The Origin of the Next Financial Crisis

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Today, additional evidence that recession — or worse — is in sight.

But first, it appears the “Powell put” may extend the countdown clock…

Since Jerome Powell’s dovish comments on Friday, the Dow Jones has been up and away… as an addict thrills to the promise of additional stimulant.

It leaped another 256 points today. Continue reading

Is the “Melt-up” Back?

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Nothing remains of February’s correction but a quaint memory.

The stars are back in their courses… the angels are back on duty… and the Perfections are back within sight.

Both the S&P and Nasdaq have returned to record highs, while the Dow Jones is within an ace of its own.

More good cheer came by way of the Commerce Department yesterday…

Its bean counters inform us that second-quarter growth exceeded its own original 4.1% reading. Continue reading

The Road to War: China vs the US

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In 2016 Steve Bannon, President Donald Trump’s former chief strategist, declared that there was no doubt, in his mind, that the US would go to war with China in the South China Sea in the next five to 10 years.

A US-Chinese military conflict would be on top of a vow by Trump in his inaugural presidential address, to not only take on radical Islamic terrorism but to “eradicate it from the face of the Earth.” This would be done by building up America’s already supreme military. “Our military dominance must be unquestioned,” the billionaire businessman, who now controlled the most powerful political office in the world, declared in his first address to the nation.

A year and a half after that speech, the United States is not at war with China, but its economic saber-rattling is arguably the beginning of a confrontation between the world’s largest and second-largest economies. Trump’s tariff threats against not only China but Europe, Canada, Mexico and its other trade partners, are also symbolic of a shift in US foreign policy towards a more isolationist stance – one that may not strictly be due to Trump’s belligerent personality. This article will get into the antecedents of this economic and military showdown and point the way to some possible future scenarios, including a war in space. Continue reading

SUPERSTATE OR OBLIVION: ‘Unsustainable’ EU told to merge or die by leading credit agency

THE European Union must immediately merge into a huge superstate or face fast approaching oblivion, a leading credit ratings agency has warned.

Standard and Poor’s (S&P) said only the rapid creation of a United States of Europe, run by a federal government in Brussels, can prevent the bloc from total collapse.

The only alternative, they say, is to roll back decades of political integration including the euro currency and return the project to its original status as a trading bloc.

Continue reading

S&P cuts UK credit rating on Brexit fears

Whether this is case of punishment for exiting or actual concern remains to be seen, although the former is quite plausible. The S&P has in the past been used as an economic warfare tool by the American government to bend or break nations to its will.

See the source link for the video.

 

Standard & Poor’s on Monday downgraded the United Kingdom’s sovereign credit rating by two notches, from “AAA” to “AA,” citing last week’s referendum that approved a British exit from the European Union.

“In our opinion, this outcome is a seminal event, and will lead to a less predictable, stable, and effective policy framework in the U.K. We have reassessed our view of the U.K.’s institutional assessment and now no longer consider it a strength in our assessment of the rating,” the ratings agency said in a news release. Continue reading

Eurozone is ‘flying with one engine’ Disaster looms for EU, warns chief economist

EUROPE’s spluttering economy is equivalent to a plane “flying on one engine” a leading rating agency has warned, as it slashed growth projections for the bloc.

The wind has been knocked out of the finances of the single-market this year amid fears over a global crisis triggered by China’s slowdown and low oil prices, according to Standard and Poors (S&P).

Estimates from the agency are the eurozone economy will now grow just 1.5 per cent this year, down from a previous forecast at the end of last year of 1.8 per cent. Continue reading

Interest rate rise: turning point looms for US debt binge

With a $4tn mountain of debt maturing over the next five years, corporate America’s reliance on cheap cash is about to get tested.

With the prospect of steadily higher interest rates in the coming years as the Federal Reserve gradually tightens policy, US companies that tapped global markets for inexpensive finance over the past four years will soon face a different environment.

But as rates turn higher, investors may see the flip side of cheap financing. Analysts warn companies will begin defaulting in greater numbers, particularly in the energy sector, which has found itself in the line of fire as commodity prices languish. Continue reading

“There Are Big, Big Problems” – The Shocker Crushing The Economy Revealed

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We are grateful to Alexander Giryavets at Dynamika Capital for pointing us to something which is far more troubling than even the Atlanta Fed’s collapse in Q1 GDP tracking: namely the latest Credit Managers Index for the month of March which “deteriorated significantly over the last two months and current readings stand at the recessionary levels not seen since 2008.”

To be sure, we have previously shown the collapse in consumer debt as reported by the Fed, which as we noted, just suffered its worst month for revolving credit since December 2010 and explains “why the consumer has literally gone into hibernation – it has nothing to do with the weather, and everything to do with the unwillingness to “charge” purchases, which in turn is a clear glimpse into how the US consumer sees their financial and economic future.” Continue reading

Greece Changes Strategy: No Longer Demands Debt Write Off, Ask For Debt Exchange Instead

Guess who blinked first.

The ECB’s February 28th warning shot across the bow from the Troika, which is fully stacked with Germany’s Fourth Reich, sent a clear message to fall back in line. Apparently the current Communist Greek government wants to hold on to its power and not let the situation descend into utter chaos. What they’re probably waiting on is to see what options they have with their friends in Russia in hopes of throwing them a line.

Up until now, Berlin and Washington looked pretty solid as it overturned and took Ukraine away from Moscow’s sphere of influence. Now Russia struck back and has a piece of the EU.

 

Over a week after the new Greek government came to power, it has presented its first actual proposal of how it hopes to negotiate with Europe that does not involve the infamous “debt write off”, which as both Germany and the ECB have made clear, is a non-starter as it impairs the ECB’s balance sheet and leads to a loss of “faith” in the money printer, the legacy monetary system and so on. So instead of yet another debt restructuring, the FT reports that Yanis Varoufakis “would no longer call for a headline write-off of Greece’s €315bn foreign debt. Rather it would request a “menu of debt swaps” to ease the burden, including two types of new bonds.” Actually he still does, only he is not calling it as such. Continue reading

Oil fall could lead to capex collapse: DoubleLine’s Gundlach

(Reuters) – DoubleLine Capital’s Jeffrey Gundlach said on Tuesday there is a possibility of a “true collapse” in U.S. capital expenditures and hiring if the price of oil stays at its current level.

Gundlach, who correctly predicted government bond yields would plunge in 2014, said on his annual outlook webcast that 35 percent of Standard & Poor’s capital expenditures comes from the energy sector and if oil remains around the $45-plus level or drops further, growth in capital expenditures could likely “fall to zero.”

Gundlach, the co-founder of Los Angeles-based DoubleLine, which oversees $64 billion in assets, noted that “all of the job growth in the (economic) recovery can be attributed to the shale renaissance.” He added that if low oil prices remain, the U.S. could see a wave of bankruptcies from some leveraged energy companies. Continue reading

‘Plunge protection’ behind market’s sudden recovery

Mysterious forces were trying their best, but they couldn’t keep the stock market from swooning Wednesday.

They failed in the morning, despite massive purchases of stock index futures contracts. Within minutes of the market’s opening, the Dow Jones industrial average was down 350 points. Later in the day — after a lot of shocking ebb and flow — the Dow bottomed out with a decline of 460 points.

It was only in the last hour of trading that the market saviors managed to trim the Dow loss to just 173 points. And they succeeded only after Janet Yellen’s private, upbeat remarks about the economy were leaked.

Welcome to a new kind of stock market — one that the average investor should refuse to be invested in. Continue reading

Charles Nenner — Who’s Been Warning Of Market Collapses For Years — Warns A ‘Major Collapse’ Is Coming In 2018

Charles Nenner, who has claimed to have never been wrong on a market call, appeared on CNBC and warned that deflation and a stock market crash both coming.

Nenner, who developed the “Nenner cycle,” which he says can time the ups and downs of any market, said on CNBC that “for the next many years, you will not see the S&P more than 5% higher than [current levels.]”

But he warns this period of low returns will be followed years of large losses. Continue reading

What Happens Now That Argentina Is in ‘Selective Default’

Default is a major disaster for a government, but not much will happen right away now that Standard & Poor’s has declared Argentina to be in “selective default.”

S&P (MHFI) took the action today after Argentina’s talks with holdout creditors continued past the end of the 30-day grace period for a $539 million bond payment. Continue reading

Russia and China plan own rating agency to rival western players

Russia and China have agreed to set up a joint rating agency as Moscow’s stand-off with the west over Ukraine has made it more eager to establish institutions that would reduce its dependence on the U.S. and Europe.

“In the beginning, the agency will assess Russian-Chinese investment projects with a view to attracting of [investors from] a number of Asian countries,” Anton Siluanov, Russia’s finance minister, said in Beijing, according to his ministry. “Gradually, based on the progress and authority of such an agency, we believe it will rise to a level where its opinions will attract other countries.” Continue reading

China Sold Second-Largest Amount Ever Of US Treasurys In December: And Guess Who Comes To The Rescue

Combine this with Bank of America’s warning that “the US Dollar is in trouble” and you can see that the cliff America is heading towards without brakes isn’t too far away.

While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December – the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper – one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013!  Continue reading