RPT GMTP 2015 05 Peek

WORRIED BANKERS
Beginning to Batten-down-the-Hatches
MACRO UPDATE
GLOBAL MACRO TIPPING POINTS MAY 2015
4/27/2015
1 May 2015 Edition

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

general@GordonTLong.com
WORRIED BANKERS
Beginning to Batten-down-the-Hatches
GLOBAL MACRO TIPPING POINTS - MAY 2015
TIPPING POINTS .................................................................................................................................... 30

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 30
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 30
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 31
Our Assessment ................................................................................................................................................................................................ 31
James Rickards Global Risk Assessment ........................................................................................................................................................ 46
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 95
LATEST FROM THE MONITORS ..................................................................................................................................................................... 95
RESEARCH OF NOTE .................................................................................................................................................................................. 99
NEW-MONITORS - Lagarde warns of lopsided global growth ................................................................................................................ 99
NEW-MONITORS - OECD Cuts Global Growth Projections Again ........................................................................................................ 100
NEW-MONITORS World Bank Global Growth Outlook ..................................................................................................................... 101
MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ............... 103
MONITORS - World Bank Says 300M Young People neither Working nor Studying ............................................................................. 104
MONITORS - IMF warns of new threats to global economy due to excessive risk taking ...................................................................... 105
BIS ................................................................................................................................................................................................................... 107
NEW-BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ....................................................................................... 107
NEW-BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored................................................................................ 107
NEW-BIS - Even the BIS Is Shocked At How Broken Markets Have Become ........................................................................................... 110
NEW-BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ...................................... 113
NEW-BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency ................ 116
NEW-BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks .................... 117
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 122
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 126
CHARTS OF NOTE ..................................................................................................................................................................................... 126
NEW-WEF Global Business Risks ........................................................................................................................................................ 128
NEW-WEF The 2015 Global Risk Landscape ...................................................................................................................................... 129
NEW-WEF Evolving Risk Landscape (2007-2015) .............................................................................................................................. 130
NEW-WEF Global Risk Exposures By Region ..................................................................................................................................... 131
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 132
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 132
CHARTS OF NOTE ......................................................................................................................................................................................... 134
NEW The economic balance of the world is shifting ................................................................................................................................... 134
NEW Global Conflict Intensity is heating up ................................................................................................................................................ 135
NEW World Conflict Map ............................................................................................................................................................................. 136
NEW World Conflict Map Details .............................................................................................................................................................. 137
NEW Global Conflict & Protest Intensity ...................................................................................................................................................... 138
NEW Deutsche Banks Key Global Risk ...................................................................................................................................................... 138
NEW Political and Financial Risk Now Outnumber Real Economy Risks .................................................................................................. 139
RESEARCH OF NOTE .................................................................................................................................................................................... 140
NEW Global Conflict Intensity Spikes To 7-Year High ................................................................................................................................ 140
NEW These Are 2015's "Black Swans" According To SocGen .................................................................................................................. 141
NEW "Globalization Is Turning In On Itself And It Is Each Man For Himself" ............................................................................................. 142
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 145
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 146
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 148
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 150
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 150
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 161
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 164
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 165
THE RISK CONTINUUM ............................................................................................................................................................................. 169
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 172
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 174
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 176
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 178
GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 186

GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 188
YEMEN ............................................................................................................................................................................................................ 188
CHARTS OF NOTE ..................................................................................................................................................................................... 188
NEW-YEMEN Strategic Position ........................................................................................................................................................... 188
May 2015 Edition

Copyright 2015 Gordon T. Long

All Rights Reserved
NEW-YEMEN al-Houthis and Saleh Concentrations ............................................................................................................................ 189

NEW-YEMEN The Decisive Storm Coalition ...................................................................................................................................... 189
NEW-YEMEN Global Oil Chokepoints .................................................................................................................................................. 190
NEW-YEMEN Middle Eastern Oil Production & Chokepoints .............................................................................................................. 190
NEW-YEMEN Chinese Import Countries & Oil Routes ........................................................................................................................ 192
NEW-YEMEN Major Crude Oil Trade Flows in the South China Sea .................................................................................................. 193
NEW-YEMEN Regional Territorial Claims in the South China Sea ...................................................................................................... 194
RESEARCH OF NOTE ................................................................................................................................................................................ 195
NEW-YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day ................ 195
NEW-YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .................................................................................... 197
NEW-YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition.............................................................. 200
NEW-YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ................................................. 201
NEW-YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ............................. 203
NEW-YEMEN Presenting The Theater Of War; Who Controls Yemen? ............................................................................................. 208
NEW-YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War .......................................... 210
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 215
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 216
RESEARCH OF NOTE ................................................................................................................................................................................ 222
NEW-UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ............................................................................................................. 222
NEW-UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures................................................... 223
NEW-UKRAINE - Congress Approves Funding for Ukraine Arms Shipments ........................................................................................ 227
NEW-UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ..................................................................................... 231
NEW-UKRAINE - Congress Approves Funding for Ukraine Arms .......................................................................................................... 232
NEW-UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ................................................................. 235
NEW-UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ..................... 238
NEW-UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ...................................................................... 239
NEW-UKRAINE- A Russian Viewpoint ................................................................................................................................................ 241
NEW-UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War ............. 256
ISIS .................................................................................................................................................................................................................. 257
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 258
NEW-ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' ........................................................................ 262
NEW-ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy ....................................................................... 262
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 263
SYRIA .............................................................................................................................................................................................................. 266
NEW-SYRIA - Syria "Welcomes" Larger Russia Presence ..................................................................................................................... 267
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 268
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 269
SYRIA - 25 Quotes ................................................................................................................................................................................... 270
SYRIA - What Coalition? .......................................................................................................................................................................... 273
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 275
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 277
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 285
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 287
GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 291
NEW-GREECE - Greek Energy Minister Slams "Unscrupulous, Imperialist" Germany, Seeks "Bold Alternatives" In Russia ...................... 291
NEW-GREECE - Greece Prepares To Leave ................................................................................................................................................. 293
NEW-GREECE - Greek Deputy FinMin Confirms Athens Is "Prepared For Rift" With Europe ...................................................................... 295
NEW-GREECE - Will Greece Call A Referendum On Euro Membership?..................................................................................................... 296
NEW-GREECE - What Greece Owes, And More Importantly - When! .......................................................................................................... 299
NEW-GREECE - BofA's Modest Proposal For Greece: "A Negative Shock May Be Necessary" ................................................................. 302
NEW-GREECE - On Greek "Independence Day", Creditors Prepare To Seal Athens' Fate ......................................................................... 305
GEO-POLITICAL RISK Global Governance Failure ........................................................................................................................................... 308
ASIAN INFRASTRUCTURE INVESTMETN BANK A Threat to World Bank and US$ Reserve Status ..................................................... 308
CHARTS OF NOTE ..................................................................................................................................................................................... 311
NEW-AIIB Demanding Infrastructure .................................................................................................................................................... 311
RESEARCH OF NOTE ................................................................................................................................................................................ 312
NEW-AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .................................................................................... 312
NEW-AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ................................................................. 314
NEW-AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .......................................................................................... 315
NEW-AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank.... 317
NEW-AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .................................................... 320
NEW-AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ................................................................... 322
NEW-AIIB - Did De-Dollarization Just Reach Escape Velocity? ............................................................................................................. 324
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 328
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 328
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 330
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 332
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 335
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 337
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 337
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 340

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 340
May 2015 Edition


All Rights Reserved
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 341

NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 341
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 342
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 342
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 342
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 343
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 344
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 345
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 345
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 346
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 347
TIPPING POINTS ..................................................................................................................................................................... 349

NEW-CHANGES TO RANKINGS Q2 2015 ........................................................................................................................................................ 349
NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 351
NEW-CHANGES TO ROADMAPS - Longer Term Trends ................................................................................................................................... 353
NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 355
TIPPING POINTS: TOP 5 FOCUS - APRIL 2015 ................................................................................................................................................. 358
NEW-I - RISK REVERSAL .............................................................................................................................................................................. 358
NEW-II - GEO-POLITICAL EVENT RISK ........................................................................................................................................................ 359
NEW-V - CHINA HARD LANDING .................................................................................................................................................................. 360
NEW-III - JAPAN DEBT DEFLATION ............................................................................................................................................................. 364
NEW-IV - EU BANKING CRISIS ..................................................................................................................................................................... 365
GLOBAL MACRO ................................................................................................................................. 372

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 374
ECONOMIC WARNINGS....................................................................................................................................................................................... 374
IMF WARNS .................................................................................................................................................................................................... 374
NEW- IMF Warns of Permanent Stagnation ................................................................................................................................................ 374
IMF sees risk of new eurozone .................................................................................................................................................................... 376
IMF Tells Central Europe to Spend More .................................................................................................................................................... 379
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 382
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 384
BIS WARNS ..................................................................................................................................................................................................... 386
NEW-BIS WARNS - Former BIS Economic Advisor Warns on European QE............................................................................................ 386
Monetary Policy At Its Limits ........................................................................................................................................................................ 398
WORLD BANK WARNS .................................................................................................................................................................................. 399
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 401
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 404
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 405
CHARTS OF NOTE ............................................................................................................................................................................................... 408
NEW-CHART: Global Stock of Debt Outstanding Grows By $57T Since Financial Crisis ............................................................................. 408
NEW-CHART: Decade-Long Central Bank FX Reserves Surge Nears End .................................................................................................. 409
NEW-CHART: Global Business Equipment Investment ................................................................................................................................. 410
NEW-CHART: EM versus DM Credit Risk ...................................................................................................................................................... 411
NEW-CHART: MSCI World P/E versus EM P/E ............................................................................................................................................. 411
NEW-CHART: Emerging Capital Flows & Currency Moves ........................................................................................................................... 412
NEW-CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ................................................................................... 412
NEW-CHART: Domestic Bank Credit of EM versus DM ................................................................................................................................. 413
NEW-CHART: Regional Resilience Score Differences Since the Financial Crisis ......................................................................................... 413
NEW-CHART: US Macro index at a New 6 Year Low. ................................................................................................................................... 415
NEW-CHART: There is a Problem in Global Credit ........................................................................................................................................ 415
CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 416
CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 417
CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 417
CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 418
CHART: Global Corporate Profit Trends ......................................................................................................................................................... 418
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 419
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ......................................................................................... 420
CHART: Growth of Asian Middle Class Dominates Next 20 Years .............................................................................................................. 421
CHART: Global Domestic Demand Growth .................................................................................................................................................... 421
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ................................................................................................... 422
CHART: World GDP 2014 Economic Growth Estimates ................................................................................................................................ 422
CHART: World GDP versus World MSCI Stock Index .................................................................................................................................... 423
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ..................................................................................... 424
CHART: World Trade versus Central Bank Balance Sheet Growth ............................................................................................................... 424
CHART: Falling Global LEI (Leading Economic Indicator).............................................................................................................................. 425
CHART: World GDP Economic Forecast 2014 ............................................................................................................................................... 426
CHART: World GDP Economic Expectations versus MSCI Equity Index ...................................................................................................... 426
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 427
CHART: Shifting Global GDP Share ............................................................................................................................................................... 428
May 2015 Edition


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CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 429
CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 429
CHART: Future Economic Growth a Sub 2% Trend ....................................................................................................................................... 431
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth ........................................................................................... 431
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI ........................................................................................................... 432
CHART: Liquidity Drain in US in 2H 2014 ....................................................................................................................................................... 433
RESEARCH OF NOTE .......................................................................................................................................................................................... 434
NEW-GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ....................................................................................................... 434
NEW-GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ............................................ 437
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile ...................................................................................................... 438
NEW-GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ......................................................... 441
GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 442
GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ...................................................................................................... 445
GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................. 449
GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 452
GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 454
GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 456
GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 457
GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 462
GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 464
GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 467
GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 470
GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat ........................................................................................................................ 473
GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 476
GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 479
GLOBAL OUTLOOK - A 67 Million Jobs Gap ................................................................................................................................................. 481
ECONOMIC CUTS ................................................................................................................................................................................................. 486
CHARTS OF NOTE ......................................................................................................................................................................................... 486
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 486
CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 489
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 489
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 489
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 495
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 505
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 507
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 510

GLOBAL TRENDS ................................................................................................................................................................................................. 510
CHARTS OF NOTE ......................................................................................................................................................................................... 510
NEW-GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ........................................................................................ 510
NEW-GLOBAL TRENDS US Macro Continues to Plummet .................................................................................................................... 510
NEW-GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ....................................... 511
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 511
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 512
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 512
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 513
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 514
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 514
RESEARCH OF NOTE .................................................................................................................................................................................... 515
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 515
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 519
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 523
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 524
CHARTS OF NOTE ......................................................................................................................................................................................... 524
CHART Global Employment Rates ........................................................................................................................................................... 524
CHART Global Unemployment ................................................................................................................................................................. 525
CHART Global Unemployment EU Comparison ................................................................................................................................... 525
CHART Unemployment in Advanced Countries ....................................................................................................................................... 526
CHART Global Labor Participation Rates ................................................................................................................................................ 526
CHART Global Youth Unemployment By Country ................................................................................................................................ 527
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 527
RESEARCH OF NOTE .................................................................................................................................................................................... 528
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 528
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 531
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 533
GLOBAL SENTIMENT ........................................................................................................................................................................................... 535
CHARTS OF NOTE ......................................................................................................................................................................................... 535
NEW-GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ...................................................................................... 535
NEW-GLOBAL SENTIMENT Global Consumer Confidence by Country ................................................................................................. 537
NEW-GLOBAL SENTIMENT Global Consumer Confidence Improves the Most In North America ........................................................ 538
NEW-GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ................................................................................ 539
NEW-GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators ........................................... 540
NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ............................................................. 541
NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .......................................................... 542
May 2015 Edition


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NEW-GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ....................................................... 543
NEW-GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ............................................................................ 544
NEW-GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa .................................................................................. 545
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 546
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 546
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 548
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 549
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 550
RESEARCH OF NOTE .................................................................................................................................................................................... 551
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 551
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 553
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 558
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 559
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 561
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 562
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 574
CHARTS OF NOTE ......................................................................................................................................................................................... 574
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 574
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 574
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 575
RESEARCH OF NOTE .................................................................................................................................................................................... 576
GLOBAL GROWTH ............................................................................................................................................................................................... 576
CHARTS OF NOTE ......................................................................................................................................................................................... 576
NEW-GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ..................................................................................... 576
GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 577
GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 578
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 579
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 580
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 580
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 581
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 582
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 582
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 582
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 583
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 584
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 584
RESEARCH OF NOTE .................................................................................................................................................................................... 585
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 585
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 586
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 588
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 589
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 593
GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 595
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 597
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 598
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 599
GLOBAL CREDIT .................................................................................................................................................................................................. 600
CREDIT CYCLE - HY Leading the Way .......................................................................................................................................................... 600
CREDIT CYCLE - Reversal Ahead ................................................................................................................................................................. 603
GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 607

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 607
RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 607
CHARTS OF NOTE ......................................................................................................................................................................................... 611
NEW-CHARTS Consensus Fed and ECB Rate Hike Projections............................................................................................................ 611
NEW-CHARTS Global Monetary Policy Stance & Bias ........................................................................................................................... 612
NEW-CHARTS Global Government Bonds Trading With Negative Yields .............................................................................................. 613
NEW-CHARTS Lack of Inflation in Europe ............................................................................................................................................... 613
NEW-CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s) ................................................... 614
NEW-CHARTS Quantitative e Easing No Longer Drives Commodity Prices .......................................................................................... 615
NEW-CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ...................................................................................... 615
NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ............................................................................................... 616
NEW-CHARTS Sovereign Net Issuance After Central Bank Issuances ............................................................................................... 616
NEW-CHARTS Falling Global Bond Rates Continue in Q1 2015 ............................................................................................................ 617
NEW-CHARTS The Road to NIR (Negative Rates) ................................................................................................................................. 617
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 618
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 618
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 620
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 620
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 621
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 621
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 622
RESEARCH OF NOTE .................................................................................................................................................................................... 623
NEW- CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ................................................................................................. 623
NEW- CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode ................................................................................... 624
May 2015 Edition


All Rights Reserved
NEW- CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ............................................................................. 625
NEW- CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage .............................................................................. 628
NEW- CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ..................................................................... 629
NEW- CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation ............................................... 631
NEW- CENTRAL BANKS - The year of Dollar Danger for the world .......................................................................................................... 633
NEW- CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ............................................. 638
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 642
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 644
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 645
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 648
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 649
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 650
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 652
NEW-WAR ON CASH ..................................................................................................................................................................................... 657
NEW-WAR ON CASH Elliott Waves Report on the War on Cash ........................................................................................................ 657
NEW-WAR ON CASH The "War On Cash" Migrates To Switzerland...................................................................................................... 662
NEW-WAR ON CASH Chase Joins the War on Cash ............................................................................................................................. 665
NEW-WAR ON CASH Largest Bank In America Joins War On Cash ..................................................................................................... 667
NEW-WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban ................................................................................................. 669
NEW-SWISS PEG ........................................................................................................................................................................................... 674
NEW-SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .......................................................................................... 674
NEW-SWISS PEG Swiss Peg Failure The Financial System Broke Last Week .................................................................................. 676
NEW-SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ................................................... 678
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 681
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 681
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 682
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 685
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 687
BOE - UK ................................................................................................................................................................................................................ 688
CHARTS OF NOTE ......................................................................................................................................................................................... 688
UK Dissent within BOE Set to Continue ................................................................................................................................................... 688
RESEARCH OF NOTE .................................................................................................................................................................................... 688
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 688
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 690
FED - US ................................................................................................................................................................................................................ 692
CHARTS OF NOTE ......................................................................................................................................................................................... 693
NEW-CHARTS Feds QE History versus UST 10 Year Yields ................................................................................................................ 693
NEW-CHARTS Fed Balance Sheet Growth ............................................................................................................................................. 693
CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 694
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 694
RESEARCH OF NOTE .................................................................................................................................................................................... 695
NEW-US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ............................................. 695
NEW-US MONETARY - Audit the Fed Yellens Testimony....................................................................................................................... 697
NEW-US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy ................................................................ 706
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 709
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 712
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 715
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 717
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 719
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 725
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 726
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 728
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 730
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 733
CHARTS OF NOTE ......................................................................................................................................................................................... 733
NEW-JAPAN Japan Heads Back towards Deflation ................................................................................................................................ 733
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 734
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 735
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 736
RESEARCH OF NOTE .................................................................................................................................................................................... 737
NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 737
NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 740
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 741
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 744
BOJ JAPAN ......................................................................................................................................................................................................... 746
CHARTS OF NOTE ......................................................................................................................................................................................... 746
JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 746
JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 747
JAPAN Japanese Trade Balance ............................................................................................................................................................. 748
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 748
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 749
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 749
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 749
JAPAN Real Wages Plummet as Financial Repression Takes Hold ....................................................................................................... 750
May 2015 Edition


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RESEARCH OF NOTE .................................................................................................................................................................................... 751

JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 752
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 754
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 757
JAPAN - No Way Out But to Expand the Monetary Base ........................................................................................................................... 759
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years....................................................................................................................................... 760
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................... 763
JAPAN - Some Policies Have Clearly Hit the Limit ..................................................................................................................................... 765
JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 766
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 771
JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 772
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 775
JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 776
PBOC - CHINA ....................................................................................................................................................................................................... 778
CHARTS OF NOTE ......................................................................................................................................................................................... 779
NEW-CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ............................................................... 779
NEW-CHARTS China Reduces Bank Reserve Ratio .............................................................................................................................. 779
NEW-CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ................................................................................. 780
NEW-CHARTS Falling Chinese Government Revenue Growth .............................................................................................................. 781
NEW-CHARTS Falling National New Residential Housing Starts ........................................................................................................... 781
NEW-CHARTS China and Asia Residential Property Tracking US Housing Bubble .............................................................................. 782
NEW-CHARTS Real Chinese Rates versus Cuts .................................................................................................................................... 782
RESEARCH OF NOTE .................................................................................................................................................................................... 783
NEW-CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says ............................. 783
NEW-CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ............................................................................. 785
NEW-CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears......................................................................................... 787
ECB EU ............................................................................................................................................................................................................... 793
NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................... 793
CHARTS OF NOTE ......................................................................................................................................................................................... 794
NEW-CHARTS Welcome to the EUs NIRP........................................................................................................................................... 794
NEW-CHARTS Negative Swiss Government Bonds ............................................................................................................................... 795
NEW-CHARTS Negative Swiss Government Bonds ............................................................................................................................... 795
NEW-CHARTS UK & German Total Return Indices ................................................................................................................................ 796
NEW-CHARTS ECBs Dilemma of Digging Up Enough Debt .................................................................................................................. 796
NEW-CHARTS Nearly $2T European Nonds Trading With Negative Yields........................................................................................... 797
NEW-CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ....................................................... 797
NEW-CHARTS The Fastest Growing Asset Class NIR Products ......................................................................................................... 798
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ........................................................................................................... 799
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU .............................................................................................................. 800
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 ................................................................................................................ 800
CHARTS Euro-Area Inflation Expectations Decline ................................................................................................................................. 801
CHARTS Euro-Area Private Sector Loan Creation .................................................................................................................................. 802
CHARTS Euro-Area Money Supply, Private Sector Lending Growth ...................................................................................................... 802
CHARTS Euro-Area 10 Yr Sovereign Bond Yields .................................................................................................................................. 803
CHARTS Slovenia May BE the Next EU Debt Hotspot ............................................................................................................................ 803
CHARTS Spain & Portugal NPL ............................................................................................................................................................... 804
CHARTS ECBs Turn to Expand Its Balance Sheet ................................................................................................................................. 805
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................... 805
CHARTS Expect Major ECB Policy Announcement in Q2 2014 .............................................................................................................. 806
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................... 807
RESEARCH OF NOTE .................................................................................................................................................................................... 808
NEW-EU MONETARY - NIRP Is A Flawed Economic Concept ................................................................................................................. 809
NEW-EU MONETARY - NIRP ..................................................................................................................................................................... 811
NEW-EU MONETARY NIRP - Yield scarce as the world turns negative ................................................................................................. 815
NEW-EU MONETARY - XXXX .................................................................................................................................................................... 818
NEW-EU MONETARY - XXXX .................................................................................................................................................................... 818
EU MONETARY - Draghi Key Statements .................................................................................................................................................. 819
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................... 819
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action ...................................................................................... 822
EU MONETARY - Euro-Area Data Deterioration Points toward QE ........................................................................................................... 823
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down ............................................................................ 826
MACRO MONETARY INFLATION ..................................................................................................................................................................... 828
CHARTS OF NOTE ............................................................................................................................................................................................... 828
NEW-CHARTS The Fall of Hyperinflation & the Rise of Deflation ............................................................................................................... 828
NEW-CHARTS Falling US Consumer Price Index ....................................................................................................................................... 828
CHARTS Global Consumer Prices are Rising Significantly ......................................................................................................................... 829
CHARTS Global Country Inflation Rates .................................................................................................................................................. 829
CHARTS Two Worlds if Inflation EM and DM ....................................................................................................................................... 829
CHARTS Developed Country Inflation Rates ........................................................................................................................................... 831
RESEARCH OF NOTE .................................................................................................................................................................................... 832
NEW- INFLATION Martin Armstrongs Explanation of Monetary Inflation ............................................................................................... 832
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ............................................. 834
GEO-ECONOMIC INSTABILITIES........................................................................................................................................... 836
May 2015 Edition


All Rights Reserved
GEO-ECONOMIC INDEX ...................................................................................................................................................................................... 836

US$ RESERVE STATUS & ERODING INFLUENCE............................................................................................................................................ 837
NEW-RESEARCH WE FOLLOWED DE=DOLLARIZATION .................................................................................................................... 837
CHARTS OF NOTE ......................................................................................................................................................................................... 840
NEW-DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ....................................... 840
NEW-DE-DOLLARIZATION - AIIBs Founding Members ........................................................................................................................... 840
NEW-DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ............................................................ 841
NEW-DE-DOLLARIZATION - AIIB Infrastructure Investment ..................................................................................................................... 842
NEW-DE-DOLLARIZATION - The Rise & Fall of Modern Empires ............................................................................................................. 842
RESEARCH OF NOTE .................................................................................................................................................................................... 844
NEW-DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund ............................................................................. 844
NEW-DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ............................................................................... 847
NEW-DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ............................................... 849
NEW-DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ..................................... 851
NEW-DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .......................................................... 853
NEW-DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe ............................................ 855
NEW-DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ............................. 855
NEW-DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? .............................................................................................. 859
NEW-DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities ............................ 861
NEW-DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar? ............................................................................. 862
NEW-RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ......................................................... 863
NEW-RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system. ................. 865
NEW-RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ....................................................... 867
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ....................... 868
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................... 869
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ....................................................................... 870
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order ............................ 871
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar ...................................................................... 874
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ........................................................ 875
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar .................................................................................................. 876
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries ...................................................... 877
EMERGING & FRONTIER MARKETS - Capital Outflows .................................................................................................................................. 879
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 879
CHARTS OF NOTE ......................................................................................................................................................................................... 883
NEW-CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ................................................................... 883
NEW-CHARTS Wide Spread Emerging Market Capital Out Flows ......................................................................................................... 884
NEW-CHARTS Emerging Market Debt versus GDP - 2013 .................................................................................................................... 885
NEW-CHARTS Emerging Market Resilience Indicator Changes ............................................................................................................. 885
CHARTS BRIC Countries Responsible for 43% of Global Growth .......................................................................................................... 886
CHARTS BRIC & Emerging Market Inflation Rates ................................................................................................................................. 886
CHARTS Emerging Market Default Probability ........................................................................................................................................ 887
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions .................................................. 887
CHARTS Emerging Market Outflows........................................................................................................................................................ 888
CHARTS Emerging Market Outflows -2 ................................................................................................................................................... 888
CHARTS Developed versus Emerging Equity Markets 1990-2014 ...................................................................................................... 889
CHARTS Total GEM Flows....................................................................................................................................................................... 889
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................... 890
RESEARCH OF NOTE .................................................................................................................................................................................... 891
NEW-EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ............................................................................. 891
NEW-EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" ...................................................... 894
NEW-EMERGING MARKETS - Emerging markets: The great unraveling ................................................................................................. 896
NEW-EMERGING MARKETS - Moodys warns on EM dollar finance costs .............................................................................................. 901
NEW-EMERGING MARKETS - XX ............................................................................................................................................................. 902
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................... 903
EMERGING MARKETS - Crisis Redux? ..................................................................................................................................................... 904
EMERGING MARKETS - Losing Their Punch ......................................................................................................................................... 909
EMERGING MARKETS - Risk-On!............................................................................................................................................................. 911
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................... 912
EMERGING MARKETS - Crisis Temporarily Halted................................................................................................................................ 914
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................... 915
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................... 921
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................... 926
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ..................................................... 930
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain .......................................... 932
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued .......................................................................................................... 935
NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................... 935
CHARTS OF NOTE ......................................................................................................................................................................................... 938
NEW-ENERGY Saudi Crude Oil Production & Brent Price ...................................................................................................................... 938
NEW-ENERGY World Liquids Percent of Production .............................................................................................................................. 938
NEW-ENERGY Interest Rates & Oil Prices in 2015 Dollars .................................................................................................................... 939
NEW-ENERGY Oil Production and CAPEX by Operating Environment 2014 ........................................................................................ 939
NEW-ENERGY Global Drilling Intensity Will Increase ............................................................................................................................. 940
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 ...................................................... 940
ENERGY Breakeven for All Global Oil Projects ....................................................................................................................................... 941
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey ................................................................................ 942
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ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey ................................................................................ 943
ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years ............................................................................................ 944
ENERGY Falling Inflation Adjusted Gasoline Prices ................................................................................................................................ 945
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ....................................................................................................... 946
ENERGY US Shale Oil Breakeven Prices ................................................................................................................................................ 947
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................... 947
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse .............................................................. 948
ENERGY EM Oil Producers Being Crushed ............................................................................................................................................ 948
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................... 949
ENERGY Oil Supply / Demand and Price ................................................................................................................................................ 950
RESEARCH OF NOTE .................................................................................................................................................................................... 951
NEW-RUSSIA- XXXX............................................................................................................................................................................... 951
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead ...................................................... 951
RUSSIA- OPEC Presents: QE4 And Deflation ........................................................................................................................................ 954
RUSSIA Energy War ............................................................................................................................................................................. 956
NEW-PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ................................................................ 959
NEW-PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? .................................................................... 964
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ............................. 969
PETRODOLLAR Collapsing PetroDollar Foundation ........................................................................................................................... 975
UKRAINE - Pulled between EU v Russia ................................................................................................................................................ 979
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................... 979
UKRAINE - Pulled between Economic Inequality Factors ....................................................................................................................... 980
UKRAINE - Pulled between the Global Military Balance ......................................................................................................................... 981
UKRAINE - Pulled by Global Financial Markets ...................................................................................................................................... 982
UKRAINE - A Deep State Analysis .......................................................................................................................................................... 985
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ....................................................................................................... 988
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ................................................................. 989
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield ...................................................... 990
ENERGY - The Oil Price Decline ............................................................................................................................................................. 992
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................... 999
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1001
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1004
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1009
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1010
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1012
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1015
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1018
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1022
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1027
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1034
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1037
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1039
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1041
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1045
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1045
NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................. 1045
CHARTS OF NOTE ....................................................................................................................................................................................... 1046
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1046
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1047
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1047
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1048
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1048
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1049
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1049
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1050
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1051
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1051
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1052
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1052
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1053
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1054
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1054
RESEARCH OF NOTE .................................................................................................................................................................................. 1056
NEW-CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls .............................................. 1056
NEW-CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio .................................................................. 1061
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1062
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1063
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1064
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1066
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1067
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1068
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1071
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1073
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1076
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1077
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CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1078

CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1080
CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1085
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1088
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1090
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1091
GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1093
CHARTS OF NOTE ....................................................................................................................................................................................... 1095
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1095
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1095
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1097
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1097
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1098
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1098
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1099
RESEARCH OF NOTE .................................................................................................................................................................................. 1101
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1101
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1102
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1105
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1107
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1109
DEBT Growth of Financial Services ....................................................................................................................................................... 1112
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1112
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1114
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1116
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1117
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1117
CHARTS OF NOTE ....................................................................................................................................................................................... 1118
CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1118
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1118
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1119
CHARTS Food Importers ........................................................................................................................................................................ 1119
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1120
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1121
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1121
CHARTS CRB Food Index One Year .................................................................................................................................................. 1123
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1124
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1125
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1126
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1126
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1127
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1128
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1129
CHARTS Coffee Futures ........................................................................................................................................................................ 1129
CHARTS Lean Hog Futures ................................................................................................................................................................... 1130
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1130
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1131
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1131
RESEARCH OF NOTE .................................................................................................................................................................................. 1132
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1132
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1135
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1136
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1138
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1138
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1143
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1144
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1146
EUROPE - Euro Exposed .............................................................................................................................................................................. 1146
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1148
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1149
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1149
SWITZERLAND - No Choice ......................................................................................................................................................................... 1149
SINGAPORE - Hot Money ............................................................................................................................................................................. 1150
UK- Pound Joins War .................................................................................................................................................................................... 1151
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1152
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1155
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1158
CYBER SPYING ............................................................................................................................................................................................ 1159
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May 2015 Edition


All Rights Reserved
REGIONAL ........................................................................................................................................... 1160

EU DEFLATION IS REAL A Major Problem for Banks & Government Debt ................................................................................................ 1161
CHARTS OF NOTE ....................................................................................................................................................................................... 1163
NEW--CHARTS - Draghi Had To Deliver or it would have been a Collateral Massacre .......................................................................... 1163
NEW--CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ............................................................................. 1163
NEW--CHARTS Eurozone is the Biggest Drag on Global Profits .......................................................................................................... 1164
NEW--CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ............................................................ 1164
NEW--CHARTS EU PMIS Rolling Over ................................................................................................................................................. 1165
NEW--CHARTS Eurozone Banks Too Big To Be Bailed Out! ............................................................................................................... 1166
NEW--CHARTS Eurozone Area Consumer Confidence May Be Misleading ........................................................................................ 1167
NEW--CHARTS Eurozone GDP & Recession Pattern ........................................................................................................................... 1167
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1168
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1168
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1169
CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1170
CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1171
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1171
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1172
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1173
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1173
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1174
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1174
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1175
CHARTS EU Confidence ........................................................................................................................................................................ 1176
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1177
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1177
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1178
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1179
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1180
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1181
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1182
CHARTS - EU Area Weakness ................................................................................................................................................................. 1183
CHARTS - EU Area GDP ........................................................................................................................................................................... 1184
CHARTS - EU Area PMI ............................................................................................................................................................................ 1185
CHARTS - EU Area PMI ............................................................................................................................................................................ 1186
CHARTS - EU Real Rates ......................................................................................................................................................................... 1187
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1188
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1189
CHARTS - EU PMI ..................................................................................................................................................................................... 1189
CHARTS - EU CPI ..................................................................................................................................................................................... 1191
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1192
CHARTS - Europe's "Core" Problem is France .................................................................................................................................... 1193
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ........................................................................... 1196
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................. 1197
CHARTS - EU Credit Downgrades, France and UK On Tap ................................................................................................................... 1199
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1201
CHARTS - Dangerous Delusional Divergences .................................................................................................................................... 1203
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1204
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1205
CHARTS - Eurozone Misery Indices Never Been Higher ..................................................................................................................... 1206
CHARTS - Euro Currency .......................................................................................................................................................................... 1208
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1213
RESEARCH OF NOTE .................................................................................................................................................................................. 1215
NEW--RESEARCH The Broken Model of the Eurozone ........................................................................................................................ 1215
NEW--RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts ....................................................................... 1216
NEW--RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ................................................................. 1217
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1219
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1219
RESEARCH ECB Rate Decision .......................................................................................................................................................... 1221
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1224
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1225
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................. 1227
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ........................................................................... 1229
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1231
RESEARCH Emerging Markets Aggravates Festering Banking Problems .................................................................................... 1232
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ...................................................................... 1234
RESEARCH - EFSF Downgraded to AA+ ............................................................................................................................................... 1236
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1237
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece .............................................................. 1240
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1242
PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1242
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1245
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................. 1247
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1252
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1256
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All Rights Reserved
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1259

PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1260
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ........................................................................................ 1261
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1268
ITALY FALLS BACK INTO A TRIPLE-DIP RECESSION ................................................................................................................................. 1270
CHARTS OF NOTE ....................................................................................................................................................................................... 1270
NEW--CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low .................................................................................................... 1270
NEW--CHARTS - ITALY Italian Unemployment ..................................................................................................................................... 1271
NEW--CHARTS - ITALY Italian Core Inflation ........................................................................................................................................ 1271
NEW--CHARTS - ITALY Italian Industrial Porduction ............................................................................................................................ 1272
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1273
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1274
CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1274
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1275
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1276
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1277
RESEARCH OF NOTE .................................................................................................................................................................................. 1278
NEW--RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone .......................................................................... 1278
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1281
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1283
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1287
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1287
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................. 1288
ITALIAN ELECTION - Message Given By the People ............................................................................................................................ 1290
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1294
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!........................................................................... 1297
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................. 1297
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................. 1299
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................. 1303
FRANCE ECONOMIC MALAISE SPARKING POTENTIAL POLITICAL CRISIS ............................................................................................ 1305
CHARTS OF NOTE ....................................................................................................................................................................................... 1305
NEW--CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ................................................................................................ 1305
NEW--CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ............................................................ 1305
NEW--CHARTS FRANCE French Job Seekers .................................................................................................................................. 1306
NEW--CHARTS FRANCE Inflation Expectations ................................................................................................................................ 1306
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1308
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1308
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1309
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1310
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1310
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1311
CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1312
CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1313
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1314
CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1315
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1316
RESEARCH OF NOTE .................................................................................................................................................................................. 1317
NEW--RESEARCH Economic Malaise Sparks Political Crisis in France .............................................................................................. 1317
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1319
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1321
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1321
RESEARCH - Steady Breakdown Underway ......................................................................................................................................... 1324
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ................................................................................................... 1328
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1330
FRANCE - What You Need to Know ......................................................................................................................................................... 1330
FRANCE - Key Indicators .......................................................................................................................................................................... 1331
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1334
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1337
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1338
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1340
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1341
FRANCE - Uncompetitive .......................................................................................................................................................................... 1342
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1344
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1346
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1348
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1349
GERMANY GERMANY IN RECESSION.......................................................................................................................................................... 1351
CHARTS OF NOTE ....................................................................................................................................................................................... 1351
NEW--CHARTS - GERMANY - 1.179% 30 Year Bond Yield ................................................................................................................... 1351
NEW--CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ................................................................................................. 1352
NEW--CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................... 1352
NEW--CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close ................................................................... 1353
NEW--CHARTS - GERMANY 10 Y European Yields ............................................................................................................................. 1354
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May 2015 Edition


All Rights Reserved
NEW--CHARTS - GERMANY German Unemployment ......................................................................................................................... 1355

NEW--CHARTS - GERMANY German Core Inflation ............................................................................................................................ 1355
NEW--CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................... 1355
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1356
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1356
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1357
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1357
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1358
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1359
RESEARCH OF NOTE .................................................................................................................................................................................. 1361
NEW--RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian ............................................... 1361
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1364
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1366
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1367
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1371
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1372
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1377
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1378
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1380
UK EXPECT RATE INCREASE BY SPRING 2015.......................................................................................................................................... 1382
CHARTS OF NOTE ....................................................................................................................................................................................... 1382
NEW--CHARTS - UK - Deficit One of Worst of Developed Economies .................................................................................................... 1382
NEW--CHARTS - UK Private Sector Surplus Eliminated ....................................................................................................................... 1382
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1383
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1384
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1384
CHARTS - UK CPI Below Target for 7th Month ...................................................................................................................................... 1385
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1386
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1386
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1387
CHARTS - UK GDP ................................................................................................................................................................................ 1388
CHARTS - UK Population Growth .......................................................................................................................................................... 1388
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1389
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1390
CHARTS - UK - Lending ............................................................................................................................................................................ 1391
CHARTS - UK - Unemployment ................................................................................................................................................................ 1391
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1392
CHARTS - UK - GDP ................................................................................................................................................................................. 1392
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1393
RESEARCH OF NOTE .................................................................................................................................................................................. 1394
NEW--RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November .................................................. 1394
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1396
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1399
UK - What you need to Know..................................................................................................................................................................... 1400
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1401
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1402
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1403
UK - Doomsday Debt Machine .................................................................................................................................................................. 1404
UK - QE Extension Coming ....................................................................................................................................................................... 1407
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1409
UK - Technically in a Depression ........................................................................................................................................................... 1410
IBERIAN PENINSULA LOW RATES MASK SERIOUS PERCULATING PROBLEMS ................................................................................... 1413
CHARTS OF NOTE ............................................................................................................................................................................................. 1413
NEW--CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ........................................................................................................ 1413
NEW--CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low .................................................................................................. 1413
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1414
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1415
RESEARCH OF NOTE .................................................................................................................................................................................. 1416
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1416
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1418
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1419
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1421
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1422
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1423
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1424
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1429
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1431
IBERIA - Bank Deposits Were Leaving, Now they Are Fleeing ................................................................................................................ 1432
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1433
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IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1434
ASIA FALLING CURRENCIES, RISING DEBT & SLOWING GROWTH.............................................................................. 1443

CHINA THE NEXT PEG TO FALL ............................................................................................................................................................... 1443
CHARTS OF NOTE ....................................................................................................................................................................................... 1456
NEW--CHARTS - CHINA Falling Chinese Industrial Profits .................................................................................................................... 1456
NEW--CHARTS - CHINA Something Up (or rather down) with Chinese Currency? .............................................................................. 1456
NEW--CHARTS - CHINA Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks .................................................. 1457
NEW--CHARTS - CHINA Corporate Bond Yields ................................................................................................................................... 1457
NEW--CHARTS - CHINA New Retail Stock Trading Accounts ............................................................................................................... 1458
NEW--CHARTS - CHINA Credit Growth 30% Above Trend for Private Sector Debt to GDP ................................................................ 1458
NEW--CHARTS - CHINA Falling Foreign Currency Reserves ................................................................................................................ 1459
NEW--CHARTS - CHINA 2 Year Yield Goes Negative .......................................................................................................................... 1460
th
NEW--CHARTS - CHINA China Used More Cement in Last 3 Years than US in Entire 20 Century .................................................. 1461
NEW--CHARTS - CHINA China Real Activity Indicators Steel, Cement & Electricity ........................................................................ 1461
NEW--CHARTS - CHINA Chinese Coal Consumption Falls .................................................................................................................. 1462
NEW--CHARTS - CHINA Chinese Y-o-Y Outstanding Credit & M2 ...................................................................................................... 1462
NEW--CHARTS - CHINA Chinas Bank Reserve Requirement Ratio ................................................................................................... 1463
NEW--CHARTS - CHINA New Stock Market Trading Accounts ............................................................................................................ 1464
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1465
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1465
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1466
CHARTS Industrial Output A Concern.................................................................................................................................................... 1466
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1467
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1468
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1468
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1470
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1470
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1470
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1471
CHARTS China Equity Flows ................................................................................................................................................................. 1472
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1472
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1473
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1473
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1474
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1475
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1476
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1477
CHARTS Shadow Banking System ........................................................................................................................................................ 1477
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1479
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1480
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1481
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1481
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1483
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1484
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1485
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1486
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1487
RESEARCH WE FOLLOWED THIS TRI-SEMSTER .................................................................................................................................... 1488
RESEARCH OF NOTE .................................................................................................................................................................................. 1489
NEW--CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ...................................................................................... 1489
NEW--CHINA Yuan Diverging From Its Trading Basket .................................................................................................................... 1495
NEW--CHINA Signs of Madness in the Global Financial System .................................................................................................... 1497
NEW--CHINA Reverses Direction and Begins Easing....................................................................................................................... 1498
NEW--CHINA China's Economic Reporting Possibly a Deception .................................................................................................. 1499
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1501
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1504
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1506
CHINA - China's Rehypothecation............................................................................................................................................................. 1509
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1511
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 1513
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 1516
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 1517
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 1518
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 1521
CHINA - Falling Yuan ................................................................................................................................................................................. 1523
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 1525
CHINA SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ....................................................................................... 1528
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 1530
CHINA - Has an Inflation Problem ............................................................................................................................................................. 1531
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 1532
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 1535
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 1540
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 1542
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 1547
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May 2015 Edition


All Rights Reserved
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 1550
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 1553
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1557
RESEARCH - China's Stunning $15 Trillion in New Liquidity ............................................................................................................. 1557
RESEARCH - Dr. Copper Ready to Top and Head Lower .................................................................................................................... 1560
RESEARCH - China's $1 Trillion GDP Lie .............................................................................................................................................. 1561
RESEARCH - What the Deceleration Could Portend ............................................................................................................................ 1563
RESEARCH - Credit Bubble: 240% Of GDP And Soaring .................................................................................................................... 1566
RESEARCH - Forget Taper risk: China is a bigger threat ....................................................................................................................... 1570
RESEARCH - Sustainability Requires a Slowdown in Investment ............................................................................................................ 1572
RESEARCH - China Likely to Continue Interest Rate Liberalization ........................................................................................................ 1574
RESEARCH - China #1 in Broad Array of Key Areas ............................................................................................................................... 1577
RESEARCH - Global Business Confidence Sliding Rapidly ............................................................................................................... 1578
RESEARCH - Investors Worried and Losing Confidence .................................................................................................................... 1581
RESEARCH - China Stampeding into Gold ........................................................................................................................................... 1582
RESEARCH - China "Will introduce some measures to arrest the slowdown of growth in the next couple of quarters" ........... 1584
RESEARCH - Slower Growth In the Cards & Endorsed by New Chinese Leadership ..................................................................... 1585
RESEARCH - Is a PBOC Controlled Speculation Bust Possible or Will It Get Out of Control ........................................................ 1587
RESEARCH - PBOC Liquidity Squeeze ................................................................................................................................................. 1588
RESEARCH - Chinese Housing Bubble Restricting PBOC Actions .................................................................................................... 1590
RESEARCH - PBOC Squeezing Banks towards Reducing Speculative Risk .................................................................................... 1592
RESEARCH - Chinese Overnight Repo at 25% ...................................................................................................................................... 1594
RESEARCH - Red Flags ........................................................................................................................................................................... 1595
RESEARCH - Credit Fueled Growth in China ....................................................................................................................................... 1597
RESEARCH - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ................................ 1602
RESEARCH - A Potentially De-Stabilizing Cash Crunch ..................................................................................................................... 1604
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 1605
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 1607
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 1610
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 1613
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 1617
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 1618
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 1619
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 1621
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 1623
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 1625
CHINA - Withdraws Liquidity .................................................................................................................................................................. 1626
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 1628
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 1638
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 1641
CHINA - PMI Improvement....................................................................................................................................................................... 1642
CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 1645
CHINA - An Implicit Social Contract .......................................................................................................................................................... 1647
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 1649
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 1650
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 1651
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 1652
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 1654
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 1655
CHINA - Credit to GDP ............................................................................................................................................................................. 1657
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 1658
CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 1660
JAPAN: JAPAN GOES ALL IN ............................................................................................................................................................................ 1665
RESEARCH WE FOLLOWED....................................................................................................................................................................... 1666
CHARTS OF NOTE ....................................................................................................................................................................................... 1672
NEW--CHARTS - JAPAN 1.174% 30 Year Bond Yield ......................................................................................................................... 1672
NEW--CHARTS - JAPAN 2 Year Yield Goes Negative.......................................................................................................................... 1672
NEW--CHARTS - JAPAN Savings Rate Goes Negative ........................................................................................................................ 1673
NEW--CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages ................................................................... 1673
NEW--CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ...................................................................................... 1674
NEW--CHARTS - JAPAN Shifting Demographics - Birth versus Deaths ............................................................................................... 1674
NEW--CHARTS JAPAN Nikkei Strength is all Relative .................................................................................................................... 1675
NEW--CHARTS - JAPAN Trade Balance ............................................................................................................................................... 1675
NEW--CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) .......................................................................................... 1676
NEW--CHARTS - JAPAN BOJ Reserve Balances ................................................................................................................................. 1677
NEW--CHARTS - JAPAN Macro Crisis Zones ....................................................................................................................................... 1678
NEW--CHARTS - JAPAN Demographics ............................................................................................................................................... 1678
NEW--CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ..................................................................................................... 1679
NEW--CHARTS - JAPAN Japans Economy versus the Rest of the World ........................................................................................... 1679
NEW--CHARTS - JAPAN Japans Decline in Real Interest Rates ......................................................................................................... 1680
NEW--CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ................................................................................................................ 1681
NEW--CHARTS - JAPAN Bankruptcies Due to Depreciating Yen ......................................................................................................... 1682
NEW--CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ........................................................................... 1682
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 1684
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 1684
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 1685
16
May 2015 Edition


All Rights Reserved
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 1685

CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 1686
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 1687
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 1687
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 1688
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 1688
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 1689
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 1690
CHARTS - GDP Trend ............................................................................................................................................................................... 1690
CHARTS - CPI Trend ................................................................................................................................................................................. 1691
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 1691
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 1692
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 1693
RESEARCH OF NOTE .................................................................................................................................................................................. 1694
NEW--JAPAN The BOJ Ups The Ante ................................................................................................................................................. 1694
NEW--JAPAN Is Japan Kaput? ............................................................................................................................................................. 1695
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 1698
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1700
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 1703
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 1705
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1706
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 1708
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 1710
JAPAN - What the Japanese been Buying ............................................................................................................................................. 1711
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 1713
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 1716
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 1717
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 1718
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 1720
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 1721
JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 1724
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 1726
JAPAN - What You Need to Know............................................................................................................................................................. 1728
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 1731
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 1731
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 1735
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 1736
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 1737
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 1738
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 1742
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 1744
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 1747
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 1748
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 1750
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 1751
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 1752
JAPAN - Yen Devaluation ........................................................................................................................................................................ 1753
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 1754
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 1756
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 1758
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 1758
JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 1760
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 1763
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 1765
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 1768
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 1770
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 1772
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 1778
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 1781
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 1785
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 1791
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 1795
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 1796
JAPAN - PMI Breakdown ........................................................................................................................................................................... 1798
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 1800
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 1801
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 1804
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 1804
EMERGING MARKETS RUSSIA UNDER FINANCIAL SIEGE ..................................................................................................... 1806

BRICS ............................................................................................................................................................................................................ 1812
NEW--BRICS Population, GDP,GDP per Capita ................................................................................................................................. 1812
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 1813
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 1813
BRICS Inflation Problems Abound ...................................................................................................................................................... 1815
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May 2015 Edition


All Rights Reserved
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 1816

BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 1817
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 1819
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 1820
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 1823
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 1825
BRAZIL........................................................................................................................................................................................................... 1827
NEW-BRAZIL - Brazils Economy Just Imploded! ..................................................................................................................................... 1827
NEW-BRAZIL - Brazils economy slips into recession .............................................................................................................................. 1829
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 1832
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 1833
RUSSIA - Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................. 1836
NEW - RUSSIA 2015 Russia Consensus GDP Forecast ...................................................................................................................... 1837
NEW - RUSSIA Foreign Exchange Reserves ........................................................................................................................................ 1837
NEW - RUSSIA Exchange and Interest Rate ......................................................................................................................................... 1838
NEW - RUSSIA - Real GDP and Car Sales .............................................................................................................................................. 1838
NEW - RUSSIA Inflation Rate ................................................................................................................................................................. 1839
NEW - RUSSIA GDP Forecast versus USDRUB ................................................................................................................................... 1839
NEW - RUSSIA WTI Crude versus Ruble .............................................................................................................................................. 1840
NEW - RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ............................................................................ 1840
NEW - RUSSIA Russian CDS Spreads .................................................................................................................................................. 1841
NEW - RUSSIA Winners and Losers of Oil Price Plunge....................................................................................................................... 1842
NEW - RUSSIA CDS Spreads Has Widened 250bp Since Mid-June .................................................................................................... 1843
NEW - RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks ......................................................................................... 1844
NEW - RUSSIA Crude Oil in Rubles....................................................................................................................................................... 1845
NEW - RUSSIA Russian Reserves versus USDRUB ............................................................................................................................ 1845
NEW - RUSSIA Falling Oil Price Weighs on Economy and the Ruble .................................................................................................. 1846
NEW - RUSSIA Russian Ruble versus Reserves .................................................................................................................................. 1847
NEW - RUSSIA Russian Breakeven Oil Prices versus Liquids Production ........................................................................................... 1848
NEW - RUSSIA Russian Refining & Upstream Economics-1 ................................................................................................................ 1849
NEW - RUSSIA Russian Refining & Upstream Economics-2 ................................................................................................................ 1849
NEW - RUSSIA Russian Holdings of US Treasuries ............................................................................................................................. 1850
NEW - RUSSIA Russian 9 Year Gold Buying Spree .............................................................................................................................. 1851
NEW - RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ............................................................................................ 1851
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 1852
INDIA.............................................................................................................................................................................................................. 1852
NEW-INDIA CAPEX Bottom Out? .......................................................................................................................................................... 1852
INDIA Real GDP and Car Sales ............................................................................................................................................................. 1853
INDIA Inflation ......................................................................................................................................................................................... 1854
INDIA - Inflation .......................................................................................................................................................................................... 1855
INDIA - WPI ................................................................................................................................................................................................ 1856
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 1857
INDIA - Panic in India ................................................................................................................................................................................. 1858
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 1860
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 1861
SOUTH AFRICA ............................................................................................................................................................................................ 1863
EMERGING MARKETS ....................................................................................................................................................................................... 1865
CHARTS OF NOTE ....................................................................................................................................................................................... 1865
NEW--CHARTS Falling EM Currencies .................................................................................................................................................. 1865
CHARTS Post-China 16 ......................................................................................................................................................................... 1866
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 1867
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 1867
CHARTS - Reserves versus World ............................................................................................................................................................ 1867
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 1869
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 1870
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 1871
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 1872
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 1873
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 1874
RESEARCH OF NOTE .................................................................................................................................................................................. 1875
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 1875
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1876
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1877
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 1882
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 1882
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 1884
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 1886
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 1892
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 1893
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 1895
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 1897
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1899
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 1904
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 1906
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 1907
18
May 2015 Edition


All Rights Reserved
ASEAN ........................................................................................................................................................................................................... 1910

NEW--ASEAN: A New Common Market.................................................................................................................................................... 1910
ASIA ............................................................................................................................................................................................................... 1914
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 1914
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 1914
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 1916
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 1916
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 1918
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 1919
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 1919
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 1920
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 1921
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 1921
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 1922
ASIA - Regional Risk-Reward .................................................................................................................................................................... 1924
ASIA - Credit Contraction Problems ...................................................................................................................................................... 1925
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 1927
ASIA - Synchronized Markets .................................................................................................................................................................... 1929
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 1931
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 1932
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 1936
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 1937
ASIA - Demographic Headwinds ............................................................................................................................................................ 1940
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 1941
LATIN AMERICA ........................................................................................................................................................................................... 1943
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 1943
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 1943
MIDDLE EAST ............................................................................................................................................................................................... 1945
TURKEY ..................................................................................................................................................................................................... 1945
US ECONOMY ..................................................................................................................................... 1946

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 1948
MACRO - US Macro Data .................................................................................................................................................................................... 1948
CHARTS OF NOTE ....................................................................................................................................................................................... 1948
NEW-MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ................................................................................... 1948
NEW-MACRO Goldman Sachs Global Leading Indicator Has Plummeted ........................................................................................... 1949
NEW-MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ............................................... 1949
NEW-MACRO 2015 World GDP Growth versus World Stocks .............................................................................................................. 1950
NEW-MACRO World GDP Annual Estimates versus World Stocks ...................................................................................................... 1950
NEW-MACRO World Economies Cutting Rates to Avoid Economic Contraction .................................................................................. 1951
NEW-MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ............................................................ 1951
NEW-MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ........................................................... 1952
NEW-MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ......................................................... 1952
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 1953
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 1953
MACRO US Macro Surprise Index ......................................................................................................................................................... 1953
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 1954
MACRO World Trade Volumes ............................................................................................................................................................... 1956
MACRO Marginal Utility .......................................................................................................................................................................... 1956
MACRO Global Manufacturing PMI ........................................................................................................................................................ 1957
MACRO Credit Markets Diverging .......................................................................................................................................................... 1957
MACRO US Macro Complacency ........................................................................................................................................................... 1958
MACRO Macro Implied Vols ................................................................................................................................................................... 1958
MACRO Markets Stretched .................................................................................................................................................................... 1959
RESEARCH OF NOTE ........................................................................................................................................................................................ 1960
NEW-MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population............................................................ 1960
MACRO A World Recession? ..................................................................................................................................................................... 1962
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 1963
MACRO The Ambivalent Superpower ..................................................................................................................................................... 1965
MACRO Things Worse than Slow Growth ................................................................................................................................................. 1967
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 1970
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 1972
MACRO - Output Gap .................................................................................................................................................................................... 1979
US INVESTMENT CYCLE ...................................................................................................................................................... 1988

CHARTS OF NOTE ............................................................................................................................................................................................. 1988
NEW-CHART Current Economic Cycle Is Getting Old In The Tooth ...................................................................................................... 1988
NEW-CHART US Recession Cycle Suggests Cycle May Be Close To Ending ......................................................................................... 1989
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ................................................................................................... 1989
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ................................................................................................... 1990
CHART - Economy in Decline from Consuming More than it Produces ....................................................................................................... 1991
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 1991
ECONOMIC INDICATORS .................................................................................................................................................................................. 1993
19
May 2015 Edition


All Rights Reserved
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 1993

RESEARCH - The US Economy Continues to Tank under Obama.......................................................................................................... 1993
REFERENCE CHARTS ............................................................................................................................................................................. 1995
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2000
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2000
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2002
NEW-SOME HIGHLIGHTS............................................................................................................................................................................ 2002
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2005
NEW-CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed ................................ 2005
NEW-CHARTS Non-Farm Payrolls Monthly and Yearly Change ....................................................................................................... 2005
NEW-CHARTS Civilian Unemployment Rate ......................................................................................................................................... 2005
NEW-CHARTS JOLTS-Total Job Openings ........................................................................................................................................... 2006
NEW-CHARTS New Jobless Claims w/ 4 Week Moving Average......................................................................................................... 2006
NEW-CHARTS Non-Farm Payrolls ........................................................................................................................................................ 2007
CHARTS US Monthly Job Growth .......................................................................................................................................................... 2008
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 2008
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 2009
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 2009
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 2009
CHARTS - Underemployment Gap ............................................................................................................................................................ 2011
CHARTS - Participation Rate..................................................................................................................................................................... 2012
CHARTS - Part Time Employment ............................................................................................................................................................ 2012
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2013
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2014
RESEARCH OF NOTE .................................................................................................................................................................................. 2019
NEW-RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie"................................................................................ 2019
NEW-RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ......................................................................................................... 2020
NEW-RESEARCH - American Express to cut more than 4,000 jobs........................................................................................................ 2021
RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 2022
RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 2025
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 2028
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 2031
SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 2032
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2038
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 2038
CHARTS & TABLES ...................................................................................................................................................................................... 2039
NEW-CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ........................................................................................... 2039
NEW-CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................... 2040
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 2041
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 2041
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 2042
CHARTS - Orange Book ............................................................................................................................................................................ 2042
RESEARCH OF NOTE .................................................................................................................................................................................. 2043
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 2043
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 2044
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2046
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2046
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2051
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2051
NEW-American Association of Independent Investors ................................................................................................................................. 2052
NEW-Investors Intelligence ........................................................................................................................................................................... 2052
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2053
NEW-Small Business Optimism .................................................................................................................................................................... 2055
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2057
NEW-Margin Levels ....................................................................................................................................................................................... 2058
NEW-Real Margin Debt as % of GDP ........................................................................................................................................................... 2064
NEW-Margin Debt versus S&P 500............................................................................................................................................................... 2064
NEW-Mutual Fund Cash Levels v S&P 500 .................................................................................................................................................. 2065
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2067
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2067
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2068
NEW-TRIN ..................................................................................................................................................................................................... 2069
NEW-McClellan Oscillator ............................................................................................................................................................................. 2070
CHARTS OF NOTE ............................................................................................................................................................................................. 2071
NEW-CHARTS Asset Allocation Global Equities .................................................................................................................................... 2071
NEW-CHARTS Asset Allocation Global Bonds ....................................................................................................................................... 2071
NEW-CHARTS Active versus Passive Funds Allocation ........................................................................................................................... 2072
NEW-CHARTS Investors Intelligence Survey of % Bears ......................................................................................................................... 2072
NEW-CHARTS Sentiment at Post 2008 Crisis Highs ................................................................................................................................ 2074
NEW-CHARTS CNBC Viewership Steadily Falling .................................................................................................................................... 2075
NEW-CHARTS Investor Allocation Trends for Stocks, Bonds and Cash .................................................................................................. 2076
NEW-CHARTS Uptick in Feds Financial Stress Index Composite ........................................................................................................... 2077
CHARTS Fear Barometer Diverges with VIX, CDS IG Index ................................................................................................................. 2078
20
May 2015 Edition


All Rights Reserved
CHARTS Extreme Complacency Seen Near End of Cycles .................................................................................................................. 2078

CHARTS Complacency Seen In PE/VIX ................................................................................................................................................. 2079
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern ................................................................................................. 2079
CHARTS Smart Money Flows ................................................................................................................................................................ 2081
CHARTS Fed Assets versus Bullish Sentiment ..................................................................................................................................... 2081
CHARTS Macro Support Has Technically Broken Down ....................................................................................................................... 2082
CHARTS US Surprise Index Setting Up for Downturn ........................................................................................................................... 2082
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ......................................... 2083
RESEARCH OF NOTE ........................................................................................................................................................................................ 2084
NEW-SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years ......................................................... 2084
NEW-SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. .............................................................................................................. 2085
NEW-SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent.................................................................................... 2086
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ............................................................................................ 2091
SENTIMENT: Elliott Wave's View from the Top ............................................................................................................................................ 2094
SITUATIONAL SUMMARY & ANALYSIS .................................................................................................................................................. 2098
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2102
LATEST ..................................................................................................................................................................................................... 2102
NEW-CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 ........................................................................................ 2106
NEW-CHARTS Retails Sales Mo-o-Mo Drops ....................................................................................................................................... 2106
NEW-CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .................................................................... 2107
NEW-CHARTS What Americans Spent Their "Gas Savings" On .......................................................................................................... 2107
NEW-CHARTS Retail Sales-Previous Month Comparisons ................................................................................................................... 2109
NEW-CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas .................................................................................................. 2110
NEW-CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ...................................................................................................... 2110
NEW-CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .......................................................................................... 2111
NEW-CHARTS Total Household Debt Added Since the Great Financial Crisis .................................................................................... 2111
NEW-CHARTS Total Household Debt Added in Q4 2014 ..................................................................................................................... 2112
NEW-CHARTS Real Personal Consumption ......................................................................................................................................... 2112
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 2113
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 2114
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 2115
CHARTS Retail Sales ............................................................................................................................................................................. 2115
CHARTS Retail Sales - Details ............................................................................................................................................................... 2117
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 2118
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 2118
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 2119
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 2119
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 2120
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 2122
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 2123
CHARTS - Core Retail Growth .................................................................................................................................................................. 2124
RESEARCH OF NOTE .................................................................................................................................................................................. 2125
NEW-RESEARCH - Headwinds for US Consumers & Home Buyers ....................................................................................................... 2125
NEW-RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting ................................................................. 2126
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2127
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ........................................................................... 2129
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 2131
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ................................................................................... 2134
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................................... 2135
RESEARCH - A Sequential Decline in Wages .......................................................................................................................................... 2136
RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ..................................................................................... 2137
RESEARCH - Consumers Using Savings to Maintain Life Style .............................................................................................................. 2137
RESEARCH - The Destruction of America's Middle Class ....................................................................................................................... 2140
RESEARCH - Dramatic Slowing in Restaurant Business ......................................................................................................................... 2140
RESEARCH - Signs of Serious Troubles .................................................................................................................................................. 2141
RESEARCH - Falling Real Disposable Income means Falling Consumption ........................................................................................... 2144
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2151
LATEST ..................................................................................................................................................................................................... 2152
xNEW-CHARTS Ratio of Coincident-to-Lagging Conference Board Indices ........................................................................................ 2155
NEW-CHARTS GDP Q4 2014 Revised Components Table .................................................................................................................. 2156
NEW-CHARTS Quarterly Change in % Contributions to GDP .............................................................................................................. 2156
NEW-CHARTS Three Reasons CAPEX is Faltering .............................................................................................................................. 2156
NEW-CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ....................................................................................... 2157
NEW-CHARTS Philly Fed Rolling Over .................................................................................................................................................. 2158
NEW-CHARTS US Profits & Sales Have Stalled ................................................................................................................................... 2158
NEW-CHARTS Real GDP versus CAPEX ............................................................................................................................................. 2159
NEW-CHARTS Change In Inventories Inflated from Lack of Demand ............................................................................................... 2160
NEW-CHARTS US GDP Revision for Q4-2014 ..................................................................................................................................... 2160
NEW-CHARTS Quarterly GDP by Component Breakdown ................................................................................................................... 2161
CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 2162
21
May 2015 Edition


All Rights Reserved
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 2162

CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 2164
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 2165
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 2165
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 2166
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 2167
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 2167
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 2168
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 2169
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 2169
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 2170
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 2171
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 2171
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 2172
CHARTS - Manufacturing .......................................................................................................................................................................... 2173
CHARTS - Exports ..................................................................................................................................................................................... 2173
CHARTS - Durable Goods ......................................................................................................................................................................... 2174
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 2174
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 2175
RESEARCH OF NOTE .................................................................................................................................................................................. 2176
NEW-RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ......................................................................... 2176
NEW-RESEARCH - The U.S. Economy is Dead ...................................................................................................................................... 2177
NEW-RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ............................................................................... 2180
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 2182
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 2187
RESEARCH - Economic Recoveries Don't Look Like This! ...................................................................................................................... 2187
RESEARCH - 2nd Worst Decade in Over 220 Years (And Getting Worse) ............................................................................................. 2188
RESEARCH - US Economy is being fundamentally transformed ............................................................................................................. 2190
RESEARCH - Shrinking CAPEX, Expanding Buybacks and Dividends ................................................................................................... 2193
REFERENCE - Prior Posts ............................................................................................................................................................................ 2197
RESEARCH - US Economic Recovery Has Peaked ................................................................................................................................. 2197
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2206
US PUBLIC POLICY STATE OF THE UNION DIRECTION & PRIORITES .......................................................................... 2213
NEW-LATEST ............................................................................................................................................................................................ 2214
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 2214
CORPORATE INVERSIONS ..................................................................................................................................................................... 2215
FERGUSON ............................................................................................................................................................................................... 2215
MILITARIZATION OF POLICE .................................................................................................................................................................. 2216
POLLS ........................................................................................................................................................................................................ 2217
INCARCERATION ..................................................................................................................................................................................... 2217
FLAWED TAX POLICY .............................................................................................................................................................................. 2218
MINIMUM WAGE ....................................................................................................................................................................................... 2218
SOCIAL CANCERS ................................................................................................................................................................................... 2218
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 2218
INEQUALITY .............................................................................................................................................................................................. 2218
CREEPING SOCIALISM ............................................................................................................................................................................ 2218
POLICIAL PARALYSIS .............................................................................................................................................................................. 2219
STATE OF THE UNION ............................................................................................................................................................................. 2219
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 2219
OBAMACARE ............................................................................................................................................................................................ 2220
GENERAL PUBLIC POLICY...................................................................................................................................................................... 2222
STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 2223
NEW-STATE OF THE UNION Remarks by the President in State of the Union Address January 20th, 2015 .................................. 2223
NEW-STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon .......................................................... 2233
NEW-CHARTS The Cost of Healthcare By Country Spending Per Person........................................................................................ 2236
NEW-CHARTS The Bankrupt US Healthcare System......................................................................................................................... 2236
NEW-CHARTS Rise in Number of Homeless Children .......................................................................................................................... 2237
NEW-CHARTS One-Third of All Homeless Live in These 10 Cities ...................................................................................................... 2238
NEW-CHARTS Trends in American Public Schooling Since 1970 ........................................................................................................ 2239
NEW-CHARTS Size of US Army Since 1946 ......................................................................................................................................... 2239
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2240
CHARTS Changing Presidential Stance ................................................................................................................................................ 2241
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2241
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2242
RESEARCH OF NOTE .................................................................................................................................................................................. 2243
NEW-POLICY - A 'Shadow" State of the Union ........................................................................................................................................ 2243
NEW-POLICY - Banks Remove the "Heart" of Dodd-Frank ...................................................................................................................... 2246
NEW-POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ...................................................................... 2250
NEW-POLICY - The Death Cross of American Business ......................................................................................................................... 2253
POLICY - The Death Cross of American Business ................................................................................................................................... 2253
POLICY - The State of the Union I have a Dream! .............................................................................................................................. 2256
22
May 2015 Edition


All Rights Reserved
POLICY - A self-destructive path toward oblivion...................................................................................................................................... 2260

POLICY - Indictment of US Public, Fiscal & Monetary Policy ................................................................................................................... 2265
POLICY - The Crisis of Trust Continues to Worsen .................................................................................................................................. 2278
POLICY - The Stunning Truth about Inequality In America....................................................................................................................... 2279
POLICY - Pointing US towards Government Dependence ....................................................................................................................... 2280
POLICY - Yet another Game of Deception ................................................................................................................................................ 2284
POLICY - Obamacare A Flawed Public Policy Implementation ................................................................................................................ 2287
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 2290
Manipulating Bad Financial Data ........................................................................................................................................................... 2290
Manipulating Bad Nuclear Facts ............................................................................................................................................................ 2291
Manipulating Oil Spill Info ....................................................................................................................................................................... 2292
Manipulating Data on Other Environmental Issues ............................................................................................................................... 2292
Manipulating Food Safety Data .............................................................................................................................................................. 2293
Manipulating Health Safety Data ........................................................................................................................................................... 2293
Manipulating Metrics for War ................................................................................................................................................................. 2293
The Core Problem .................................................................................................................................................................................. 2293
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ................................................................................................... 2294
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed........................................................................... 2297
POLICY - "What is good for GM is good for America" is no longer correct .............................................................................................. 2299
POLICY - Where is the Logic In US Public Policy ..................................................................................................................................... 2300
POLICY - What is the Real Driving Force Behind the New Immigration Law? ......................................................................................... 2303
POLICY - Crony Capitalism and How America Lost its Way! ................................................................................................................... 2306
MONETARY POLICY TAPER IGNITES GLOBAL DOLLAR STRENGTH ........................................................................... 2315

NEW-LATEST ................................................................................................................................................................................................ 2315
TAPER IMPLEMENTATION & 2ND HALF LIQUDITY SQUEEZE ................................................................................................................. 2316
THE BERNANKE YELLEN/FISHER TRANSITION ................................................................................................................................... 2318
FED POST DECEMBER TAPER ............................................................................................................................................................... 2320
FED PRE-DECEMBER TAPER ................................................................................................................................................................. 2321
TAPER ........................................................................................................................................................................................................... 2324
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2327
NEW-CHARTS: Fed is Allowing Adjusted Monetary Base to Fall ................................................................................................................ 2327
NEW-CHARTS: Federal Reserve Monetary Base Since 1918 ..................................................................................................................... 2328
NEW-CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ............................................................................................... 2328
NEW-CHARTS: Fed Balance Sheet & Policy Rate Target ........................................................................................................................... 2329
NEW-CHARTS: Cash Balances versus Total Reserve Balances................................................................................................................. 2329
NEW-CHARTS: Fed Balance Sheet and QE Versions ................................................................................................................................. 2330
NEW-CHARTS: Major US Financial Institutional Leverage Ratios ............................................................................................................... 2331
NEW-CHARTS: Fed Balance Sheet Composition ........................................................................................................................................ 2332
NEW-CHARTS: Cash Bank Holdings............................................................................................................................................................ 2333
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2334
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2334
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2335
CHARTS: Repo Volumes .............................................................................................................................................................................. 2335
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2336
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2336
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2337
CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2338
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2339
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2339
CHARTS: Net National Savings Rate............................................................................................................................................................ 2340
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2340
CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2341
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2342
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2343
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2343
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2344
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2346
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2346
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2347
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2348
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2349
NEW- RATES: Is There a Zero Bound for US Rates? .................................................................................................................................. 2350
RATES: Historical Policy Rates ..................................................................................................................................................................... 2351
RATES: Debt ................................................................................................................................................................................................. 2352
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2352
RATES: Real Interest Rates .......................................................................................................................................................................... 2353
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2354
NEW-INFLATION: Market-Based Inflation Expectations on the Rebound ................................................................................................... 2355
NEW-INFLATION: US Inflation Education-Medical-Food-Housing versus CPI ......................................................................................... 2355
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2357
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2357
INFLATION: Cost of Eating ........................................................................................................................................................................... 2358
23
May 2015 Edition


All Rights Reserved
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 2359

th
INFLATION: July 4 Cost of Beef Burger ...................................................................................................................................................... 2360
th
INFLATION: Bloombergs July 4 Barbecue Index ....................................................................................................................................... 2360
INFLATION: Butter on a Roll ......................................................................................................................................................................... 2361
INFLATION: Back to School Shocker............................................................................................................................................................ 2362
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 2363
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 2364
INFLATION: Back to School Shocker............................................................................................................................................................ 2364
RESEARCH OF NOTE ........................................................................................................................................................................................ 2365
NEW-RESEARCH Global Currency Wars & Deflationary Pressures ........................................................................................................ 2365
NEW-RESEARCH Debt is a promise of something of value in the future ................................................................................................. 2370
NEW-RESEARCH Is NIRP Coming To America? ..................................................................................................................................... 2378
NEW-RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ............................................................................... 2381
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2388
REPO FAILS .................................................................................................................................................................................................. 2389
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 2390
FISCAL POLICY A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................. 2392
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 2392
20 U.S. companies that paid 0% in taxes ............................................................................................................................................................ 2392
FISCAL MATTERS ........................................................................................................................................................................................ 2394
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2396
NEW-CHARTS US Federal Government Debt to GDP ............................................................................................................................. 2396
NEW-CHARTS Mandatory versus Discretionary Spending ....................................................................................................................... 2396
NEW-CHARTS Drivers of US Debt ............................................................................................................................................................ 2397
NEW-CHARTS State & Local Tax Revenues ............................................................................................................................................ 2398
NEW-CHARTS Total Government Expenditures versus Real GDP .......................................................................................................... 2398
NEW-CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ............................................................................................ 2399
NEW-CHARTS US Debt About to Pass $18T and 102% of GDP ............................................................................................................. 2399
NEW-CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax .............................................................................................. 2400
NEW-CHARTS
Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ............................ 2401
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 2404
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 2404
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 2404
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 2405
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 2406
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 2406
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 2407
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 2407
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 2407
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 2408
CHARTS - US Trade Balance Improvement ................................................................................................................................................. 2408
CHARTS - Growth & Jobs ............................................................................................................................................................................. 2409
CHARTS - Taxes & Spending ....................................................................................................................................................................... 2413
CHARTS - Politics & Policy ........................................................................................................................................................................... 2416
CHARTS - The Stakes ................................................................................................................................................................................... 2417
CHARTS - Official Fiscal Deficit & Debt ........................................................................................................................................................ 2419
CHARTS - Payroll Tax Holiday ...................................................................................................................................................................... 2420
CHARTS - Tax Rate Comparisons ................................................................................................................................................................ 2421
CHARTS - Risk Perceptions .......................................................................................................................................................................... 2422
CHARTS - 2013 Quarterly Impact ................................................................................................................................................................. 2423
CHARTS - Budget Deficit .............................................................................................................................................................................. 2424
CHARTS - Sovereign Debt ............................................................................................................................................................................ 2426
CHARTS - State & Local Government Drag ................................................................................................................................................. 2427
CHARTS - Government Dependence ........................................................................................................................................................... 2430
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 2430
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 2434
BUDGET - What You Need to Know ................................................................................................................................................................... 2436
BUDGET - Political Budget Cowardice and Capitulation .............................................................................................................................. 2437
BUDGET - Political Budget Cowardice and Capitulation - 2 ......................................................................................................................... 2439
BUDGET - The Ultimate in Political Can-Kicking! ......................................................................................................................................... 2441
BUDGET - The Next Step in the Collapse Of The Dollar .............................................................................................................................. 2444
BUDGET - As Represented and Spun for the Public .................................................................................................................................... 2447
BUDGET - Implications .................................................................................................................................................................................. 2448
BUDGET - A Budget That Institutionalizes Big Government ........................................................................................................................ 2451
BUDGET - The Secrets in The Budget ......................................................................................................................................................... 2455
RESEARCH OF NOTE ........................................................................................................................................................................................ 2458
NEW-RESEARCH Private Pension Fund Levels Fall Behind .................................................................................................................... 2458
NEW-RESEARCH - State & Local Government Crisis ................................................................................................................................. 2462
NEW-RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed ................................................................................. 2468
NEW-RESEARCH - $89.5 trillion in liabilities ................................................................................................................................................ 2470
NEW-RESEARCH - The Federal Government is "cooking the books"! ........................................................................................................ 2474
24
May 2015 Edition


All Rights Reserved
NEW-RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ............................................................................................ 2478
NEW-RESEARCH NIA 2015 U.S. Debt Crisis Report ............................................................................................................................... 2481
RESEARCH - Budget Deficit Shrinking ......................................................................................................................................................... 2490
RESEARCH - Avoiding Taxes ....................................................................................................................................................................... 2492
RESEARCH - A Confluence Of Risky Economic Events .............................................................................................................................. 2493
RESEARCH - Everyone Hates Sequestration, But Few Can Agree On What to Cut .................................................................................. 2494
RESEARCH - $70T Off-Balance Sheet Federal Liabilities ........................................................................................................................... 2496
BUDGET SELLOUT ............................................................................................................................................................................................. 2499
BUDGET AGREEMENT ................................................................................................................................................................................ 2502
GOVERNMENT SHUTDOWN ....................................................................................................................................................................... 2503
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2504
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 2506

EMPLOYMENT .................................................................................................................................................................................................... 2510
LATEST ..................................................................................................................................................................................................... 2511
CHARTS & TABLES ...................................................................................................................................................................................... 2514
NEW-CHARTS Industries That Have Been Hiring ................................................................................................................................. 2514
NEW-CHARTS Top 5 Industry Cuts ....................................................................................................................................................... 2514
NEW-CHARTS Employees in the US by Industry .................................................................................................................................. 2514
NEW-CHARTS Workers Aged 55 and Over ........................................................................................................................................... 2515
NEW-CHARTS Percentage of Over 65 in Labor Force.......................................................................................................................... 2516
NEW-CHARTS Non Participation Has Stabilized? ................................................................................................................................. 2516
NEW-CHARTS Share of Population Retired .......................................................................................................................................... 2516
NEW-CHARTS Goods Producing Workers versus Government Payroll ............................................................................................. 2517
NEW-CHARTS Not in the Labor Force................................................................................................................................................... 2517
NEW-CHARTS Labor Force Participation versus Not in the Labor Force ............................................................................................. 2518
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 2520
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 2520
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 2521
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 2521
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 2522
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 2522
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 2523
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 2523
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 2524
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 2524
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 2525
CHARTS Labor Participation Rate ......................................................................................................................................................... 2525
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 2526
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 2526
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 2527
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 2528
CHARTS Labor Force Participation by Age ........................................................................................................................................... 2529
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 2530
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 2531
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 2531
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 2531
CHARTS - Part-Time Employment ............................................................................................................................................................ 2532
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 2532
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 2533
CHARTS - The Under-Employment Gap ................................................................................................................................................... 2533
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 2534
RESEARCH OF NOTE .................................................................................................................................................................................. 2535
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 2535
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 2538
EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 2540
EMPLOYMENT - With and Without Obama's Recovery Plan ................................................................................................................... 2542
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ................................................................ 2543
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30............................................................................. 2545
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting .................. 2548
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 2549
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ........................................................................................................... 2550
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs .............................................................................................. 2557
1- CAPITAL SPENDING ............................................................................................................................................................................ 2560
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................. 2563
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 2567
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 2578
LATEST ..................................................................................................................................................................................................... 2578
STUDENT LOANS ..................................................................................................................................................................................... 2578
CHARTS & TABLES ...................................................................................................................................................................................... 2581
NEW-CHARTS Real Median Household Income in the United States .................................................................................................. 2581
NEW-CHARTS Food Stamps Number of Participants ........................................................................................................................ 2581
25
May 2015 Edition


All Rights Reserved
NEW-CHARTS Food Stamps Number of Participants per Employed ................................................................................................ 2582

NEW-CHARTS Food Stamps Cost Per Participant per Month ........................................................................................................... 2582
NEW-CHARTS Food Stamps Annual Program Cost .......................................................................................................................... 2583
NEW-CHARTS Education, Medical, Food, Housing Costs versus CPI ................................................................................................. 2583
NEW-CHARTS Rising Sub-Prime .......................................................................................................................................................... 2584
NEW-CHARTS Early Delinquencies on US Car Loans Has Been Rising ............................................................................................. 2585
NEW-CHARTS Student Loan Default Rates By Graduating Year ......................................................................................................... 2586
NEW-CHARTS Student Loan Graduating Debt Levels Class 2009 ................................................................................................... 2586
NEW-CHARTS Student Loan Borrowing Trends ................................................................................................................................... 2588
NEW-CHARTS Increasing Government Entitlement Dependency ........................................................................................................ 2588
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 2589
CHARTS US Household Balance Sheet ................................................................................................................................................ 2589
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 2590
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 2591
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 2592
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 2592
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 2593
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 2594
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 2595
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 2595
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 2596
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 2596
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 2597
CHARTS This is a Structural .................................................................................................................................................................. 2597
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 2598
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 2599
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ....................................................................................................... 2599
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................... 2600
RESEARCH OF NOTE .................................................................................................................................................................................. 2601
NEW-RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery".............................................. 2601
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 2603
RESEARCH - The Facts are clear. The US Standard of Living is Falling ................................................................................................ 2604
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 2605
RESEARCH - Standards of Living and Artificial Expectations .................................................................................................................. 2607
RESEARCH - A Lack of Demand in US Economy .................................................................................................................................... 2609
RESEARCH - Full Time Jobs or Food Stamps & Disability? .................................................................................................................... 2610
STANDARD OF LIVING - Salary Compression ........................................................................................................................................ 2612
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level ........................................................................................... 2613
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ......................................................................... 2614
DISPOSABLE INCOME - Bad Even in Nominal Terms ............................................................................................................................ 2616
INFLATION - It's There but the Government Doesn't Account for it. ........................................................................................................ 2616
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 2618
LATEST ..................................................................................................................................................................................................... 2618
CHARTS & TABLES ...................................................................................................................................................................................... 2622
NEW-POLICY San Francisco Y/Y Price Increase Indicator ................................................................................................................... 2622
NEW-POLICY Meaningful Housing Recovery On Hold Until Spring...................................................................................................... 2623
NEW-POLICY Housing Starts ................................................................................................................................................................ 2623
NEW-POLICY Existing & New Home Sales ........................................................................................................................................... 2624
NEW-POLICY Home Ownership Rate versus Rental Rate ................................................................................................................... 2624
NEW-POLICY Mortgages Past Due and Foreclosure Starts .............................................................................................................. 2625
NEW-POLICY Mortgage Spreads .......................................................................................................................................................... 2625
NEW-POLICY Lumber Sales .................................................................................................................................................................. 2626
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 2628
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 2629
CHARTS National Home Price Medians & Indexes ............................................................................................................................... 2630
CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 2630
CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 2630
CHARTS New Home Prices ................................................................................................................................................................... 2631
CHARTS Housing Starts and Completions ............................................................................................................................................ 2632
CHARTS DJ Home Construction Index .................................................................................................................................................. 2632
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 2633
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 2634
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 2634
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 2635
CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 2635
CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 2636
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 2636
CHARTS - Double Top in Construction Index ........................................................................................................................................... 2636
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary......................................................................................................... 2637
CHARTS - Household Formations ............................................................................................................................................................. 2637
CHARTS Falling Originations ................................................................................................................................................................. 2638
CHARTS Falling Credit Scores ............................................................................................................................................................... 2639
CHARTS Falling Down payments ........................................................................................................................................................... 2639
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 2640
26
May 2015 Edition


All Rights Reserved
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 2640
CHARTS - Housing Starts ......................................................................................................................................................................... 2641
CHARTS - Composition of Housing Sales ................................................................................................................................................ 2641
CHARTS - New Home Sales ..................................................................................................................................................................... 2642
CHARTS - Existing Residential Supply ..................................................................................................................................................... 2642
CHARTS - Housing Starts ......................................................................................................................................................................... 2643
RESEARCH OF NOTE .................................................................................................................................................................................. 2645
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 2645
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 2646
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 2648
RESEARCH - Household Formation Drives Residential Real Estate ....................................................................................................... 2650
OVERVIEW ................................................................................................................................................................................................ 2653
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 2658
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 2661
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 2662
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 2664
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 2666
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ............................................................................... 2667
HOUSING: Soaring FHA Delinquencies .................................................................................................................................................... 2668
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 2673
LATEST ..................................................................................................................................................................................................... 2673
NEW-CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ........................................................................................................... 2677
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 2677
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 2678
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 2678
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 2679
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 2680
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 2680
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 2680
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 2681
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 2683
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 2684
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 2684
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 2685
RESEARCH OF NOTE .................................................................................................................................................................................. 2687
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 2687
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 2688
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 2688
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 2693
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ................................................................................... 2694
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level .................................................. 2696
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 2699
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 2702
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 2703
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 2704
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 2705
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 2706
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ...................................................................... 2707
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 2713
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 2714
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 2715
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 2718
COMMERCIAL REAL ESTATE - Rising Beef Costs ................................................................................................................................. 2719
COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 2723
COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete ................................................................................................. 2725
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 2727
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 2728
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 2729
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous .............................................. 2731
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ..................................... 2738
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode......................................................................................... 2740
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ................................................ 2741
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements ....................................................................................... 2743
COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ........................................................................ 2746
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ........................................................................... 2748
COMMERCIAL REAL ESTATE - Getting Worse Fast .............................................................................................................................. 2750
COMMERCIAL REAL ESTATE - Unfolding Implosion .............................................................................................................................. 2752
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ......................................................................................................................... 2753
COMMERCIAL REAL ESTATE - Financial Crisis II Coming..................................................................................................................... 2758
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ................................................................................................................ 2765
COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 2768
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 2770
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 2772
27
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COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 2777
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 2784
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 2785
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 2788
OVERVIEW ................................................................................................................................................................................................ 2792
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 2793
SPECIAL FOCUS .................................................................................................................................................................. 2799

NEW-YELLENS HUMPHREY HAWKINS TESTIMONY .................................................................................................................................... 2799
The Testimony was More about Whether to Audit the Fed or Not? .......................................................................................................... 2799
AUDIT THE FED .................................................................................................................................................................................................. 2799
CHARTS OF NOTE ....................................................................................................................................................................................... 2801
NEW-HUMPHREY-HAWKINS 5-to-10 Year Forward Inflation .............................................................................................................. 2801
NEW-HUMPHREY-HAWKINS Wealth to Income Ratio ......................................................................................................................... 2801
NEW-HUMPHREY-HAWKINS Consumer Sentiment and Income Expectations .................................................................................. 2802
NEW-HUMPHREY-HAWKINS Private Housing Starts and Permits ...................................................................................................... 2803
NEW-HUMPHREY-HAWKINS New and Existing Home Sales .............................................................................................................. 2803
NEW-HUMPHREY-HAWKINS Mortgage Interest Rates and Refinance Activity .................................................................................. 2804
NEW-HUMPHREY-HAWKINS US Trade and Current Account ............................................................................................................. 2805
NEW-HUMPHREY-HAWKINS US Net Financial Flows ......................................................................................................................... 2805
NEW-HUMPHREY-HAWKINS Change is Real Government Expenditures On Consumption and Investment .................................... 2806
NEW-HUMPHREY-HAWKINS Yield On Nominal US Treasury Securities ............................................................................................ 2806
NEW-HUMPHREY-HAWKINS Bank Holding Company Profitability...................................................................................................... 2807
RESEARCH OF NOTE .................................................................................................................................................................................. 2808
NEW-HUMPHREY-HAWKINS Prepared Testimony - Transcript .......................................................................................................... 2808
NEW-HUMPHREY-HAWKINS Congressional Monetary Report ........................................................................................................... 2811
NEW-HUMPHREY-HAWKINS Yellen Secures More Flexibility for 'Patient' Fed .................................................................................. 2812
NEW-HUMPHREY-HAWKINS Should the Fed be Independent? 100 Points In Examining the Feds Track Record .......................... 2814
NEW-HUMPHREY-HAWKINS Yellen Encourages More Levered Risk Taking in Markets ................................................................... 2823
SPECIAL SUPPLEMENT....................................................................................................................................................... 2830

FLOWS ................................................................................................................................................................................................................. 2830
NEW-LIQUIDITY FLOWS QE Is Debt Cancellation ................................................................................................................................... 2830
NEW-LIQUIDITY FLOWS The Most Profitable Organization In History .................................................................................................... 2831
NEW-LIQUIDITY FLOWS Now On The Endangered Species List: Bond Traders .................................................................................... 2832
NEW-LIQUIDITY FLOWS The ECBs Bazooka Should Send European Stocks Higher ........................................................................... 2835
NEW-LIQUIDITY FLOWS Downdraft Hits Emerging-Market Capital Flows - Bloomberg ......................................................................... 2836
NEW-LIQUIDITY FLOWS 2015 Could Be A Tough Year For Stocks ........................................................................................................ 2837
NEW-LIQUIDITY FLOWS EU Stocks negatively correlated to the ECB's own B/S .................................................................................. 2838
NEW-LIQUIDITY FLOWS Positive Thoughts on 2015............................................................................................................................... 2841
NEW-LIQUIDITY FLOWS Global Liquidity Is Drying Up ............................................................................................................................ 2844
NEW-LIQUIDITY FLOWS This Is What 6 Years Of Central Bank Liquidity Injections Look Like ............................................................. 2846
NEW-LIQUIDITY FLOWS Austrian Money Supply Growth Sending Early Warning ................................................................................. 2847
NEW-LIQUIDITY FLOWS Drying Up Quickly On Multiple Front................................................................................................................ 2852
NEW-LIQUIDITY FLOWS A Dramatic Change in the Liquidity Environment ............................................................................................ 2853
NEW-LIQUIDITY FLOWS China Central Bank Cuts Interest Rates to Support Growth ........................................................................... 2858
LIQUIDITY FLOWS 3 Month Advanced Fed Balance Sheet versus S&P 500 .......................................................................................... 2859
LIQUIDITY FLOWS Lurking Problems in Repo Land Rising Failures .................................................................................................... 2860
LIQUIDITY FLOWS Eating the Seed Corn of Capitalisms Savings. .................................................................................................... 2865
LIQUIDITY FLOWS Reverse Repos The Feds New Magic Trick ........................................................................................................ 2868
LIQUIDITY FLOWS Fed Magic Trick ....................................................................................................................................................... 2870
LIQUIDITY FLOWS - Current QE Experiment is simply not working!! .......................................................................................................... 2872
LIQUIDITY FLOWS Liquidity is Becoming a Serious Issue Due to Japanese Bond Market Problems .................................................... 2876
LIQUIDITY FLOWS - In A Sea Of Money Printing, What Happened To All The Liquidity? .......................................................................... 2879
LIQUIDITY FLOWS - Why "Tapering" Is a Mirage and the Fed May Be Loosening Instead ....................................................................... 2882
LIQUIDITY FLOWS Half a Trillion More Demand than Supply Means Lower US Treasury Yields .......................................................... 2884
28
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WORRIED BANKERS

GLOBAL MACRO TIPPING POINTS MAY 2015

1 May 2015 Edition

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TIPPING POINTS .................................................................................................................................... 30

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 186

May 2015 Edition

Restricted & Confidential

NEW-YEMEN al-Houthis and Saleh Concentrations ............................................................................................................................ 189

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 340

May 2015 Edition

Restricted & Confidential

NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 341

TIPPING POINTS ..................................................................................................................................................................... 349

GLOBAL MACRO ................................................................................................................................. 372

May 2015 Edition

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GLOBAL MACRO: INDICATORS ............................................................................................................................................ 510

May 2015 Edition

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GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 607

May 2015 Edition

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May 2015 Edition

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RESEARCH OF NOTE .................................................................................................................................................................................... 751

GEO-ECONOMIC INSTABILITIES........................................................................................................................................... 836

May 2015 Edition

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GEO-ECONOMIC INDEX ...................................................................................................................................................................................... 836

May 2015 Edition

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May 2015 Edition

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CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1078

May 2015 Edition

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REGIONAL ........................................................................................................................................... 1160

May 2015 Edition

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PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1259

May 2015 Edition

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NEW--CHARTS - GERMANY German Unemployment ......................................................................................................................... 1355

May 2015 Edition

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IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1434

ASIA FALLING CURRENCIES, RISING DEBT & SLOWING GROWTH.............................................................................. 1443

May 2015 Edition

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May 2015 Edition

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CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 1685

EMERGING MARKETS RUSSIA UNDER FINANCIAL SIEGE ..................................................................................................... 1806

May 2015 Edition

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BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 1816

May 2015 Edition

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ASEAN ........................................................................................................................................................................................................... 1910

US ECONOMY ..................................................................................................................................... 1946

US INVESTMENT CYCLE ...................................................................................................................................................... 1988

May 2015 Edition