RPT GMTP 2015 PEEK

GLOBAL SLOWDOWN STEEPENING
Credit Cycle is Reacting
GLOBAL RISK
GLOBAL MACRO TIPPING POINTS - DECEMBER 2015
11/30/2015
1 December 2015 Edition

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

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GLOBAL SLOWDOWN STEEPENING

Credit Cycle is Reacting
GLOBAL MACRO TIPPING POINTS - DECEMBER 2015
GLOBAL RISK ......................................................................................................................................... 37

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 37
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 37
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 38
Our Assessment ................................................................................................................................................................................................ 38
James Rickards Global Risk Assessment ........................................................................................................................................................ 51
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 99
LATEST FROM THE MONITORS ..................................................................................................................................................................... 99
RESEARCH OF NOTE ................................................................................................................................................................................ 103
NEW-MONITORS Why Are The IMF, The UN, The BIS And Citi All Warning That An Economic Crisis Could Be Imminent?.......... 103
NEW-MONITORS The G-30 Group Of Central Bankers Warn They Can "No Longer Save The World" ........................................... 105
WORLD BANK ................................................................................................................................................................................................. 108
NEW-WB Key Takeaways From the World Bank/IMF Meetings .............................................................................................................. 108
NEW-WB Federal Reserve rate rise would cause panic and turmoil, warns World Bank ........................................................................ 109
WB World Bank - Global Economic Prospects Report .............................................................................................................................. 109
WB Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ........................................................................................ 110
WB Global Growth Outlook ........................................................................................................................................................................ 113
WB- World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ................................. 114
WB- World Bank Says 300M Young People neither Working nor Studying ............................................................................................... 115
OECD ............................................................................................................................................................................................................... 117
NEW-OECD World cannot spend its way out of a slump, warns OECD chief ......................................................................................... 117
NEW-OECD OECD Chief Economist: It's Time To "Temper The Frothiness" In Markets ....................................................................... 119
OECD Leading Indicator Casts Doubt on US Economic Rebound .......................................................................................................... 121
OECD Warns 40 Million People Will Be Out of Work Next Year .............................................................................................................. 122
OECD Cuts Global Growth Projections Again ............................................................................................................................................. 124
IMF ................................................................................................................................................................................................................... 125
NEW-IMF IMF warns of stagnation threat to G7 economies ..................................................................................................................... 125
NEW-IMF IMF Fears $3 Trillion Credit Crunch .......................................................................................................................................... 127
IMF Tells Regulators to Brace for Global Liquidity Shock ......................................................................................................................... 129
IMF- Lagarde warns of lopsided global growth .......................................................................................................................................... 134
IMF warns of new threats to global economy due to excessive risk taking ................................................................................................ 135
BIS ................................................................................................................................................................................................................... 137
NEW-BIS BIS Warns of Major Faultlines In Global Debt Bubble ........................................................................................................... 137
BIS - BIS Quarterly Report ........................................................................................................................................................................... 139
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 139
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 140
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 142
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 146
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 149
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 150
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 155
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 159
CHARTS OF NOTE ..................................................................................................................................................................................... 159
WEF Global Business Risks ................................................................................................................................................................. 161
WEF The 2015 Global Risk Landscape ................................................................................................................................................ 162
WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 163
WEF Global Risk Exposures By Region ............................................................................................................................................... 164
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 165
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 165
CHARTS OF NOTE ......................................................................................................................................................................................... 167
NEW-Credit Denominated in US Dollars ..................................................................................................................................................... 167
NEW-IMFs Global GDP Outlook ................................................................................................................................................................. 167
NEW-IMF Economic Forecasts Are So Consistently Bad That it Says they Dont Understand the Problem! .......................................... 168
Total Global Credit-Market Debt Owed as % of GDP ................................................................................................................................. 169
57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ....................................................................... 170
Global Risk Landscape Grid ........................................................................................................................................................................ 171
Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .............................................................................................. 172
Global Risks of Highest Concern ................................................................................................................................................................. 172
Global Risks Versus Impact ......................................................................................................................................................................... 173
The economic balance of the world is shifting ............................................................................................................................................. 174
Global Conflict Intensity is heating up.......................................................................................................................................................... 175
World Conflict Map ....................................................................................................................................................................................... 176
World Conflict Map Details........................................................................................................................................................................ 177
Global Conflict & Protest Intensity ............................................................................................................................................................... 178
December 2015 Edition

2

Deutsche Banks Key Global Risk ............................................................................................................................................................... 178

Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 179
RESEARCH OF NOTE .................................................................................................................................................................................... 180
NEW-A Generation in Crisis- - The World Needs 5 Million Jobs-Month To Stymie Youth Extremism ....................................................... 180
NEW-Presenting SocGen's 5 Black Swans For 2016 ................................................................................................................................. 181
NEW- Paul Brodsky: "Expect The Unexpected. It Might Be Time To Duck And Cover" ............................................................................ 184
McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE .............................................................................................. 187
Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 ............................................................................................... 192
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 195
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 196
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 198
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 201
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 202
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 203
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 206
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 206
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 217
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 220
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 221
THE RISK CONTINUUM ............................................................................................................................................................................. 224
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 226
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 228
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 230
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 232
GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 239

GEO-POLITICAL RISK - SOCIAL, ECONOMIC & FINANCIAL ........................................................................................................ 241
NEW-PARIS SHOCKER ISIS Reality ................................................................................................................................................................. 241
NEW-TERRORISM - "There's No Such Thing As ISIS": Journalist Destroys West's Terror Narrative, Warns Of Crackdown On "Dissidents"
......................................................................................................................................................................................................................... 241
NEW-TERRORISM - Secretary of Defense Chuck Hagel: ISIL poses a threat greater than 9/11. ............................................................. 242
NEW-TERRORISM - Two Reasons the 'War On Terror' Will Always Fail ...................................................................................................... 243
NEW-TAXATION Setting the Stage for the Coming Taxation Explosion ........................................................................................................... 245
RESEARCH OF NOTE .................................................................................................................................................................................... 245
NEW-TAXATION Taxes must be paid, says George Osborne, as he backs crackdown on havens. ..................................................... 245
NEW-TAXATION The Coming Tax Tsunami Will Erode Wealth and Capital at a Shocking Pace .......................................................... 247
NEW-DEMOGRAPHICS Aging Population & Youth Unempolyment ................................................................................................................. 249
CHART OF NOTE............................................................................................................................................................................................ 249
NEW-YOUTH UNEMPLOYMENT Global Population .............................................................................................................................. 249
NEW-YOUTH UNEMPLOYMENT Global Aging ...................................................................................................................................... 249
NEW-YOUTH UNEMPLOYMENT Global Aging By Country ................................................................................................................... 250
RESEARCH OF NOTE .................................................................................................................................................................................... 252
NEW-YOUTH UNEMPLOYMENT - "A Generation In Crisis" - The World Needs 5 Million Jobs/Month To Stymie Youth Extremism ...... 252
NEW-YOUTH UNEMPLOYMENT - Four Ticking Global Time-Bombs Few Even Hear ............................................................................. 253
GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 258

ISIS .................................................................................................................................................................................................................. 258
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 259
NEW-ISIS - An Undercover Look Inside ISIS .......................................................................................................................................... 263
ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 265
ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 265
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 266
SYRIA .............................................................................................................................................................................................................. 269
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 269
NEW-SYRIA - Pipeline Politics: Russia, Turkey Clash Over Energy As Syria Rift Shifts Focus To German Line ................................. 270
NEW-SYRIA - Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .............................................. 273
NEW-SYRIA - Is The US Going To War With Syria Over A Natural Gas Pipeline? ............................................................................... 275
NEW-SYRIA - Why Did Obama Choose Syria? ...................................................................................................................................... 278
SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 279
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 280
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 282
SYRIA - 25 Quotes ................................................................................................................................................................................... 283
SYRIA - What Coalition? .......................................................................................................................................................................... 286
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 288
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 290
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 298
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 300
NEW-CHINA SEA - Why China Wants Control of The South China Sea In 10 Charts .......................................................................... 301
NEW-CHINA SEA - "Strongly Dissatisfied" China Warns US "Accident" Is "Highly Likely" In South China Sea ................................... 306
NEW-CHINA SEA - PLA Officer: China Must Establish South China Sea ADIZ; Will "Fight .................................................................. 308
IRAN ................................................................................................................................................................................................................. 310
RESEARCH OF NOTE ................................................................................................................................................................................ 310
NEW-IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ......................................................................................................... 310
NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 313
YEMEN ............................................................................................................................................................................................................ 314

3

CHARTS OF NOTE ..................................................................................................................................................................................... 314

YEMEN Strategic Position .................................................................................................................................................................... 314
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 315
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 315
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 316
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 316
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 318
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 319
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 320
RESEARCH OF NOTE ................................................................................................................................................................................ 321
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 321
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 323
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 326
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 327
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 329
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 334
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 336
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 341
RESEARCH OF NOTE ................................................................................................................................................................................ 348
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 348
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 349
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 353
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 357
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 358
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 361
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 364
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 365
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 367
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 381
GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 384

NEW-GOVERNANCE The G-30 Group of Central Bankers Warn They Can "No Longer Save The World"............................................... 384
ASIAN INFRASTRUCTURE INVESTMENT BANK A Threat to World Bank and US$ Reserve Status ..................................................... 387
CHARTS OF NOTE ..................................................................................................................................................................................... 390
AIIB Demanding Infrastructure .............................................................................................................................................................. 390
RESEARCH OF NOTE ................................................................................................................................................................................ 391
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 391
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 393
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 394
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 396
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 399
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 401
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 403
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 406
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 406
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 408
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 410
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 413
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 415
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 415
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 418

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 418
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 419
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 419
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 420
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 420
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 421
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 421
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 423
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 423
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 424
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 425
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 426
GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 428

CHANGES TO RANKINGS Q4 2015 ................................................................................................................................................................. 428
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 430
CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 431
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 432
TIPPING POINTS: TOP 5 FOCUS - DECEMBER 2015 ....................................................................................................................................... 435
NEW-I BOND BUBBLE................................................................................................................................................................................. 435

4

NEW-II- GEO-POLITICAL EVENT RISK ......................................................................................................................................................... 444

NEW-III - CHINA HARD LANDING ................................................................................................................................................................. 457
NEW-IV - RISK REVERSAL ............................................................................................................................................................................ 466
NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 470
GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 477

ECONOMIC WARNINGS....................................................................................................................................................................................... 477
IMF WARNS .................................................................................................................................................................................................... 477
NEW-IMF Warns of gloomy eurozone outlook ............................................................................................................................................ 477
NEW-IMF Warns U.S.: Your financial system is (still) vulnerable ............................................................................................................... 481
NEW-IMF Warns Japan over Its Staggering National Debt ........................................................................................................................ 483
NEW-IMF Warns Japan to step up reforms ................................................................................................................................................. 483
NEW-IMF Warns Fed on risks of hiking too soon........................................................................................................................................ 484
IMF Warns of Permanent Stagnation .......................................................................................................................................................... 485
IMF Sees risk of new eurozone ................................................................................................................................................................... 487
IMF Tells Central Europe to Spend More .................................................................................................................................................... 490
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 493
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 495
BIS WARNS ..................................................................................................................................................................................................... 497
BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................................... 497
Monetary Policy At Its Limits ........................................................................................................................................................................ 509
WORLD BANK WARNS .................................................................................................................................................................................. 510
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ............................................................................... 512
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 515
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 516
CHARTS OF NOTE ............................................................................................................................................................................................... 519
NEW-CHART: Global Consumer Confidence Turns ....................................................................................................................................... 519
NEW-CHART: Global Consumer Confidence Momentum versus Bond Yields .............................................................................................. 519
NEW-CHART: Bear Grip Felt Around the World ............................................................................................................................................. 520
NEW-CHART: Emerging Market FX in Freefall .............................................................................................................................................. 520
NEW-CHART: Asian Dollar Index Sends Ominous Sign ................................................................................................................................ 521
NEW-CHART: Biggest Currency Losers ......................................................................................................................................................... 521
NEW-CHART: The Great Unwind - A Triple Unwind of EM Credit, Chinas Leverage and US Monetary Easing ......................................... 522
NEW-CHART: Latin Americas Economic Slowdown ..................................................................................................................................... 523
CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 523
CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 524
CHART: Global Business Equipment Investment ........................................................................................................................................... 525
CHART: EM versus DM Credit Risk ................................................................................................................................................................ 526
CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 526
CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 527
CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................................. 527
CHART: Domestic Bank Credit of EM versus DM .......................................................................................................................................... 528
CHART: Regional Resilience Score Differences Since the Financial Crisis................................................................................................... 528
CHART: US Macro index at a New 6 Year Low. ............................................................................................................................................. 530
CHART: There is a Problem in Global Credit .................................................................................................................................................. 530
CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 531
CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 532
CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 532
CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 533
CHART: Global Corporate Profit Trends ......................................................................................................................................................... 533
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 534
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ......................................................................................... 535
CHART: Growth of Asian Middle Class Dominates Next 20 Years .............................................................................................................. 536
CHART: Global Domestic Demand Growth .................................................................................................................................................... 536
CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit ................................................................................................... 537
CHART: World GDP 2014 Economic Growth Estimates ................................................................................................................................ 537
CHART: World GDP versus World MSCI Stock Index .................................................................................................................................... 538
CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ..................................................................................... 539
CHART: World Trade versus Central Bank Balance Sheet Growth ............................................................................................................... 539
CHART: Falling Global LEI (Leading Economic Indicator).............................................................................................................................. 540
CHART: World GDP Economic Forecast 2014 ............................................................................................................................................... 541
CHART: World GDP Economic Expectations versus MSCI Equity Index ...................................................................................................... 541
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 542
CHART: Shifting Global GDP Share ............................................................................................................................................................... 543
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 544
CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 544
CHART: Future Economic Growth a Sub 2% Trend ....................................................................................................................................... 545
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth ........................................................................................... 545
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI ........................................................................................................... 546
CHART: Liquidity Drain in US in 2H 2014 ....................................................................................................................................................... 547
RESEARCH OF NOTE .......................................................................................................................................................................................... 548
GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ................................................................................................................. 548
GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ...................................................... 551
GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile ............................................................................................................... 552
GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ................................................................... 555

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3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 556

This is the Biggest Risk to the World's Economy ...................................................................................................... 559
What is global market turbulence telling us? ............................................................................................................. 563
Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 566
The Last Days Of The Growth Story? ........................................................................................................................ 568
The Last Days Of The Growth Story? ........................................................................................................................ 570
- THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 571
- 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 576
- Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 578
- Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 581
The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 584
- Credit Fueled Globalization in Retreat ........................................................................................................................ 587
- Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 589
- Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 592
- A 67 Million Jobs Gap ................................................................................................................................................. 594
ECONOMIC CUTS ................................................................................................................................................................................................. 598

CHARTS OF NOTE ......................................................................................................................................................................................... 598
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 598
CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 601
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 601
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 601
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 607
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 617
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 619
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 622

GLOBAL TRENDS ................................................................................................................................................................................................. 622
CHARTS OF NOTE ......................................................................................................................................................................................... 622
NEW-GLOBAL TRENDS World Industrial Production Index ................................................................................................................... 622
NEW-GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ................................................... 622
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index ................................................................................................ 623
NEW-GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015................................ 623
NEW-GLOBAL TRENDS JAPAN Industrial Production Index ................................................................................................................. 624
NEW-GLOBAL TRENDS EURO AREA Industrial Production Index ....................................................................................................... 624
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 625
NEW-GLOBAL TRENDS EMERGING ASIA Industrial Production Index ................................................................................................ 625
GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 625
GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 626
GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 627
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 627
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 628
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 628
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 629
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 630
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 630
RESEARCH OF NOTE .................................................................................................................................................................................... 631
NEW-GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse ................................................................................ 631
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 631
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 636
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 640
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 641
CHARTS OF NOTE ......................................................................................................................................................................................... 641
CHART Global Employment Rates ........................................................................................................................................................... 641
CHART Global Unemployment ................................................................................................................................................................. 642
CHART Global Unemployment EU Comparison ................................................................................................................................... 642
CHART Unemployment in Advanced Countries ....................................................................................................................................... 643
CHART Global Labor Participation Rates ................................................................................................................................................ 643
CHART Global Youth Unemployment By Country ................................................................................................................................ 644
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 644
RESEARCH OF NOTE .................................................................................................................................................................................... 645
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 645
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 647
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 649
GLOBAL SENTIMENT ........................................................................................................................................................................................... 651
CHARTS OF NOTE ......................................................................................................................................................................................... 651
NEW-GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected .................................................. 651
NEW-GLOBAL SENTIMENT Global Consumer Confidence Turns ............................................................................................................. 652
NEW-GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ......................................... 653
NEW-GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ............................................................................. 654
NEW-GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ............................................. 655
NEW-GLOBAL SENTIMENT Differing Concerns Around the World By Region ................................................................................... 656
NEW-GLOBAL SENTIMENT Growing Recessionary Sentiment ............................................................................................................. 657
NEW-GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ........................................................................ 658
GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 659
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 660

6

GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 661
GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 662
GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 663
GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 664
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 665
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 666
GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 667
GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 668
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 669
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 669
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 671
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 672
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 673
RESEARCH OF NOTE .................................................................................................................................................................................... 674
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 674
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 676
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 680
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 681
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 683
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 684
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 695
CHARTS OF NOTE ......................................................................................................................................................................................... 696
NEW-GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region ..................................................................... 696
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 696
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 697
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 698
RESEARCH OF NOTE .................................................................................................................................................................................... 699
GLOBAL GROWTH ............................................................................................................................................................................................... 699
CHARTS OF NOTE ......................................................................................................................................................................................... 699
NEW-GLOBAL GROWTH World Trade Values in US$ ........................................................................................................................... 699
NEW-GLOBAL GROWTH World Industrial Production ............................................................................................................................ 700
NEW-GLOBAL GROWTH World Trade (Values in US$) Index ............................................................................................................... 701
NEW-GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 ..................................................................... 702
NEW-GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................................... 703
NEW-GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ...................................................................... 703
NEW-GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 704
NEW-GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ................................................................................. 704
NEW-GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ................................................... 705
NEW-GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ................................................................... 705
NEW-GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ........................................... 706
NEW-GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ........................................................... 706
NEW-GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................ 707
NEW-GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ............................................................ 707
NEW-GLOBAL GROWTH CHINAS Imports, Annual % Change ............................................................................................................ 708
NEW-GLOBAL GROWTH CHINAS Exports, Annual % Change ............................................................................................................ 708
GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 709
GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 710
GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 711
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 712
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 713
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 713
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 714
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 715
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 715
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 715
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 716
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 717
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 717
RESEARCH OF NOTE .................................................................................................................................................................................... 718
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 718
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 719
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 721
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 722
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 726
GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 728
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 730
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 731
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 732
GLOBAL CREDIT .................................................................................................................................................................................................. 733
NEW- CREDIT CYCLE - HG Spread Widening .......................................................................................................................................... 733
NEW- CREDIT CYCLE - Widening Gap Between Debt & Equity ............................................................................................................... 733
CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 733
CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 737
GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 740

7

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 740

RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 740
CHARTS OF NOTE ......................................................................................................................................................................................... 743
NEW-CHARTS Saudi + China Reserves versus 10Y UST Yield ............................................................................................................. 743
NEW-CHARTS Total World Reserve Foreign Exchange Reserves......................................................................................................... 743
NEW-CHARTS Why Canada May Become a Problem For Janet Yellen ................................................................................................ 744
CHARTS Consensus Fed and ECB Rate Hike Projections ..................................................................................................................... 745
CHARTS Global Monetary Policy Stance & Bias ..................................................................................................................................... 746
CHARTS Global Government Bonds Trading With Negative Yields........................................................................................................ 747
CHARTS Lack of Inflation in Europe ........................................................................................................................................................ 747
CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s)............................................................. 748
CHARTS Quantitative e Easing No Longer Drives Commodity Prices .................................................................................................... 749
CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................................ 749
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 750
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 750
CHARTS Falling Global Bond Rates Continue in Q1 2015 ...................................................................................................................... 751
CHARTS The Road to NIR (Negative Rates) ........................................................................................................................................... 751
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 752
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 752
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 754
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 754
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 755
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 755
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 756
RESEARCH OF NOTE .................................................................................................................................................................................... 757
NEW-CENTRAL BANKS - xxxx ................................................................................................................................................................... 757
NEW-CENTRAL BANKS - 8 Capital Markets 'Threats' To The Central Bank Narrative ............................................................................. 757
NEW-CENTRAL BANKS - How Much More Faith In Central Banks Is Left? .............................................................................................. 759
CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................................ 761
CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode .............................................................................................. 762
CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................................ 763
CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage ......................................................................................... 766
CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ................................................................................ 767
CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation .......................................................... 769
CENTRAL BANKS - The year of Dollar Danger for the world ..................................................................................................................... 771
CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ........................................................ 776
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 780
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 782
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 783
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 786
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 787
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 788
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 790
WAR ON CASH ............................................................................................................................................................................................... 795
WAR ON CASH Elliott Waves Report on the War on Cash .................................................................................................................. 795
WAR ON CASH The "War On Cash" Migrates To Switzerland ............................................................................................................... 800
WAR ON CASH Chase Joins the War on Cash ....................................................................................................................................... 803
WAR ON CASH Largest Bank In America Joins War On Cash ............................................................................................................... 805
WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban .......................................................................................................... 807
SWISS PEG ..................................................................................................................................................................................................... 811
SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .................................................................................................... 812
SWISS PEG Swiss Peg Failure The Financial System Broke Last Week ............................................................................................ 814
SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ............................................................ 815
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 819
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 819
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 820
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 823
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 825
BOE - UK ................................................................................................................................................................................................................ 826
CHARTS OF NOTE ......................................................................................................................................................................................... 826
UK Sterling/ US Dollar Exchange Rate after UK Super Thursday ......................................................................................................... 826
UK Dissent within BOE Set to Continue ................................................................................................................................................... 826
RESEARCH OF NOTE .................................................................................................................................................................................... 827
NEW-UK - Neutral Report Leaves BOE on Track for February Liftoff ........................................................................................................ 827
NEW-UK - Did The Bank Of England Just Admit Financial Markets Aren't "Real"? ................................................................................... 829
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 830
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 831
FED - US ................................................................................................................................................................................................................ 833
CHARTS OF NOTE ......................................................................................................................................................................................... 834
NEW-CHARTS Inflation Expectations versus Fed QE Easing Operations .............................................................................................. 834
NEW-CHARTS Depth of US Treasury Markets Has Declined from Recent Highs .................................................................................. 834
NEW-CHARTS China Dumping US Treasuries as Chinese Forex Reserves Fall .................................................................................. 835
NEW-CHARTS US Defenses Down ......................................................................................................................................................... 836
NEW-CHARTS September Rate Hike Forecast History .......................................................................................................................... 837
NEW-CHARTS Only One Thing Can Stop the Fed from a September Rate Hike Emerging Market Weakness ................................. 837
CHARTS Feds QE History versus UST 10 Year Yields .......................................................................................................................... 838

8

CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 838

CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 838
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 839
RESEARCH OF NOTE .................................................................................................................................................................................... 840
NEW-US MONETARY Why We Have Low Level Equilibria .................................................................................................................. 840
NEW-US MONETARY Crashing Inflation Expectations Suggest Imminent Launch Of QE4 ................................................................... 842
NEW-US MONETARY Why Goldman Is Confident the Fed Will Wait To Hike Until December (At Least) ............................................ 843
NEW-US MONETARY Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End of Debt Supercycle..... 845
NEW-US MONETARY What Options Are Saying About A Possible September Rate Hike ................................................................... 846
NEW-US MONETARY The Fed Is Scared To Raise Rates, Ron Paul Warns "Everything Is Too Vulnerable" ...................................... 848
NEW-US MONETARY Hilsenrath Warns Fed Is Out Of Ammo, "Policy Makers Resorting To Backup, Backup Plans" ........................ 849
NEW-US MONETARY China's Record Dumping Of US Treasuries Leaves Goldman Speechless ....................................................... 851
NEW-US MONETARY Fed Goes Looking For Evidence of Broken Treasury Market, Decides Everything Is Fine ............................... 856
NEW-US MONETARY The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts ...................................................... 861
US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ....................................................... 861
US MONETARY - Audit the Fed Yellens Testimony ................................................................................................................................ 864
US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy .......................................................................... 873
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 876
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 879
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 882
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 884
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 886
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 892
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 893
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 895
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 897
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 900
CHARTS OF NOTE ......................................................................................................................................................................................... 900
JAPAN Japan Heads Back towards Deflation .......................................................................................................................................... 900
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 901
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 902
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 903
RESEARCH OF NOTE .................................................................................................................................................................................... 904
NEW- GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ...................................................... 904
NEW- GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ................................................. 906
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 907
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 910
BOJ JAPAN ......................................................................................................................................................................................................... 912
CHARTS OF NOTE ......................................................................................................................................................................................... 912
JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 912
JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 913
JAPAN Japanese Trade Balance ............................................................................................................................................................. 914
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 914
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 915
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 915
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 915
JAPAN Real Wages Plummet as Financial Repression Takes Hold ....................................................................................................... 916
RESEARCH OF NOTE .................................................................................................................................................................................... 917
JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 918
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 920
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 923
JAPAN - No Way Out But to Expand the Monetary Base ........................................................................................................................... 925
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years....................................................................................................................................... 926
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................... 929
JAPAN - Some Policies Have Clearly Hit the Limit ..................................................................................................................................... 931
JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 932
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 937
JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 938
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 941
JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 942
PBOC - CHINA ....................................................................................................................................................................................................... 944
CHARTS OF NOTE ......................................................................................................................................................................................... 945
NEW-CHARTS Chinas Capital Inflow / Outflow ...................................................................................................................................... 945
NEW-CHARTS Chinas Falling Holdings of US Treasuries ..................................................................................................................... 945
NEW-CHARTS Cumulative % Increases in Pork Since the Start of the Cycle ........................................................................................ 946
NEW-CHARTS Severe Supply of Food Staple - Pork .............................................................................................................................. 946
NEW-CHARTS Chinese CPI (Minus Pork) ............................................................................................................................................... 947
CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ......................................................................... 947
CHARTS China Reduces Bank Reserve Ratio ........................................................................................................................................ 947
CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ........................................................................................... 948
CHARTS Falling Chinese Government Revenue Growth ........................................................................................................................ 950
CHARTS Falling National New Residential Housing Starts ..................................................................................................................... 950
CHARTS China and Asia Residential Property Tracking US Housing Bubble ........................................................................................ 951
CHARTS Real Chinese Rates versus Cuts .............................................................................................................................................. 951
RESEARCH OF NOTE .................................................................................................................................................................................... 952
NEW CHINA MONETARY - Devaluation Stunner: China Has Dumped $100 Billion In Treasuries In The Past Two Week ..................... 952

9

NEW CHINA MONETARY - China's Record Dumping Of US Treasuries Leaves Goldman Speechless .................................................. 954
NEW CHINA MONETARY - Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts .................. 959
CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says ...................................... 965
CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ....................................................................................... 967
CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears .................................................................................................. 969
ECB EU ............................................................................................................................................................................................................... 975
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 975
CHARTS OF NOTE ......................................................................................................................................................................................... 976
NEW-CHARTS EU QE Results An Abject Failure ................................................................................................................................ 976
CHARTS Welcome to the EUs NIRP .................................................................................................................................................... 976
CHARTS Negative Swiss Government Bonds ......................................................................................................................................... 977
CHARTS Negative Swiss Government Bonds ......................................................................................................................................... 977
CHARTS UK & German Total Return Indices .......................................................................................................................................... 978
CHARTS ECBs Dilemma of Digging Up Enough Debt ............................................................................................................................ 978
CHARTS Nearly $2T European Nonds Trading With Negative Yields .................................................................................................... 979
CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ................................................................. 979
CHARTS The Fastest Growing Asset Class NIR Products ................................................................................................................... 980
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ........................................................................................................... 981
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU .............................................................................................................. 982
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 ................................................................................................................ 982
CHARTS Euro-Area Inflation Expectations Decline ................................................................................................................................. 983
CHARTS Euro-Area Private Sector Loan Creation .................................................................................................................................. 984
CHARTS Euro-Area Money Supply, Private Sector Lending Growth ...................................................................................................... 984
CHARTS Euro-Area 10 Yr Sovereign Bond Yields .................................................................................................................................. 985
CHARTS Slovenia May BE the Next EU Debt Hotspot ............................................................................................................................ 985
CHARTS Spain & Portugal NPL ............................................................................................................................................................... 986
CHARTS ECBs Turn to Expand Its Balance Sheet ................................................................................................................................. 987
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................... 987
CHARTS Expect Major ECB Policy Announcement in Q2 2014 .............................................................................................................. 988
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................... 989
RESEARCH OF NOTE .................................................................................................................................................................................... 990
NEW-EU MONETARY - Draghi Failed: European Inflation Expectations Slide To Pre-QE Level ............................................................. 991
EU MONETARY - NIRP Is A Flawed Economic Concept ........................................................................................................................... 992
EU MONETARY - NIRP ............................................................................................................................................................................... 994
EU MONETARY NIRP - Yield scarce as the world turns negative .......................................................................................................... 998
EU MONETARY - Draghi Key Statements ................................................................................................................................................ 1001
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................. 1002
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action .................................................................................... 1004
EU MONETARY - Euro-Area Data Deterioration Points toward QE ......................................................................................................... 1006
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down .......................................................................... 1008
MACRO MONETARY INFLATION ................................................................................................................................................................... 1010
CHARTS OF NOTE ............................................................................................................................................................................................. 1010
CHARTS The Fall of Hyperinflation & the Rise of Deflation ...................................................................................................................... 1010
CHARTS Falling US Consumer Price Index .............................................................................................................................................. 1010
CHARTS Global Consumer Prices are Rising Significantly ....................................................................................................................... 1011
CHARTS Global Country Inflation Rates ................................................................................................................................................ 1011
CHARTS Two Worlds if Inflation EM and DM ..................................................................................................................................... 1011
CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1013
RESEARCH OF NOTE .................................................................................................................................................................................. 1014
INFLATION Martin Armstrongs Explanation of Monetary Inflation ........................................................................................................ 1014
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ........................................... 1016
GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1018

GEO-ECONOMIC INDEX .................................................................................................................................................................................... 1018
EMERGING & FRONTIER MARKETS - Emerging Markets Growth, Credit & Forex Problems - Fx Plummet ................................................ 1019
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1019
CHARTS OF NOTE ....................................................................................................................................................................................... 1023
NEW-CHARTS Emerging Market 10 Year Shift in Share of World GDP 2004 to 2014 ..................................................................... 1023
NEW-CHARTS Emerging Market Fx in Freefall ..................................................................................................................................... 1023
NEW-CHARTS Total Economy Debt as a % of GDP India, Poland, Ireland and Spain ..................................................................... 1024
NEW-CHARTS Global FX Reserves 2000 versus 2005 versus 2015 ................................................................................................ 1024
NEW-CHARTS GDP per Capita Income ................................................................................................................................................ 1025
NEW-CHARTS EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 .......................................................................... 1026
NEW-CHARTS Brazil in or Near a Serious Recession .......................................................................................................................... 1026
NEW-CHARTS Collapsing Currencies in Columbia and Chile ............................................................................................................... 1027
NEW-CHARTS The Unwind of EM Credit, Chinas Leverage and US Monetary Easing ...................................................................... 1028
NEW-CHARTS The Tale of Two Economies Chile versus Portugal ................................................................................................... 1029
NEW-CHARTS Emerging & Developed Economy Growth Rates Converge ......................................................................................... 1030
NEW-CHARTS Emerging Market Currency Sell-Off .............................................................................................................................. 1030
NEW-CHARTS Emerging Markets Stocks versus Developed Market Stocks ....................................................................................... 1031
NEW-CHARTS Investors Are Pulling Money From Developing Markets ............................................................................................... 1032
NEW-CHARTS Valuation of EM Stocks is Falling Against Developed Markets .................................................................................... 1032
NEW-CHARTS EM Capital Outflows Surge Towards $1T ..................................................................................................................... 1033
NEW-CHARTS Developing Nation Currencies Plunge After Chinas Devaluation Rattles Markets...................................................... 1033
CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ........................................................................... 1035

10

CHARTS Wide Spread Emerging Market Capital Out Flows ................................................................................................................. 1036
CHARTS Emerging Market Debt versus GDP - 2013 ............................................................................................................................ 1037
CHARTS Emerging Market Resilience Indicator Changes .................................................................................................................... 1037
CHARTS BRIC Countries Responsible for 43% of Global Growth ........................................................................................................ 1038
CHARTS BRIC & Emerging Market Inflation Rates ............................................................................................................................... 1038
CHARTS Emerging Market Default Probability ...................................................................................................................................... 1039
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions ................................................ 1039
CHARTS Emerging Market Outflows...................................................................................................................................................... 1040
CHARTS Emerging Market Outflows -2 ................................................................................................................................................. 1040
CHARTS Developed versus Emerging Equity Markets 1990-2014 .................................................................................................... 1041
CHARTS Total GEM Flows..................................................................................................................................................................... 1041
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................. 1042
RESEARCH OF NOTE .................................................................................................................................................................................. 1043
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1043
NEW-EMERGING MARKETS - Emerging Market Currencies To Crash 30-50%, Jen Says ................................................................... 1043
NEW-EMERGING MARKETS - Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse ..................... 1045
NEW-EMERGING MARKETS - Emerging markets: Redrawing the world map ....................................................................................... 1051
NEW-EMERGING MARKETS - Lost Decade in Emerging Markets: Investors Already Halfway There .................................................. 1058
EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ..................................................................................... 1063
EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" .............................................................. 1066
EMERGING MARKETS - Emerging markets: The great unraveling ......................................................................................................... 1068
EMERGING MARKETS - Moodys warns on EM dollar finance costs ...................................................................................................... 1073
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................. 1074
EMERGING MARKETS - Crisis Redux? ................................................................................................................................................... 1075
EMERGING MARKETS - Losing Their Punch ....................................................................................................................................... 1080
EMERGING MARKETS - Risk-On!........................................................................................................................................................... 1082
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................. 1083
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1085
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................. 1086
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1092
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1097
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ................................................... 1101
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain ........................................ 1104
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1107
US$ RESERVE STATUS & ERODING INFLUENCE.......................................................................................................................................... 1107
RESEARCH WE FOLLOWED DE=DOLLARIZATION ............................................................................................................................ 1107
CHARTS OF NOTE ....................................................................................................................................................................................... 1111
DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ............................................... 1111
DE-DOLLARIZATION - AIIBs Founding Members ................................................................................................................................... 1111
DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ................................................................... 1112
DE-DOLLARIZATION - AIIB Infrastructure Investment ............................................................................................................................. 1113
DE-DOLLARIZATION - The Rise & Fall of Modern Empires .................................................................................................................... 1113
RESEARCH OF NOTE .................................................................................................................................................................................. 1115
DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund..................................................................................... 1115
DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ....................................................................................... 1119
DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ....................................................... 1121
DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ............................................. 1123
DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .................................................................. 1125
DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe .................................................... 1127
DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ..................................... 1127
DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? ..................................................................................................... 1131
DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities .................................... 1133
DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar?..................................................................................... 1134
RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ................................................................ 1135
RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system.......................... 1137
RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ............................................................... 1139
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ..................... 1140
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................. 1141
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ..................................................................... 1142
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order .......................... 1143
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar .................................................................... 1146
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ...................................................... 1147
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar ................................................................................................ 1149
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries .................................................... 1150
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued ........................................................................................................ 1152
CHARTS OF NOTE ....................................................................................................................................................................................... 1155
ENERGY Saudi Crude Oil Production & Brent Price ............................................................................................................................. 1155
ENERGY World Liquids Percent of Production ...................................................................................................................................... 1155
ENERGY Interest Rates & Oil Prices in 2015 Dollars ............................................................................................................................ 1156
ENERGY Oil Production and CAPEX by Operating Environment 2014 ................................................................................................ 1156
ENERGY Global Drilling Intensity Will Increase ..................................................................................................................................... 1157
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 .................................................... 1157
ENERGY Breakeven for All Global Oil Projects ..................................................................................................................................... 1158
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1159
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1160

11

ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years .......................................................................................... 1161
ENERGY Falling Inflation Adjusted Gasoline Prices .............................................................................................................................. 1162
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ..................................................................................................... 1163
ENERGY US Shale Oil Breakeven Prices .............................................................................................................................................. 1165
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................. 1165
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ............................................................ 1166
ENERGY EM Oil Producers Being Crushed .......................................................................................................................................... 1166
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................. 1167
ENERGY Oil Supply / Demand and Price .............................................................................................................................................. 1168
RESEARCH OF NOTE .................................................................................................................................................................................. 1169
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .................................................... 1169
RUSSIA- OPEC Presents: QE4 And Deflation ...................................................................................................................................... 1172
RUSSIA Energy War ........................................................................................................................................................................... 1174
PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ....................................................................... 1177
PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? ............................................................................ 1181
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ........................... 1186
PETRODOLLAR Collapsing PetroDollar Foundation ......................................................................................................................... 1192
UKRAINE - Pulled between EU v Russia .............................................................................................................................................. 1196
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................. 1196
UKRAINE - Pulled between Economic Inequality Factors ..................................................................................................................... 1197
UKRAINE - Pulled between the Global Military Balance ....................................................................................................................... 1198
UKRAINE - Pulled by Global Financial Markets .................................................................................................................................... 1199
UKRAINE - A Deep State Analysis ........................................................................................................................................................ 1202
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ..................................................................................................... 1206
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ............................................................... 1207
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield .................................................... 1208
ENERGY - The Oil Price Decline ........................................................................................................................................................... 1210
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................. 1217
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1219
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1222
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1227
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1228
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1230
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1233
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1236
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1240
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1245
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1252
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1255
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1257
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1259
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1264
CHARTS OF NOTE ....................................................................................................................................................................................... 1265
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1265
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1266
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1266
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1267
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1267
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1268
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1268
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1269
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1270
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1270
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1271
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1271
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1272
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1273
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1273
RESEARCH OF NOTE .................................................................................................................................................................................. 1275
CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls ........................................................ 1275
CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio ............................................................................ 1279
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1280
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1281
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1282
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1284
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1285
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1286
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1289
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1291
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1294
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1295
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1296
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1299
CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1304
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1307

12

CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1309

CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1310
GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1312
CHARTS OF NOTE ....................................................................................................................................................................................... 1314
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1314
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1314
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1316
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1316
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1317
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1317
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1318
RESEARCH OF NOTE .................................................................................................................................................................................. 1320
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1320
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1321
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1324
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1326
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1328
RESEARCH WE FOLLOWED....................................................................................................................................................................... 1330
DEBT Growth of Financial Services ....................................................................................................................................................... 1331
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1331
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1333
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1335
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1336
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1336
CHARTS OF NOTE ....................................................................................................................................................................................... 1337
CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1337
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1337
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1338
CHARTS Food Importers ........................................................................................................................................................................ 1338
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1339
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1340
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1340
CHARTS CRB Food Index One Year .................................................................................................................................................. 1342
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1343
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1344
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1345
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1345
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1347
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1348
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1349
CHARTS Coffee Futures ........................................................................................................................................................................ 1349
CHARTS Lean Hog Futures ................................................................................................................................................................... 1350
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1350
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1351
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1351
RESEARCH OF NOTE .................................................................................................................................................................................. 1352
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1352
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1355
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1356
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1358
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1358
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1363
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1364
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1366
EUROPE - Euro Exposed .............................................................................................................................................................................. 1366
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1368
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1369
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1369
SWITZERLAND - No Choice ......................................................................................................................................................................... 1369
SINGAPORE - Hot Money ............................................................................................................................................................................. 1370
UK- Pound Joins War .................................................................................................................................................................................... 1371
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1372
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1375
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1378
CYBER SPYING ............................................................................................................................................................................................ 1379
REGIONAL ........................................................................................................................................... 1380

EU DIS-INFLATION MOVING TOWARDS DEFLATION ...................................................................................................... 1381
CHARTS OF NOTE ....................................................................................................................................................................................... 1383
NEW-CHARTS Main Migrant Route to Germany ................................................................................................................................... 1383

13

NEW-CHARTS Many Migrant Routes Being Taken ............................................................................................................................... 1384

NEW-CHARTS Many Migrant Routes Being Taken- Air, Land and Sea ............................................................................................... 1385
NEW-CHARTS Migrants Entering Hungary ........................................................................................................................................... 1385
NEW-CHARTS Schengen Non Shengen EU Countries ..................................................................................................................... 1386
NEW-CHARTS Schengen Non Shengen EU Countries-2 .................................................................................................................. 1387
NEW-CHARTS Migrant Detentions ........................................................................................................................................................ 1388
NEW-CHARTS German Asylum Applications...................................................................................................................................... 1389
NEW-CHARTS Euro Area and EU28 Unemployment Rates ................................................................................................................. 1390
NEW-CHARTS Unemployment Rates by Country Seasonally Adjusted ............................................................................................ 1391
NEW-CHARTS Inflation Tracks Commodity Prices ................................................................................................................................ 1391
NEW-CHARTS Tracing EU Dis-Inflation towards Deflation .................................................................................................................... 1392
CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ......................................................................................... 1394
CHARTS Eurozone GDP Since 1999 ..................................................................................................................................................... 1394
CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" .................................................... 1395
CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ..................................................... 1396
CHARTS "Over 1/2 of all government bonds yield less than 1%." ......................................................................................................... 1397
CHARTS A weaker Euro has been good for the STOXX 600 ................................................................................................................ 1398
CHARTS Eurozone equity inflows continue to rise ................................................................................................................................ 1399
CHARTS YTD flows into European equity funds ................................................................................................................................... 1399
CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ........................................................................................... 1399
CHARTS Negative Yields Have Become the New Norm in the Euro area .......................................................................................... 1400
CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ............................................................... 1400
CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. .................................................................................................................... 1401
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre..................................................................................... 1401
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ........................................................................................ 1402
CHARTS Eurozone is the Biggest Drag on Global Profits ..................................................................................................................... 1402
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ....................................................................... 1403
CHARTS EU PMIS Rolling Over ............................................................................................................................................................ 1404
CHARTS Eurozone Banks Too Big To Be Bailed Out! .......................................................................................................................... 1405
CHARTS Eurozone Area Consumer Confidence May Be Misleading ................................................................................................... 1406
CHARTS Eurozone GDP & Recession Pattern ...................................................................................................................................... 1406
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1407
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1407
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1408
CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1409
CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1410
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1410
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1411
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1412
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1412
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1413
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1413
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1414
CHARTS EU Confidence ........................................................................................................................................................................ 1415
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1416
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1417
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1417
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1418
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1419
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1420
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1421
CHARTS - EU Area Weakness ................................................................................................................................................................. 1422
CHARTS - EU Area GDP ........................................................................................................................................................................... 1423
CHARTS - EU Area PMI ............................................................................................................................................................................ 1424
CHARTS - EU Area PMI ............................................................................................................................................................................ 1425
CHARTS - EU Real Rates ......................................................................................................................................................................... 1426
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1427
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1428
CHARTS - EU PMI ..................................................................................................................................................................................... 1428
CHARTS - EU CPI ..................................................................................................................................................................................... 1430
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1431
CHARTS - Europe's "Core" Problem is France .................................................................................................................................... 1432
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ........................................................................... 1435
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................. 1436
CHARTS - EU Credit Downgrades, France and UK On Tap ................................................................................................................... 1438
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1440
CHARTS - Dangerous Delusional Divergences .................................................................................................................................... 1442
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1443
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1444
CHARTS - Eurozone Misery Indices Never Been Higher ..................................................................................................................... 1445
CHARTS - Euro Currency .......................................................................................................................................................................... 1447
RESEARCH OF NOTE .................................................................................................................................................................................. 1453
NEW-RESEARCH Migrant Crisis Sparks Balkan Border Battles As EU Buckles Under Overwhelming Refugee Flow ....................... 1453
NEW-RESEARCH Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU ................................................................. 1457
NEW-RESEARCH "The End of The EU": Merkel's "Heroic" Refugee Response May Destroy Union, Slovakia Warns ...................... 1458
NEW-RESEARCH Europe's Refugee Crisis "Out of Control", Hungary PM Rages "This Is A German Problem, Not An EU Problem"
.................................................................................................................................................................................................................... 1465

14

RESEARCH The Broken Model of the Eurozone ................................................................................................................................... 1468

RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................. 1470
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ............................................................................ 1471
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1473
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1473
RESEARCH ECB Rate Decision .......................................................................................................................................................... 1475
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1478
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1479
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................. 1481
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ........................................................................... 1483
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1485
RESEARCH Emerging Markets Aggravates Festering Banking Problems .................................................................................... 1486
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ...................................................................... 1488
RESEARCH - EFSF Downgraded to AA+ ............................................................................................................................................... 1490
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1491
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece .............................................................. 1494
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1496
PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1496
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1500
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................. 1502
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1508
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1512
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1515
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1516
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ........................................................................................ 1517
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1524
ITALY FALLING BIRTH RATE & "MIGRANT BOAT PEOPLE" MOUNTING PROBLEMS ............................................................................. 1526
CHARTS OF NOTE ....................................................................................................................................................................................... 1527
NEW-CHARTS - ITALY Non-Performing Loans by Region ................................................................................................................... 1527
NEW-CHARTS - ITALY Gross Italian Impaired Loans ........................................................................................................................... 1528
NEW-CHARTS - ITALY Italian Government Debt .................................................................................................................................. 1528
NEW-CHARTS - ITALY Banks Non-Performing Loans ......................................................................................................................... 1529
CHARTS - ITALY Quarterly GDP Growth .............................................................................................................................................. 1530
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ............................................................................................................... 1530
CHARTS - ITALY Italian Unemployment ................................................................................................................................................ 1532
CHARTS - ITALY Italian Core Inflation ................................................................................................................................................... 1532
CHARTS - ITALY Italian Industrial Porduction ....................................................................................................................................... 1533
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1534
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1535
CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1535
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1536
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1537
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1538
RESEARCH OF NOTE .................................................................................................................................................................................. 1539
NEW-RESEARCH Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable" . 1539
NEW-RESEARCH Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis 09-02-15 Zero Hedge ....... 1541
NEW-RESEARCH Italy Non-Performing Loans Hit A New Record High............................................................................................ 1547
RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low ............................................................................. 1551
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ..................................................................................... 1553
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1557
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1559
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1563
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1563
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................. 1565
ITALIAN ELECTION - Message Given By the People ............................................................................................................................ 1567
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1571
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!........................................................................... 1574
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................. 1575
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................. 1577
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................. 1580
FRANCE FRENCH DEBT & BANK EXPOSURES BIGGER THAN MOST APPRECIATE ............................................................................. 1582
CHARTS OF NOTE ....................................................................................................................................................................................... 1582
NEW-CHARTS FRANCE Total Net Government Liabilities ................................................................................................................ 1582
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. ........................................................ 1582
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ........................................................................................................... 1583
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ....................................................................... 1583
CHARTS FRANCE French Job Seekers ............................................................................................................................................. 1583
CHARTS FRANCE Inflation Expectations ........................................................................................................................................... 1584
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1585
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1585
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1586
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1587
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1587
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1588
CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1589
CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1590

15

CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1591

CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1592
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1593
RESEARCH OF NOTE .................................................................................................................................................................................. 1594
NEW-RESEARCH Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction in Debt Burden........ 1594
NEW-RESEARCH When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) ....................... 1598
RESEARCH Economic Malaise Sparks Political Crisis in France ......................................................................................................... 1599
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1601
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1603
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1603
RESEARCH - Steady Breakdown Underway ......................................................................................................................................... 1606
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ................................................................................................... 1610
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1612
FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ..................................................... 1612
FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ....................................................................... 1612
FRANCE - What You Need to Know ......................................................................................................................................................... 1614
FRANCE - Key Indicators .......................................................................................................................................................................... 1615
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1619
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1622
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1623
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1625
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1626
FRANCE - Uncompetitive .......................................................................................................................................................................... 1627
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1629
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1631
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1633
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1634
GERMANY REFUGEE PROBLEM AT DANGEROUS TIPPING POINT ......................................................................................................... 1636
CHARTS OF NOTE ....................................................................................................................................................................................... 1636
CHARTS - GERMANY GDP Growth ...................................................................................................................................................... 1636
CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ................................................................................. 1637
CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY .............................................................................................. 1638
CHARTS - GERMANY Germany now leading the way back up in Euro Zone ...................................................................................... 1638
CHARTS - GERMANY On rolling bi-weekly basis, the 10-yr Bund yield rise of 43 bps is about as big as it gets in recent history ..... 1639
CHARTS - GERMANY - 1.179% 30 Year Bond Yield .............................................................................................................................. 1640
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ............................................................................................................ 1640
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1640
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close .............................................................................. 1641
CHARTS - GERMANY 10 Y European Yields........................................................................................................................................ 1642
CHARTS - GERMANY German Unemployment .................................................................................................................................... 1643
CHARTS - GERMANY German Core Inflation ....................................................................................................................................... 1643
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1643
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1644
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1644
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1645
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1645
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1646
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1647
RESEARCH OF NOTE .................................................................................................................................................................................. 1649
NEW-RESEARCH - U.S. Will Station New Nuclear Weapons in Germany against Russia ..................................................................... 1649
NEW-RESEARCH - Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience ..................... 1650
NEW-RESEARCH - Why Volkswagen Is Systematically Important For Germany And Europe ............................................................... 1654
NEW-RESEARCH - Europe's Woes: The Escalating Cost to Germany ................................................................................................... 1657
RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo .................................................................................................... 1660
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian.......................................................... 1661
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1664
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1666
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1667
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1671
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1672
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1677
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1678
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1680
UK WHO IS JEREMY CORBYN? ..................................................................................................................................................................... 1682
CHARTS OF NOTE ............................................................................................................................................................................................. 1682
CHARTS - UK - U.K. productivity growth remains dismal. ........................................................................................................................ 1682
CHARTS - UK - The UK's increasingly polarized politics .......................................................................................................................... 1682
CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. .................... 1683
CHARTS - UK The UK's financial sector has the highest exposure to China ........................................................................................ 1683
CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years ..... 1683
CHARTS - UK - Deficit One of Worst of Developed Economies ............................................................................................................... 1684
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................. 1685
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1686
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1687
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1687

16

th
CHARTS - UK CPI Below Target for 7 Month ...................................................................................................................................... 1688

CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1689
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1689
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1690
CHARTS - UK GDP ................................................................................................................................................................................ 1691
CHARTS - UK Population Growth .......................................................................................................................................................... 1691
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1692
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1693
CHARTS - UK - Lending ............................................................................................................................................................................ 1694
CHARTS - UK - Unemployment ................................................................................................................................................................ 1695
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1696
CHARTS - UK - GDP ................................................................................................................................................................................. 1696
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1697
RESEARCH OF NOTE .................................................................................................................................................................................. 1698
NEW-RESEARCH British General Threatens Military Coup If Corbyn Elected ..................................................................................... 1698
NEW-RESEARCH The End of Britain? Martin Armstrong On Jeremy Corbyn's Resurrection Of Marx ............................................... 1699
NEW-RESEARCH What is Jeremy Corbyn's programme for government? .......................................................................................... 1703
NEW-RESEARCH What does Jeremy Corbyn stand for? Jeremy Corbyn's policies and views explained .......................................... 1709
NEW-RESEARCH Who is Jeremy Bernard Corbyn? ............................................................................................................................. 1713
NEW-RESEARCH The City Of London Has Turned Britain into A "Civilized Mafia State".................................................................... 1718
RESEARCH What Remains of the UK Middle? ..................................................................................................................................... 1719
RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ..................................................................................................... 1720
RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading .................................. 1723
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................. 1726
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1728
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1731
UK - What you need to Know..................................................................................................................................................................... 1732
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1733
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1734
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1735
UK - Doomsday Debt Machine .................................................................................................................................................................. 1736
UK - QE Extension Coming ....................................................................................................................................................................... 1739
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1741
UK - Technically in a Depression ........................................................................................................................................................... 1742
IBERIAN PENINSULA SPANISH ELECTION & ASCENDING PORTUGAL SOCIALISTS SIGNAL TROUBLES ......................................... 1745
CHARTS OF NOTE ............................................................................................................................................................................................. 1745
NEW-CHARTS - SPAIN Spains Debt-to-GDP........................................................................................................................................ 1745
NEW-CHARTS - SPAIN Spains & Portugals Unemployment Rate June 2015 Seasonally Adjusted ................................................ 1745
CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ................................................................................... 1745
CHARTS - PORTUGAL Share of Lower Skilled Workers ....................................................................................................................... 1746
CHARTS - PORTUGAL Non-Performing Loans...................................................................................................................................... 1747
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ............................................................................................................... 1748
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................. 1748
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1749
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1750
RESEARCH OF NOTE .................................................................................................................................................................................. 1751
NEW-RESEARCH - Spain's Economic Recovery Is "One Big Lie" ..................................................................................................... 1751
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1754
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1757
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1761
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1763
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1764
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1766
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1767
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1768
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1769
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1774
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1776
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1779
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1780
CHINA: YUAN DEVALUATION RATTLES FX WORLD ................................................................................................................... 1789

CHARTS OF NOTE ....................................................................................................................................................................................... 1789
NEW-CHARTS Sinking Li Keqiamg Index Contrasts With Stable GDP ................................................................................................ 1789
NEW-CHARTS China is the Undisputed Engine of Global Growth ....................................................................................................... 1790
NEW-CHARTS China Has Been Consuming Mind-Boggling Amounts of Raw Materials ..................................................................... 1790
NEW-CHARTS Fixed Asset Investment & Consumption in China Y-o-Y Growth .............................................................................. 1791
NEW-CHARTS Fixed Asset Investment Rises Least Since 2000.......................................................................................................... 1792
NEW-CHARTS Economic Indicators Point to Lower Growth than the Headline Figures ...................................................................... 1792
NEW-CHARTS Gains of Real Estate Development Investment 1/10th of 2010 Pace ........................................................................... 1793
NEW-CHARTS Foreign Exports to China as a % of GDP ..................................................................................................................... 1794
NEW-CHARTS Foreign Exports to China for Chinas Domestic Use as a % of GDP ........................................................................... 1794
NEW-CHARTS China & Belgium Treasury Holdings vs China FX Reserves ........................................................................................ 1795
NEW-CHARTS Breakdown of Chinese Imports ..................................................................................................................................... 1796

17

NEW-CHARTS Chinese Imports Slow to 5 Year Low ............................................................................................................................ 1797

NEW-CHARTS Chinas Increasing Substitution of Imports for Made in China Products .................................................................... 1797
NEW-CHARTS Developing Economies Exposure to Chinese Domestic Demand ................................................................................ 1798
NEW-CHARTS Chinas GDP Monthly Tracker and Target .................................................................................................................... 1799
NEW-CHARTS China Matters Less for US Consumers than for Stock Investors ................................................................................. 1799
NEW-CHARTS Monthly Change in Foreign Reserves........................................................................................................................... 1800
NEW-CHARTS Monthly FX Purchases .................................................................................................................................................. 1801
NEW-CHARTS Chinas Estimated Productivity Growth Based on IP & Employment Shifts ................................................................. 1801
NEW-CHARTS Shanghai Composite Index Profits% Y-o-Y ............................................................................................................... 1802
NEW-CHARTS Corporate & Household Debt as % GDP ...................................................................................................................... 1802
NEW-CHARTS Weak Yuan Supported Much of 21-Year Export Rise to U.S. ...................................................................................... 1803
NEW-CHARTS xxxx ............................................................................................................................................................................... 1804
NEW-CHARTS Outstanding Balance of Margin Finance Shanghai Composite ................................................................................. 1804
NEW-CHARTS Currency Rout Goes Global as Risk Seen of 50% Loss .............................................................................................. 1804
NEW-CHARTS Yuan Trading Band ....................................................................................................................................................... 1805
NEW-CHARTS Historical Yuan FX Pattern ............................................................................................................................................ 1806
CHARTS China Plans to Spend Billions on Infrastructure in Pakistan .................................................................................................. 1807
CHARTS Chinas Proposed Silk Road Routes....................................................................................................................................... 1808
CHARTS China Activity Proxy & Official GDP........................................................................................................................................ 1809
CHARTS China Relaxes Commercial Bank Reserves ........................................................................................................................... 1810
CHARTS Chinese Balance of Payments ................................................................................................................................................ 1810
CHARTS Chinese Hot Money Flows ...................................................................................................................................................... 1811
CHARTS Falling Chinese Industrial Production ..................................................................................................................................... 1811
CHARTS Commodity Prices % Change Since July 2014 ...................................................................................................................... 1812
CHARTS Chinese Steel Demand, Iron Ore ............................................................................................................................................ 1812
CHARTS Chinese Rail Freight ............................................................................................................................................................... 1813
CHARTS Chinese Bank Assets versus US Bank Assets ....................................................................................................................... 1814
CHARTS Chinese Leverage and Underlying Nominal GDP .................................................................................................................. 1814
CHARTS Measures of Real & Nominal GDP Growth in China .............................................................................................................. 1815
CHARTS Chinese Total Debt & Breakdown........................................................................................................................................... 1815
CHARTS New Chinese Retail Stock Market Accounts .......................................................................................................................... 1816
CHARTS New Chinese Retail Stock Market Accounts-2 ....................................................................................................................... 1817
CHARTS Plummeting Chinese Consumer Confidence .......................................................................................................................... 1817
CHARTS Chinese PMI ............................................................................................................................................................................ 1818
CHARTS Chinese Exports versus Taiwan-Korea-Japan ....................................................................................................................... 1819
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 1820
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 1820
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 1821
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 1821
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 1822
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 1822
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 1823
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 1824
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 1824
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 1825
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 1826
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 1826
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 1826
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 1827
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1828
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1828
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1829
CHARTS Industrial Output A Concern.................................................................................................................................................... 1829
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1830
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1831
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1832
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1833
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1833
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1833
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1834
CHARTS China Equity Flows ................................................................................................................................................................. 1835
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1835
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1836
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1836
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1837
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1838
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1839
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1840
CHARTS Shadow Banking System ........................................................................................................................................................ 1840
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1842
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1843
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1844
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1845
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1846
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1847
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1848
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1849

18

CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1850

RESEARCH OF NOTE .................................................................................................................................................................................. 1851
NEW-CHINA China's Economy Continues To Crumble As Key Data Is Worst In 15 Years ................................................................. 1851
NEW-CHINA China Outflows Said To Surpass A Staggering $300 Billion in Under Three Months ..................................................... 1854
NEW-CHINA China FX Reserve Drop Is Collateral Damage from Yuan Fall ........................................................................................ 1857
NEW-CHINA This Isn't 1994: China and That First U.S. Rate Hike ....................................................................................................... 1860
NEW-CHINA Expect Regional Ripples, Not Global Waves, From China Selloff ................................................................................... 1862
NEW-CHINA China Risks Downward Spiral of Falling Markets, Growth ............................................................................................... 1863
NEW-CHINA China to the Rescue ......................................................................................................................................................... 1865
NEW-CHINA Yuan Devaluation Helps Attain U.S. Monetary Tightening Without Fed Rate Hikes ....................................................... 1866
NEW-CHINA Devaluation Promises to Boost Exports, But Adds Stability Risk .................................................................................... 1868
NEW-CHINA Risk of a Vicious Circle on Market, Profit Declines .......................................................................................................... 1870
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1871
CHINA "New Silk Road" Could Change Global Economics Forever ..................................................................................................... 1871
CHINA Beginning to Panic - China Easing to Combat The 'Darkest Period' of 2015 .................................................................... 1875
CHINA Skewed Heavily To The Downside," BNP Says ..................................................................................................................... 1876
CHINA Economists seek to ease fears on Chinas record capital outflow..................................................................................... 1881
CHINA China sets up $16B Gold fund as part of Silk Road initiative .................................................................................................... 1884
CHINA The Real Reason China Is Buying Up the World's Gold ...................................................................................................... 1884
CHINA China could crash US dollar with 30,000 tons of gold ............................................................................................................... 1887
CHINA Hard Landing Clearly Evident ................................................................................................................................................. 1890
CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ................................................................................................. 1893
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1899
CHINA Signs of Madness in the Global Financial System ............................................................................................................... 1901
CHINA Reverses Direction and Begins Easing ................................................................................................................................. 1902
CHINA China's Economic Reporting Possibly a Deception ............................................................................................................. 1903
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1905
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1908
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1910
CHINA - China's Rehypothecation............................................................................................................................................................. 1913
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1915
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 1917
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 1920
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 1921
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 1922
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 1925
CHINA - Falling Yuan ................................................................................................................................................................................. 1927
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 1929
CHINA - SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ..................................................................................... 1932
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 1935
CHINA - Has an Inflation Problem ............................................................................................................................................................. 1936
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 1937
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 1940
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 1945
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 1947
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 1952
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 1956
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 1959
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 1963
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 1966
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 1969
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 1972
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 1976
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 1977
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 1978
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 1980
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 1982
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 1984
CHINA - Withdraws Liquidity .................................................................................................................................................................. 1985
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 1987
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 1997
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 2000
CHINA - PMI Improvement....................................................................................................................................................................... 2001
CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 2004
CHINA - An Implicit Social Contract .......................................................................................................................................................... 2006
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 2008
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 2009
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 2010
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 2011
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 2014
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 2015
CHINA - Credit to GDP ............................................................................................................................................................................. 2017
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 2018
CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 2020
JAPAN: NOTHING SEEMS TO BE WORKING AS ABENOMICS LOSES SUPPORT ............................................................................. 2025

19

CHARTS OF NOTE ....................................................................................................................................................................................... 2026

NEW-CHARTS - JAPAN Real Y-o-Y Cash Earnings with Abenomics .................................................................................................. 2026
NEW-CHARTS - JAPAN BOJs Accelerating Purchases of Equity Funds Seen as Driving Force of Tokyo Share Markets................ 2026
NEW-CHARTS - JAPAN More than a Fourth of Japans Population is Over the Age of 65 .................................................................. 2027
NEW-CHARTS - JAPAN IMFs Forecast of Japanese Population Growth ............................................................................................ 2027
NEW-CHARTS - JAPAN Prefectures with More Seniors Saw Steeper GDP Losses ............................................................................ 2028
NEW-CHARTS - JAPAN Aging Population Will Continue Dragging Down Growth ............................................................................... 2028
NEW-CHARTS - JAPAN Fewer, Older Citizens Facing Larger Debt Burden ........................................................................................ 2029
NEW-CHARTS - JAPAN 20 Years Later China Follows Japans Pattern .............................................................................................. 2030
CHARTS - JAPAN Financial Repression Gets Heavier in Japan .......................................................................................................... 2030
CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat ............................................................................................................... 2031
CHARTS - JAPAN 48 Month Trade Balance Deficit .............................................................................................................................. 2032
CHARTS - JAPAN Y-o-Y Contracting Imports ....................................................................................................................................... 2032
CHARTS - JAPAN Monetary Base versus USDJPY .............................................................................................................................. 2033
CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000......................................................................................... 2033
CHARTS - JAPAN 1.174% 30 Year Bond Yield .................................................................................................................................... 2035
CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 2035
CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 2035
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 2036
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 2036
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 2037
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 2037
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 2038
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 2039
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 2040
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 2041
CHARTS - JAPAN Demographics .......................................................................................................................................................... 2042
CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 2042
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 2043
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 2044
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 2045
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 2046
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 2046
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 2048
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 2048
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 2049
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 2049
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 2050
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 2051
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 2051
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 2052
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 2052
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 2053
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 2054
CHARTS - GDP Trend ............................................................................................................................................................................... 2054
CHARTS - CPI Trend ................................................................................................................................................................................. 2055
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 2055
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 2056
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 2057
RESEARCH OF NOTE .................................................................................................................................................................................. 2058
NEW-JAPAN Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan .............................................. 2058
NEW-JAPAN S&P Downgrades Japan from AA- To A+ On Doubts Abenomics Will Work - Full Text ........................................ 2060
NEW-JAPAN Elderly Japanese Population Hits New Record - Demographic Death-Rattle Continues....................................... 2062
NEW-JAPAN Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!" ................... 2066
NEW-JAPAN Abe Ratings Crash to Record Lows, Japan Lowers Minimum Voting Age ............................................................. 2067
JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ................................................................................. 2070
JAPAN Japan Still the Worlds Top Credit? ....................................................................................................................................... 2071
JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target ........................................................................................ 2072
JAPAN Japanese trading firms to cut investments, sell assets ...................................................................................................... 2073
JAPAN The BOJ Ups The Ante ............................................................................................................................................................ 2075
JAPAN Is Japan Kaput? ........................................................................................................................................................................ 2076
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 2079
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2081
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 2084
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 2086
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2087
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 2089
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 2091
JAPAN - What the Japanese been Buying ............................................................................................................................................. 2092
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 2094
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 2097
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 2098
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 2099
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 2102
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 2103
JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 2106
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 2108

20

JAPAN - What You Need to Know............................................................................................................................................................. 2110

JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 2113
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 2113
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 2117
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 2118
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 2119
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 2120
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 2123
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 2125
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 2128
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 2129
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 2131
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 2132
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 2133
JAPAN - Yen Devaluation ........................................................................................................................................................................ 2134
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 2135
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 2137
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 2139
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 2139
JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 2141
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 2144
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 2146
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 2149
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 2151
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 2153
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 2159
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 2162
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 2166
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 2172
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 2177
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 2178
JAPAN - PMI Breakdown ........................................................................................................................................................................... 2180
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 2182
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 2183
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 2186
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 2186
EMERGING MARKETS FX ROUT CONTINUES ...................................................................................................................... 2188

EMERGING MARKETS ....................................................................................................................................................................................... 2188
CHARTS OF NOTE ....................................................................................................................................................................................... 2188
NEW-CHARTS MSCI EM FX Index - New 6 Year Lows ....................................................................................................................... 2188
NEW-CHARTS EM FX Loses Since FOMC Meeting Brazil Noticeably Worse .................................................................................. 2189
NEW-CHARTS EM FX Debasement By Country Since FOMC ............................................................................................................. 2189
NEW-CHARTS EM FX Debasement By Country Since 9/7/09 .............................................................................................................. 2189
NEW-CHARTS Brazilians Scramble to Protect their Store of Value (Coming to Other Countries) ....................................................... 2190
NEW-CHARTS Brazil Real GDP Y-o-Y% ............................................................................................................................................... 2191
NEW-CHARTS Brazil Real / US$ versus Brazil 5Y CDS ...................................................................................................................... 2191
NEW-CHARTS Brazil Change in Yields Compared to Turkey and Mexico ........................................................................................ 2193
NEW-CHARTS Brazil Sovereign Gross Debt/GDP Government versus BI Simulation .................................................................. 2193
NEW-CHARTS Brazil Number of days to start a business Worst in the Major Countries! .............................................................. 2194
NEW-CHARTS Brazil Real Reaches Record Low as Budget Pessimism Rises ................................................................................ 2194
NEW-CHARTS 5Y CDS Spreads Brazil, Russia, Turkey, Indonesia, Colombia & Peru .................................................................... 2195
CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000 ..................................................................................................... 2195
CHARTS AFRICA-Foreign Direct Investment & Trade .......................................................................................................................... 2196
CHARTS AFRICA-Geographic Comparisons ......................................................................................................................................... 2197
CHARTS Emerging Markets Corporate Defaults ................................................................................................................................... 2197
CHARTS Emerging Markets Economic Surprise Index ......................................................................................................................... 2198
CHARTS Emerging Markets Currency Change versus USD ................................................................................................................. 2198
CHARTS Emerging Markets Change in Nominal Policy Rate ............................................................................................................... 2199
CHARTS EM Vulnerability to an external shock Resilience Indicator .............................................................................................. 2200
CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ................................................... 2201
CHARTS Falling EM Currencies ............................................................................................................................................................. 2202
CHARTS Post-China 16 ......................................................................................................................................................................... 2203
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 2204
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 2204
CHARTS - Reserves versus World ............................................................................................................................................................ 2204
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 2206
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 2207
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 2208
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 2209
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 2210
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 2211
RESEARCH OF NOTE .................................................................................................................................................................................. 2212
NEW-EMERGING MARKETS - Why Asian Markets Are Collapsing .................................................................................................... 2212
NEW-EMERGING MARKETS - History Suggests Asia Can Handle Fed Tightening ......................................................................... 2214
EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" .......................................... 2216

21

EMERGING MARKETS - North Korea: Chinese Outsourcing Giant ................................................................................................... 2218

EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 2220
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 2222
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 2222
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 2228
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 2228
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 2230
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 2232
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 2238
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 2239
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 2241
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 2243
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 2245
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 2249
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 2251
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 2252
ASEAN ........................................................................................................................................................................................................... 2255
ASEAN: A New Common Market .............................................................................................................................................................. 2255
ASIA ............................................................................................................................................................................................................... 2259
NEW- ASIA: CHARTS The Most Leveraged Region Today Corporate Leverage Debt/EBITDA ....................................................... 2259
NEW -ASIA: CHARTS Entering More Adverse Part of the Credit Cycle ............................................................................................... 2259
NEW- ASIA: CHARTS Real GDP Slowing, Real Funding Costs Are Rising ......................................................................................... 2260
ASIA: CHARTS Demographic Peaks of Working Age Populations ....................................................................................................... 2261
ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth............................................................................................ 2262
ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports ........................................................................................................ 2263
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 2264
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 2264
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 2266
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 2266
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 2268
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 2269
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 2269
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 2270
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 2271
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 2271
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 2272
ASIA - Regional Risk-Reward .................................................................................................................................................................... 2274
ASIA - Credit Contraction Problems ...................................................................................................................................................... 2275
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 2277
ASIA - Synchronized Markets .................................................................................................................................................................... 2279
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 2281
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 2282
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 2286
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 2287
ASIA - Demographic Headwinds ............................................................................................................................................................ 2290
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 2291
LATIN AMERICA ........................................................................................................................................................................................... 2293
NEW-LATIN AMERICA Latin America Shouldn't Blame the Federal Reserve ................................................................................ 2293
NEW-COLUMBIA Colombian Peso Leads Currency Declines as Crude Falls ................................................................................ 2295
NEW-ARGENTINA Fewer Reserves Are a Plus for Argentine Bondholders................................................................................... 2295
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 2296
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 2297
MIDDLE EAST ............................................................................................................................................................................................... 2299
TURKEY ..................................................................................................................................................................................................... 2299
BRICS................................................................................................................................................................................................................... 2306
BRICS Population, GDP,GDP per Capita ............................................................................................................................................ 2306
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 2307
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 2307
BRICS Inflation Problems Abound ...................................................................................................................................................... 2309
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 2310
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 2311
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 2313
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 2314
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 2317
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 2319
BRAZIL........................................................................................................................................................................................................... 2321
NEW-BRAZIL - Brazil Budget Cuts Not Enough to Avoid More Downgrades .......................................................................................... 2321
NEW-BRAZIL - Brazil's Economy Is Now A Job Destruction Machine ..................................................................................................... 2322
NEW-BRAZIL - Local Rates Hit Hardest by Swift S&P Sovereign Downgrade to Junk ........................................................................... 2325
NEW-BRAZIL - Recession and High Rates Doomed Brazils Investment-Grade Rating ......................................................................... 2327
NEW-BRAZIL - Why Brazil Is Not Coming Back Anytime Soon ............................................................................................................... 2329
NEW-BRAZIL - Brazil Returns to Junk as Developing Nations Feel the Squeeze ................................................................................... 2329
BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ...................................................................................................... 2332
BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ............................................................................................. 2339

22

BRAZIL - Brazils Depressed Consumer Confidence Index ...................................................................................................................... 2339

BRAZIL - Brazils Collapsing Confidence in the Construction Sector ....................................................................................................... 2340
BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ............................................................................................................... 2340
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 2342
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 2345
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 2348
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 2349
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 2352
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 2353
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 2353
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 2354
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 2354
RUSSIA Inflation Rate ............................................................................................................................................................................ 2355
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 2355
RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 2356
RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 2356
RUSSIA Russian CDS Spreads ............................................................................................................................................................. 2357
RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 2358
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 2359
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 2360
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 2361
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 2361
RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 2362
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 2363
RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 2364
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 2365
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 2366
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 2367
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 2368
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 2368
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 2370
RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ............................................................................................................... 2370
INDIA.............................................................................................................................................................................................................. 2371
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 2371
INDIA Real GDP and Car Sales ............................................................................................................................................................. 2372
INDIA Inflation ......................................................................................................................................................................................... 2373
INDIA - Inflation .......................................................................................................................................................................................... 2374
INDIA - WPI ................................................................................................................................................................................................ 2375
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 2376
INDIA - Panic in India ................................................................................................................................................................................. 2377
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 2379
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 2380
SOUTH AFRICA ............................................................................................................................................................................................ 2382
US ECONOMY ..................................................................................................................................... 2384

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 2386
MACRO - US Macro Data .................................................................................................................................................................................... 2386
CHARTS OF NOTE ....................................................................................................................................................................................... 2386
NEW-MACRO EM Wave is the Third Wave in the Global Financial Crisis ............................................................................................ 2386
NEW-MACRO Deteriorating EM FX, Equity and Debt ........................................................................................................................ 2387
NEW-MACRO Global Slowdown Only Getting Worse - China .............................................................................................................. 2388
NEW-MACRO Global Slowdown Only Getting Worse - India ................................................................................................................ 2389
NEW-MACRO Global Import-Export Trends .......................................................................................................................................... 2390
NEW-MACRO Developed World Import-Export Trends Has Nearly Halved Since 2000 ...................................................................... 2391
NEW-MACRO Emerging Market Import-Export Trends Has Also Fallen .............................................................................................. 2392
NEW-MACRO September US Macro versus S&P 500 .......................................................................................................................... 2393
MACRO June US Macro versus S&P 500 .............................................................................................................................................. 2393
MACRO 10 Year View of US Macro versus S&P 500 Historic Divergence ........................................................................................ 2394
MACRO US Macro Not This Low Since 2008 Financial Crisis ............................................................................................................... 2394
MACRO S&P 500 versus High Yield (HY) Bond Yield ........................................................................................................................... 2395
MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ............................................................................................. 2395
MACRO Goldman Sachs Global Leading Indicator Has Plummeted..................................................................................................... 2397
MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ........................................................ 2397
MACRO 2015 World GDP Growth versus World Stocks ....................................................................................................................... 2398
MACRO World GDP Annual Estimates versus World Stocks ................................................................................................................ 2398
MACRO World Economies Cutting Rates to Avoid Economic Contraction ........................................................................................... 2399
MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ..................................................................... 2399
MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ..................................................................... 2400
MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ................................................................... 2400
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 2401
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 2401
MACRO US Macro Surprise Index ......................................................................................................................................................... 2401
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 2402
MACRO World Trade Volumes ............................................................................................................................................................... 2404
MACRO Marginal Utility .......................................................................................................................................................................... 2404

23

MACRO Global Manufacturing PMI ........................................................................................................................................................ 2405

MACRO Credit Markets Diverging .......................................................................................................................................................... 2405
MACRO US Macro Complacency ........................................................................................................................................................... 2406
MACRO Macro Implied Vols ................................................................................................................................................................... 2406
MACRO Markets Stretched .................................................................................................................................................................... 2407
RESEARCH OF NOTE ........................................................................................................................................................................................ 2408
MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population ..................................................................... 2408
MACRO A World Recession? ..................................................................................................................................................................... 2410
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 2411
MACRO The Ambivalent Superpower ..................................................................................................................................................... 2413
MACRO Things Worse than Slow Growth ................................................................................................................................................. 2415
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 2418
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 2420
MACRO - Output Gap .................................................................................................................................................................................... 2427
US INVESTMENT CYCLE ...................................................................................................................................................... 2436

CHARTS OF NOTE ............................................................................................................................................................................................. 2437
NEW-CHART Financial Cycles and Crisis Are Becoming Longer & Deeper ............................................................................................ 2437
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2437
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2438
NEW-CHART A Secular Problem on the Verge of Also Being a Business /Credit /Rate Cycle Problem ................................................. 2438
NEW-CHART Business Cycle Surprise Index............................................................................................................................................ 2439
NEW-CHART Boom-Bust Cycle In Stocks ................................................................................................................................................. 2439
CHART Net Investment as a Share of Net Domestic Product ................................................................................................................... 2440
CHART Net Worth to GDP ......................................................................................................................................................................... 2440
CHART % of Unprofitable IPOs .................................................................................................................................................................. 2441
CHART US Private Construction Spending ............................................................................................................................................... 2442
CHART SPX versus 12 MMA Due for a Momentum Sell Period .......................................................................................................... 2442
CHART Current Economic Cycle Is Getting Old in The Tooth ................................................................................................................ 2443
CHART US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending ............................................................... 2444
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ................................................................................................... 2444
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ................................................................................................... 2445
CHART - Economy in Decline from Consuming More than it Produces ....................................................................................................... 2446
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 2446
ECONOMIC INDICATORS .................................................................................................................................................................................. 2448
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 2448
NEW-RESEARCH - 8 Charts That Prove The US Is Already In A Recession.......................................................................................... 2448
NEW-RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here .................................... 2453
RESEARCH - The US Economy Continues to Tank under Obama.......................................................................................................... 2456
REFERENCE CHARTS ............................................................................................................................................................................. 2458
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2463
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2463
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2465
SOME HIGHLIGHTS ..................................................................................................................................................................................... 2465
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2469
NEW-CHARTS October NFP 60K below Estimates at 142K ................................................................................................................. 2469
NEW-CHARTS Change in Civilian Employment: August 2015 .............................................................................................................. 2469
NEW-CHARTS Peaks In LMCI Leads Declines in Employment ............................................................................................................ 2471
NEW-CHARTS September 2015 Monthly Job Change by State Bottoms up Says 22K Jobs Lost ................................................... 2471
NEW-CHARTS Initial Jobless Claims ..................................................................................................................................................... 2472
NEW-CHARTS Increased Job Openings not a Sign of Better Employment .......................................................................................... 2474
CHARTS Full Time Jobs Approach 2007 Highs ..................................................................................................................................... 2475
CHARTS Full Time versus Part Time Jobs ............................................................................................................................................ 2475
CHARTS April Jobs Added By Industry .................................................................................................................................................. 2475
CHARTS Wages of Production & Non-Supervisory Employees Y-0-Y % Change ................................................................................ 2476
CHARTS US Labor Productivity ............................................................................................................................................................. 2478
CHARTS Wages of All Employees Y-o-Y % Change ............................................................................................................................. 2478
CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed.......................................... 2479
CHARTS Non-Farm Payrolls Monthly and Yearly Change ................................................................................................................. 2480
CHARTS Civilian Unemployment Rate................................................................................................................................................... 2480
CHARTS JOLTS-Total Job Openings .................................................................................................................................................... 2481
CHARTS New Jobless Claims w/ 4 Week Moving Average .................................................................................................................. 2481
CHARTS Non-Farm Payrolls .................................................................................................................................................................. 2482
CHARTS US Monthly Job Growth .......................................................................................................................................................... 2482
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 2483
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 2483
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 2484
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 2484
CHARTS - Underemployment Gap ............................................................................................................................................................ 2486
CHARTS - Participation Rate..................................................................................................................................................................... 2487
CHARTS - Part Time Employment ............................................................................................................................................................ 2487

24

NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2488

NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2489
RESEARCH OF NOTE .................................................................................................................................................................................. 2496
NEW-RESEARCH - Payrolls Disaster: Only 142K Jobs Added In September With Zero Wage Growth; August Revised Much Lower 2496
NEW-RESEARCH - The September Jobs Report Was Even Worse: U.S. States Lost A Total Of 22,000 Jobs ..................................... 2499
NEW-RESEARCH - 698K Native-Born Americans Lost Their Job in August: Why This Suddenly Is The Most Important Jobs Chart .. 2500
NEW-RESEARCH - Since 2007: 1.4 Million Manufacturing Jobs Lost; 1.4 Million Waiter/Bartender Jobs Gained ................................ 2504
NEW-RESEARCH - Goldman Demolishes Jobless Claims Hype: "This Does Not Signal A Booming Labor Market" ............................ 2505
RESEARCH - Part-Time Jobs Soar By 437,000; Full-Time Jobs Tumble, Stay Firmly Under Pre-Recession Highs .............................. 2509
RESEARCH - The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report ....................................................................... 2510
RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie" ......................................................................................... 2515
RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ................................................................................................................... 2517
RESEARCH - American Express to cut more than 4,000 jobs ................................................................................................................. 2518
RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 2519
RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 2522
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 2525
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 2528
SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 2529
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2535
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2535
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 2535
NEW-CHARTS Global Consumer Confidence Begins Reversal from Trend Resistance...................................................................... 2539
NEW-CHARTS US Economic Index Steadily Eroding ........................................................................................................................... 2539
NEW-CHARTS UMich Consumer Confidence with Biggest Miss on Record ........................................................................................ 2540
CHARTS Falling NFIB Small Business Optimism .................................................................................................................................. 2540
CHARTS Falling Small Business Hiring Plans ....................................................................................................................................... 2540
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ..................................................................................................... 2541
CHARTS Consumer Comfort Plunges Most In 10 Months..................................................................................................................... 2542
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 2543
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 2543
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 2544
CHARTS - Orange Book ............................................................................................................................................................................ 2544
RESEARCH OF NOTE .................................................................................................................................................................................. 2545
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 2545
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 2547
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2549
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2549
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2553
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2555
NEW-American Association of Independent Investors ................................................................................................................................. 2556
NEW-Investors Intelligence ........................................................................................................................................................................... 2556
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2557
NEW-Small Business Optimism .................................................................................................................................................................... 2558
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2561
NEW-Margin Levels ....................................................................................................................................................................................... 2562
Real Margin Debt as % of GDP ..................................................................................................................................................................... 2568
Margin Debt versus S&P 500 ........................................................................................................................................................................ 2568
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 2570
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2573
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2573
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2574
NEW-TRIN ..................................................................................................................................................................................................... 2575
NEW-McClellan Oscillator ............................................................................................................................................................................. 2576
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 2577
NEW-CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce .................................................................. 2577
NEW-CHARTS Nominal & Real Household Spending Expectations ........................................................................................................ 2578
NEW-CHARTS Household Spending Expectations by Income Bucket ..................................................................................................... 2578
NEW-CHARTS A Very Neutral (Highly Unusual) Bull Market .................................................................................................................... 2579
NEW-CHARTS Historical Swings in Sentiment ......................................................................................................................................... 2579
NEW-CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About? ............................................................ 2581
NEW-CHARTS Investors Intelligence Bulls & Bears ................................................................................................................................. 2581
NEW-CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ................................................................................ 2582
NEW-CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! ......................................................................... 2582
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ......................................................................................................... 2583
CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................................ 2584
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ............................................................................................ 2585
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ........................................................................... 2585
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................. 2586
CHARTS - Orange Book ................................................................................................................................................................................ 2586
CHARTS Asset Allocation Global Equities .............................................................................................................................................. 2587
CHARTS Asset Allocation Global Bonds ................................................................................................................................................ 2587
CHARTS Active versus Passive Funds Allocation ..................................................................................................................................... 2588
CHARTS Investors Intelligence Survey of % Bears ................................................................................................................................... 2588
CHARTS Sentiment at Post 2008 Crisis Highs .......................................................................................................................................... 2590
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................. 2591

25

CHARTS Investor Allocation Trends for Stocks, Bonds and Cash ............................................................................................................ 2592
CHARTS Uptick in Feds Financial Stress Index Composite ..................................................................................................................... 2593
CHARTS Fear Barometer Diverges with VIX, CDS IG Index .................................................................................................................... 2594
CHARTS Extreme Complacency Seen Near End of Cycles ...................................................................................................................... 2594
CHARTS Complacency Seen In PE/VIX ..................................................................................................................................................... 2595
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern .................................................................................................... 2595
CHARTS Smart Money Flows .................................................................................................................................................................... 2597
CHARTS Fed Assets versus Bullish Sentiment ......................................................................................................................................... 2597
CHARTS Macro Support Has Technically Broken Down ........................................................................................................................... 2598
CHARTS US Surprise Index Setting Up for Downturn ............................................................................................................................... 2598
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................. 2599
RESEARCH OF NOTE ........................................................................................................................................................................................ 2600
NEW-SENTIMENT Oblivious To Risk - Complacency Still Reigns ........................................................................................................ 2600
NEW-SENTIMENT UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record ......................................... 2604
NEW-SENTIMENT Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ............................... 2605
SENTIMENT: The "Smart Money" Has Never Been More Bearish .............................................................................................................. 2606
SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ................................................................. 2609
SENTIMENT: We Are All Bulls Now .............................................................................................................................................................. 2612
SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says .............................................. 2613
SENTIMENT: One Heckuva Bull Market but Momentum Weakening! ......................................................................................................... 2614
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................. 2616
SENTIMENT: Americas Crisis of Trust ......................................................................................................................................................... 2618
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years .................................................................. 2620
SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. ........................................................................................................................ 2620
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ............................................................................................. 2622
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ............................................................................................ 2627
SENTIMENT: Elliott Wave's View from the Top ............................................................................................................................................ 2630
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2634
NEW-CHARTS October Retail Sales Control Group Y-o-Y & Sequential Change ................................................................................ 2638
NEW-CHARTS October Retail Y-o-Y Sales ........................................................................................................................................... 2638
NEW-CHARTS Retail Sales Ex Autos M-o-M ........................................................................................................................................ 2639
NEW-CHARTS Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2639
NEW-CHARTS Consumer Credit Car Loans ......................................................................................................................................... 2640
NEW-CHARTS Consumer Loans Owned by the Government .............................................................................................................. 2640
NEW-CHARTS Student & Car Loans ..................................................................................................................................................... 2642
NEW-CHARTS Total Non-Revolving Credit ........................................................................................................................................... 2642
NEW-CHARTS August Sequential Change in Revolving and Non-Revolving Credit ............................................................................ 2643
NEW-CHARTS Gas Prices Below $2/Gallon by December? ................................................................................................................. 2643
NEW-CHARTS Aggregate Income Proxy versus Retail Sales ex Auto and Gas .................................................................................. 2644
NEW-CHARTS Consumption Items Sampling - Y-o-Y Growth .............................................................................................................. 2644
CHARTS Retail Sales Control Group Y/Y and Sequential Change ....................................................................................................... 2646
CHARTS Retail Sales Y-0-Y ................................................................................................................................................................... 2646
CHARTS Retail Sales Ex Auto ............................................................................................................................................................... 2647
CHARTS VICE Index and Discretionary Spending ................................................................................................................................ 2648
CHARTS Value of Manufacturers New Orders for Consumer Goods Industries .................................................................................. 2649
CHARTS y-0-y Chain Store Sales .......................................................................................................................................................... 2649
CHARTS Y-0-Y Factory Orders .............................................................................................................................................................. 2650
CHARTS Annual Growth in Retail Sales ................................................................................................................................................ 2650
CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 .................................................................................................. 2651
CHARTS Retails Sales Mo-o-Mo Drops ................................................................................................................................................. 2651
CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .............................................................................. 2652
CHARTS What Americans Spent Their "Gas Savings" On .................................................................................................................... 2653
CHARTS Retail Sales-Previous Month Comparisons ............................................................................................................................. 2655
CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas ............................................................................................................ 2656
CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ............................................................................................................... 2656
CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .................................................................................................... 2657
CHARTS Total Household Debt Added Since the Great Financial Crisis .............................................................................................. 2657
CHARTS Total Household Debt Added in Q4 2014 ............................................................................................................................... 2658
CHARTS Real Personal Consumption ................................................................................................................................................... 2658
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 2659
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 2661
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 2662
CHARTS Retail Sales ............................................................................................................................................................................. 2662
CHARTS Retail Sales - Details ............................................................................................................................................................... 2664
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 2665
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 2665
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 2666
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 2666
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 2667
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 2669
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 2670
CHARTS - Core Retail Growth .................................................................................................................................................................. 2671
RESEARCH OF NOTE .................................................................................................................................................................................. 2672
NEW- RECESSION Retail Implosion Proves we are in a Recession .................................................................................................... 2672

26

RESEARCH - Headwinds for US Consumers & Home Buyers ................................................................................................................ 2678

RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2679
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2681
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ........................................................................... 2683
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 2685
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ................................................................................... 2688
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................................... 2689
RESEARCH - A Sequential Decline in Wages .......................................................................................................................................... 2690
RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ..................................................................................... 2691
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2698
NEW-CHARTS Strong Dollar, High Inventories to Slow US Factory Output ......................................................................................... 2702
NEW-CHARTS US ISMs 3 Mo MA ......................................................................................................................................................... 2703
NEW-CHARTS September Survey Data versus Non Farm Payrolls ..................................................................................................... 2704
NEW-CHARTS Regional Surveys for September versus ISM PMI (August)......................................................................................... 2705
NEW-CHARTS Regional Manufacturing Surveys versus Forward EPS Estimates ............................................................................... 2706
NEW-CHARTS Historical Regional Index Comparisons Last Seen in 2008....................................................................................... 2706
NEW-CHARTS Predicted US Quarterly GDP Grow Q-o-Q Annualized ............................................................................................. 2707
NEW-CHARTS Predicted US Annual Growth % Through 2024 ............................................................................................................ 2707
NEW-CHARTS Predicted US Growth Compared to UK and Eurozone ................................................................................................. 2708
CHARTS US Q2 GDP Consensus Forecast versus Atlanta Feds 0.7% ............................................................................................... 2708
CHARTS Q1 2015 US GDP Growth Consensus Estimate .................................................................................................................... 2710
CHARTS US Business Investment Current versus Previous Recoveries .......................................................................................... 2710
CHARTS US Vehicle Miles 12 Month Total All Roads ..................................................................................................................... 2711
CHARTS CAPEX Use of Cash ............................................................................................................................................................ 2712
CHARTS Change in Total Private Industries.......................................................................................................................................... 2712
CHARTS US Private Construction Spending ......................................................................................................................................... 2713
CHARTS Ratio of Coincident-to-Lagging Conference Board Indices .................................................................................................... 2714
CHARTS GDP Q4 2014 Revised Components Table ............................................................................................................................ 2715
CHARTS Quarterly Change in % Contributions to GDP ........................................................................................................................ 2715
CHARTS Three Reasons CAPEX is Faltering ....................................................................................................................................... 2715
CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ................................................................................................. 2716
CHARTS Philly Fed Rolling Over ........................................................................................................................................................... 2717
CHARTS US Profits & Sales Have Stalled ............................................................................................................................................. 2718
CHARTS Real GDP versus CAPEX ....................................................................................................................................................... 2718
CHARTS Change In Inventories Inflated from Lack of Demand ......................................................................................................... 2719
CHARTS US GDP Revision for Q4-2014 ............................................................................................................................................... 2720
CHARTS Quarterly GDP by Component Breakdown ............................................................................................................................. 2720
CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 2722
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 2722
CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 2724
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 2725
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 2725
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 2726
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 2727
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 2727
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 2728
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 2729
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 2729
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 2730
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 2731
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 2731
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 2732
CHARTS - Manufacturing .......................................................................................................................................................................... 2733
CHARTS - Exports ..................................................................................................................................................................................... 2733
CHARTS - Durable Goods ......................................................................................................................................................................... 2734
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 2734
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 2735
RESEARCH OF NOTE .................................................................................................................................................................................. 2736
NEW-RESEARCH - The Divergence in ISM Surveys Shows a Troubling Path for U.S. Growth ............................................................. 2736
NEW-RESEARCH - Conference Board "Leading Indicators" Plunges To Lowest Since March 2013 ..................................................... 2737
NEW-RESEARCH - xxxx ........................................................................................................................................................................... 2738
RESEARCH - Biggest Inventory Build In History Prevents Total Collapse Of The US Economy ............................................................ 2738
RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ................................................................................... 2740
RESEARCH - The U.S. Economy is Dead ................................................................................................................................................ 2742
RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ......................................................................................... 2744
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 2747
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 2752
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2757
US PUBLIC POLICY RUSSIA & IRAN ESCALATE SYRIAN CONFLICT ............................................................................ 2765
NEW-SYRIA RUSSIA & IRAN ENTER THE FRAY ................................................................................................................................ 2766

27

NEW-TRANS PACIFIC PARTNERSHIP (TPP) ......................................................................................................................................... 2769

NEW-US GUN CONTROL (DEBATED AGAIN) ........................................................................................................................................ 2771
CHARLESTOWN SHOOTING ............................................................................................................................................................... 2771
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 2772
BALTIMORE RIOTS............................................................................................................................................................................... 2772
FERGUSON ........................................................................................................................................................................................... 2773
MILITARIZATION OF POLICE............................................................................................................................................................... 2773
POLLS ........................................................................................................................................................................................................ 2774
CORPORATE INVERSIONS ..................................................................................................................................................................... 2775
INCARCERATION ..................................................................................................................................................................................... 2775
FLAWED TAX POLICY .............................................................................................................................................................................. 2775
MINIMUM WAGE ....................................................................................................................................................................................... 2775
SOCIAL CANCERS ................................................................................................................................................................................... 2776
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 2776
INEQUALITY .............................................................................................................................................................................................. 2776
CREEPING SOCIALISM ............................................................................................................................................................................ 2777
POLICIAL PARALYSIS .............................................................................................................................................................................. 2777
STATE OF THE UNION ............................................................................................................................................................................. 2777
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 2777
OBAMACARE ............................................................................................................................................................................................ 2779
GENERAL PUBLIC POLICY...................................................................................................................................................................... 2781
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 2782
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 2782
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 2783
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 2784
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 2785
CHARTS Size of US Army Since 1946................................................................................................................................................... 2785
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2786
CHARTS Changing Presidential Stance ................................................................................................................................................ 2787
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2787
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2788
RESEARCH OF NOTE .................................................................................................................................................................................. 2789
POLICY - A 'Shadow" State of the Union .................................................................................................................................................. 2789
POLICY - Banks Remove the "Heart" of Dodd-Frank ............................................................................................................................... 2792
POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ............................................................................... 2796
POLICY - The Death Cross of American Business ................................................................................................................................... 2799
POLICY - The State of the Union I have a Dream! .............................................................................................................................. 2801
POLICY - A self-destructive path toward oblivion...................................................................................................................................... 2805
POLICY - Indictment of US Public, Fiscal & Monetary Policy ................................................................................................................... 2810
POLICY - The Crisis of Trust Continues to Worsen .................................................................................................................................. 2823
POLICY - The Stunning Truth about Inequality In America....................................................................................................................... 2824
POLICY - Pointing US towards Government Dependence ....................................................................................................................... 2825
POLICY - Yet another Game of Deception ................................................................................................................................................ 2829
POLICY - Obamacare A Flawed Public Policy Implementation ................................................................................................................ 2833
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 2836
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ................................................................................................... 2840
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed........................................................................... 2843
POLICY - "What is good for GM is good for America" is no longer correct .............................................................................................. 2845
POLICY - Where is the Logic In US Public Policy ..................................................................................................................................... 2846
POLICY - What is the Real Driving Force Behind the New Immigration Law? ......................................................................................... 2849
POLICY - Crony Capitalism and How America Lost its Way! ................................................................................................................... 2852
STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 2856
STATE OF THE UNION Remarks by the President in State of the Union Address January 20th, 2015 ............................................ 2856
STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon ................................................................... 2866
MONETARY POLICY GLOBAL SLOW DOWN FORCES FED TO HOLD ON RATE INCREASE ......................................................... 2874
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2874
NEW-CHARTS: US Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2874
NEW-CHARTS: Velocity of Money Shows Transmission System Broken ................................................................................................... 2874
NEW-CHARTS: Interest Rates Reflect Economic Growth & Inflation .......................................................................................................... 2875
NEW-CHARTS: Fed Balance Sheet Change versus S&P 500 ..................................................................................................................... 2875
NEW-CHARTS: Fed Policy Initiatives versus S&P 500 Actions ................................................................................................................... 2876
NEW-CHARTS: Total US Credit Old versus New Series........................................................................................................................... 2876
NEW-CHARTS: Banks Treasuries Stash Boosts Case for Fed Delay ........................................................................................................ 2877
NEW-CHARTS: US Treasuries Purchased by Domestic Mutual Funds ....................................................................................................... 2877
NEW-CHARTS: Total Debt and Loans versus US GDP ............................................................................................................................... 2878
NEW-CHARTS: Credit Markets Instruments All Sectors- Liability Levels ................................................................................................. 2878
CHARTS: ZIRP Policy Results Compared to Previous Falling or Steady Rate Targets .............................................................................. 2879
CHARTS: Producer Price Index is Plummeting Complete Lack of Pricing Power .................................................................................... 2880
CHARTS: Liquidity Problems in Bond Market Are Only Getting Worse ....................................................................................................... 2880
CHARTS: Lending is Coming From the Fed Not the Banks ...................................................................................................................... 2881
CHARTS: Debt Service Ratio for Prior Expansions ...................................................................................................................................... 2881
CHARTS: Why Interest Rates Cant Come Up Derivative Collateral Underpinnings ................................................................................ 2882
CHARTS: Total Credit Market Debt + Fed B/S versus Nominal GDP Growth ............................................................................................. 2882

28

CHARTS: Fed is Allowing Adjusted Monetary Base to Fall .......................................................................................................................... 2883

CHARTS: Federal Reserve Monetary Base Since 1918............................................................................................................................... 2883
CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ......................................................................................................... 2884
CHARTS: Fed Balance Sheet & Policy Rate Target ..................................................................................................................................... 2884
CHARTS: Cash Balances versus Total Reserve Balances .......................................................................................................................... 2885
CHARTS: Fed Balance Sheet and QE Versions ........................................................................................................................................... 2885
CHARTS: Major US Financial Institutional Leverage Ratios ........................................................................................................................ 2887
CHARTS: Fed Balance Sheet Composition .................................................................................................................................................. 2888
CHARTS: Cash Bank Holdings ..................................................................................................................................................................... 2889
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2890
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2890
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2891
CHARTS: Repo Volumes .............................................................................................................................................................................. 2891
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2892
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2892
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2893
CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2894
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2895
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2895
CHARTS: Net National Savings Rate............................................................................................................................................................ 2896
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2896
CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2897
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2898
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2899
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2899
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2900
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2902
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2902
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2903
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2904
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2905
NEW-RATES: Market-Implied Odds of a Rate Hike ..................................................................................................................................... 2906
NEW-RATES: Probability of Fed Rate Move Fed Funds Futures.............................................................................................................. 2906
NEW-RATES: Feds Mixed Signals Loses It Credibility ................................................................................................................................ 2907
RATES: Almost a Third of All Trades Have Known Only ZIRP ..................................................................................................................... 2908
RATES: Is There a Zero Bound for US Rates? ............................................................................................................................................. 2909
RATES: Historical Policy Rates ..................................................................................................................................................................... 2910
RATES: Debt ................................................................................................................................................................................................. 2911
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2911
RATES: Real Interest Rates .......................................................................................................................................................................... 2912
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2913
NEW-INFLATION: Core PCE and 5Y/5Y Forward Breakeven ..................................................................................................................... 2914
INFLATION: Inflation Targeting is Clearly Not Working ................................................................................................................................ 2914
INFLATION: Market-Based Inflation Expectations on the Rebound ............................................................................................................. 2915
INFLATION: US Inflation Education-Medical-Food-Housing versus CPI .................................................................................................. 2915
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2917
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2917
INFLATION: Cost of Eating ........................................................................................................................................................................... 2918
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 2919
INFLATION: July 4th Cost of Beef Burger ...................................................................................................................................................... 2920
INFLATION: Bloombergs July 4th Barbecue Index ....................................................................................................................................... 2920
INFLATION: Butter on a Roll ......................................................................................................................................................................... 2921
INFLATION: Back to School Shocker............................................................................................................................................................ 2922
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 2923
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 2924
INFLATION: Back to School Shocker............................................................................................................................................................ 2924
RESEARCH OF NOTE ........................................................................................................................................................................................ 2925
NEW-RESEARCH Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After "Discovering" Another $2.7 Trillion In Debt
....................................................................................................................................................................................................................... 2925
NEW-RESEARCH Fed Admits "Changes In Asset Prices", "Decline In Equity Prices" Influenced Rate Decision ................................... 2929
RESEARCH Bank Reserves & Loans: The Fed is pushing On A String ................................................................................................... 2929
RESEARCH Global Currency Wars & Deflationary Pressures .................................................................................................................. 2933
RESEARCH Debt is a promise of something of value in the future ........................................................................................................... 2939
RESEARCH Is NIRP Coming To America? ............................................................................................................................................... 2946
RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ......................................................................................... 2949
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2956
REPO FAILS .................................................................................................................................................................................................. 2957
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 2958
FISCAL POLICY HERE WE GO AGAIN WITH THE DEBT CEILING CHARADE! ............................................................................ 2959
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 2961
NEW-PEURTO RICO .................................................................................................................................................................................... 2961
NEW-ILLINOIS & CHICAGO ......................................................................................................................................................................... 2961
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 2963
FISCAL MATTERS ........................................................................................................................................................................................ 2965

29

FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 2967

CHARTS OF NOTE ....................................................................................................................................................................................... 2967
NEW-FINANCING The Debt Ceiling Debt Limit is Likely to Fall in November ........................................................................................... 2967
FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .............................................................. 2967
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ........................................................................... 2968
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ........................................................................... 2968
FINANCING CHINA SELLING China & Belgium Holdings Change ........................................................................................................ 2969
FINANCING Breakdown of US Debt Holdings as of 2014 .......................................................................................................................... 2969
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 2970
CHARTS Drivers of US Debt ...................................................................................................................................................................... 2971
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 2972
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 2972
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 2973
NEW-RESEARCH - Lew moves up by two days to Nov. 3 the deadline by which Congress must raise the nations debt limit ................. 2974
NEW-RESEARCH - With Republicans In Disarray, All Eyes Turn To November 18 When The US Runs Out Of Cash ............................ 2976
NEW-RESEARCH - As Debt Ceiling "Accident" Looms, Ron Paul .............................................................................................................. 2977
RESEARCH - $70T Off-Balance Sheet Federal Liabilities ........................................................................................................................... 2979
FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 2983
NEW-CHARTS Where Did Every Dollar in Spending Go? ........................................................................................................................ 2983
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 2983
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 2984
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 2985
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 2985
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 2986
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 2986
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 2987
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 2987
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 2989
BUDGET - President Obama's Entire Budget In One Chart ......................................................................................................................... 2990
BUDGET - A Budget That Institutionalizes Big Government ........................................................................................................................ 2991
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 2996
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 2997
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 2999
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 3003
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 3007
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 3017
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 3017
RESEARCH - Almost Half of US States Are Officially Broke ........................................................................................................................ 3017
RESEARCH - State & Local Government Crisis ........................................................................................................................................... 3022
RESEARCH - State & Local Government Drag ............................................................................................................................................ 3028
UNFUNDED LIABILITIES .................................................................................................................................................................................... 3033
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 3033
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 3037
US REGULATORY COSTS ................................................................................................................................................................................. 3040
CHARTS Annual Cost of Federal Regulation 2012, $1.863T ................................................................................................................. 3040
RESEARCH Investor Uncertainty............................................................................................................................................................... 3040
US TAX POLICY & ISSUES ................................................................................................................................................................................ 3042
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 3042
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 3044
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 3046
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 3046
CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 3047
RESEARCH - Tax Rate Comparisons .......................................................................................................................................................... 3048
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 3048
RESEARCH - Taxes & Spending .................................................................................................................................................................. 3049
RESEARCH - Avoiding Taxes ....................................................................................................................................................................... 3053
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 3056
CHARTS Competing Visions of Government ............................................................................................................................................. 3056
CHARTS - Sovereign Debt ............................................................................................................................................................................ 3057
CHARTS - Growing Government Dependence ............................................................................................................................................. 3058
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 3058
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 3062
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 3064
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 3066

EMPLOYMENT .................................................................................................................................................................................................... 3072
LATEST ..................................................................................................................................................................................................... 3073
CHARTS & TABLES ...................................................................................................................................................................................... 3076
NEW-CHARTS Labor Force Participation Rate versus Food Stamp Participants ................................................................................. 3076
NEW-CHARTS World Youth Unemployment A Crisis ......................................................................................................................... 3076
NEW-CHARTS Change in Civilian Employment since December 2007 ................................................................................................ 3077
NEW-CHARTS Total Foreign-Born versus Native-Born Workers Since Dec 2007 ............................................................................... 3078

30

NEW-CHARTS Manufacturers versus Waiter/Bartenders Since 2007 .................................................................................................. 3079

NEW-CHARTS Food Service & Drinking Place Workers (Waiters & Bartenders) Since 2010 ............................................................. 3079
CHARTS DOW Industrials versus Employed Population ....................................................................................................................... 3080
CHARTS Employment to Working Age Population ................................................................................................................................ 3080
CHARTS The Real American Economy ................................................................................................................................................. 3080
CHARTS Full Time versus Part Time ..................................................................................................................................................... 3081
CHARTS Cumulative Workers Added by Age Group ............................................................................................................................. 3081
CHARTS Wages of Production and Non-Supervisory Employees ........................................................................................................ 3082
CHARTS Wages of Supervisory Employees Y-0-Y % Change ............................................................................................................. 3082
CHARTS Industries That Have Been Hiring ........................................................................................................................................... 3083
CHARTS Top 5 Industry Cuts ................................................................................................................................................................. 3083
CHARTS Employees in the US by Industry ............................................................................................................................................ 3084
CHARTS Workers Aged 55 and Over .................................................................................................................................................... 3084
CHARTS Percentage of Over 65 in Labor Force ................................................................................................................................... 3085
CHARTS Non Participation Has Stabilized? .......................................................................................................................................... 3085
CHARTS Share of Population Retired .................................................................................................................................................... 3086
CHARTS Goods Producing Workers versus Government Payroll ....................................................................................................... 3086
CHARTS Not in the Labor Force ............................................................................................................................................................ 3087
CHARTS Labor Force Participation versus Not in the Labor Force ....................................................................................................... 3087
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 3089
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 3089
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 3090
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 3090
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 3091
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 3091
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 3092
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 3092
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 3093
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 3093
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 3094
CHARTS Labor Participation Rate ......................................................................................................................................................... 3094
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 3095
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 3095
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 3096
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 3097
CHARTS Labor Force Participation by Age ........................................................................................................................................... 3098
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 3099
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 3100
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 3100
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 3101
CHARTS - Part-Time Employment ............................................................................................................................................................ 3101
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 3101
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 3102
CHARTS - The Under-Employment Gap ................................................................................................................................................... 3102
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 3103
RESEARCH OF NOTE .................................................................................................................................................................................. 3104
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 3104
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 3107
EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 3109
EMPLOYMENT - With and Without Obama's Recovery Plan ................................................................................................................... 3111
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ................................................................ 3112
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30............................................................................. 3114
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting .................. 3117
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 3118
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ........................................................................................................... 3119
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs .............................................................................................. 3126
REFERENCE - Prior Posts ............................................................................................................................................................................ 3129
1- CAPITAL SPENDING ............................................................................................................................................................................ 3129
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................. 3132
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 3136
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 3147
LATEST ..................................................................................................................................................................................................... 3147
STUDENT LOANS ..................................................................................................................................................................................... 3149
CHARTS & TABLES ...................................................................................................................................................................................... 3151
NEW-CHARTS Average Hourly Earnings of all Employees Total Private .......................................................................................... 3151
NEW-CHARTS Individuals Annually Receiving Foods Stamps ............................................................................................................. 3151
NEW-CHARTS Homeless among Students is Growing ......................................................................................................................... 3152
NEW-CHARTS Stagnant Middle Class Wages ...................................................................................................................................... 3152
NEW-CHARTS Median Earnings by Sex ............................................................................................................................................... 3153
NEW-CHARTS Disconnect Between Productivity and Typical Workers Compensation 1948-2014 ................................................. 3154
NEW-CHARTS Unemployment Rate is close to 24% according to Shadow Stats ................................................................................ 3155
NEW-CHARTS Non-Farm Payrolls less HES Complex ......................................................................................................................... 3155
NEW-CHARTS Childcare Costs Surge Past Rent, Tuition in Most of US ............................................................................................. 3156
NEW-CHARTS Illinois the Biggest User of Food Stamps in Mid-West .................................................................................................. 3157
NEW-CHARTS Illinois has Regained Few Manufacturing Jobs Since the Great Recession ................................................................ 3157

31

NEW-CHARTS Food Stamps Outpace Manufacturing Jobs 25-1 in Illinois .......................................................................................... 3157
NEW-CHARTS Debt by Generation ....................................................................................................................................................... 3158
CHARTS US Personal Savings Rate as a % of Disposable Income ..................................................................................................... 3159
CHARTS US Corporate Profits versus US Median Household Income ................................................................................................. 3160
CHARTS Death of the American Middle Class ...................................................................................................................................... 3160
CHARTS Income Gap being Filled With Credit ...................................................................................................................................... 3161
CHARTS Peak Spending Years ............................................................................................................................................................. 3162
CHARTS Real Per Capita Sum of Corporate Profits After Tax, Disposable Personal Income and Government Receipts .............. 3163
CHARTS Real Median Household Income in the United States ............................................................................................................ 3164
CHARTS Food Stamps Number of Participants .................................................................................................................................. 3165
CHARTS Food Stamps Number of Participants per Employed .......................................................................................................... 3165
CHARTS Food Stamps Cost Per Participant per Month ..................................................................................................................... 3166
CHARTS Food Stamps Annual Program Cost .................................................................................................................................... 3166
CHARTS Education, Medical, Food, Housing Costs versus CPI ........................................................................................................... 3167
CHARTS Rising Sub-Prime .................................................................................................................................................................... 3167
CHARTS Early Delinquencies on US Car Loans Has Been Rising ....................................................................................................... 3169
CHARTS Student Loan Default Rates By Graduating Year ................................................................................................................... 3170
CHARTS Student Loan Graduating Debt Levels Class 2009 ............................................................................................................. 3170
CHARTS Student Loan Borrowing Trends ............................................................................................................................................. 3171
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3171
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3172
CHARTS US Household Balance Sheet ................................................................................................................................................ 3172
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 3173
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 3174
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 3175
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 3175
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 3176
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 3177
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 3178
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 3178
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 3179
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 3179
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 3180
CHARTS This is a Structural .................................................................................................................................................................. 3180
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 3181
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 3182
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ....................................................................................................... 3182
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................... 3183
RESEARCH OF NOTE .................................................................................................................................................................................. 3184
NEW-RESEARCH Typical male worker earned less in 2014 than in 1973. .......................................................................................... 3184
NEW-RESEARCH Why This Feels Like A Depression For Most People .............................................................................................. 3186
NEW-RESEARCH The Story of America's Debt In 6 Easy Graphics .................................................................................................... 3190
RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery" ....................................................... 3195
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 3198
RESEARCH - The Facts are clear. The US Standard of Living is Falling ................................................................................................ 3199
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 3200
RESEARCH - Standards of Living and Artificial Expectations .................................................................................................................. 3203
RESEARCH - A Lack of Demand in US Economy .................................................................................................................................... 3205
RESEARCH - Full Time Jobs or Food Stamps & Disability? .................................................................................................................... 3206
REFERENCE - Prior Posts ............................................................................................................................................................................ 3208
STANDARD OF LIVING - Salary Compression ........................................................................................................................................ 3208
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level ........................................................................................... 3209
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ......................................................................... 3210
DISPOSABLE INCOME - Bad Even in Nominal Terms ............................................................................................................................ 3212
INFLATION - It's There but the Government Doesn't Account for it. ........................................................................................................ 3212
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 3214
LATEST ..................................................................................................................................................................................................... 3214
CHARTS & TABLES ...................................................................................................................................................................................... 3218
NEW-POLICY US Cities with Highest Median Prices of Single-Family Homes..................................................................................... 3218
NEW-POLICY NAHB Sentiment Much Higher than Permits and Starts? .............................................................................................. 3218
NEW-POLICY Flattenening NAHB Sentiment ........................................................................................................................................ 3219
POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ........................................ 3220
POLICY Mortgage Purchase Application Index versus Fed Balance Sheet .......................................................................................... 3221
POLICY Total News Home Sales v Median New Home Sale Price ...................................................................................................... 3222
POLICY San Francisco Y/Y Price Increase Indicator ............................................................................................................................. 3222
POLICY Meaningful Housing Recovery On Hold Until Spring ............................................................................................................... 3224
POLICY Housing Starts .......................................................................................................................................................................... 3224
POLICY Existing & New Home Sales ..................................................................................................................................................... 3225
POLICY Home Ownership Rate versus Rental Rate ............................................................................................................................. 3225
POLICY Mortgages Past Due and Foreclosure Starts ........................................................................................................................ 3226
POLICY Mortgage Spreads .................................................................................................................................................................... 3226
POLICY Lumber Sales ............................................................................................................................................................................ 3227
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 3229
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 3230
CHARTS National Home Price Medians & Indexes ............................................................................................................................... 3231

32

CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 3231

CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 3231
CHARTS New Home Prices ................................................................................................................................................................... 3232
CHARTS Housing Starts and Completions ............................................................................................................................................ 3233
CHARTS DJ Home Construction Index .................................................................................................................................................. 3233
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 3234
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 3235
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 3235
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 3236
CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 3236
CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 3237
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 3237
CHARTS - Double Top in Construction Index ........................................................................................................................................... 3237
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary......................................................................................................... 3238
CHARTS - Household Formations ............................................................................................................................................................. 3238
CHARTS Falling Originations ................................................................................................................................................................. 3239
CHARTS Falling Credit Scores ............................................................................................................................................................... 3240
CHARTS Falling Down payments ........................................................................................................................................................... 3240
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 3241
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 3241
CHARTS - Housing Starts ......................................................................................................................................................................... 3242
CHARTS - Composition of Housing Sales ................................................................................................................................................ 3242
CHARTS - New Home Sales ..................................................................................................................................................................... 3243
CHARTS - Existing Residential Supply ..................................................................................................................................................... 3243
CHARTS - Housing Starts ......................................................................................................................................................................... 3244
RESEARCH OF NOTE .................................................................................................................................................................................. 3246
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 3246
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 3247
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 3249
RESEARCH - Household Formation Drives Residential Real Estate ....................................................................................................... 3251
OVERVIEW ................................................................................................................................................................................................ 3254
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 3260
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 3263
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 3264
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 3266
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 3268
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ............................................................................... 3269
HOUSING: Soaring FHA Delinquencies .................................................................................................................................................... 3271
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 3276
LATEST ...................................................................................................................................................................................................... 3276
CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 3280
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 3280
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 3281
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 3281
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 3282
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 3283
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 3283
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 3284
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 3285
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 3286
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 3287
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 3287
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 3288
RESEARCH OF NOTE .................................................................................................................................................................................. 3290
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 3290
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 3291
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 3291
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 3296
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ................................................................................... 3297
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level .................................................. 3299
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 3302
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 3305
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 3306
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 3307
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 3308
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 3309
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ...................................................................... 3310
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 3316
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 3317
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 3318
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 3321
COMMERCIAL REAL ESTATE - Rising Beef Costs ................................................................................................................................. 3322
COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 3326

33

COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete ................................................................................................. 3328
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 3330
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 3331
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 3332
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous .............................................. 3334
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ..................................... 3341
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode......................................................................................... 3343
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ................................................ 3344
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements ....................................................................................... 3346
COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ........................................................................ 3349
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ........................................................................... 3352
COMMERCIAL REAL ESTATE - Getting Worse Fast .............................................................................................................................. 3353
COMMERCIAL REAL ESTATE - Unfolding Implosion .............................................................................................................................. 3355
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ......................................................................................................................... 3356
COMMERCIAL REAL ESTATE - Financial Crisis II Coming..................................................................................................................... 3361
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ................................................................................................................ 3368
COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 3371
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 3373
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 3375
COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 3379
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 3385
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 3386
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 3389
OVERVIEW ................................................................................................................................................................................................ 3393
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 3394
SPECIAL FOCUS QE FOR THE PEOPLE ....................................................................................................................... 3400

QE & ZIRP POLICY The Experiment was a Failure ...................................................................................................................................... 3401
LATEST ARTICLES .................................................................................................................................................................................. 3401
QE Policy is a Failure ................................................................................................................................................................................. 3401
CHARTS OF NOTE ....................................................................................................................................................................................... 3402
NEW-CHARTS Money Creation in the US Federal Reserve OMF (Helicopter Money) ..................................................................... 3402
NEW-CHARTS Money Creation in the US Federal Reserve A System of Secured Collateral .......................................................... 3403
QE4 Further Fed Balance Sheet Expansion Expected .................................................................................................................................... 3404
CHARTS OF NOTE ....................................................................................................................................................................................... 3404
NEW-CHARTS Time For More Fed Balance Sheet Growth or Face a Recession ................................................................................ 3404
NEW-CHARTS Expect Exponential Growth in the Fed Balance Sheet ................................................................................................. 3404
OMF Helicopter Money ................................................................................................................................................................................... 3406
LATEST ARTICLES .................................................................................................................................................................................. 3406
NIRP Negative Interest Rate Policy .................................................................................................................................................................. 3406
LATEST ARTICLES .................................................................................................................................................................................. 3406
War on Cash ........................................................................................................................................................................................................ 3407
LATEST ARTICLES .................................................................................................................................................................................. 3407
SPECIAL SUPPLEMENT US RECESSION RUMBLINGS ................................................................................................... 3409

US RECESSION RUMBLINGS ........................................................................................................................................................................... 3409
CHARTS OF NOTE ....................................................................................................................................................................................... 3410
NEW-RECESSION We are already in a US GDP Recession ................................................................................................................ 3410
NEW-RECESSION HY Close to 2001 Recession Levels ...................................................................................................................... 3410
NEW-RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending........................................ 3411
NEW-RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ........................................................................... 3411
NEW-RECESSION Current Economic Cycle Is Getting Old In The Tooth.......................................................................................... 3412
NEW-RECESSION Average Monthly Job Growth Deteriorating ........................................................................................................... 3412
NEW-RECESSION Annual Percent Change In Real GDP .................................................................................................................... 3413
NEW-RECESSION US Manufacturing Sector Recession...................................................................................................................... 3413
NEW-RECESSION Large Profit Margin Declines Coincides With Recessions ..................................................................................... 3414
NEW-RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ..................................... 3414
NEW-RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative ................................................................ 3415
NEW-RECESSION US Recession Estimates Pop ................................................................................................................................. 3415
NEW-RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds .................................................................... 3416
NEW-RECESSION Real S&P 500 Index with Historical Recessions .................................................................................................... 3416
NEW-RECESSION September Survey Data versus Non Farm Payrolls .............................................................................................. 3417
NEW-RECESSION Regional Surveys for September versus ISM PMI (August) .................................................................................. 3417
NEW-RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates ........................................................................ 3418
NEW-RECESSION Historical Regional Index Comparisons Last Seen in 2008 ................................................................................ 3418
NEW-RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds .................................... 3419
NEW-RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ........................................................................... 3420
RECESSION CT 2015 Revenue Recession .......................................................................................................................................... 3420
RECESSION Q2 2015 Revenue Recession .......................................................................................................................................... 3421
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................. 3421

34

RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted.......................................................................... 3422
RECESSION Top 10 US Market Areas Signal Retail Problem Underway ............................................................................................ 3422
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ....................................................... 3423
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................. 3424
RECESSION Wholesale Inventories vs GDP Trends ............................................................................................................................ 3424
RECESSION Auto Inventories to Sales ................................................................................................................................................. 3425
RECESSION Falling Collateral and Residuals Undermine Real Growth ............................................................................................ 3425
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................. 3426
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................. 3426
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ...................................................................... 3427
RECESSION Real Gross Domestic Investment versus Recessions ..................................................................................................... 3427
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................. 3428
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................. 3429
RECESSION ISM Composite Index versus Recessions........................................................................................................................ 3430
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................. 3430
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................. 3431
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions......................................................................... 3431
RECESSION Major Economic Trends.................................................................................................................................................... 3432
NEW-RESEARCH OF NOTE ........................................................................................................................................................................ 3433
NEW- RECESSION Economists are starting to warn about the risk of a new U.S. recession .............................................................. 3433
NEW- RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................... 3436
RECESSION Retail Sales Slump on Deck ............................................................................................................................................. 3438
RECESSION This Is another "Subprime" Waiting To Blow ................................................................................................................... 3441
RECESSION Record Gap between US Inventories and Sales Screams Recession ............................................................................ 3444
RECESSION August spending was the weakest in nominal dollar terms since 2012 ........................................................................... 3446
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................. 3451

35

MONTHLY PROCESS OF ABSTRACTION

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

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

(GMTP)
Market Analytics & Technical

Analysis (MTA)
Monthly Market Commentary

(MMC)

36
Focus


RPT GMTP 2015 PEEK

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GLOBAL SLOWDOWN STEEPENING

Credit Cycle is Reacting

GLOBAL MACRO TIPPING POINTS - DECEMBER 2015

1 December 2015 Edition

Restricted & Confidential

GLOBAL SLOWDOWN STEEPENING

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

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

Deutsche Banks Key Global Risk ............................................................................................................................................................... 178

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 239

GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 258

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

CHARTS OF NOTE ..................................................................................................................................................................................... 314

GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 384

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 418

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 428

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

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NEW-II- GEO-POLITICAL EVENT RISK ......................................................................................................................................................... 444

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 477

December 2015 Edition

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Restricted & Confidential

3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 556

ECONOMIC CUTS ................................................................................................................................................................................................. 598

GLOBAL MACRO: INDICATORS ............................................................................................................................................ 622

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 740

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

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GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 740

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 838

December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

Restricted & Confidential

GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1018

December 2015 Edition

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December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

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December 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved

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CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1309

REGIONAL ........................................................................................................................................... 1380

December 2015 Edition

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NEW-CHARTS Many Migrant Routes Being Taken ............................................................................................................................... 1384

December 2015 Edition