONETARY Hilsenrath Warns Fed Is Out Of Ammo, "Policy Makers Resorting To Backup, Backup Plans" ........................ 933
NEW-US MONETARY China's Record Dumping Of US Treasuries Leaves Goldman Speechless ....................................................... 935
NEW-US MONETARY Fed Goes Looking For Evidence of Broken Treasury Market, Decides Everything Is Fine ............................... 940
NEW-US MONETARY The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts ...................................................... 945
US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ....................................................... 945
US MONETARY - Audit the Fed Yellens Testimony ................................................................................................................................ 948
US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy .......................................................................... 957
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 960
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 963
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 966
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 968
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 970
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 976
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 977
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 979
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 981
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 984
CHARTS OF NOTE ......................................................................................................................................................................................... 984
JAPAN Japan Heads Back towards Deflation .......................................................................................................................................... 984
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 985
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 986
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 987
RESEARCH OF NOTE .................................................................................................................................................................................... 988
NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 988
NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 990
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 991
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 994
BOJ JAPAN ......................................................................................................................................................................................................... 996
CHARTS OF NOTE ......................................................................................................................................................................................... 996
JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 996
JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 997
JAPAN Japanese Trade Balance ............................................................................................................................................................. 998
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 998
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 999
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 999
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 999
JAPAN Real Wages Plummet as Financial Repression Takes Hold ..................................................................................................... 1000
RESEARCH OF NOTE .................................................................................................................................................................................. 1001
JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game .................................................................................... 1002
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ............................................................................... 1004
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target ............................................................................................ 1007
JAPAN - No Way Out But to Expand the Monetary Base ......................................................................................................................... 1009
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years..................................................................................................................................... 1010
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................. 1013
JAPAN - Some Policies Have Clearly Hit the Limit ................................................................................................................................... 1015
JAPAN - Foreshadows Next Global Crisis ................................................................................................................................................ 1016
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ..................................................................... 1021
JAPAN - Shinzo Abes Monetary-Policy Delusions ................................................................................................................................... 1022
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" ................................................................................ 1025
JAPAN - Japanese Economic Policy Goes The Full Ponzi ....................................................................................................................... 1026
PBOC - CHINA ..................................................................................................................................................................................................... 1028
CHARTS OF NOTE ....................................................................................................................................................................................... 1029
NEW-CHARTS Chinas Capital Inflow / Outflow .................................................................................................................................... 1029
NEW-CHARTS Chinas Falling Holdings of US Treasuries ................................................................................................................... 1029
NEW-CHARTS Cumulative % Increases in Pork Since the Start of the Cycle ...................................................................................... 1030
NEW-CHARTS Severe Supply of Food Staple - Pork ............................................................................................................................ 1030
NEW-CHARTS Chinese CPI (Minus Pork) ............................................................................................................................................. 1031
CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ....................................................................... 1031
CHARTS China Reduces Bank Reserve Ratio ...................................................................................................................................... 1031
CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ......................................................................................... 1032
CHARTS Falling Chinese Government Revenue Growth ...................................................................................................................... 1034
CHARTS Falling National New Residential Housing Starts ................................................................................................................... 1034
CHARTS China and Asia Residential Property Tracking US Housing Bubble ...................................................................................... 1035
CHARTS Real Chinese Rates versus Cuts ............................................................................................................................................ 1035

10

RESEARCH OF NOTE .................................................................................................................................................................................. 1036

NEW CHINA MONETARY - Devaluation Stunner: China Has Dumped $100 Billion In Treasuries In The Past Two Week ................... 1036
NEW CHINA MONETARY - China's Record Dumping Of US Treasuries Leaves Goldman Speechless ................................................ 1038
NEW CHINA MONETARY - Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts ................ 1043
CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says .................................... 1049
CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ..................................................................................... 1051
CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears ................................................................................................ 1053
ECB EU ............................................................................................................................................................................................................. 1059
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1059
CHARTS OF NOTE ....................................................................................................................................................................................... 1060
NEW-CHARTS EU QE Results An Abject Failure .............................................................................................................................. 1060
CHARTS Welcome to the EUs NIRP .................................................................................................................................................. 1060
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1061
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1061
CHARTS UK & German Total Return Indices ........................................................................................................................................ 1062
CHARTS ECBs Dilemma of Digging Up Enough Debt .......................................................................................................................... 1062
CHARTS Nearly $2T European Nonds Trading With Negative Yields .................................................................................................. 1063
CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ............................................................... 1063
CHARTS The Fastest Growing Asset Class NIR Products ................................................................................................................. 1064
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ......................................................................................................... 1065
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU ............................................................................................................ 1066
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 .............................................................................................................. 1066
CHARTS Euro-Area Inflation Expectations Decline ............................................................................................................................... 1067
CHARTS Euro-Area Private Sector Loan Creation ................................................................................................................................ 1068
CHARTS Euro-Area Money Supply, Private Sector Lending Growth .................................................................................................... 1068
CHARTS Euro-Area 10 Yr Sovereign Bond Yields ................................................................................................................................ 1069
CHARTS Slovenia May BE the Next EU Debt Hotspot .......................................................................................................................... 1069
CHARTS Spain & Portugal NPL ............................................................................................................................................................. 1070
CHARTS ECBs Turn to Expand Its Balance Sheet ............................................................................................................................... 1071
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................. 1071
CHARTS Expect Major ECB Policy Announcement in Q2 2014 ............................................................................................................ 1072
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................. 1073
RESEARCH OF NOTE .................................................................................................................................................................................. 1074
NEW-EU MONETARY - Draghi Failed: European Inflation Expectations Slide To Pre-QE Level ........................................................... 1075
EU MONETARY - NIRP Is A Flawed Economic Concept ......................................................................................................................... 1076
EU MONETARY - NIRP ............................................................................................................................................................................. 1078
EU MONETARY NIRP - Yield scarce as the world turns negative ........................................................................................................ 1082
EU MONETARY - Draghi Key Statements ................................................................................................................................................ 1085
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................. 1086
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action .................................................................................... 1088
EU MONETARY - Euro-Area Data Deterioration Points toward QE ......................................................................................................... 1090
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down .......................................................................... 1092
MACRO MONETARY INFLATION ................................................................................................................................................................... 1094
CHARTS OF NOTE ............................................................................................................................................................................................. 1094
CHARTS The Fall of Hyperinflation & the Rise of Deflation ...................................................................................................................... 1094
CHARTS Falling US Consumer Price Index .............................................................................................................................................. 1094
CHARTS Global Consumer Prices are Rising Significantly ....................................................................................................................... 1095
CHARTS Global Country Inflation Rates ................................................................................................................................................ 1095
CHARTS Two Worlds if Inflation EM and DM ..................................................................................................................................... 1095
CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1097
RESEARCH OF NOTE .................................................................................................................................................................................. 1098
INFLATION Martin Armstrongs Explanation of Monetary Inflation ........................................................................................................ 1098
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ........................................... 1100
GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1102

GEO-ECONOMIC INDEX .................................................................................................................................................................................... 1102
EMERGING & FRONTIER MARKETS - Emerging Markets Growth, Credit & Forex Problems - Fx Plummet ................................................ 1103
CHARTS OF NOTE ....................................................................................................................................................................................... 1107
NEW-CHARTS Emerging Market 10 Year Shift in Share of World GDP 2004 to 2014 ..................................................................... 1107
NEW-CHARTS Emerging Market Fx in Freefall ..................................................................................................................................... 1107
NEW-CHARTS Total Economy Debt as a % of GDP India, Poland, Ireland and Spain ..................................................................... 1108
NEW-CHARTS Global FX Reserves 2000 versus 2005 versus 2015 ................................................................................................ 1108
NEW-CHARTS GDP per Capita Income ................................................................................................................................................ 1109
NEW-CHARTS EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 .......................................................................... 1110
NEW-CHARTS Brazil in or Near a Serious Recession .......................................................................................................................... 1110
NEW-CHARTS Collapsing Currencies in Columbia and Chile ............................................................................................................... 1111
NEW-CHARTS The Unwind of EM Credit, Chinas Leverage and US Monetary Easing ...................................................................... 1112
NEW-CHARTS The Tale of Two Economies Chile versus Portugal ................................................................................................... 1113
NEW-CHARTS Emerging & Developed Economy Growth Rates Converge ......................................................................................... 1114
NEW-CHARTS Emerging Market Currency Sell-Off .............................................................................................................................. 1114
NEW-CHARTS Emerging Markets Stocks versus Developed Market Stocks ....................................................................................... 1115
NEW-CHARTS Investors Are Pulling Money From Developing Markets ............................................................................................... 1116
NEW-CHARTS Valuation of EM Stocks is Falling Against Developed Markets .................................................................................... 1116
NEW-CHARTS EM Capital Outflows Surge Towards $1T ..................................................................................................................... 1117

11

NEW-CHARTS Developing Nation Currencies Plunge After Chinas Devaluation Rattles Markets...................................................... 1117
CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ........................................................................... 1119
CHARTS Wide Spread Emerging Market Capital Out Flows ................................................................................................................. 1120
CHARTS Emerging Market Debt versus GDP - 2013 ............................................................................................................................ 1121
CHARTS Emerging Market Resilience Indicator Changes .................................................................................................................... 1121
CHARTS BRIC Countries Responsible for 43% of Global Growth ........................................................................................................ 1122
CHARTS BRIC & Emerging Market Inflation Rates ............................................................................................................................... 1122
CHARTS Emerging Market Default Probability ...................................................................................................................................... 1123
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions ................................................ 1123
CHARTS Emerging Market Outflows...................................................................................................................................................... 1124
CHARTS Emerging Market Outflows -2 ................................................................................................................................................. 1124
CHARTS Developed versus Emerging Equity Markets 1990-2014 .................................................................................................... 1125
CHARTS Total GEM Flows..................................................................................................................................................................... 1125
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................. 1126
RESEARCH OF NOTE .................................................................................................................................................................................. 1127
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1127
NEW-EMERGING MARKETS - Emerging Market Currencies To Crash 30-50%, Jen Says ................................................................... 1127
NEW-EMERGING MARKETS - Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse ..................... 1129
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1135
NEW-EMERGING MARKETS - Lost Decade in Emerging Markets: Investors Already Halfway There .................................................. 1142
EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ..................................................................................... 1147
EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" .............................................................. 1150
EMERGING MARKETS - Emerging markets: The great unraveling ......................................................................................................... 1152
EMERGING MARKETS - Moodys warns on EM dollar finance costs ...................................................................................................... 1157
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................. 1158
EMERGING MARKETS - Crisis Redux? ................................................................................................................................................... 1159
EMERGING MARKETS - Losing Their Punch ....................................................................................................................................... 1164
EMERGING MARKETS - Risk-On!........................................................................................................................................................... 1166
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................. 1167
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1169
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................. 1170
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1176
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1181
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ................................................... 1185
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain ........................................ 1188
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1191
US$ RESERVE STATUS & ERODING INFLUENCE.......................................................................................................................................... 1191
RESEARCH WE FOLLOWED DE=DOLLARIZATION ............................................................................................................................ 1191
CHARTS OF NOTE ....................................................................................................................................................................................... 1195
DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ............................................... 1195
DE-DOLLARIZATION - AIIBs Founding Members ................................................................................................................................... 1195
DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ................................................................... 1196
DE-DOLLARIZATION - AIIB Infrastructure Investment ............................................................................................................................. 1197
DE-DOLLARIZATION - The Rise & Fall of Modern Empires .................................................................................................................... 1197
RESEARCH OF NOTE .................................................................................................................................................................................. 1199
DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund..................................................................................... 1199
DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ....................................................................................... 1203
DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ....................................................... 1205
DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ............................................. 1207
DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .................................................................. 1209
DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe .................................................... 1211
DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ..................................... 1211
DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? ..................................................................................................... 1215
DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities .................................... 1217
DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar?..................................................................................... 1218
RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ................................................................ 1219
RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system.......................... 1221
RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ............................................................... 1223
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ..................... 1224
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................. 1225
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ..................................................................... 1226
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order .......................... 1227
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar .................................................................... 1230
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ...................................................... 1231
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar ................................................................................................ 1233
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries .................................................... 1234
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued ........................................................................................................ 1236
CHARTS OF NOTE ....................................................................................................................................................................................... 1239
ENERGY Saudi Crude Oil Production & Brent Price ............................................................................................................................. 1239
ENERGY World Liquids Percent of Production ...................................................................................................................................... 1239
ENERGY Interest Rates & Oil Prices in 2015 Dollars ............................................................................................................................ 1240
ENERGY Oil Production and CAPEX by Operating Environment 2014 ................................................................................................ 1240
ENERGY Global Drilling Intensity Will Increase ..................................................................................................................................... 1241
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 .................................................... 1241
ENERGY Breakeven for All Global Oil Projects ..................................................................................................................................... 1242

12

ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1243
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1244
ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years .......................................................................................... 1245
ENERGY Falling Inflation Adjusted Gasoline Prices .............................................................................................................................. 1246
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ..................................................................................................... 1247
ENERGY US Shale Oil Breakeven Prices .............................................................................................................................................. 1249
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................. 1249
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ............................................................ 1250
ENERGY EM Oil Producers Being Crushed .......................................................................................................................................... 1250
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................. 1251
ENERGY Oil Supply / Demand and Price .............................................................................................................................................. 1252
RESEARCH OF NOTE .................................................................................................................................................................................. 1253
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .................................................... 1253
RUSSIA- OPEC Presents: QE4 And Deflation ...................................................................................................................................... 1256
RUSSIA Energy War ........................................................................................................................................................................... 1258
PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ....................................................................... 1261
PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? ............................................................................ 1265
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ........................... 1270
PETRODOLLAR Collapsing PetroDollar Foundation ......................................................................................................................... 1276
UKRAINE - Pulled between EU v Russia .............................................................................................................................................. 1280
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................. 1280
UKRAINE - Pulled between Economic Inequality Factors ..................................................................................................................... 1281
UKRAINE - Pulled between the Global Military Balance ....................................................................................................................... 1282
UKRAINE - Pulled by Global Financial Markets .................................................................................................................................... 1283
UKRAINE - A Deep State Analysis ........................................................................................................................................................ 1286
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ..................................................................................................... 1290
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ............................................................... 1291
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield .................................................... 1292
ENERGY - The Oil Price Decline ........................................................................................................................................................... 1294
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................. 1301
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1303
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1306
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1311
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1312
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1314
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1317
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1320
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1324
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1329
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1336
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1339
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1341
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1343
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1348
CHARTS OF NOTE ....................................................................................................................................................................................... 1349
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1349
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1350
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1350
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1351
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1351
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1352
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1352
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1353
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1354
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1354
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1355
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1355
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1356
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1357
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1357
RESEARCH OF NOTE .................................................................................................................................................................................. 1359
CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls ........................................................ 1359
CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio ............................................................................ 1363
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1364
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1365
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1366
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1368
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1369
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1370
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1373
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1375
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1378
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1379
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1380
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1383

13

CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1388
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1391
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1393
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1394
GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1396
CHARTS OF NOTE ....................................................................................................................................................................................... 1398
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1398
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1398
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1400
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1400
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1401
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1401
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1402
RESEARCH OF NOTE .................................................................................................................................................................................. 1404
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1404
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1405
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1408
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1410
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1412
DEBT Growth of Financial Services ....................................................................................................................................................... 1415
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1415
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1417
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1419
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1420
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1420
CHARTS OF NOTE ....................................................................................................................................................................................... 1421
CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1421
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1421
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1422
CHARTS Food Importers ........................................................................................................................................................................ 1422
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1423
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1424
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1424
CHARTS CRB Food Index One Year .................................................................................................................................................. 1426
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1427
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1428
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1429
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1429
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1431
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1432
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1433
CHARTS Coffee Futures ........................................................................................................................................................................ 1433
CHARTS Lean Hog Futures ................................................................................................................................................................... 1434
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1434
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1435
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1435
RESEARCH OF NOTE .................................................................................................................................................................................. 1436
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1436
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1439
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1440
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1442
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1442
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1447
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1448
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1450
EUROPE - Euro Exposed .............................................................................................................................................................................. 1450
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1452
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1453
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1453
SWITZERLAND - No Choice ......................................................................................................................................................................... 1453
SINGAPORE - Hot Money ............................................................................................................................................................................. 1454
UK- Pound Joins War .................................................................................................................................................................................... 1455
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1456
RESEARCH WE FOLLOWED....................................................................................................................................................................... 1456
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1459
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1462
CYBER SPYING ............................................................................................................................................................................................ 1463
REGIONAL ........................................................................................................................................... 1464

EU DIS-INFLATION MOVING TOWARDS DEFLATION ...................................................................................................... 1465

14

CHARTS OF NOTE ....................................................................................................................................................................................... 1467

NEW-CHARTS Main Migrant Route to Germany ................................................................................................................................... 1467
NEW-CHARTS Many Migrant Routes Being Taken ............................................................................................................................... 1468
NEW-CHARTS Many Migrant Routes Being Taken- Air, Land and Sea ............................................................................................... 1469
NEW-CHARTS Migrants Entering Hungary ........................................................................................................................................... 1469
NEW-CHARTS Schengen Non Shengen EU Countries ..................................................................................................................... 1470
NEW-CHARTS Schengen Non Shengen EU Countries-2 .................................................................................................................. 1471
NEW-CHARTS Migrant Detentions ........................................................................................................................................................ 1472
NEW-CHARTS German Asylum Applications...................................................................................................................................... 1473
NEW-CHARTS Euro Area and EU28 Unemployment Rates ................................................................................................................. 1474
NEW-CHARTS Unemployment Rates by Country Seasonally Adjusted ............................................................................................ 1475
NEW-CHARTS Inflation Tracks Commodity Prices ................................................................................................................................ 1475
NEW-CHARTS Tracing EU Dis-Inflation towards Deflation .................................................................................................................... 1476
CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ......................................................................................... 1478
CHARTS Eurozone GDP Since 1999 ..................................................................................................................................................... 1478
CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" .................................................... 1479
CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ..................................................... 1480
CHARTS "Over 1/2 of all government bonds yield less than 1%." ......................................................................................................... 1481
CHARTS A weaker Euro has been good for the STOXX 600 ................................................................................................................ 1482
CHARTS Eurozone equity inflows continue to rise ................................................................................................................................ 1483
CHARTS YTD flows into European equity funds ................................................................................................................................... 1483
CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ........................................................................................... 1483
CHARTS Negative Yields Have Become the New Norm in the Euro area .......................................................................................... 1484
CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ............................................................... 1484
CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. .................................................................................................................... 1485
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre..................................................................................... 1485
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ........................................................................................ 1486
CHARTS Eurozone is the Biggest Drag on Global Profits ..................................................................................................................... 1486
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ....................................................................... 1487
CHARTS EU PMIS Rolling Over ............................................................................................................................................................ 1488
CHARTS Eurozone Banks Too Big To Be Bailed Out! .......................................................................................................................... 1489
CHARTS Eurozone Area Consumer Confidence May Be Misleading ................................................................................................... 1490
CHARTS Eurozone GDP & Recession Pattern ...................................................................................................................................... 1490
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1491
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1491
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1492
CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1493
CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1494
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1494
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1495
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1496
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1496
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1497
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1497
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1498
CHARTS EU Confidence ........................................................................................................................................................................ 1499
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1500
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1501
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1501
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1502
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1503
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1504
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1505
CHARTS - EU Area Weakness ................................................................................................................................................................. 1506
CHARTS - EU Area GDP ........................................................................................................................................................................... 1507
CHARTS - EU Area PMI ............................................................................................................................................................................ 1508
CHARTS - EU Area PMI ............................................................................................................................................................................ 1509
CHARTS - EU Real Rates ......................................................................................................................................................................... 1510
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1511
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1512
CHARTS - EU PMI ..................................................................................................................................................................................... 1512
CHARTS - EU CPI ..................................................................................................................................................................................... 1514
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1515
CHARTS - Europe's "Core" Problem is France ......................................................................................................................................... 1516
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ................................................................................... 1519
CHARTS - Evidence OF Global Slowing Now Indisputable ...................................................................................................................... 1520
CHARTS - EU Credit Downgrades, France and UK On Tap .................................................................................................................... 1522
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1524
CHARTS - Dangerous Delusional Divergences ........................................................................................................................................ 1526
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1527
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1528
CHARTS - Eurozone Misery Indices Never Been Higher ......................................................................................................................... 1529
CHARTS - Euro Currency .......................................................................................................................................................................... 1531
RESEARCH OF NOTE .................................................................................................................................................................................. 1537
NEW-RESEARCH Migrant Crisis Sparks Balkan Border Battles As EU Buckles Under Overwhelming Refugee Flow ....................... 1537
NEW-RESEARCH Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU ................................................................. 1541
NEW-RESEARCH "The End of The EU": Merkel's "Heroic" Refugee Response May Destroy Union, Slovakia Warns ...................... 1542

15

NEW-RESEARCH Europe's Refugee Crisis "Out of Control", Hungary PM Rages "This Is A German Problem, Not An EU Problem"
.................................................................................................................................................................................................................... 1549
RESEARCH The Broken Model of the Eurozone ................................................................................................................................... 1552
RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................. 1554
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ............................................................................ 1555
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1557
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1557
RESEARCH ECB Rate Decision ............................................................................................................................................................ 1559
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1562
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1563
RESEARCH The ECBs Negative Deposit Rate .................................................................................................................................... 1565
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ................................................................................. 1567
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1569
RESEARCH Emerging Markets Aggravates Festering Banking Problems ........................................................................................... 1570
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets .............................................................................. 1572
RESEARCH - EFSF Downgraded to AA+ ................................................................................................................................................. 1574
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1575
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece ...................................................................... 1578
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1580
PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1580
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1584
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees.............................. 1586
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1591
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1595
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1598
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1599
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ............................................................................................... 1600
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1607
ITALY FALLING BIRTH RATE & "MIGRANT BOAT PEOPLE" MOUNTING PROBLEMS ............................................................................. 1609
CHARTS OF NOTE ....................................................................................................................................................................................... 1610
NEW-CHARTS - ITALY Non-Performing Loans by Region ................................................................................................................... 1610
NEW-CHARTS - ITALY Gross Italian Impaired Loans ........................................................................................................................... 1611
NEW-CHARTS - ITALY Italian Government Debt .................................................................................................................................. 1611
NEW-CHARTS - ITALY Banks Non-Performing Loans ......................................................................................................................... 1612
CHARTS - ITALY Quarterly GDP Growth .............................................................................................................................................. 1613
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ............................................................................................................... 1613
CHARTS - ITALY Italian Unemployment ................................................................................................................................................ 1615
CHARTS - ITALY Italian Core Inflation ................................................................................................................................................... 1615
CHARTS - ITALY Italian Industrial Porduction ....................................................................................................................................... 1616
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1617
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1618
CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1618
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1619
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1620
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1621
RESEARCH OF NOTE .................................................................................................................................................................................. 1622
NEW-RESEARCH Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable" . 1622
NEW-RESEARCH Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis 09-02-15 Zero Hedge ....... 1624
NEW-RESEARCH Italy Non-Performing Loans Hit A New Record High............................................................................................ 1630
RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low ............................................................................. 1634
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ..................................................................................... 1636
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1640
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1642
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1646
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1646
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ....................................................................... 1648
ITALIAN ELECTION - Message Given By the People .............................................................................................................................. 1650
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1654
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise! ............................................................................. 1657
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................... 1658
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................... 1660
ITALIAN ELECTION - Regional Financial Cracks in Sicily........................................................................................................................ 1663
FRANCE FRENCH DEBT & BANK EXPOSURES BIGGER THAN MOST APPRECIATE ............................................................................. 1665
CHARTS OF NOTE ....................................................................................................................................................................................... 1665
NEW-CHARTS FRANCE Total Net Government Liabilities ................................................................................................................ 1665
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. ........................................................ 1665
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ........................................................................................................... 1666
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ....................................................................... 1666
CHARTS FRANCE French Job Seekers ............................................................................................................................................. 1666
CHARTS FRANCE Inflation Expectations ........................................................................................................................................... 1667
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1668
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1668
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1669
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1670
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1670
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1671

16

CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1672

CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1673
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1674
CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1675
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1676
RESEARCH OF NOTE .................................................................................................................................................................................. 1677
NEW-RESEARCH Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction in Debt Burden........ 1677
NEW-RESEARCH When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) .............................. 1681
RESEARCH Economic Malaise Sparks Political Crisis in France ......................................................................................................... 1682
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1684
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1686
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1686
RESEARCH - Steady Breakdown Underway ............................................................................................................................................ 1689
RESEARCH - France Loses its Coveted and NEEDED AAA Rating........................................................................................................ 1693
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1695
FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ..................................................... 1695
FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ....................................................................... 1695
FRANCE - What You Need to Know ......................................................................................................................................................... 1697
FRANCE - Key Indicators .......................................................................................................................................................................... 1698
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1702
FRANCE - Quits on Austerity - Never a Doubt This Would Happen ......................................................................................................... 1705
FRANCE - Socialism is Expensive ............................................................................................................................................................ 1706
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1708
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1709
FRANCE - Uncompetitive .......................................................................................................................................................................... 1710
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1712
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1714
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1716
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1717
GERMANY REFUGEE PROBLEM AT DANGEROUS TIPPING POINT ......................................................................................................... 1719
CHARTS OF NOTE ....................................................................................................................................................................................... 1719
CHARTS - GERMANY GDP Growth ...................................................................................................................................................... 1719
CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ................................................................................. 1720
CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY .............................................................................................. 1721
CHARTS - GERMANY Germany now leading the way back up in Euro Zone ...................................................................................... 1721
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 ..... 1722
CHARTS - GERMANY - 1.179% 30 Year Bond Yield .............................................................................................................................. 1723
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ............................................................................................................ 1723
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1723
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close .............................................................................. 1724
CHARTS - GERMANY 10 Y European Yields........................................................................................................................................ 1725
CHARTS - GERMANY German Unemployment .................................................................................................................................... 1726
CHARTS - GERMANY German Core Inflation ....................................................................................................................................... 1726
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1726
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1727
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1727
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1728
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1728
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1729
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1730
RESEARCH OF NOTE .................................................................................................................................................................................. 1732
NEW-RESEARCH - U.S. Will Station New Nuclear Weapons in Germany against Russia ..................................................................... 1732
NEW-RESEARCH - Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience ..................... 1733
NEW-RESEARCH - Why Volkswagen Is Systematically Important For Germany And Europe ............................................................... 1737
NEW-RESEARCH - Europe's Woes: The Escalating Cost to Germany ................................................................................................... 1740
RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo .................................................................................................... 1743
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian.......................................................... 1744
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1747
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1749
RESEARCH - Merkel's Third Chancellorship Challenges ......................................................................................................................... 1750
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1754
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1755
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ................................................................................. 1760
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel .............................................................................. 1761
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1763
UK WHO IS JEREMY CORBYN? ..................................................................................................................................................................... 1765
CHARTS OF NOTE ............................................................................................................................................................................................. 1765
CHARTS - UK - U.K. productivity growth remains dismal. ........................................................................................................................ 1765
CHARTS - UK - The UK's increasingly polarized politics .......................................................................................................................... 1765
CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. .................... 1766
CHARTS - UK The UK's financial sector has the highest exposure to China ........................................................................................ 1766
CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years ..... 1766
CHARTS - UK - Deficit One of Worst of Developed Economies ............................................................................................................... 1767
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................. 1768
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1769

17

CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1770
nd
CHARTS - UK Below 2% Target But 2 Highest in EU ......................................................................................................................... 1770
th
CHARTS - UK CPI Below Target for 7 Month ...................................................................................................................................... 1771
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1772
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1772
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1773
CHARTS - UK GDP ................................................................................................................................................................................ 1774
CHARTS - UK Population Growth .......................................................................................................................................................... 1774
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1775
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1776
CHARTS - UK - Lending ............................................................................................................................................................................ 1777
CHARTS - UK - Unemployment ................................................................................................................................................................ 1778
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1779
CHARTS - UK - GDP ................................................................................................................................................................................. 1779
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1780
RESEARCH OF NOTE .................................................................................................................................................................................. 1781
NEW-RESEARCH British General Threatens Military Coup If Corbyn Elected ..................................................................................... 1781
NEW-RESEARCH The End of Britain? Martin Armstrong On Jeremy Corbyn's Resurrection Of Marx ............................................... 1782
NEW-RESEARCH What is Jeremy Corbyn's programme for government? .......................................................................................... 1786
NEW-RESEARCH What does Jeremy Corbyn stand for? Jeremy Corbyn's policies and views explained .......................................... 1792
NEW-RESEARCH Who is Jeremy Bernard Corbyn? ............................................................................................................................. 1796
NEW-RESEARCH The City Of London Has Turned Britain into A "Civilized Mafia State".................................................................... 1801
RESEARCH What Remains of the UK Middle? ..................................................................................................................................... 1802
RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ..................................................................................................... 1803
RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading .................................. 1806
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................. 1809
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1811
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1814
UK - What you need to Know..................................................................................................................................................................... 1815
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1816
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1817
UK - Public Policy turns Against Austerity and PM Cameron ................................................................................................................... 1818
UK - Doomsday Debt Machine .................................................................................................................................................................. 1819
UK - QE Extension Coming ....................................................................................................................................................................... 1822
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ............................................................................................. 1824
UK - Technically in a Depression ............................................................................................................................................................... 1825
IBERIAN PENINSULA SPANISH ELECTION & ASCENDING PORTUGAL SOCIALISTS SIGNAL TROUBLES ......................................... 1828
CHARTS OF NOTE ............................................................................................................................................................................................. 1828
NEW-CHARTS - SPAIN Spains Debt-to-GDP........................................................................................................................................ 1828
NEW-CHARTS - SPAIN Spains & Portugals Unemployment Rate June 2015 Seasonally Adjusted ................................................ 1828
CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ................................................................................... 1828
CHARTS - PORTUGAL Share of Lower Skilled Workers ....................................................................................................................... 1829
CHARTS - PORTUGAL Non-Performing Loans...................................................................................................................................... 1830
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ............................................................................................................... 1831
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................. 1831
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1832
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1833
RESEARCH OF NOTE .................................................................................................................................................................................. 1834
NEW-RESEARCH - Spain's Economic Recovery Is "One Big Lie"........................................................................................................... 1834
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ...................................................................................................... 1837
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ...................................................................................................... 1840
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .................................................................................................... 1844
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion ...................................................................... 1846
RESEARCH - The Spanish Government's 'Bad Bank' Scam ................................................................................................................... 1847
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1849
IBERIA - Regional Bailout Bailouts a Massive Problem ............................................................................................................................ 1850
IBERIA - NPL Going Ballistic ..................................................................................................................................................................... 1851
IBERIA - Spanish Funding Problem .......................................................................................................................................................... 1852
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1857
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1859
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1862
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1863
CHINA: YUAN DEVALUATION RATTLES FX WORLD ................................................................................................................... 1872

CHARTS OF NOTE ....................................................................................................................................................................................... 1872
NEW-CHARTS Sinking Li Keqiamg Index Contrasts With Stable GDP ................................................................................................ 1872
NEW-CHARTS China is the Undisputed Engine of Global Growth ....................................................................................................... 1873
NEW-CHARTS China Has Been Consuming Mind-Boggling Amounts of Raw Materials ..................................................................... 1873
NEW-CHARTS Fixed Asset Investment & Consumption in China Y-o-Y Growth .............................................................................. 1874
NEW-CHARTS Fixed Asset Investment Rises Least Since 2000.......................................................................................................... 1875
NEW-CHARTS Economic Indicators Point to Lower Growth than the Headline Figures ...................................................................... 1875
NEW-CHARTS Gains of Real Estate Development Investment 1/10th of 2010 Pace ........................................................................... 1876
NEW-CHARTS Foreign Exports to China as a % of GDP ..................................................................................................................... 1877
NEW-CHARTS Foreign Exports to China for Chinas Domestic Use as a % of GDP ........................................................................... 1877

18

NEW-CHARTS China & Belgium Treasury Holdings vs China FX Reserves ........................................................................................ 1878
NEW-CHARTS Breakdown of Chinese Imports ..................................................................................................................................... 1879
NEW-CHARTS Chinese Imports Slow to 5 Year Low ............................................................................................................................ 1880
NEW-CHARTS Chinas Increasing Substitution of Imports for Made in China Products .................................................................... 1880
NEW-CHARTS Developing Economies Exposure to Chinese Domestic Demand ................................................................................ 1881
NEW-CHARTS Chinas GDP Monthly Tracker and Target .................................................................................................................... 1882
NEW-CHARTS China Matters Less for US Consumers than for Stock Investors ................................................................................. 1882
NEW-CHARTS Monthly Change in Foreign Reserves........................................................................................................................... 1883
NEW-CHARTS Monthly FX Purchases .................................................................................................................................................. 1884
NEW-CHARTS Chinas Estimated Productivity Growth Based on IP & Employment Shifts ................................................................. 1884
NEW-CHARTS Shanghai Composite Index Profits% Y-o-Y ............................................................................................................... 1885
NEW-CHARTS Corporate & Household Debt as % GDP ...................................................................................................................... 1885
NEW-CHARTS Weak Yuan Supported Much of 21-Year Export Rise to U.S. ...................................................................................... 1886
NEW-CHARTS xxxx ............................................................................................................................................................................... 1887
NEW-CHARTS Outstanding Balance of Margin Finance Shanghai Composite ................................................................................. 1887
NEW-CHARTS Currency Rout Goes Global as Risk Seen of 50% Loss .............................................................................................. 1887
NEW-CHARTS Yuan Trading Band ....................................................................................................................................................... 1888
NEW-CHARTS Historical Yuan FX Pattern ............................................................................................................................................ 1889
CHARTS China Plans to Spend Billions on Infrastructure in Pakistan .................................................................................................. 1890
CHARTS Chinas Proposed Silk Road Routes....................................................................................................................................... 1891
CHARTS China Activity Proxy & Official GDP........................................................................................................................................ 1892
CHARTS China Relaxes Commercial Bank Reserves ........................................................................................................................... 1893
CHARTS Chinese Balance of Payments ................................................................................................................................................ 1893
CHARTS Chinese Hot Money Flows ...................................................................................................................................................... 1894
CHARTS Falling Chinese Industrial Production ..................................................................................................................................... 1894
CHARTS Commodity Prices % Change Since July 2014 ...................................................................................................................... 1895
CHARTS Chinese Steel Demand, Iron Ore ............................................................................................................................................ 1895
CHARTS Chinese Rail Freight ............................................................................................................................................................... 1896
CHARTS Chinese Bank Assets versus US Bank Assets ....................................................................................................................... 1897
CHARTS Chinese Leverage and Underlying Nominal GDP .................................................................................................................. 1897
CHARTS Measures of Real & Nominal GDP Growth in China .............................................................................................................. 1898
CHARTS Chinese Total Debt & Breakdown........................................................................................................................................... 1898
CHARTS New Chinese Retail Stock Market Accounts .......................................................................................................................... 1899
CHARTS New Chinese Retail Stock Market Accounts-2 ....................................................................................................................... 1900
CHARTS Plummeting Chinese Consumer Confidence .......................................................................................................................... 1900
CHARTS Chinese PMI ............................................................................................................................................................................ 1901
CHARTS Chinese Exports versus Taiwan-Korea-Japan ....................................................................................................................... 1902
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 1903
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 1903
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 1904
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 1904
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 1905
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 1905
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 1906
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 1907
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 1907
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 1908
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 1909
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 1909
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 1909
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 1910
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1911
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1911
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1912
CHARTS Industrial Output A Concern.................................................................................................................................................... 1912
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1913
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1914
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1915
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1916
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1916
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1916
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1917
CHARTS China Equity Flows ................................................................................................................................................................. 1918
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1918
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1919
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1919
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1920
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1921
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1922
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1923
CHARTS Shadow Banking System ........................................................................................................................................................ 1923
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1925
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1926
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1927
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1928
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1929
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1930

19

CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1931

CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1932
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1933
RESEARCH OF NOTE .................................................................................................................................................................................. 1934
NEW-CHINA China's Economy Continues To Crumble As Key Data Is Worst In 15 Years ................................................................. 1934
NEW-CHINA China Outflows Said To Surpass A Staggering $300 Billion in Under Three Months ..................................................... 1937
NEW-CHINA China FX Reserve Drop Is Collateral Damage from Yuan Fall ........................................................................................ 1940
NEW-CHINA This Isn't 1994: China and That First U.S. Rate Hike ....................................................................................................... 1943
NEW-CHINA Expect Regional Ripples, Not Global Waves, From China Selloff ................................................................................... 1945
NEW-CHINA China Risks Downward Spiral of Falling Markets, Growth ............................................................................................... 1946
NEW-CHINA China to the Rescue ......................................................................................................................................................... 1948
NEW-CHINA Yuan Devaluation Helps Attain U.S. Monetary Tightening Without Fed Rate Hikes ....................................................... 1949
NEW-CHINA Devaluation Promises to Boost Exports, But Adds Stability Risk .................................................................................... 1951
NEW-CHINA Risk of a Vicious Circle on Market, Profit Declines .......................................................................................................... 1953
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1954
CHINA "New Silk Road" Could Change Global Economics Forever ..................................................................................................... 1954
CHINA Beginning to Panic - China Easing to Combat The 'Darkest Period' of 2015 .................................................................... 1958
CHINA Skewed Heavily To The Downside," BNP Says ..................................................................................................................... 1959
CHINA Economists seek to ease fears on Chinas record capital outflow..................................................................................... 1964
CHINA China sets up $16B Gold fund as part of Silk Road initiative .................................................................................................... 1967
CHINA The Real Reason China Is Buying Up the World's Gold ...................................................................................................... 1967
CHINA China could crash US dollar with 30,000 tons of gold ............................................................................................................... 1970
CHINA Hard Landing Clearly Evident ................................................................................................................................................. 1973
CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ................................................................................................. 1976
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1982
CHINA Signs of Madness in the Global Financial System ............................................................................................................... 1984
CHINA Reverses Direction and Begins Easing ................................................................................................................................. 1985
CHINA China's Economic Reporting Possibly a Deception ............................................................................................................. 1986
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1988
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1991
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1993
CHINA - China's Rehypothecation............................................................................................................................................................. 1996
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1998
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 2000
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 2003
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 2004
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 2005
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 2008
CHINA - Falling Yuan ................................................................................................................................................................................. 2010
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 2012
CHINA - SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ..................................................................................... 2015
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 2018
CHINA - Has an Inflation Problem ............................................................................................................................................................. 2019
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 2020
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 2023
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 2028
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 2030
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 2035
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 2039
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 2042
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 2046
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 2049
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 2052
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 2055
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 2059
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 2060
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 2061
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 2063
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 2065
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 2067
CHINA - Withdraws Liquidity .................................................................................................................................................................. 2068
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 2070
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 2080
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 2083
CHINA - PMI Improvement....................................................................................................................................................................... 2084
CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 2087
CHINA - An Implicit Social Contract .......................................................................................................................................................... 2089
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 2091
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 2092
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 2093
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 2094
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 2097
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 2098
CHINA - Credit to GDP ............................................................................................................................................................................. 2100
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 2101
CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 2103

20

JAPAN: NOTHING SEEMS TO BE WORKING AS ABENOMICS LOSES SUPPORT ............................................................................. 2108

CHARTS OF NOTE ....................................................................................................................................................................................... 2109
NEW-CHARTS - JAPAN Real Y-o-Y Cash Earnings with Abenomics .................................................................................................. 2109
NEW-CHARTS - JAPAN BOJs Accelerating Purchases of Equity Funds Seen as Driving Force of Tokyo Share Markets................ 2109
NEW-CHARTS - JAPAN More than a Fourth of Japans Population is Over the Age of 65 .................................................................. 2110
NEW-CHARTS - JAPAN IMFs Forecast of Japanese Population Growth ............................................................................................ 2110
NEW-CHARTS - JAPAN Prefectures with More Seniors Saw Steeper GDP Losses ............................................................................ 2111
NEW-CHARTS - JAPAN Aging Population Will Continue Dragging Down Growth ............................................................................... 2111
NEW-CHARTS - JAPAN Fewer, Older Citizens Facing Larger Debt Burden ........................................................................................ 2112
NEW-CHARTS - JAPAN 20 Years Later China Follows Japans Pattern .............................................................................................. 2113
CHARTS - JAPAN Financial Repression Gets Heavier in Japan .......................................................................................................... 2113
CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat ............................................................................................................... 2114
CHARTS - JAPAN 48 Month Trade Balance Deficit .............................................................................................................................. 2115
CHARTS - JAPAN Y-o-Y Contracting Imports ....................................................................................................................................... 2115
CHARTS - JAPAN Monetary Base versus USDJPY .............................................................................................................................. 2116
CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000......................................................................................... 2116
CHARTS - JAPAN 1.174% 30 Year Bond Yield .................................................................................................................................... 2118
CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 2118
CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 2118
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 2119
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 2119
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 2120
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 2120
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 2121
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 2122
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 2123
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 2124
CHARTS - JAPAN Demographics .......................................................................................................................................................... 2125
CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 2125
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 2126
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 2127
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 2128
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 2129
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 2129
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 2131
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 2131
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 2132
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 2132
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 2133
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 2134
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 2134
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 2135
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 2135
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 2136
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 2137
CHARTS - GDP Trend ............................................................................................................................................................................... 2137
CHARTS - CPI Trend ................................................................................................................................................................................. 2138
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 2138
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 2139
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 2140
RESEARCH OF NOTE .................................................................................................................................................................................. 2141
NEW-JAPAN Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan .............................................. 2141
NEW-JAPAN S&P Downgrades Japan from AA- To A+ On Doubts Abenomics Will Work - Full Text ........................................ 2143
NEW-JAPAN Elderly Japanese Population Hits New Record - Demographic Death-Rattle Continues....................................... 2145
NEW-JAPAN Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!" ................... 2149
NEW-JAPAN Abe Ratings Crash to Record Lows, Japan Lowers Minimum Voting Age ............................................................. 2150
JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ................................................................................. 2153
JAPAN Japan Still the Worlds Top Credit? ....................................................................................................................................... 2154
JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target ........................................................................................ 2155
JAPAN Japanese trading firms to cut investments, sell assets ...................................................................................................... 2156
JAPAN The BOJ Ups The Ante ............................................................................................................................................................ 2158
JAPAN Is Japan Kaput? ........................................................................................................................................................................ 2159
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 2162
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2164
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 2167
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 2169
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2170
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 2172
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 2174
JAPAN - What the Japanese been Buying ............................................................................................................................................. 2175
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 2177
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 2180
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 2181
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 2182
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 2185
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 2186

21

JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 2189

SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 2191
JAPAN - What You Need to Know............................................................................................................................................................. 2193
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 2196
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 2196
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 2200
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 2201
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 2202
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 2203
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 2206
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 2208
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 2211
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 2212
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 2214
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 2215
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 2216
JAPAN - Yen Devaluation ........................................................................................................................................................................ 2217
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 2218
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 2220
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 2222
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 2222
JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 2224
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 2227
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 2229
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 2232
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 2234
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 2236
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 2242
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 2245
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 2249
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 2255
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 2260
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 2261
JAPAN - PMI Breakdown ........................................................................................................................................................................... 2263
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 2265
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 2266
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 2269
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 2269
EMERGING MARKETS FX ROUT CONTINUES ...................................................................................................................... 2271

EMERGING MARKETS ....................................................................................................................................................................................... 2271
CHARTS OF NOTE ....................................................................................................................................................................................... 2271
NEW-CHARTS MSCI EM FX Index - New 6 Year Lows ....................................................................................................................... 2271
NEW-CHARTS EM FX Loses Since FOMC Meeting Brazil Noticeably Worse .................................................................................. 2272
NEW-CHARTS EM FX Debasement By Country Since FOMC ............................................................................................................. 2272
NEW-CHARTS EM FX Debasement By Country Since 9/7/09 .............................................................................................................. 2272
NEW-CHARTS Brazilians Scramble to Protect their Store of Value (Coming to Other Countries) ....................................................... 2273
NEW-CHARTS Brazil Real GDP Y-o-Y% ............................................................................................................................................... 2274
NEW-CHARTS Brazil Real / US$ versus Brazil 5Y CDS ...................................................................................................................... 2274
NEW-CHARTS Brazil Change in Yields Compared to Turkey and Mexico ........................................................................................ 2276
NEW-CHARTS Brazil Sovereign Gross Debt/GDP Government versus BI Simulation .................................................................. 2276
NEW-CHARTS Brazil Number of days to start a business Worst in the Major Countries! .............................................................. 2277
NEW-CHARTS Brazil Real Reaches Record Low as Budget Pessimism Rises ................................................................................ 2277
NEW-CHARTS 5Y CDS Spreads Brazil, Russia, Turkey, Indonesia, Colombia & Peru .................................................................... 2278
CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000 ..................................................................................................... 2278
CHARTS AFRICA-Foreign Direct Investment & Trade .......................................................................................................................... 2279
CHARTS AFRICA-Geographic Comparisons ......................................................................................................................................... 2280
CHARTS Emerging Markets Corporate Defaults ................................................................................................................................... 2280
CHARTS Emerging Markets Economic Surprise Index ......................................................................................................................... 2281
CHARTS Emerging Markets Currency Change versus USD ................................................................................................................. 2281
CHARTS Emerging Markets Change in Nominal Policy Rate ............................................................................................................... 2282
CHARTS EM Vulnerability to an external shock Resilience Indicator .............................................................................................. 2283
CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ................................................... 2284
CHARTS Falling EM Currencies ............................................................................................................................................................. 2285
CHARTS Post-China 16 ......................................................................................................................................................................... 2286
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 2287
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 2287
CHARTS - Reserves versus World ............................................................................................................................................................ 2287
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 2289
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 2290
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 2291
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 2292
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 2293
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 2294
RESEARCH OF NOTE .................................................................................................................................................................................. 2295
NEW-EMERGING MARKETS - Why Asian Markets Are Collapsing .................................................................................................... 2295

22

NEW-EMERGING MARKETS - History Suggests Asia Can Handle Fed Tightening ......................................................................... 2297
EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" .......................................... 2299
EMERGING MARKETS - North Korea: Chinese Outsourcing Giant ................................................................................................... 2301
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 2303
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 2305
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 2305
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 2311
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 2311
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 2313
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 2315
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 2321
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 2322
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 2324
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 2326
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 2328
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 2332
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 2334
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 2335
ASEAN ........................................................................................................................................................................................................... 2338
ASEAN: A New Common Market .............................................................................................................................................................. 2338
ASIA ............................................................................................................................................................................................................... 2342
NEW- ASIA: CHARTS The Most Leveraged Region Today Corporate Leverage Debt/EBITDA ....................................................... 2342
NEW -ASIA: CHARTS Entering More Adverse Part of the Credit Cycle ............................................................................................... 2342
NEW- ASIA: CHARTS Real GDP Slowing, Real Funding Costs Are Rising ......................................................................................... 2343
ASIA: CHARTS Demographic Peaks of Working Age Populations ....................................................................................................... 2344
ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth............................................................................................ 2345
ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports ........................................................................................................ 2346
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 2347
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 2347
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 2349
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 2349
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 2351
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 2352
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 2352
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 2353
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 2354
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 2354
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 2355
ASIA - Regional Risk-Reward .................................................................................................................................................................... 2357
ASIA - Credit Contraction Problems ...................................................................................................................................................... 2358
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 2360
ASIA - Synchronized Markets .................................................................................................................................................................... 2362
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 2364
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 2365
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 2369
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 2370
ASIA - Demographic Headwinds ............................................................................................................................................................ 2373
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 2374
LATIN AMERICA ........................................................................................................................................................................................... 2376
NEW-LATIN AMERICA Latin America Shouldn't Blame the Federal Reserve ................................................................................ 2376
NEW-COLUMBIA Colombian Peso Leads Currency Declines as Crude Falls ................................................................................ 2378
NEW-ARGENTINA Fewer Reserves Are a Plus for Argentine Bondholders................................................................................... 2378
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 2379
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 2380
MIDDLE EAST ............................................................................................................................................................................................... 2382
TURKEY ..................................................................................................................................................................................................... 2382
BRICS................................................................................................................................................................................................................... 2389
BRICS Population, GDP,GDP per Capita ............................................................................................................................................ 2389
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 2390
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 2390
BRICS Inflation Problems Abound ...................................................................................................................................................... 2392
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 2393
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 2394
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 2396
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 2397
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 2400
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 2402
BRAZIL........................................................................................................................................................................................................... 2404
NEW-BRAZIL - Brazil Budget Cuts Not Enough to Avoid More Downgrades .......................................................................................... 2404
NEW-BRAZIL - Brazil's Economy Is Now A Job Destruction Machine ..................................................................................................... 2405
NEW-BRAZIL - Local Rates Hit Hardest by Swift S&P Sovereign Downgrade to Junk ........................................................................... 2408
NEW-BRAZIL - Recession and High Rates Doomed Brazils Investment-Grade Rating ......................................................................... 2410
NEW-BRAZIL - Why Brazil Is Not Coming Back Anytime Soon ............................................................................................................... 2412
NEW-BRAZIL - Brazil Returns to Junk as Developing Nations Feel the Squeeze ................................................................................... 2412

23

BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ...................................................................................................... 2415
BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ............................................................................................. 2422
BRAZIL - Brazils Depressed Consumer Confidence Index ...................................................................................................................... 2422
BRAZIL - Brazils Collapsing Confidence in the Construction Sector ....................................................................................................... 2423
BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ............................................................................................................... 2423
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 2425
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 2428
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 2431
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 2432
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 2435
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 2436
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 2436
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 2437
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 2437
RUSSIA Inflation Rate ............................................................................................................................................................................ 2438
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 2438
RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 2439
RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 2439
RUSSIA Russian CDS Spreads ............................................................................................................................................................. 2440
RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 2441
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 2442
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 2443
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 2444
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 2444
RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 2445
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 2446
RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 2447
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 2448
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 2449
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 2450
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 2451
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 2451
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 2453
RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ............................................................................................................... 2453
INDIA.............................................................................................................................................................................................................. 2454
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 2454
INDIA Real GDP and Car Sales ............................................................................................................................................................. 2455
INDIA Inflation ......................................................................................................................................................................................... 2456
INDIA - Inflation .......................................................................................................................................................................................... 2457
INDIA - WPI ................................................................................................................................................................................................ 2458
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 2459
INDIA - Panic in India ................................................................................................................................................................................. 2460
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 2462
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 2463
SOUTH AFRICA ............................................................................................................................................................................................ 2465
US ECONOMY ..................................................................................................................................... 2466

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 2468
MACRO - US Macro Data .................................................................................................................................................................................... 2468
CHARTS OF NOTE ....................................................................................................................................................................................... 2468
NEW-MACRO EM Wave is the Third Wave in the Global Financial Crisis ............................................................................................ 2468
NEW-MACRO Deteriorating EM FX, Equity and Debt ........................................................................................................................ 2469
NEW-MACRO Global Slowdown Only Getting Worse - China .............................................................................................................. 2470
NEW-MACRO Global Slowdown Only Getting Worse - India ................................................................................................................ 2471
NEW-MACRO Global Import-Export Trends .......................................................................................................................................... 2472
NEW-MACRO Developed World Import-Export Trends Has Nearly Halved Since 2000 ...................................................................... 2473
NEW-MACRO Emerging Market Import-Export Trends Has Also Fallen .............................................................................................. 2474
NEW-MACRO September US Macro versus S&P 500 .......................................................................................................................... 2475
MACRO June US Macro versus S&P 500 .............................................................................................................................................. 2475
MACRO 10 Year View of US Macro versus S&P 500 Historic Divergence ........................................................................................ 2476
MACRO US Macro Not This Low Since 2008 Financial Crisis ............................................................................................................... 2476
MACRO S&P 500 versus High Yield (HY) Bond Yield ........................................................................................................................... 2477
MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ............................................................................................. 2477
MACRO Goldman Sachs Global Leading Indicator Has Plummeted..................................................................................................... 2479
MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ........................................................ 2479
MACRO 2015 World GDP Growth versus World Stocks ....................................................................................................................... 2480
MACRO World GDP Annual Estimates versus World Stocks ................................................................................................................ 2480
MACRO World Economies Cutting Rates to Avoid Economic Contraction ........................................................................................... 2481
MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ..................................................................... 2481
MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ..................................................................... 2482
MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ................................................................... 2482
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 2483
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 2483
MACRO US Macro Surprise Index ......................................................................................................................................................... 2483
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 2484

24

MACRO World Trade Volumes ............................................................................................................................................................... 2486

MACRO Marginal Utility .......................................................................................................................................................................... 2486
MACRO Global Manufacturing PMI ........................................................................................................................................................ 2487
MACRO Credit Markets Diverging .......................................................................................................................................................... 2487
MACRO US Macro Complacency ........................................................................................................................................................... 2488
MACRO Macro Implied Vols ................................................................................................................................................................... 2488
MACRO Markets Stretched .................................................................................................................................................................... 2489
RESEARCH OF NOTE ........................................................................................................................................................................................ 2490
MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population ..................................................................... 2490
MACRO A World Recession? ..................................................................................................................................................................... 2492
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 2493
MACRO The Ambivalent Superpower ..................................................................................................................................................... 2495
MACRO Things Worse than Slow Growth ................................................................................................................................................. 2497
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 2500
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 2502
MACRO - Output Gap .................................................................................................................................................................................... 2509
US INVESTMENT CYCLE ...................................................................................................................................................... 2518

CHARTS OF NOTE ............................................................................................................................................................................................. 2519
NEW-CHART Financial Cycles and Crisis Are Becoming Longer & Deeper ............................................................................................ 2519
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2519
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2520
NEW-CHART A Secular Problem on the Verge of Also Being a Business /Credit /Rate Cycle Problem ................................................. 2520
NEW-CHART Business Cycle Surprise Index............................................................................................................................................ 2521
NEW-CHART Boom-Bust Cycle In Stocks ................................................................................................................................................. 2521
CHART Net Investment as a Share of Net Domestic Product ................................................................................................................... 2522
CHART Net Worth to GDP ......................................................................................................................................................................... 2522
CHART % of Unprofitable IPOs .................................................................................................................................................................. 2523
CHART US Private Construction Spending ............................................................................................................................................... 2524
CHART SPX versus 12 MMA Due for a Momentum Sell Period .......................................................................................................... 2524
CHART Current Economic Cycle Is Getting Old in The Tooth ................................................................................................................ 2525
CHART US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending ............................................................... 2526
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ................................................................................................... 2526
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ................................................................................................... 2527
CHART - Economy in Decline from Consuming More than it Produces ....................................................................................................... 2528
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 2528
ECONOMIC INDICATORS .................................................................................................................................................................................. 2530
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 2530
NEW-RESEARCH - 8 Charts That Prove The US Is Already In A Recession.......................................................................................... 2530
NEW-RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here .................................... 2535
RESEARCH - The US Economy Continues to Tank under Obama.......................................................................................................... 2538
REFERENCE CHARTS ............................................................................................................................................................................. 2540
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2545
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2545
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2547
SOME HIGHLIGHTS ..................................................................................................................................................................................... 2547
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2551
NEW-CHARTS October NFP 60K below Estimates at 142K ................................................................................................................. 2551
NEW-CHARTS Change in Civilian Employment: August 2015 .............................................................................................................. 2551
NEW-CHARTS Peaks In LMCI Leads Declines in Employment ............................................................................................................ 2553
NEW-CHARTS September 2015 Monthly Job Change by State Bottoms up Says 22K Jobs Lost ................................................... 2553
NEW-CHARTS Initial Jobless Claims ..................................................................................................................................................... 2554
NEW-CHARTS Increased Job Openings not a Sign of Better Employment .......................................................................................... 2556
CHARTS Full Time Jobs Approach 2007 Highs ..................................................................................................................................... 2557
CHARTS Full Time versus Part Time Jobs ............................................................................................................................................ 2557
CHARTS April Jobs Added By Industry .................................................................................................................................................. 2557
CHARTS Wages of Production & Non-Supervisory Employees Y-0-Y % Change ................................................................................ 2558
CHARTS US Labor Productivity ............................................................................................................................................................. 2560
CHARTS Wages of All Employees Y-o-Y % Change ............................................................................................................................. 2560
CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed.......................................... 2561
CHARTS Non-Farm Payrolls Monthly and Yearly Change ................................................................................................................. 2562
CHARTS Civilian Unemployment Rate................................................................................................................................................... 2562
CHARTS JOLTS-Total Job Openings .................................................................................................................................................... 2563
CHARTS New Jobless Claims w/ 4 Week Moving Average .................................................................................................................. 2563
CHARTS Non-Farm Payrolls .................................................................................................................................................................. 2564
CHARTS US Monthly Job Growth .......................................................................................................................................................... 2564
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 2565
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 2565
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 2566
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 2566
CHARTS - Underemployment Gap ............................................................................................................................................................ 2568

25

CHARTS - Participation Rate..................................................................................................................................................................... 2569

CHARTS - Part Time Employment ............................................................................................................................................................ 2569
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2570
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2571
RESEARCH OF NOTE .................................................................................................................................................................................. 2578
NEW-RESEARCH - Payrolls Disaster: Only 142K Jobs Added In September With Zero Wage Growth; August Revised Much Lower 2578
NEW-RESEARCH - The September Jobs Report Was Even Worse: U.S. States Lost A Total Of 22,000 Jobs ..................................... 2581
NEW-RESEARCH - 698K Native-Born Americans Lost Their Job in August: Why This Suddenly Is The Most Important Jobs Chart .. 2582
NEW-RESEARCH - Since 2007: 1.4 Million Manufacturing Jobs Lost; 1.4 Million Waiter/Bartender Jobs Gained ................................ 2586
NEW-RESEARCH - Goldman Demolishes Jobless Claims Hype: "This Does Not Signal A Booming Labor Market" ............................ 2587
RESEARCH - Part-Time Jobs Soar By 437,000; Full-Time Jobs Tumble, Stay Firmly Under Pre-Recession Highs .............................. 2591
RESEARCH - The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report ....................................................................... 2592
RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie" ......................................................................................... 2597
RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ................................................................................................................... 2599
RESEARCH - American Express to cut more than 4,000 jobs ................................................................................................................. 2600
RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 2601
RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 2604
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 2607
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 2610
SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 2611
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2617
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2617
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 2617
NEW-CHARTS Global Consumer Confidence Begins Reversal from Trend Resistance...................................................................... 2621
NEW-CHARTS US Economic Index Steadily Eroding ........................................................................................................................... 2621
NEW-CHARTS UMich Consumer Confidence with Biggest Miss on Record ........................................................................................ 2622
CHARTS Falling NFIB Small Business Optimism .................................................................................................................................. 2622
CHARTS Falling Small Business Hiring Plans ....................................................................................................................................... 2622
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ..................................................................................................... 2623
CHARTS Consumer Comfort Plunges Most In 10 Months..................................................................................................................... 2624
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 2625
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 2625
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 2626
CHARTS - Orange Book ............................................................................................................................................................................ 2626
RESEARCH OF NOTE .................................................................................................................................................................................. 2627
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 2627
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 2629
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2631
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2631
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2635
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2637
NEW-American Association of Independent Investors ................................................................................................................................. 2638
NEW-Investors Intelligence ........................................................................................................................................................................... 2638
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2639
NEW-Small Business Optimism .................................................................................................................................................................... 2640
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2643
NEW-Margin Levels ....................................................................................................................................................................................... 2644
Real Margin Debt as % of GDP ..................................................................................................................................................................... 2650
Margin Debt versus S&P 500 ........................................................................................................................................................................ 2650
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 2652
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2655
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2655
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2656
NEW-TRIN ..................................................................................................................................................................................................... 2657
NEW-McClellan Oscillator ............................................................................................................................................................................. 2658
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 2659
NEW-CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce .................................................................. 2659
NEW-CHARTS Nominal & Real Household Spending Expectations ........................................................................................................ 2660
NEW-CHARTS Household Spending Expectations by Income Bucket ..................................................................................................... 2660
NEW-CHARTS A Very Neutral (Highly Unusual) Bull Market .................................................................................................................... 2661
NEW-CHARTS Historical Swings in Sentiment ......................................................................................................................................... 2661
NEW-CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About? ............................................................ 2663
NEW-CHARTS Investors Intelligence Bulls & Bears ................................................................................................................................. 2663
NEW-CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ................................................................................ 2664
NEW-CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! ......................................................................... 2664
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ......................................................................................................... 2665
CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................................ 2666
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ............................................................................................ 2667
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ........................................................................... 2667
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................. 2668
CHARTS - Orange Book ................................................................................................................................................................................ 2668
CHARTS Asset Allocation Global Equities .............................................................................................................................................. 2669
CHARTS Asset Allocation Global Bonds ................................................................................................................................................ 2669
CHARTS Active versus Passive Funds Allocation ..................................................................................................................................... 2670
CHARTS Investors Intelligence Survey of % Bears ................................................................................................................................... 2670

26

CHARTS Sentiment at Post 2008 Crisis Highs .......................................................................................................................................... 2672

CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................. 2673
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash ............................................................................................................ 2674
CHARTS Uptick in Feds Financial Stress Index Composite ..................................................................................................................... 2675
CHARTS Fear Barometer Diverges with VIX, CDS IG Index .................................................................................................................... 2676
CHARTS Extreme Complacency Seen Near End of Cycles ...................................................................................................................... 2676
CHARTS Complacency Seen In PE/VIX ..................................................................................................................................................... 2677
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern .................................................................................................... 2677
CHARTS Smart Money Flows .................................................................................................................................................................... 2679
CHARTS Fed Assets versus Bullish Sentiment ......................................................................................................................................... 2679
CHARTS Macro Support Has Technically Broken Down ........................................................................................................................... 2680
CHARTS US Surprise Index Setting Up for Downturn ............................................................................................................................... 2680
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................. 2681
RESEARCH OF NOTE ........................................................................................................................................................................................ 2682
NEW-SENTIMENT Oblivious To Risk - Complacency Still Reigns ........................................................................................................ 2682
NEW-SENTIMENT UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record ......................................... 2686
NEW-SENTIMENT Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ............................... 2687
SENTIMENT: The "Smart Money" Has Never Been More Bearish .............................................................................................................. 2688
SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ................................................................. 2691
SENTIMENT: We Are All Bulls Now .............................................................................................................................................................. 2694
SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says .............................................. 2695
SENTIMENT: One Heckuva Bull Market but Momentum Weakening! ......................................................................................................... 2696
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................. 2698
SENTIMENT: Americas Crisis of Trust ......................................................................................................................................................... 2700
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years .................................................................. 2702
SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. ........................................................................................................................ 2702
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ............................................................................................. 2704
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ............................................................................................ 2709
SENTIMENT: Elliott Wave's View from the Top ............................................................................................................................................ 2712
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2716
NEW-CHARTS October Retail Sales Control Group Y-o-Y & Sequential Change ................................................................................ 2720
NEW-CHARTS October Retail Y-o-Y Sales ........................................................................................................................................... 2720
NEW-CHARTS Retail Sales Ex Autos M-o-M ........................................................................................................................................ 2721
NEW-CHARTS Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2721
NEW-CHARTS Consumer Credit Car Loans ......................................................................................................................................... 2722
NEW-CHARTS Consumer Loans Owned by the Government .............................................................................................................. 2722
NEW-CHARTS Student & Car Loans ..................................................................................................................................................... 2724
NEW-CHARTS Total Non-Revolving Credit ........................................................................................................................................... 2724
NEW-CHARTS August Sequential Change in Revolving and Non-Revolving Credit ............................................................................ 2725
NEW-CHARTS Gas Prices Below $2/Gallon by December? ................................................................................................................. 2725
NEW-CHARTS Aggregate Income Proxy versus Retail Sales ex Auto and Gas .................................................................................. 2726
NEW-CHARTS Consumption Items Sampling - Y-o-Y Growth .............................................................................................................. 2726
CHARTS Retail Sales Control Group Y/Y and Sequential Change ....................................................................................................... 2728
CHARTS Retail Sales Y-0-Y ................................................................................................................................................................... 2728
CHARTS Retail Sales Ex Auto ............................................................................................................................................................... 2729
CHARTS VICE Index and Discretionary Spending ................................................................................................................................ 2730
CHARTS Value of Manufacturers New Orders for Consumer Goods Industries .................................................................................. 2731
CHARTS y-0-y Chain Store Sales .......................................................................................................................................................... 2731
CHARTS Y-0-Y Factory Orders .............................................................................................................................................................. 2732
CHARTS Annual Growth in Retail Sales ................................................................................................................................................ 2732
CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 .................................................................................................. 2733
CHARTS Retails Sales Mo-o-Mo Drops ................................................................................................................................................. 2733
CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .............................................................................. 2734
CHARTS What Americans Spent Their "Gas Savings" On .................................................................................................................... 2735
CHARTS Retail Sales-Previous Month Comparisons ............................................................................................................................. 2737
CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas ............................................................................................................ 2738
CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ............................................................................................................... 2738
CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .................................................................................................... 2739
CHARTS Total Household Debt Added Since the Great Financial Crisis .............................................................................................. 2739
CHARTS Total Household Debt Added in Q4 2014 ............................................................................................................................... 2740
CHARTS Real Personal Consumption ................................................................................................................................................... 2740
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 2741
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 2743
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 2744
CHARTS Retail Sales ............................................................................................................................................................................. 2744
CHARTS Retail Sales - Details ............................................................................................................................................................... 2746
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 2747
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 2747
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 2748
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 2748
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 2749
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 2751
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 2752
CHARTS - Core Retail Growth .................................................................................................................................................................. 2753

27

RESEARCH OF NOTE .................................................................................................................................................................................. 2754

NEW- RECESSION Retail Implosion Proves we are in a Recession .................................................................................................... 2754
RESEARCH - Headwinds for US Consumers & Home Buyers ................................................................................................................ 2760
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2761
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2763
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ........................................................................... 2765
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 2767
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ................................................................................... 2770
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................................... 2771
RESEARCH - A Sequential Decline in Wages .......................................................................................................................................... 2772
RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ..................................................................................... 2773
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2780
NEW-CHARTS Strong Dollar, High Inventories to Slow US Factory Output ......................................................................................... 2784
NEW-CHARTS US ISMs 3 Mo MA ......................................................................................................................................................... 2785
NEW-CHARTS September Survey Data versus Non Farm Payrolls ..................................................................................................... 2786
NEW-CHARTS Regional Surveys for September versus ISM PMI (August)......................................................................................... 2787
NEW-CHARTS Regional Manufacturing Surveys versus Forward EPS Estimates ............................................................................... 2788
NEW-CHARTS Historical Regional Index Comparisons Last Seen in 2008....................................................................................... 2788
NEW-CHARTS Predicted US Quarterly GDP Grow Q-o-Q Annualized ............................................................................................. 2789
NEW-CHARTS Predicted US Annual Growth % Through 2024 ............................................................................................................ 2789
NEW-CHARTS Predicted US Growth Compared to UK and Eurozone ................................................................................................. 2790
CHARTS US Q2 GDP Consensus Forecast versus Atlanta Feds 0.7% ............................................................................................... 2790
CHARTS Q1 2015 US GDP Growth Consensus Estimate .................................................................................................................... 2792
CHARTS US Business Investment Current versus Previous Recoveries .......................................................................................... 2792
CHARTS US Vehicle Miles 12 Month Total All Roads ..................................................................................................................... 2793
CHARTS CAPEX Use of Cash ............................................................................................................................................................ 2794
CHARTS Change in Total Private Industries.......................................................................................................................................... 2794
CHARTS US Private Construction Spending ......................................................................................................................................... 2795
CHARTS Ratio of Coincident-to-Lagging Conference Board Indices .................................................................................................... 2796
CHARTS GDP Q4 2014 Revised Components Table ............................................................................................................................ 2797
CHARTS Quarterly Change in % Contributions to GDP ........................................................................................................................ 2797
CHARTS Three Reasons CAPEX is Faltering ....................................................................................................................................... 2797
CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ................................................................................................. 2798
CHARTS Philly Fed Rolling Over ........................................................................................................................................................... 2799
CHARTS US Profits & Sales Have Stalled ............................................................................................................................................. 2800
CHARTS Real GDP versus CAPEX ....................................................................................................................................................... 2800
CHARTS Change In Inventories Inflated from Lack of Demand ......................................................................................................... 2801
CHARTS US GDP Revision for Q4-2014 ............................................................................................................................................... 2802
CHARTS Quarterly GDP by Component Breakdown ............................................................................................................................. 2802
CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 2804
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 2804
CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 2806
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 2807
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 2807
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 2808
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 2809
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 2809
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 2810
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 2811
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 2811
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 2812
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 2813
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 2813
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 2814
CHARTS - Manufacturing .......................................................................................................................................................................... 2815
CHARTS - Exports ..................................................................................................................................................................................... 2815
CHARTS - Durable Goods ......................................................................................................................................................................... 2816
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 2816
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 2817
RESEARCH OF NOTE .................................................................................................................................................................................. 2818
NEW-RESEARCH - The Divergence in ISM Surveys Shows a Troubling Path for U.S. Growth ............................................................. 2818
NEW-RESEARCH - Conference Board "Leading Indicators" Plunges To Lowest Since March 2013 ..................................................... 2819
NEW-RESEARCH - xxxx ........................................................................................................................................................................... 2820
RESEARCH - Biggest Inventory Build In History Prevents Total Collapse Of The US Economy ............................................................ 2820
RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ................................................................................... 2822
RESEARCH - The U.S. Economy is Dead ................................................................................................................................................ 2824
RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ......................................................................................... 2826
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 2829
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 2834
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2839
US PUBLIC POLICY RUSSIA & IRAN ESCALATE SYRIAN CONFLICT ............................................................................ 2847

28


NEW-SYRIA RUSSIA & IRAN ENTER THE FRAY ................................................................................................................................ 2848
NEW-TRANS PACIFIC PARTNERSHIP (TPP) ......................................................................................................................................... 2851
NEW-US GUN CONTROL (DEBATED AGAIN) ........................................................................................................................................ 2853
CHARLESTOWN SHOOTING ............................................................................................................................................................... 2853
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 2854
BALTIMORE RIOTS............................................................................................................................................................................... 2854
FERGUSON ........................................................................................................................................................................................... 2855
MILITARIZATION OF POLICE............................................................................................................................................................... 2855
POLLS ........................................................................................................................................................................................................ 2856
CORPORATE INVERSIONS ..................................................................................................................................................................... 2857
INCARCERATION ..................................................................................................................................................................................... 2857
FLAWED TAX POLICY .............................................................................................................................................................................. 2857
MINIMUM WAGE ....................................................................................................................................................................................... 2857
SOCIAL CANCERS ................................................................................................................................................................................... 2858
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 2858
INEQUALITY .............................................................................................................................................................................................. 2858
CREEPING SOCIALISM ............................................................................................................................................................................ 2859
POLICIAL PARALYSIS .............................................................................................................................................................................. 2859
STATE OF THE UNION ............................................................................................................................................................................. 2859
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 2859
OBAMACARE ............................................................................................................................................................................................ 2861
GENERAL PUBLIC POLICY...................................................................................................................................................................... 2863
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 2864
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 2864
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 2865
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 2866
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 2867
CHARTS Size of US Army Since 1946................................................................................................................................................... 2867
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2868
CHARTS Changing Presidential Stance ................................................................................................................................................ 2869
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2869
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2870
RESEARCH OF NOTE .................................................................................................................................................................................. 2871
POLICY - A 'Shadow" State of the Union .................................................................................................................................................. 2871
POLICY - Banks Remove the "Heart" of Dodd-Frank ............................................................................................................................... 2874
POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ............................................................................... 2878
POLICY - The Death Cross of American Business ................................................................................................................................... 2881
POLICY - The State of the Union I have a Dream! .............................................................................................................................. 2883
POLICY - A self-destructive path toward oblivion...................................................................................................................................... 2887
POLICY - Indictment of US Public, Fiscal & Monetary Policy ................................................................................................................... 2892
POLICY - The Crisis of Trust Continues to Worsen .................................................................................................................................. 2905
POLICY - The Stunning Truth about Inequality In America....................................................................................................................... 2906
POLICY - Pointing US towards Government Dependence ....................................................................................................................... 2907
POLICY - Yet another Game of Deception ................................................................................................................................................ 2911
POLICY - Obamacare A Flawed Public Policy Implementation ................................................................................................................ 2915
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 2918
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ................................................................................................... 2922
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed........................................................................... 2925
POLICY - "What is good for GM is good for America" is no longer correct .............................................................................................. 2927
POLICY - Where is the Logic In US Public Policy ..................................................................................................................................... 2928
POLICY - What is the Real Driving Force Behind the New Immigration Law? ......................................................................................... 2931
POLICY - Crony Capitalism and How America Lost its Way! ................................................................................................................... 2934
STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 2938
STATE OF THE UNION Remarks by the President in State of the Union Address January 20th, 2015 ............................................ 2938
STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon ................................................................... 2948
MONETARY POLICY GLOBAL SLOW DOWN FORCES FED TO HOLD ON RATE INCREASE ......................................................... 2956
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2956
NEW-CHARTS: US Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2956
NEW-CHARTS: Velocity of Money Shows Transmission System Broken ................................................................................................... 2956
NEW-CHARTS: Interest Rates Reflect Economic Growth & Inflation .......................................................................................................... 2957
NEW-CHARTS: Fed Balance Sheet Change versus S&P 500 ..................................................................................................................... 2957
NEW-CHARTS: Fed Policy Initiatives versus S&P 500 Actions ................................................................................................................... 2958
NEW-CHARTS: Total US Credit Old versus New Series........................................................................................................................... 2958
NEW-CHARTS: Banks Treasuries Stash Boosts Case for Fed Delay ........................................................................................................ 2959
NEW-CHARTS: US Treasuries Purchased by Domestic Mutual Funds ....................................................................................................... 2959
NEW-CHARTS: Total Debt and Loans versus US GDP ............................................................................................................................... 2960
NEW-CHARTS: Credit Markets Instruments All Sectors- Liability Levels ................................................................................................. 2960
CHARTS: ZIRP Policy Results Compared to Previous Falling or Steady Rate Targets .............................................................................. 2961
CHARTS: Producer Price Index is Plummeting Complete Lack of Pricing Power .................................................................................... 2962
CHARTS: Liquidity Problems in Bond Market Are Only Getting Worse ....................................................................................................... 2962
CHARTS: Lending is Coming From the Fed Not the Banks ...................................................................................................................... 2963
CHARTS: Debt Service Ratio for Prior Expansions ...................................................................................................................................... 2963

29

CHARTS: Why Interest Rates Cant Come Up Derivative Collateral Underpinnings ................................................................................ 2964
CHARTS: Total Credit Market Debt + Fed B/S versus Nominal GDP Growth ............................................................................................. 2964
CHARTS: Fed is Allowing Adjusted Monetary Base to Fall .......................................................................................................................... 2965
CHARTS: Federal Reserve Monetary Base Since 1918............................................................................................................................... 2965
CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ......................................................................................................... 2966
CHARTS: Fed Balance Sheet & Policy Rate Target ..................................................................................................................................... 2966
CHARTS: Cash Balances versus Total Reserve Balances .......................................................................................................................... 2967
CHARTS: Fed Balance Sheet and QE Versions ........................................................................................................................................... 2967
CHARTS: Major US Financial Institutional Leverage Ratios ........................................................................................................................ 2969
CHARTS: Fed Balance Sheet Composition .................................................................................................................................................. 2970
CHARTS: Cash Bank Holdings ..................................................................................................................................................................... 2971
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2972
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2972
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2973
CHARTS: Repo Volumes .............................................................................................................................................................................. 2973
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2974
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2974
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2975
CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2976
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2977
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2977
CHARTS: Net National Savings Rate............................................................................................................................................................ 2978
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2978
CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2979
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2980
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2981
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2981
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2982
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2984
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2984
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2985
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2986
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2987
NEW-RATES: Market-Implied Odds of a Rate Hike ..................................................................................................................................... 2988
NEW-RATES: Probability of Fed Rate Move Fed Funds Futures.............................................................................................................. 2988
NEW-RATES: Feds Mixed Signals Loses It Credibility ................................................................................................................................ 2989
RATES: Almost a Third of All Trades Have Known Only ZIRP ..................................................................................................................... 2990
RATES: Is There a Zero Bound for US Rates? ............................................................................................................................................. 2991
RATES: Historical Policy Rates ..................................................................................................................................................................... 2992
RATES: Debt ................................................................................................................................................................................................. 2993
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2993
RATES: Real Interest Rates .......................................................................................................................................................................... 2994
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2995
NEW-INFLATION: Core PCE and 5Y/5Y Forward Breakeven ..................................................................................................................... 2996
INFLATION: Inflation Targeting is Clearly Not Working ................................................................................................................................ 2996
INFLATION: Market-Based Inflation Expectations on the Rebound ............................................................................................................. 2997
INFLATION: US Inflation Education-Medical-Food-Housing versus CPI .................................................................................................. 2997
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2999
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2999
INFLATION: Cost of Eating ........................................................................................................................................................................... 3000
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 3001
INFLATION: July 4th Cost of Beef Burger ...................................................................................................................................................... 3002
INFLATION: Bloombergs July 4th Barbecue Index ....................................................................................................................................... 3002
INFLATION: Butter on a Roll ......................................................................................................................................................................... 3003
INFLATION: Back to School Shocker............................................................................................................................................................ 3004
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 3005
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 3006
INFLATION: Back to School Shocker............................................................................................................................................................ 3006
RESEARCH OF NOTE ........................................................................................................................................................................................ 3007
NEW-RESEARCH Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After "Discovering" Another $2.7 Trillion In Debt
....................................................................................................................................................................................................................... 3007
NEW-RESEARCH Fed Admits "Changes In Asset Prices", "Decline In Equity Prices" Influenced Rate Decision ................................... 3011
RESEARCH Bank Reserves & Loans: The Fed is pushing On A String ................................................................................................... 3011
RESEARCH Global Currency Wars & Deflationary Pressures .................................................................................................................. 3015
RESEARCH Debt is a promise of something of value in the future ........................................................................................................... 3021
RESEARCH Is NIRP Coming To America? ............................................................................................................................................... 3028
RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ......................................................................................... 3031
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 3038
REPO FAILS .................................................................................................................................................................................................. 3039
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 3040
FISCAL POLICY HERE WE GO AGAIN WITH THE DEBT CEILING CHARADE! ............................................................................ 3041
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 3043
NEW-PEURTO RICO .................................................................................................................................................................................... 3043
NEW-ILLINOIS & CHICAGO ......................................................................................................................................................................... 3043
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 3045

30

FISCAL MATTERS ........................................................................................................................................................................................ 3047

FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 3049
CHARTS OF NOTE ....................................................................................................................................................................................... 3049
NEW-FINANCING The Debt Ceiling Debt Limit is Likely to Fall in November ........................................................................................... 3049
FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .............................................................. 3049
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ........................................................................... 3050
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ........................................................................... 3050
FINANCING CHINA SELLING China & Belgium Holdings Change ........................................................................................................ 3051
FINANCING Breakdown of US Debt Holdings as of 2014 .......................................................................................................................... 3051
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 3052
CHARTS Drivers of US Debt ...................................................................................................................................................................... 3053
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 3054
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 3054
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 3055
NEW-RESEARCH - Lew moves up by two days to Nov. 3 the deadline by which Congress must raise the nations debt limit ................. 3056
NEW-RESEARCH - With Republicans In Disarray, All Eyes Turn To November 18 When The US Runs Out Of Cash ............................ 3058
NEW-RESEARCH - As Debt Ceiling "Accident" Looms, Ron Paul .............................................................................................................. 3059
RESEARCH - $70T Off-Balance Sheet Federal Liabilities ........................................................................................................................... 3061
FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 3065
NEW-CHARTS Where Did Every Dollar in Spending Go? ........................................................................................................................ 3065
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 3065
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 3066
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 3067
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 3067
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 3068
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 3068
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 3069
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 3069
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 3071
BUDGET - President Obama's Entire Budget In One Chart ......................................................................................................................... 3072
BUDGET - A Budget That Institutionalizes Big Government ........................................................................................................................ 3073
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 3078
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 3079
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 3081
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 3085
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 3089
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 3099
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 3099
RESEARCH - Almost Half of US States Are Officially Broke ........................................................................................................................ 3099
RESEARCH - State & Local Government Crisis ........................................................................................................................................... 3104
RESEARCH - State & Local Government Drag ............................................................................................................................................ 3110
UNFUNDED LIABILITIES .................................................................................................................................................................................... 3115
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 3115
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 3119
US REGULATORY COSTS ................................................................................................................................................................................. 3122
CHARTS Annual Cost of Federal Regulation 2012, $1.863T ................................................................................................................. 3122
RESEARCH Investor Uncertainty............................................................................................................................................................... 3122
US TAX POLICY & ISSUES ................................................................................................................................................................................ 3124
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 3124
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 3126
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 3128
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 3128
CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 3129
RESEARCH - Tax Rate Comparisons .......................................................................................................................................................... 3130
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 3130
RESEARCH - Taxes & Spending .................................................................................................................................................................. 3131
RESEARCH - Avoiding Taxes ....................................................................................................................................................................... 3135
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 3138
CHARTS Competing Visions of Government ............................................................................................................................................. 3138
CHARTS - Sovereign Debt ............................................................................................................................................................................ 3139
CHARTS - Growing Government Dependence ............................................................................................................................................. 3140
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 3140
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 3144
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 3146
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 3148

EMPLOYMENT .................................................................................................................................................................................................... 3154
LATEST ..................................................................................................................................................................................................... 3155
CHARTS & TABLES ...................................................................................................................................................................................... 3158
NEW-CHARTS Labor Force Participation Rate versus Food Stamp Participants ................................................................................. 3158
NEW-CHARTS World Youth Unemployment A Crisis ......................................................................................................................... 3158
NEW-CHARTS Change in Civilian Employment since December 2007 ................................................................................................ 3159

31

NEW-CHARTS Total Foreign-Born versus Native-Born Workers Since Dec 2007 ............................................................................... 3160
NEW-CHARTS Manufacturers versus Waiter/Bartenders Since 2007 .................................................................................................. 3161
NEW-CHARTS Food Service & Drinking Place Workers (Waiters & Bartenders) Since 2010 ............................................................. 3161
CHARTS DOW Industrials versus Employed Population ....................................................................................................................... 3162
CHARTS Employment to Working Age Population ................................................................................................................................ 3162
CHARTS The Real American Economy ................................................................................................................................................. 3162
CHARTS Full Time versus Part Time ..................................................................................................................................................... 3163
CHARTS Cumulative Workers Added by Age Group ............................................................................................................................. 3163
CHARTS Wages of Production and Non-Supervisory Employees ........................................................................................................ 3164
CHARTS Wages of Supervisory Employees Y-0-Y % Change ............................................................................................................. 3164
CHARTS Industries That Have Been Hiring ........................................................................................................................................... 3165
CHARTS Top 5 Industry Cuts ................................................................................................................................................................. 3165
CHARTS Employees in the US by Industry ............................................................................................................................................ 3166
CHARTS Workers Aged 55 and Over .................................................................................................................................................... 3166
CHARTS Percentage of Over 65 in Labor Force ................................................................................................................................... 3167
CHARTS Non Participation Has Stabilized? .......................................................................................................................................... 3167
CHARTS Share of Population Retired .................................................................................................................................................... 3168
CHARTS Goods Producing Workers versus Government Payroll ....................................................................................................... 3168
CHARTS Not in the Labor Force ............................................................................................................................................................ 3169
CHARTS Labor Force Participation versus Not in the Labor Force ....................................................................................................... 3169
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 3171
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 3171
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 3172
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 3172
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 3173
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 3173
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 3174
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 3174
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 3175
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 3175
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 3176
CHARTS Labor Participation Rate ......................................................................................................................................................... 3176
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 3177
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 3177
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 3178
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 3179
CHARTS Labor Force Participation by Age ........................................................................................................................................... 3180
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 3181
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 3182
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 3182
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 3183
CHARTS - Part-Time Employment ............................................................................................................................................................ 3183
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 3183
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 3184
CHARTS - The Under-Employment Gap ................................................................................................................................................... 3184
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 3185
RESEARCH OF NOTE .................................................................................................................................................................................. 3186
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 3186
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 3189
EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 3191
EMPLOYMENT - With and Without Obama's Recovery Plan ................................................................................................................... 3193
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ................................................................ 3194
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30............................................................................. 3196
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting .................. 3199
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 3200
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ........................................................................................................... 3201
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs .............................................................................................. 3208
REFERENCE - Prior Posts ............................................................................................................................................................................ 3211
1- CAPITAL SPENDING ............................................................................................................................................................................ 3211
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................. 3214
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 3218
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 3229
LATEST ..................................................................................................................................................................................................... 3229
STUDENT LOANS ..................................................................................................................................................................................... 3231
CHARTS & TABLES ...................................................................................................................................................................................... 3233
NEW-CHARTS Average Hourly Earnings of all Employees Total Private .......................................................................................... 3233
NEW-CHARTS Individuals Annually Receiving Foods Stamps ............................................................................................................. 3233
NEW-CHARTS Homeless among Students is Growing ......................................................................................................................... 3234
NEW-CHARTS Stagnant Middle Class Wages ...................................................................................................................................... 3234
NEW-CHARTS Median Earnings by Sex ............................................................................................................................................... 3235
NEW-CHARTS Disconnect Between Productivity and Typical Workers Compensation 1948-2014 ................................................. 3236
NEW-CHARTS Unemployment Rate is close to 24% according to Shadow Stats ................................................................................ 3237
NEW-CHARTS Non-Farm Payrolls less HES Complex ......................................................................................................................... 3237
NEW-CHARTS Childcare Costs Surge Past Rent, Tuition in Most of US ............................................................................................. 3238
NEW-CHARTS Illinois the Biggest User of Food Stamps in Mid-West .................................................................................................. 3239

32

NEW-CHARTS Illinois has Regained Few Manufacturing Jobs Since the Great Recession ................................................................ 3239
NEW-CHARTS Food Stamps Outpace Manufacturing Jobs 25-1 in Illinois .......................................................................................... 3239
NEW-CHARTS Debt by Generation ....................................................................................................................................................... 3240
CHARTS US Personal Savings Rate as a % of Disposable Income ..................................................................................................... 3241
CHARTS US Corporate Profits versus US Median Household Income ................................................................................................. 3242
CHARTS Death of the American Middle Class ...................................................................................................................................... 3242
CHARTS Income Gap being Filled With Credit ...................................................................................................................................... 3243
CHARTS Peak Spending Years ............................................................................................................................................................. 3244
CHARTS Real Per Capita Sum of Corporate Profits After Tax, Disposable Personal Income and Government Receipts .............. 3245
CHARTS Real Median Household Income in the United States ............................................................................................................ 3246
CHARTS Food Stamps Number of Participants .................................................................................................................................. 3247
CHARTS Food Stamps Number of Participants per Employed .......................................................................................................... 3247
CHARTS Food Stamps Cost Per Participant per Month ..................................................................................................................... 3248
CHARTS Food Stamps Annual Program Cost .................................................................................................................................... 3248
CHARTS Education, Medical, Food, Housing Costs versus CPI ........................................................................................................... 3249
CHARTS Rising Sub-Prime .................................................................................................................................................................... 3249
CHARTS Early Delinquencies on US Car Loans Has Been Rising ....................................................................................................... 3251
CHARTS Student Loan Default Rates By Graduating Year ................................................................................................................... 3252
CHARTS Student Loan Graduating Debt Levels Class 2009 ............................................................................................................. 3252
CHARTS Student Loan Borrowing Trends ............................................................................................................................................. 3253
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3253
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3254
CHARTS US Household Balance Sheet ................................................................................................................................................ 3254
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 3255
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 3256
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 3257
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 3257
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 3258
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 3259
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 3260
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 3260
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 3261
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 3261
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 3262
CHARTS This is a Structural .................................................................................................................................................................. 3262
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 3263
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 3264
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ....................................................................................................... 3264
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................... 3265
RESEARCH OF NOTE .................................................................................................................................................................................. 3266
NEW-RESEARCH Typical male worker earned less in 2014 than in 1973. .......................................................................................... 3266
NEW-RESEARCH Why This Feels Like A Depression For Most People .............................................................................................. 3268
NEW-RESEARCH The Story of America's Debt In 6 Easy Graphics .................................................................................................... 3272
RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery" ....................................................... 3277
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 3280
RESEARCH - The Facts are clear. The US Standard of Living is Falling ................................................................................................ 3281
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 3282
RESEARCH - Standards of Living and Artificial Expectations .................................................................................................................. 3285
RESEARCH - A Lack of Demand in US Economy .................................................................................................................................... 3287
RESEARCH - Full Time Jobs or Food Stamps & Disability? .................................................................................................................... 3288
REFERENCE - Prior Posts ............................................................................................................................................................................ 3290
STANDARD OF LIVING - Salary Compression ........................................................................................................................................ 3290
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level ........................................................................................... 3291
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ......................................................................... 3292
DISPOSABLE INCOME - Bad Even in Nominal Terms ............................................................................................................................ 3294
INFLATION - It's There but the Government Doesn't Account for it. ........................................................................................................ 3294
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 3296
LATEST ..................................................................................................................................................................................................... 3296
CHARTS & TABLES ...................................................................................................................................................................................... 3300
NEW-POLICY US Cities with Highest Median Prices of Single-Family Homes..................................................................................... 3300
NEW-POLICY NAHB Sentiment Much Higher than Permits and Starts? .............................................................................................. 3300
NEW-POLICY Flattenening NAHB Sentiment ........................................................................................................................................ 3301
POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ........................................ 3302
POLICY Mortgage Purchase Application Index versus Fed Balance Sheet .......................................................................................... 3303
POLICY Total News Home Sales v Median New Home Sale Price ...................................................................................................... 3304
POLICY San Francisco Y/Y Price Increase Indicator ............................................................................................................................. 3304
POLICY Meaningful Housing Recovery On Hold Until Spring ............................................................................................................... 3306
POLICY Housing Starts .......................................................................................................................................................................... 3306
POLICY Existing & New Home Sales ..................................................................................................................................................... 3307
POLICY Home Ownership Rate versus Rental Rate ............................................................................................................................. 3307
POLICY Mortgages Past Due and Foreclosure Starts ........................................................................................................................ 3308
POLICY Mortgage Spreads .................................................................................................................................................................... 3308
POLICY Lumber Sales ............................................................................................................................................................................ 3309
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 3311
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 3312

33

CHARTS National Home Price Medians & Indexes ............................................................................................................................... 3313

CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 3313
CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 3313
CHARTS New Home Prices ................................................................................................................................................................... 3314
CHARTS Housing Starts and Completions ............................................................................................................................................ 3315
CHARTS DJ Home Construction Index .................................................................................................................................................. 3315
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 3316
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 3317
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 3317
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 3318
CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 3318
CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 3319
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 3319
CHARTS - Double Top in Construction Index ........................................................................................................................................... 3319
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary......................................................................................................... 3320
CHARTS - Household Formations ............................................................................................................................................................. 3320
CHARTS Falling Originations ................................................................................................................................................................. 3321
CHARTS Falling Credit Scores ............................................................................................................................................................... 3322
CHARTS Falling Down payments ........................................................................................................................................................... 3322
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 3323
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 3323
CHARTS - Housing Starts ......................................................................................................................................................................... 3324
CHARTS - Composition of Housing Sales ................................................................................................................................................ 3324
CHARTS - New Home Sales ..................................................................................................................................................................... 3325
CHARTS - Existing Residential Supply ..................................................................................................................................................... 3325
CHARTS - Housing Starts ......................................................................................................................................................................... 3326
RESEARCH OF NOTE .................................................................................................................................................................................. 3328
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 3328
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 3329
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 3331
RESEARCH - Household Formation Drives Residential Real Estate ....................................................................................................... 3333
OVERVIEW ................................................................................................................................................................................................ 3336
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 3342
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 3345
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 3346
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 3348
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 3350
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ............................................................................... 3351
HOUSING: Soaring FHA Delinquencies .................................................................................................................................................... 3353
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 3358
LATEST ...................................................................................................................................................................................................... 3358
CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 3362
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 3362
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 3363
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 3363
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 3364
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 3365
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 3365
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 3366
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 3367
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 3368
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 3369
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 3369
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 3370
RESEARCH OF NOTE .................................................................................................................................................................................. 3372
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 3372
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 3373
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 3373
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 3378
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ................................................................................... 3379
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level .................................................. 3381
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 3384
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 3387
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 3388
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 3389
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 3390
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 3391
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ...................................................................... 3392
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 3398
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 3399
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 3400
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 3403
COMMERCIAL REAL ESTATE - Rising Beef Costs ................................................................................................................................. 3404

34

COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 3408

COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete ................................................................................................. 3410
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 3412
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 3413
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 3414
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous .............................................. 3416
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ..................................... 3423
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode......................................................................................... 3425
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ................................................ 3426
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements ....................................................................................... 3428
COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ........................................................................ 3431
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ........................................................................... 3434
COMMERCIAL REAL ESTATE - Getting Worse Fast .............................................................................................................................. 3435
COMMERCIAL REAL ESTATE - Unfolding Implosion .............................................................................................................................. 3437
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ......................................................................................................................... 3438
COMMERCIAL REAL ESTATE - Financial Crisis II Coming..................................................................................................................... 3443
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ................................................................................................................ 3450
COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 3453
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 3455
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 3457
COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 3461
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 3467
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 3468
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 3471
OVERVIEW ................................................................................................................................................................................................ 3475
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 3476
SPECIAL FOCUS QE FOR THE PEOPLE ....................................................................................................................... 3482

QE & ZIRP POLICY The Experiment was a Failure ...................................................................................................................................... 3483
LATEST ARTICLES .................................................................................................................................................................................. 3483
QE Policy is a Failure ................................................................................................................................................................................. 3483
CHARTS OF NOTE ....................................................................................................................................................................................... 3484
NEW-CHARTS Money Creation in the US Federal Reserve OMF (Helicopter Money) ..................................................................... 3484
NEW-CHARTS Money Creation in the US Federal Reserve A System of Secured Collateral .......................................................... 3485
QE4 Further Fed Balance Sheet Expansion Expected .................................................................................................................................... 3486
CHARTS OF NOTE ....................................................................................................................................................................................... 3486
NEW-CHARTS Time For More Fed Balance Sheet Growth or Face a Recession ................................................................................ 3486
NEW-CHARTS Expect Exponential Growth in the Fed Balance Sheet ................................................................................................. 3486
OMF Helicopter Money ................................................................................................................................................................................... 3488
LATEST ARTICLES .................................................................................................................................................................................. 3488
NIRP Negative Interest Rate Policy .................................................................................................................................................................. 3488
LATEST ARTICLES .................................................................................................................................................................................. 3488
War on Cash ........................................................................................................................................................................................................ 3489
LATEST ARTICLES .................................................................................................................................................................................. 3489
SPECIAL SUPPLEMENT US RECESSION RUMBLINGS ................................................................................................... 3491

US RECESSION RUMBLINGS ........................................................................................................................................................................... 3491
CHARTS OF NOTE ....................................................................................................................................................................................... 3492
NEW-RECESSION We are already in a US GDP Recession ................................................................................................................ 3492
NEW-RECESSION HY Close to 2001 Recession Levels ...................................................................................................................... 3492
NEW-RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending........................................ 3493
NEW-RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ........................................................................... 3493
NEW-RECESSION Current Economic Cycle Is Getting Old In The Tooth.......................................................................................... 3494
NEW-RECESSION Average Monthly Job Growth Deteriorating ........................................................................................................... 3494
NEW-RECESSION Annual Percent Change In Real GDP .................................................................................................................... 3495
NEW-RECESSION US Manufacturing Sector Recession...................................................................................................................... 3495
NEW-RECESSION Large Profit Margin Declines Coincides With Recessions ..................................................................................... 3496
NEW-RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ..................................... 3496
NEW-RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative ................................................................ 3497
NEW-RECESSION US Recession Estimates Pop ................................................................................................................................. 3497
NEW-RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds .................................................................... 3498
NEW-RECESSION Real S&P 500 Index with Historical Recessions .................................................................................................... 3498
NEW-RECESSION September Survey Data versus Non Farm Payrolls .............................................................................................. 3499
NEW-RECESSION Regional Surveys for September versus ISM PMI (August) .................................................................................. 3499
NEW-RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates ........................................................................ 3500
NEW-RECESSION Historical Regional Index Comparisons Last Seen in 2008 ................................................................................ 3500
NEW-RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds .................................... 3501
NEW-RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ........................................................................... 3502
RECESSION CT 2015 Revenue Recession .......................................................................................................................................... 3502
RECESSION Q2 2015 Revenue Recession .......................................................................................................................................... 3503

35

RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................. 3503

RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted.......................................................................... 3504
RECESSION Top 10 US Market Areas Signal Retail Problem Underway ............................................................................................ 3504
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ....................................................... 3505
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................. 3506
RECESSION Wholesale Inventories vs GDP Trends ............................................................................................................................ 3506
RECESSION Auto Inventories to Sales ................................................................................................................................................. 3507
RECESSION Falling Collateral and Residuals Undermine Real Growth ............................................................................................ 3507
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................. 3508
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................. 3508
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ...................................................................... 3509
RECESSION Real Gross Domestic Investment versus Recessions ..................................................................................................... 3509
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................. 3510
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................. 3511
RECESSION ISM Composite Index versus Recessions........................................................................................................................ 3512
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................. 3512
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................. 3513
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions......................................................................... 3513
RECESSION Major Economic Trends.................................................................................................................................................... 3514
NEW-RESEARCH OF NOTE ........................................................................................................................................................................ 3515
NEW- RECESSION Economists are starting to warn about the risk of a new U.S. recession .............................................................. 3515
NEW- RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................... 3518
RECESSION Retail Sales Slump on Deck ............................................................................................................................................. 3520
RECESSION This Is another "Subprime" Waiting To Blow ................................................................................................................... 3523
RECESSION Record Gap between US Inventories and Sales Screams Recession ............................................................................ 3526
RECESSION August spending was the weakest in nominal dollar terms since 2012 ........................................................................... 3528
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................. 3533

36

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)

37
Focus


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QE FOR THE PEOPLE

Helicopter Money (OMF) Coming During the Next Drawdown

GLOBAL MACRO TIPPING POINTS NOVEMBER 2015

1 November 2015 Edition

Restricted & Confidential

QE FOR THE PEOPLE

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

November 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 192

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 211

November 2015 Edition

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ISIS .................................................................................................................................................................................................................. 311

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 375

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 384

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

November 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 428

November 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

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IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 545

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

November 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

ECONOMIC CUTS ................................................................................................................................................................................................. 682

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

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November 2015 Edition

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

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Restricted & Confidential

November 2015 Edition

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Restricted & Confidential

RESEARCH OF NOTE .................................................................................................................................................................................. 1036

GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1102

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November 2015 Edition

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November 2015 Edition

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REGIONAL ........................................................................................................................................... 1464

November 2015 Edition

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Restricted & Confidential

CHARTS OF NOTE ....................................................................................................................................................................................... 1467

November 2015 Edition