RPT GMTP 2016 02 PEEK

UNCERTAINTY & APPREHENSIVE
UNEASINESS
Sentiment Takes on a Tone of Worry
GLOBAL MACRO & TIPPING POINTS
GLOBAL MACRO TIPPING POINTS - FEBRUARY 2016
1/25/2016
1 FEBRUARY 2016 Edition

Copyright 2016 Gordon T. Long All Rights Reserved
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UNCERTAINTY & APPREHENSIVE UNEASINESS

Sentiment Takes on a Tone of Worry
GLOBAL MACRO TIPPING POINTS - FEBRUARY 2016
GLOBAL RISK ......................................................................................................................................... 38

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 38
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 38
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 39
Our Assessment ................................................................................................................................................................................................ 39
James Rickards Global Risk Assessment ........................................................................................................................................................ 52
MACRO MONITORING INSTITUTIONS ............................................................................................................................................................... 100
LATEST FROM THE MONITORS ................................................................................................................................................................... 100
RESEARCH OF NOTE ................................................................................................................................................................................ 104
NEW-MONITORS Why Are The IMF, The UN, The BIS And Citi All Warning That An Economic Crisis Could Be Imminent?.......... 104
NEW-MONITORS The G-30 Group Of Central Bankers Warn They Can "No Longer Save The World" ........................................... 106
WORLD BANK ................................................................................................................................................................................................. 109
NEW-WB Key Takeaways From the World Bank/IMF Meetings .............................................................................................................. 109
NEW-WB Federal Reserve rate rise would cause panic and turmoil, warns World Bank ........................................................................ 110
WB World Bank - Global Economic Prospects Report .............................................................................................................................. 110
WB Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ........................................................................................ 111
WB Global Growth Outlook ........................................................................................................................................................................ 114
WB- World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ................................. 115
WB- World Bank Says 300M Young People neither Working nor Studying ............................................................................................... 116
OECD ............................................................................................................................................................................................................... 118
NEW-OECD World cannot spend its way out of a slump, warns OECD chief ......................................................................................... 118
NEW-OECD OECD Chief Economist: It's Time To "Temper The Frothiness" In Markets ....................................................................... 120
OECD Leading Indicator Casts Doubt on US Economic Rebound .......................................................................................................... 122
OECD Warns 40 Million People Will Be Out of Work Next Year .............................................................................................................. 123
OECD Cuts Global Growth Projections Again ............................................................................................................................................. 125
IMF ................................................................................................................................................................................................................... 126
NEW-IMF IMF warns of stagnation threat to G7 economies ..................................................................................................................... 126
NEW-IMF IMF Fears $3 Trillion Credit Crunch .......................................................................................................................................... 128
IMF Tells Regulators to Brace for Global Liquidity Shock ......................................................................................................................... 130
IMF- Lagarde warns of lopsided global growth .......................................................................................................................................... 135
IMF warns of new threats to global economy due to excessive risk taking ................................................................................................ 136
BIS ................................................................................................................................................................................................................... 138
NEW-BIS BIS Warns of Major Faultlines In Global Debt Bubble ........................................................................................................... 138
BIS - BIS Quarterly Report ........................................................................................................................................................................... 140
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 140
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 141
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 143
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 147
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 150
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 151
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 156
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 160
CHARTS OF NOTE ..................................................................................................................................................................................... 160
WEF Global Business Risks ................................................................................................................................................................. 162
WEF The 2015 Global Risk Landscape ................................................................................................................................................ 163
WEF Evolving Risk Landscape (2007-2015) ........................................................................................................................................ 164
WEF Global Risk Exposures By Region ............................................................................................................................................... 165
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 166
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 166
CHARTS OF NOTE ......................................................................................................................................................................................... 168
NEW-Credit Denominated in US Dollars ..................................................................................................................................................... 168
NEW-IMFs Global GDP Outlook ................................................................................................................................................................. 168
NEW-IMF Economic Forecasts Are So Consistently Bad That it Says they Dont Understand the Problem! .......................................... 169
Total Global Credit-Market Debt Owed as % of GDP ................................................................................................................................. 170
57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ....................................................................... 171
Global Risk Landscape Grid ........................................................................................................................................................................ 172
Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .............................................................................................. 173
Global Risks of Highest Concern ................................................................................................................................................................. 173
Global Risks Versus Impact ......................................................................................................................................................................... 174
The economic balance of the world is shifting ............................................................................................................................................. 175
Global Conflict Intensity is heating up.......................................................................................................................................................... 176
World Conflict Map ....................................................................................................................................................................................... 177
World Conflict Map Details........................................................................................................................................................................ 178
February 2016 Edition

2

Global Conflict & Protest Intensity ............................................................................................................................................................... 179

Deutsche Banks Key Global Risk ............................................................................................................................................................... 179
Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 180
RESEARCH OF NOTE .................................................................................................................................................................................... 181
NEW-A Generation in Crisis- - The World Needs 5 Million Jobs-Month To Stymie Youth Extremism ....................................................... 181
NEW-Presenting SocGen's 5 Black Swans For 2016 ................................................................................................................................. 182
NEW- Paul Brodsky: "Expect The Unexpected. It Might Be Time To Duck And Cover" ............................................................................ 185
McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE .............................................................................................. 188
Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 ............................................................................................... 193
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 196
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 197
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 199
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 202
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 203
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 204
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 207
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 207
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 218
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 221
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 222
THE RISK CONTINUUM ............................................................................................................................................................................. 225
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 227
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 229
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 231
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 233
GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 240

GEO-POLITICAL RISK - SOCIAL, ECONOMIC & FINANCIAL ........................................................................................................ 242
NEW-PARIS SHOCKER ISIS Reality ................................................................................................................................................................. 242
NEW-TERRORISM - "There's No Such Thing As ISIS": Journalist Destroys West's Terror Narrative, Warns Of Crackdown On "Dissidents"
......................................................................................................................................................................................................................... 242
NEW-TERRORISM - Secretary of Defense Chuck Hagel: ISIL poses a threat greater than 9/11. ............................................................. 243
NEW-TERRORISM - Two Reasons the 'War On Terror' Will Always Fail ...................................................................................................... 244
NEW-TAXATION Setting the Stage for the Coming Taxation Explosion ........................................................................................................... 246
RESEARCH OF NOTE .................................................................................................................................................................................... 246
NEW-TAXATION Taxes must be paid, says George Osborne, as he backs crackdown on havens. ..................................................... 246
NEW-TAXATION The Coming Tax Tsunami Will Erode Wealth and Capital at a Shocking Pace .......................................................... 248
NEW-DEMOGRAPHICS Aging Population & Youth Unempolyment ................................................................................................................. 250
CHART OF NOTE............................................................................................................................................................................................ 250
NEW-YOUTH UNEMPLOYMENT Global Population .............................................................................................................................. 250
NEW-YOUTH UNEMPLOYMENT Global Aging ...................................................................................................................................... 250
NEW-YOUTH UNEMPLOYMENT Global Aging By Country ................................................................................................................... 251
RESEARCH OF NOTE .................................................................................................................................................................................... 253
NEW-YOUTH UNEMPLOYMENT - "A Generation In Crisis" - The World Needs 5 Million Jobs/Month To Stymie Youth Extremism ...... 253
NEW-YOUTH UNEMPLOYMENT - Four Ticking Global Time-Bombs Few Even Hear ............................................................................. 254
GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 259

ISIS .................................................................................................................................................................................................................. 259
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 260
NEW-ISIS - An Undercover Look Inside ISIS .......................................................................................................................................... 264
ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 266
ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 266
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 267
SYRIA .............................................................................................................................................................................................................. 270
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 270
NEW-SYRIA - Pipeline Politics: Russia, Turkey Clash Over Energy As Syria Rift Shifts Focus To German Line ................................. 271
NEW-SYRIA - Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .............................................. 274
NEW-SYRIA - Is The US Going To War With Syria Over A Natural Gas Pipeline? ............................................................................... 276
NEW-SYRIA - Why Did Obama Choose Syria? ...................................................................................................................................... 279
SYRIA - Syria "Welcomes" Larger Russia Presence............................................................................................................................... 280
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .......................................................................................... 281
SYRIA - Syrian War You Are Not Being Told About ................................................................................................................................ 283
SYRIA - 25 Quotes ................................................................................................................................................................................... 284
SYRIA - What Coalition? .......................................................................................................................................................................... 287
SYRIA - US Supporting Fully an "Al Qaeda Operation" .......................................................................................................................... 289
SYRIA - Decision Already Taken to Bomb Syria ..................................................................................................................................... 291
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 299
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 301
NEW-CHINA SEA - Why China Wants Control of The South China Sea In 10 Charts .......................................................................... 302
NEW-CHINA SEA - "Strongly Dissatisfied" China Warns US "Accident" Is "Highly Likely" In South China Sea ................................... 307
NEW-CHINA SEA - PLA Officer: China Must Establish South China Sea ADIZ; Will "Fight .................................................................. 309
IRAN ................................................................................................................................................................................................................. 311
RESEARCH OF NOTE ................................................................................................................................................................................ 311
NEW-IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ......................................................................................................... 311
NEW-IRAN NBC Special Report: Nuclear Agreement Reached With Iran .......................................................................................... 314

3

YEMEN ............................................................................................................................................................................................................ 315

CHARTS OF NOTE ..................................................................................................................................................................................... 315
YEMEN Strategic Position .................................................................................................................................................................... 315
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 316
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 316
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 317
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 317
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 319
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 320
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 321
RESEARCH OF NOTE ................................................................................................................................................................................ 322
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 322
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 324
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 327
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 328
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 330
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 335
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 337
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 342
RESEARCH OF NOTE ................................................................................................................................................................................ 349
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 349
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 350
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 354
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 358
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 359
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 362
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 365
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 366
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 368
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 382
GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 385

NEW-GOVERNANCE The G-30 Group of Central Bankers Warn They Can "No Longer Save The World"............................................... 385
ASIAN INFRASTRUCTURE INVESTMENT BANK A Threat to World Bank and US$ Reserve Status ..................................................... 388
CHARTS OF NOTE ..................................................................................................................................................................................... 391
AIIB Demanding Infrastructure .............................................................................................................................................................. 391
RESEARCH OF NOTE ................................................................................................................................................................................ 392
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 392
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 394
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 395
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 397
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 400
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 402
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 404
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 407
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 407
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 409
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 411
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 414
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ................................................................................................................ 416
KISSINGER- Henry Kissingers World Order ............................................................................................................................................. 416
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 419

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 419
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 420
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 420
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 421
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 421
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 422
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 422
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 424
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 424
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 425
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 426
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 427
GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 429

CHANGES TO RANKINGS Q4 2015 ................................................................................................................................................................. 429
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 431
CHANGES TO ROADMAPS - Longer Term Trends ............................................................................................................................................. 432
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 433
TIPPING POINTS: TOP 5 FOCUS - DECEMBER 2015 ....................................................................................................................................... 436

4

NEW-I BOND BUBBLE................................................................................................................................................................................. 436

NEW-II- GEO-POLITICAL EVENT RISK ......................................................................................................................................................... 445
NEW-III - CHINA HARD LANDING ................................................................................................................................................................. 458
NEW-IV - RISK REVERSAL ............................................................................................................................................................................ 467
NEW-V- JAPAN DEBT DEFLATION ............................................................................................................................................................... 471
GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 478

ECONOMIC CUTS ................................................................................................................................................................................................. 478
NEW-IMF DOWNGRADES OUTLOOK FOR WORLD ECONOMY ............................................................................................................... 478
NEW-IMF Now Projects the world economy will grow by only 3.4% in 2016 .............................................................................................. 478
NEW-IMF Slashes Global Growth Outlook Again, Warning "Of Great Challenges" In Year Ahead........................................................... 479
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 483
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 494
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 496
CHARTS OF NOTE ......................................................................................................................................................................................... 498
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ........................................................................................ 498
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 502
CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 506
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 506
ECONOMIC WARNINGS....................................................................................................................................................................................... 507
NEW-OECD WARNS ...................................................................................................................................................................................... 507
NEW-'WORSE THAN 2007': OECD Chairman warns of looming wave of worldwide bankruptcies .......................................................... 507
IMF WARNS .................................................................................................................................................................................................... 509
IMF Warns of gloomy eurozone outlook ...................................................................................................................................................... 509
IMF Warns U.S.: Your financial system is (still) vulnerable ......................................................................................................................... 513
IMF Warns Japan over Its Staggering National Debt .................................................................................................................................. 515
IMF Warns Japan to step up reforms .......................................................................................................................................................... 515
IMF Warns Fed on risks of hiking too soon ................................................................................................................................................. 516
IMF Warns of Permanent Stagnation .......................................................................................................................................................... 517
IMF Sees risk of new eurozone ................................................................................................................................................................... 519
IMF Tells Central Europe to Spend More .................................................................................................................................................... 522
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 525
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 527
BIS WARNS ..................................................................................................................................................................................................... 529
BIS WARNS - Former BIS Economic Advisor Warns on European QE ..................................................................................................... 529
Monetary Policy At Its Limits ........................................................................................................................................................................ 541
WORLD BANK WARNS .................................................................................................................................................................................. 542
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ............................................................................... 544
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 547
RESEARCH WE FOLLOWED ............................................................................................................................................................................... 548
CHARTS OF NOTE ............................................................................................................................................................................................... 551
NEW-CHART: A Global Bear Market? ............................................................................................................................................................ 551
NEW-CHART: World Equity Market Capitalization Loses .............................................................................................................................. 552
NEW-CHART: A 7.5 Year Global Cycle May be Underway ............................................................................................................................ 552
NEW-CHART: Chinas Total Debt at 3005 A Drag on Future Growth ............................................................................................................ 553
NEW-CHART: The Largest Rolling Losses in Commodities Since the Great Depression ............................................................................. 553
NEW-CHART: Latest IMF Global Growth Projections .................................................................................................................................... 554
NEW-CHART: IMF Global Growth Projections -2 ........................................................................................................................................... 554
NEW-CHART: IMF Perspective on Global Transitions & Associated Risks ................................................................................................... 556
CHART: Global Consumer Confidence Turns................................................................................................................................................. 556
CHART: Global Consumer Confidence Momentum versus Bond Yields ....................................................................................................... 557
CHART: Bear Grip Felt Around the World ....................................................................................................................................................... 557
CHART: Emerging Market FX in Freefall ........................................................................................................................................................ 558
CHART: Asian Dollar Index Sends Ominous Sign .......................................................................................................................................... 559
CHART: Biggest Currency Losers ................................................................................................................................................................... 559
CHART: The Great Unwind - A Triple Unwind of EM Credit, Chinas Leverage and US Monetary Easing ................................................... 560
CHART: Latin Americas Economic Slowdown ............................................................................................................................................... 561
CHART: Global Stock of Debt Outstanding Grows By $57T since Financial Crisis ....................................................................................... 561
CHART: Decade-Long Central Bank FX Reserves Surge Nears End ............................................................................................................ 562
CHART: Global Business Equipment Investment ........................................................................................................................................... 563
CHART: EM versus DM Credit Risk ................................................................................................................................................................ 564
CHART: MSCI World P/E versus EM P/E ....................................................................................................................................................... 564
CHART: Emerging Capital Flows & Currency Moves ..................................................................................................................................... 565
CHART: Falling Real GDP of Emerging Versus Rising Developed Economies ............................................................................................. 565
CHART: Domestic Bank Credit of EM versus DM .......................................................................................................................................... 566
CHART: Regional Resilience Score Differences Since the Financial Crisis................................................................................................... 566
CHART: US Macro index at a New 6 Year Low. ............................................................................................................................................. 568
CHART: There is a Problem in Global Credit .................................................................................................................................................. 568
CHART: Serial Disappointments & Ratcheting Down of Global Growth ......................................................................................................... 569
CHART: Continuous Weakening of Global GDP Estimates ........................................................................................................................... 570
CHART: Reduced Demand Pressures on Energy Prices ............................................................................................................................... 570
CHART: Reduced Demand Pressures on Commodities................................................................................................................................. 571
CHART: Global Corporate Profit Trends ......................................................................................................................................................... 571
CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ............................................................................ 572
CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ......................................................................................... 573

5

CHART: Growth of Asian Middle Class Dominates Next 20 Years .............................................................................................................. 574
CHART: Global Domestic Demand Growth .................................................................................................................................................... 574
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability..................................................................................... 575
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies .................................................................................... 576
CHART: Eventually All this Debt Must be Rolled over or Paid Out................................................................................................................. 576
RESEARCH OF NOTE .......................................................................................................................................................................................... 576
GLOBAL OUTLOOK The Global Liquidity Squeeze Has Begun ................................................................................................................. 577
GLOBAL OUTLOOK Biggest Worry" Is Dramatic Decline In Bond Market Liquidity, Prudential Says ...................................................... 580
GLOBAL OUTLOOK 2015 Macro Outlook Proving to be Volatile ............................................................................................................... 581
GLOBAL OUTLOOK 2015 Macro Outlook Forecasts Hinge on a Deteriorating US Economy ................................................................... 584
GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession ........................................................................................... 585
GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy ...................................................................................................... 588
GLOBAL OUTLOOK What is global market turbulence telling us? ............................................................................................................. 592
GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn ............................................................ 595
GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 597
GLOBAL OUTLOOK The Last Days Of The Growth Story? ........................................................................................................................ 599
GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................. 600
GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ......................................................................... 605
GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ................................................................................................. 607
GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ........................................................................ 610
GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth ............................................................ 613
GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat ........................................................................................................................ 616
GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ..................................................................................................................... 618
GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility ............................................................................... 621
GLOBAL OUTLOOK - A 67 Million Jobs Gap ................................................................................................................................................. 623
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 627

GLOBAL TRENDS ................................................................................................................................................................................................. 627
CHARTS OF NOTE ......................................................................................................................................................................................... 627
NEW-GLOBAL TRENDS Global Nominal GDP Growth May Be in the Midst of a Secular Downturn .................................................... 627
NEW-GLOBAL TRENDS World GDP Growth Rates Since 2000 ............................................................................................................ 627
GLOBAL TRENDS World Industrial Production Index ............................................................................................................................. 628
GLOBAL TRENDS World Industrial Production Index Annual % Change, 1966 to May 2015 ............................................................ 628
GLOBAL TRENDS UNITED STATES Industrial Production Index .......................................................................................................... 629
GLOBAL TRENDS UNITED STATES Industrial Production Index Annual % Change, 1966 to May 2015 ......................................... 629
GLOBAL TRENDS JAPAN Industrial Production Index ........................................................................................................................... 630
GLOBAL TRENDS EURO AREA Industrial Production Index ................................................................................................................. 630
GLOBAL TRENDS EMERGING ASIA Industrial Production Index.......................................................................................................... 631
GLOBAL TRENDS EMERGING ASIA Industrial Production Index.......................................................................................................... 631
GLOBAL TRENDS Consensus 2015 World GDP Growth Expectations ................................................................................................. 631
GLOBAL TRENDS US Macro Continues to Plummet .............................................................................................................................. 632
GLOBAL TRENDS GLI Momentum & Global Industrial Production Both About to Go Into Contraction ................................................. 633
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region ................................................................... 633
GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................................. 634
GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................................. 634
GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ....................................................................................... 635
GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................................ 636
GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ............................................................................................. 636
RESEARCH OF NOTE .................................................................................................................................................................................... 637
GLOBAL TRENDS The Commodities Super-Cycle Has Gone Into Reverse .......................................................................................... 637
GLOBAL TRENDS The curse of weak global demand ............................................................................................................................ 637
GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ........................................................... 642
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ....................................................................................... 646
RESEARCH OF NOTE .................................................................................................................................................................................... 647
GLOBAL GROWTH ............................................................................................................................................................................................... 647
CHARTS OF NOTE ......................................................................................................................................................................................... 647
NEW-GLOBAL GROWTH Global Nominal Y-o-Y GDP Grow .................................................................................................................. 647
NEW-GLOBAL GROWTH World Trade Volume Y-o-Y ............................................................................................................................ 647
NEW-GLOBAL GROWTH World Industrial Production ............................................................................................................................ 647
GLOBAL GROWTH World Trade Values in US$ ..................................................................................................................................... 648
GLOBAL GROWTH World Industrial Production ..................................................................................................................................... 649
GLOBAL GROWTH World Trade (Values in US$) Index ......................................................................................................................... 650
GLOBAL GROWTH World Trade Volumes Annual % Change 1966 to May 2015 .............................................................................. 651
GLOBAL GROWTH US Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................................. 652
GLOBAL GROWTH US Imports (Values) Annual % Change, 1966 to May 2015 ................................................................................ 652
GLOBAL GROWTH JAPAN Imports (Volumes) Annual % Change, 1966 to May 2015 ...................................................................... 653
GLOBAL GROWTH JAPAN Imports Annual % Change, 1966 to May 2015 ........................................................................................... 653
GLOBAL GROWTH EURO AREA Imports (Volumes) Annual % Change, 1966 to May 2015 ............................................................ 654
GLOBAL GROWTH EURO AREA (Values) Annual % Change, 1966 to May 2015 ............................................................................. 654
GLOBAL GROWTH EMERGING ASIA Imports (Volumes) Annual % Change, 1966 to May 2015 ..................................................... 655
GLOBAL GROWTH EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 ..................................................................... 655
GLOBAL GROWTH LATIN AMERICA Imports (Volumes) Annual % Change, 1966 to May 2015 ...................................................... 656
GLOBAL GROWTH LATIN AMERICA (Values) Annual % Change, 1966 to May 2015 ...................................................................... 656
GLOBAL GROWTH CHINAS Imports, Annual % Change ...................................................................................................................... 657
GLOBAL GROWTH CHINAS Exports, Annual % Change ...................................................................................................................... 657
GLOBAL GROWTH Global Leading Indicator Swirlogram Gets Worse ............................................................................................... 658

6

GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 659

GLOBAL GROWTH Eurozone PMI and GDP .......................................................................................................................................... 660
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 661
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 662
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 662
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 663
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 664
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 664
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 664
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 665
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 666
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 666
RESEARCH OF NOTE .................................................................................................................................................................................... 667
NEW-GLOBAL GROWTH - World Trade & Industrial Production Growth Near Post-Crisis Lows ............................................................. 667
NEW-GLOBAL GROWTH - CEO of World's Largest Shipping Company: "Global Growth Is Worse Than Official Reports" .................... 669
GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ................................................................................... 671
GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" ............................ 673
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine ................................................................ 674
GLOBAL GROWTH Potential of a Global Recession Mounting .............................................................................................................. 676
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates ............................................................................. 680
GLOBAL GROWTH - Uneconomic Energy Problematic ............................................................................................................................. 682
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 684
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 685
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 686
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 687
CHARTS OF NOTE ............................................................................................................................................................................................... 687
NEW-GLOBAL CONSUMPTION Historic Record Low Baltic Dry Index .................................................................................................. 687
NEW-GLOBAL CONSUMPTION China Containerized Freight Index ..................................................................................................... 687
GLOBAL CONSUMPTION Top 5 Global Household Savings Strategies by Region .............................................................................. 688
GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................................. 688
GLOBAL CONSUMPTION Global Home Prices Are Rolling Over .......................................................................................................... 689
GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU ................................................................................................. 690
GLOBAL CREDIT .................................................................................................................................................................................................. 691
CREDIT CYCLE - HG Spread Widening ..................................................................................................................................................... 691
CREDIT CYCLE - Widening Gap Between Debt & Equity .......................................................................................................................... 691
CREDIT CYCLE - HY Leading the Way ...................................................................................................................................................... 691
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 695
CHARTS OF NOTE ......................................................................................................................................................................................... 695
CHART Global Employment Rates ........................................................................................................................................................... 695
CHART Global Unemployment ................................................................................................................................................................. 696
CHART Global Unemployment EU Comparison ................................................................................................................................... 696
CHART Unemployment in Advanced Countries ....................................................................................................................................... 697
CHART Global Labor Participation Rates ................................................................................................................................................ 697
CHART Global Youth Unemployment By Country ................................................................................................................................ 698
CHART Global Chance of Finding a Job Within Year .............................................................................................................................. 698
RESEARCH OF NOTE .................................................................................................................................................................................... 699
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ............................................................................................. 699
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................... 701
GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 703
GLOBAL SENTIMENT ........................................................................................................................................................................................... 705
CHARTS OF NOTE ......................................................................................................................................................................................... 705
GLOBAL SENTIMENT Global Economic Momentum Cycle Shows Cycle Turn to Be Expected............................................................ 705
GLOBAL SENTIMENT Global Consumer Confidence Up in Europe in Q2 But Flat to Down Globally ................................................... 706
GLOBAL SENTIMENT Global Consumer Confidence Down -1 from Q1 2015 ....................................................................................... 707
GLOBAL SENTIMENT Biggest & Second Biggest Concerns in the Next Six Months By Country ...................................................... 708
GLOBAL SENTIMENT Differing Concerns Around the World By Region ............................................................................................ 709
GLOBAL SENTIMENT Growing Recessionary Sentiment ....................................................................................................................... 710
GLOBAL SENTIMENT Latin America Falls Deeper Into A Recessionary Mindset ................................................................................. 711
GLOBAL SENTIMENT Global Consumer Confidence Down In Q4 2014 ................................................................................................ 712
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 713
GLOBAL SENTIMENT Global Consumer Confidence Improves the Most in North America .................................................................. 714
GLOBAL SENTIMENT Recessionary Sentiment Increases in Latin America ......................................................................................... 715
GLOBAL SENTIMENT North America Reports Strong Increase Y-o-Y for all Confidence Indicators .................................................... 716
GLOBAL SENTIMENT Consumer Confidence Decreases in 63% of European Markets ....................................................................... 717
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Asia Pacific Markets .................................................................... 718
GLOBAL SENTIMENT Consumer Confidence Decreases in 71% of Latin America Markets ................................................................. 719
GLOBAL SENTIMENT Consumer Confidence in Saudi Arabia, Pakistan Falls ...................................................................................... 720
GLOBAL SENTIMENT Consumer Confidence High in Sub-Saharan Africa ........................................................................................... 721
GLOBAL SENTIMENT Global Business Activity Future Expectations .................................................................................................... 722
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ................................................................................. 722
GLOBAL SENTIMENT Global Consumer Confidence by Country .......................................................................................................... 724
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country .............................................................................................. 725
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen .................................................................. 726
RESEARCH OF NOTE .................................................................................................................................................................................... 727
GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows ........................................................................ 727

7

GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 729
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................... 733
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 734
GLOBAL SENTIMENT - Complacent .......................................................................................................................................................... 736
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 737
CREDIT CYCLE - Reversal Ahead .............................................................................................................................................................. 748
GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 751

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 751
RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 751
CHARTS OF NOTE ......................................................................................................................................................................................... 754
NEW-CHARTS Debt of Advanced Economies Higher as %of GDP then After WWI and WWII ............................................................. 754
NEW-CHARTS Global Debt to GDP Growth 1994 to 2014 .................................................................................................................. 755
NEW-CHARTS Central Bank Balance Sheet Growth as Percentage of Nominal GDP .......................................................................... 755
NEW-CHARTS Central Bank Key Policy Rates ....................................................................................................................................... 756
NEW-CHARTS Central Bank Pack Seen to be Needed to Spur Inflation ............................................................................................. 756
NEW-CHARTS Global Banking Profits after Tax ..................................................................................................................................... 756
NEW-CHARTS Global Stock of Debt Outstanding by Type ..................................................................................................................... 757
NEW-CHARTS Total Public Debt Outstanding by 2017 Forecasts for Currency Cartel .................................................................... 758
CHARTS Saudi + China Reserves versus 10Y UST Yield ...................................................................................................................... 758
CHARTS Total World Reserve Foreign Exchange Reserves .................................................................................................................. 759
CHARTS Why Canada May Become a Problem For Janet Yellen .......................................................................................................... 760
CHARTS Consensus Fed and ECB Rate Hike Projections ..................................................................................................................... 761
CHARTS Global Monetary Policy Stance & Bias ..................................................................................................................................... 762
CHARTS Global Government Bonds Trading With Negative Yields........................................................................................................ 763
CHARTS Lack of Inflation in Europe ........................................................................................................................................................ 763
CHARTS Two Sides of Inflation Commodities, Inflation Breakevens and UST Curve (5-30s)............................................................. 764
CHARTS Quantitative e Easing No Longer Drives Commodity Prices .................................................................................................... 765
CHARTS De-Leveraging Average Industrial Debt-Percentage of GDP ................................................................................................ 765
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 766
CHARTS Sovereign Net Issuance After Central Bank Issuances ........................................................................................................ 766
CHARTS Falling Global Bond Rates Continue in Q1 2015 ...................................................................................................................... 767
CHARTS The Road to NIR (Negative Rates) ........................................................................................................................................... 767
CHARTS Central Bank Policy Rates ........................................................................................................................................................ 768
CHARTS Days of Chinese Credit-Driven Growth are numbered ............................................................................................................. 768
CHARTS Major Central Bank Assets versus GDP Forecast ................................................................................................................... 770
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ................................................................................................................... 770
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 ........................................................................................ 771
CHARTS Global Central Bank Assets versus World Equity Prices ......................................................................................................... 771
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 ........................................................................................ 772
RESEARCH OF NOTE .................................................................................................................................................................................... 773
NEW-CENTRAL BANKS - How We Got Here: The Fed Warned Itself In 1979, Then Spent Four Decades Intentionally Avoiding The
Topic ............................................................................................................................................................................................................. 773
CENTRAL BANKS - 8 Capital Markets 'Threats' To The Central Bank Narrative ...................................................................................... 777
CENTRAL BANKS - How Much More Faith In Central Banks Is Left? ....................................................................................................... 779
CENTRAL BANKS - The $100 Trillion Global Debt Ponzi Scheme ............................................................................................................ 781
CENTRAL BANKS - The Backstop of Modern Finance Is About to Implode .............................................................................................. 782
CENTRAL BANKS - What does NIRP Tell US About Global Risk of Deflation? ........................................................................................ 783
CENTRAL BANKS - In Denmark You Are Now Paid To Take Out A Mortgage ......................................................................................... 786
CENTRAL BANKS - The Beginning of the End of the $100 TRILLION Bond Bubble ................................................................................ 787
CENTRAL BANKS - The $100 Trillion Reason Why Central Banks Are Terrified of Debt Deflation .......................................................... 789
CENTRAL BANKS - The year of Dollar Danger for the world ..................................................................................................................... 791
CENTRAL BANKS - Commodities, Inflation Breakevens and Yield Curve Sending Clear Warnings ........................................................ 796
CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms ............................................................ 800
CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ......................................................................... 802
CENTRAL BANKS Axel Merks 2014 Outlook.......................................................................................................................................... 803
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries ..................................................................... 806
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ............................................................................................................... 807
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ....................................................... 808
CENTRAL BANKS - Global Balance Sheet Expansion ............................................................................................................................... 810
WAR ON CASH ............................................................................................................................................................................................... 815
WAR ON CASH Elliott Waves Report on the War on Cash .................................................................................................................. 815
WAR ON CASH The "War On Cash" Migrates To Switzerland ............................................................................................................... 820
WAR ON CASH Chase Joins the War on Cash ....................................................................................................................................... 823
WAR ON CASH Largest Bank In America Joins War On Cash ............................................................................................................... 825
WAR ON CASH Citigroup's Gold "Expert" Demands A Cash Ban .......................................................................................................... 827
SWISS PEG ..................................................................................................................................................................................................... 831
SWISS PEG Swiss Peg Failure First Central Bank To Lose Control .................................................................................................... 832
SWISS PEG Swiss Peg Failure The Financial System Broke Last Week ............................................................................................ 834
SWISS PEG Swiss Peg Failure Keynesian Contral Banking is Destroying Money & Markets ............................................................ 835
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 839
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 839
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies ........ 840
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 843
TROUBLING DEVELOPMENTS Global Tax Overhaul ............................................................................................................................ 845
BOE - UK ................................................................................................................................................................................................................ 846

8

CHARTS OF NOTE ......................................................................................................................................................................................... 846

UK Sterling/ US Dollar Exchange Rate after UK Super Thursday ......................................................................................................... 846
UK Dissent within BOE Set to Continue ................................................................................................................................................... 846
RESEARCH OF NOTE .................................................................................................................................................................................... 847
UK - Neutral Report Leaves BOE on Track for February Liftoff .................................................................................................................. 847
UK - Did The Bank Of England Just Admit Financial Markets Aren't "Real"? ............................................................................................. 849
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 850
UK - Mark Carney and "Flexible Inflation Targeting" ................................................................................................................................... 851
FED - US ................................................................................................................................................................................................................ 853
CHARTS OF NOTE ......................................................................................................................................................................................... 854
NEW-CHARTS Fed Balance Sheet Trend Changes versus S&P 500 .................................................................................................... 854
NEW-CHARTS Fed May Potentially Hike Rates When Liquidity Conditions Are Negative ..................................................................... 854
NEW-CHARTS Fed Tightening Periods versus US and World GDP Growth .......................................................................................... 855
NEW-CHARTS Federal Reserve Balance Sheet Trend Changes ........................................................................................................... 855
NEW-CHARTS Long Term Rates Fell in the Last Tightening Cycle ........................................................................................................ 856
NEW-CHARTS Markets have been Pricing in a Fed Rate Liftoff Since 2009 ......................................................................................... 856
NEW-CHARTS Long Term Trend of 10Y UST ......................................................................................................................................... 856
NEW-CHARTS Likely Policy Support Levels by the Federal Reserve for a Falling S&P ........................................................................ 857
CHARTS Inflation Expectations versus Fed QE Easing Operations ....................................................................................................... 858
CHARTS Depth of US Treasury Markets Has Declined from Recent Highs ........................................................................................... 858
CHARTS China Dumping US Treasuries as Chinese Forex Reserves Fall ............................................................................................ 859
CHARTS US Defenses Down ................................................................................................................................................................... 860
CHARTS September Rate Hike Forecast History .................................................................................................................................... 861
CHARTS Only One Thing Can Stop the Fed from a September Rate Hike Emerging Market Weakness .......................................... 861
CHARTS Feds QE History versus UST 10 Year Yields .......................................................................................................................... 862
CHARTS Fed Balance Sheet Growth ....................................................................................................................................................... 862
CHARTS June 2015 Fed Rates Hikes Diminish....................................................................................................................................... 862
CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ......................................................................................................................... 863
RESEARCH OF NOTE .................................................................................................................................................................................... 864
US MONETARY Why We Have Low Level Equilibria............................................................................................................................ 864
US MONETARY Crashing Inflation Expectations Suggest Imminent Launch Of QE4 ............................................................................. 866
US MONETARY Why Goldman Is Confident the Fed Will Wait To Hike Until December (At Least) ...................................................... 867
US MONETARY Forget Rate Hikes: Bridgewater Says QE4 Is Next; Warns World Is Approaching End of Debt Supercycle .............. 869
US MONETARY What Options Are Saying About A Possible September Rate Hike ............................................................................. 870
US MONETARY The Fed Is Scared To Raise Rates, Ron Paul Warns "Everything Is Too Vulnerable" ................................................ 872
US MONETARY Hilsenrath Warns Fed Is Out Of Ammo, "Policy Makers Resorting To Backup, Backup Plans" .................................. 873
US MONETARY China's Record Dumping Of US Treasuries Leaves Goldman Speechless ................................................................. 875
US MONETARY Fed Goes Looking For Evidence of Broken Treasury Market, Decides Everything Is Fine ......................................... 880
US MONETARY The Fed Is Out Of Options, "QE Is All It Can Do Here" Art Cashin Predicts ................................................................ 885
US MONETARY - Humphrey Hawkins Testimony - Yellen Secures More Flexibility for 'Patient' Fed ....................................................... 885
US MONETARY - Audit the Fed Yellens Testimony ................................................................................................................................ 888
US MONETARY - Criticism by Architect of Japanese Quantitative Easing of Fed Policy .......................................................................... 897
US MONETARY - CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory .................................................................... 900
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery................................................................................ 903
US MONETARY - The Fed is stuck in a QE Trap ....................................................................................................................................... 906
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) .................................................................. 908
US MONETARY - Mathematically, The Fed Can Only Fail......................................................................................................................... 910
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession ................................................................................. 916
US MONETARY - QE Programs versus S&P 500 Movements .................................................................................................................. 917
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will............................................. 919
US MONETARY - Debt Increases $1 Trillion in One Year .......................................................................................................................... 921
GLOBAL ABE-NOMICS The Road Ahead ......................................................................................................................................................... 924
CHARTS OF NOTE ......................................................................................................................................................................................... 924
JAPAN Japan Heads Back towards Deflation .......................................................................................................................................... 924
JAPAN The Third Arrow of ABE-Nomics -I ............................................................................................................................................... 925
JAPAN The Third Arrow of ABE-Nomics II ............................................................................................................................................. 926
JAPAN Japanese Households Remain Pessimistic ................................................................................................................................. 927
RESEARCH OF NOTE .................................................................................................................................................................................... 928
GLOBAL ABE-NOMICS - Japan Shocked To Find Abenomics Is Destroying Its Middle Class ................................................................. 928
GLOBAL ABE-NOMICS - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game............................................................ 930
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 931
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 934
BOJ JAPAN ......................................................................................................................................................................................................... 936
CHARTS OF NOTE ......................................................................................................................................................................................... 936
JAPAN Japans Inflation Pressure Ebbs Away......................................................................................................................................... 936
JAPAN BOJ QE Expansion In Context Debt Monetization ................................................................................................................... 937
JAPAN Japanese Trade Balance ............................................................................................................................................................. 938
JAPAN Japanese Real & Nominal Household Income ............................................................................................................................ 938
JAPAN CPI Shoots To 3.3% Y-o-Y .......................................................................................................................................................... 939
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 939
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 939
JAPAN Real Wages Plummet as Financial Repression Takes Hold ....................................................................................................... 940
RESEARCH OF NOTE .................................................................................................................................................................................... 941
JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ...................................................................................... 942
JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ................................................................................. 944
JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .............................................................................................. 947

9

JAPAN - No Way Out But to Expand the Monetary Base ........................................................................................................................... 949
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years....................................................................................................................................... 950
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................... 953
JAPAN - Some Policies Have Clearly Hit the Limit ..................................................................................................................................... 955
JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 956
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 961
JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 962
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 965
JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 966
PBOC CHINA ...................................................................................................................................................................................................... 968
CHARTS OF NOTE ............................................................................................................................................................................................... 968
NEW-CHARTS Chinese Debt at 282% of GDP in 2014 .......................................................................................................................... 968
NEW-CHARTS Change in Chinese Bank Assets Since Q4 2008 Compared to Big 4 Central Banks .................................................... 969
CHARTS Chinas Capital Inflow / Outflow ................................................................................................................................................ 969
CHARTS Chinas Falling Holdings of US Treasuries ............................................................................................................................... 970
CHARTS Cumulative % Increases in Pork Since the Start of the Cycle .................................................................................................. 970
CHARTS Severe Supply of Food Staple - Pork ....................................................................................................................................... 971
CHARTS Chinese CPI (Minus Pork) ........................................................................................................................................................ 972
CHARTS Bank Loans in China accelerating at the fastest pace since Financial Crisis. ......................................................................... 972
CHARTS China Reduces Bank Reserve Ratio ........................................................................................................................................ 972
CHARTS Speculation Takes Hold of Sky Rocketing Chinese Stock Market ........................................................................................... 973
CHARTS Falling Chinese Government Revenue Growth ........................................................................................................................ 975
CHARTS Falling National New Residential Housing Starts ..................................................................................................................... 975
CHARTS China and Asia Residential Property Tracking US Housing Bubble ........................................................................................ 976
CHARTS Real Chinese Rates versus Cuts .............................................................................................................................................. 976
RESEARCH OF NOTE .................................................................................................................................................................................... 977
CHINA MONETARY - Devaluation Stunner: China Has Dumped $100 Billion In Treasuries In The Past Two Week .............................. 977
CHINA MONETARY - China's Record Dumping Of US Treasuries Leaves Goldman Speechless ........................................................... 979
CHINA MONETARY - Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts ........................... 984
CHINA MONETARY - China's "Animal Spirits" May Call For "Draconian" Measures To Curb Rally, UBS Says ...................................... 990
CHINA MONETARY Is China Beginning to Panic as it Lowers Reserve Ratio ....................................................................................... 992
CHINA MONETARY - Liquidity evaporates in China as 'fiscal cliff' nears .................................................................................................. 994
ECB EU ............................................................................................................................................................................................................. 1000
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1000
CHARTS OF NOTE ....................................................................................................................................................................................... 1001
CHARTS EU QE Results An Abject Failure ........................................................................................................................................ 1001
CHARTS Welcome to the EUs NIRP .................................................................................................................................................. 1001
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1002
CHARTS Negative Swiss Government Bonds ....................................................................................................................................... 1002
CHARTS UK & German Total Return Indices ........................................................................................................................................ 1003
CHARTS ECBs Dilemma of Digging Up Enough Debt .......................................................................................................................... 1003
CHARTS Nearly $2T European Nonds Trading With Negative Yields .................................................................................................. 1004
CHARTS Total National Debt Germany versus Industrial Country Average (ex-Germany) ............................................................... 1004
CHARTS The Fastest Growing Asset Class NIR Products ................................................................................................................. 1005
CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ......................................................................................................... 1006
CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU ............................................................................................................ 1007
CHARTS Euro-Area Inflation Rate on the Decline Since 2011 .............................................................................................................. 1007
CHARTS Euro-Area Inflation Expectations Decline ............................................................................................................................... 1008
CHARTS Euro-Area Private Sector Loan Creation ................................................................................................................................ 1009
CHARTS Euro-Area Money Supply, Private Sector Lending Growth .................................................................................................... 1009
CHARTS Euro-Area 10 Yr Sovereign Bond Yields ................................................................................................................................ 1010
CHARTS Slovenia May BE the Next EU Debt Hotspot .......................................................................................................................... 1010
CHARTS Spain & Portugal NPL ............................................................................................................................................................. 1011
CHARTS ECBs Turn to Expand Its Balance Sheet ............................................................................................................................... 1012
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................. 1012
CHARTS Expect Major ECB Policy Announcement in Q2 2014 ............................................................................................................ 1013
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................. 1014
RESEARCH OF NOTE .................................................................................................................................................................................. 1015
EU MONETARY - Draghi Failed: European Inflation Expectations Slide To Pre-QE Level ..................................................................... 1016
EU MONETARY - NIRP Is A Flawed Economic Concept ......................................................................................................................... 1017
EU MONETARY - NIRP ............................................................................................................................................................................. 1019
EU MONETARY NIRP - Yield scarce as the world turns negative ........................................................................................................ 1023
EU MONETARY - Draghi Key Statements ................................................................................................................................................ 1026
EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ................................................................. 1027
EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action .................................................................................... 1029
EU MONETARY - Euro-Area Data Deterioration Points toward QE ......................................................................................................... 1031
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down .......................................................................... 1033
MACRO MONETARY INFLATION ................................................................................................................................................................... 1035
CHARTS OF NOTE ............................................................................................................................................................................................. 1035
NEW-CHARTS US 5Y5Y Forward Swap ................................................................................................................................................... 1035
CHARTS The Fall of Hyperinflation & the Rise of Deflation ...................................................................................................................... 1035
CHARTS Falling US Consumer Price Index .............................................................................................................................................. 1036
CHARTS Global Consumer Prices are Rising Significantly ....................................................................................................................... 1037
CHARTS Global Country Inflation Rates ................................................................................................................................................ 1037
CHARTS Two Worlds if Inflation EM and DM ..................................................................................................................................... 1037

10

CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1039

RESEARCH OF NOTE .................................................................................................................................................................................. 1040
INFLATION Martin Armstrongs Explanation of Monetary Inflation ........................................................................................................ 1040
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ........................................... 1042
GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1044

GEO-ECONOMIC INDEX .................................................................................................................................................................................... 1044
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued ........................................................................................................ 1045
CHARTS OF NOTE ....................................................................................................................................................................................... 1048
NEW-ENERGY Islamic versus Qatar-Turkey Pipeline ........................................................................................................................... 1048
NEW-ENERGY Sunni versus Shiite In the Middle East ......................................................................................................................... 1049
NEW-ENERGY The Iranian Encirclement Strategy ............................................................................................................................. 1049
NEW-ENERGY Drowning in Oil Over Supply ......................................................................................................................................... 1051
NEW-ENERGY Rig Count Down But Not Production ............................................................................................................................ 1051
ENERGY Saudi Crude Oil Production & Brent Price ............................................................................................................................. 1053
ENERGY World Liquids Percent of Production ...................................................................................................................................... 1053
ENERGY Interest Rates & Oil Prices in 2015 Dollars ............................................................................................................................ 1053
ENERGY Oil Production and CAPEX by Operating Environment 2014 ................................................................................................ 1054
ENERGY Global Drilling Intensity Will Increase ..................................................................................................................................... 1054
ENERGY Most US shale play costs are below $80 a barrel Challenged when approaching $60 .................................................... 1055
ENERGY Breakeven for All Global Oil Projects ..................................................................................................................................... 1056
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1057
ENERGY Putin Cancels South Stream through Bulgaria To Go Through Turkey .............................................................................. 1058
ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years .......................................................................................... 1059
ENERGY Falling Inflation Adjusted Gasoline Prices .............................................................................................................................. 1060
ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ..................................................................................................... 1061
ENERGY US Shale Oil Breakeven Prices .............................................................................................................................................. 1063
ENERGY OPEC Announcement Crushes Ruble & WTI Crude ............................................................................................................. 1063
ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ............................................................ 1064
ENERGY EM Oil Producers Being Crushed .......................................................................................................................................... 1064
ENERGY Market Cap Impacts of OPEC Decision ................................................................................................................................. 1065
ENERGY Oil Supply / Demand and Price .............................................................................................................................................. 1066
RESEARCH OF NOTE .................................................................................................................................................................................. 1067
NEW-SAUDI-IRAN-Iran, Saudi Arabia "Clash" Over Syria At "Secret", Closed-Door Meeting In Davos ............................................. 1067
NEW-SAUDI-IRAN- Another Petro-State Throws In The Towel: The Last Nail In The Petrodollar Coffin ........................................... 1069
NEW-SAUDI-IRAN- Mainstream Media Finally Admits Syrian Conflict Is US-Russia Proxy War ......................................... 1071
NEW-SAUDI-IRAN- Russia and Iran Moving To Corner The Mideast Oil Supply ................................................................................ 1076
NEW-SAUDI-IRAN- Migrant Crisis & Syria War Fueled By Competing Gas Pipelines ............................................................ 1079
RUSSIA- Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead .................................................... 1084
RUSSIA- OPEC Presents: QE4 And Deflation ...................................................................................................................................... 1087
RUSSIA Energy War ........................................................................................................................................................................... 1089
PETRODOLLAR The Saudis And US Collusion Behind the Falling Oil Prices ....................................................................... 1092
PETRODOLLAR Who Is Saudi Arabia Really Targeting In Its Price War? ............................................................................ 1096
PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ........................... 1101
PETRODOLLAR Collapsing PetroDollar Foundation ......................................................................................................................... 1107
UKRAINE - Pulled between EU v Russia .............................................................................................................................................. 1111
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................. 1111
UKRAINE - Pulled between Economic Inequality Factors ..................................................................................................................... 1112
UKRAINE - Pulled between the Global Military Balance ....................................................................................................................... 1113
UKRAINE - Pulled by Global Financial Markets .................................................................................................................................... 1114
UKRAINE - A Deep State Analysis ........................................................................................................................................................ 1117
ENERGY China Uses Crude Drop to Build Strategic Oil Reserve ..................................................................................................... 1121
ENERGY - The Shale Bust Arrives: November Permits For New Shale Wells Tumble 15% ............................................................... 1122
ENERGY - Crude Crash Slams Venezuelan Bonds To Close At 5-Year Lows: 21% Yield .................................................... 1123
ENERGY - The Oil Price Decline ........................................................................................................................................................... 1125
ENERGY - The Oil-Drenched Black Swan, Part 2................................................................................................................................. 1132
ENERGY - The Oil-Drenched Black Swan, Part 1 ......................................................................................................................... 1134
ENERGY - OPEC Presents: QE4 and Deflation .................................................................................................................................... 1137
ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ............................................. 1142
ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ................................... 1143
ENERGY - Energy Quakes as OPEC Stands Pat ................................................................................................................................. 1145
ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ......................................... 1148
ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ....................................................... 1151
ENERGY - The 2014 Oil Price Crash Explained ............................................................................................................................. 1155
ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ............................................................................... 1160
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ............................................................................................... 1167
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................. 1170
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ........................................................................................ 1172
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ....................................................... 1174
EMERGING & FRONTIER MARKETS - Emerging Markets Growth, Credit & Forex Problems - Fx Plummet ................................................ 1179
CHARTS OF NOTE ....................................................................................................................................................................................... 1183
NEW-CHARTS MSCI Emerging Markets Start to Year % - Worst Ever ................................................................................................ 1183
NEW-CHARTS FX markets are collapsing as traders are betting policy makers will not continue defending exchange rates ............ 1183

11

NEW-CHARTS Premium investors demand to hold EM debt over U.S. Treasuries widened to 481 .................................................... 1184
NEW-CHARTS Capital Controls Arrive In Emerging Markets China & Azerbiajan ............................................................................ 1184
NEW-CHARTS EM Credit Outstanding in US Dollars Increased $17.7T Since 2006 ........................................................................... 1185
NEW-CHARTS EM Credit Has Expanded Dramatically Compared to Developed Markets .................................................................. 1186
CHARTS Emerging Market 10 Year Shift in Share of World GDP 2004 to 2014 ............................................................................... 1187
CHARTS Emerging Market Fx in Freefall ............................................................................................................................................... 1187
CHARTS Total Economy Debt as a % of GDP India, Poland, Ireland and Spain .............................................................................. 1187
CHARTS Global FX Reserves 2000 versus 2005 versus 2015 .......................................................................................................... 1188
CHARTS GDP per Capita Income .......................................................................................................................................................... 1189
CHARTS EMERGING ASIA (Values) Annual % Change, 1966 to May 2015 .................................................................................... 1190
CHARTS Brazil in or Near a Serious Recession .................................................................................................................................... 1190
CHARTS Collapsing Currencies in Columbia and Chile ......................................................................................................................... 1191
CHARTS The Unwind of EM Credit, Chinas Leverage and US Monetary Easing ................................................................................ 1192
CHARTS The Tale of Two Economies Chile versus Portugal ............................................................................................................ 1193
CHARTS Emerging & Developed Economy Growth Rates Converge ................................................................................................... 1194
CHARTS Emerging Market Currency Sell-Off ........................................................................................................................................ 1194
CHARTS Emerging Markets Stocks versus Developed Market Stocks ................................................................................................. 1195
CHARTS Investors Are Pulling Money From Developing Markets ........................................................................................................ 1196
CHARTS Valuation of EM Stocks is Falling Against Developed Markets .............................................................................................. 1196
CHARTS EM Capital Outflows Surge Towards $1T .............................................................................................................................. 1197
CHARTS Developing Nation Currencies Plunge After Chinas Devaluation Rattles Markets ............................................................... 1197
CHARTS Emerging Markets Facing Both Capital Out Flows and Falling Currencies ........................................................................... 1199
CHARTS Wide Spread Emerging Market Capital Out Flows ................................................................................................................. 1200
CHARTS Emerging Market Debt versus GDP - 2013 ............................................................................................................................ 1201
CHARTS Emerging Market Resilience Indicator Changes .................................................................................................................... 1201
CHARTS BRIC Countries Responsible for 43% of Global Growth ........................................................................................................ 1202
CHARTS BRIC & Emerging Market Inflation Rates ............................................................................................................................... 1202
CHARTS Emerging Market Default Probability ...................................................................................................................................... 1203
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions ................................................ 1203
CHARTS Emerging Market Outflows...................................................................................................................................................... 1204
CHARTS Emerging Market Outflows -2 ................................................................................................................................................. 1204
CHARTS Developed versus Emerging Equity Markets 1990-2014 .................................................................................................... 1205
CHARTS Total GEM Flows..................................................................................................................................................................... 1205
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................. 1206
RESEARCH OF NOTE .................................................................................................................................................................................. 1207
NEW-EMERGING MARKETS - Emerging Markets Running Scared with Capital Controls ..................................................................... 1207
NEW-EMERGING MARKETS - For Emerging Markets, It Is Now Worse Than the Asian Financial Crisis ............................................. 1208
NEW-EMERGING MARKETS - Be Very Afraid: "The 3 EM Debacles" Loom, HSBC Warns .................................................................. 1211
EMERGING MARKETS - Emerging Market Currencies To Crash 30-50%, Jen Says ............................................................................. 1214
EMERGING MARKETS - Emerging Market Mayhem: Gross Warns Of "Debacle" As Currencies, Bonds Collapse .............................. 1216
EMERGING MARKETS - Emerging markets: Redrawing the world map ................................................................................................. 1222
EMERGING MARKETS - Lost Decade in Emerging Markets: Investors Already Halfway There ............................................................ 1229
EMERGING MARKETS - JP Morgan Has A "Problem" With Emerging Markets ..................................................................................... 1234
EMERGING MARKETS - Which Emerging Markets Are Most Vulnerable To "External Shock" .............................................................. 1237
EMERGING MARKETS - Emerging markets: The great unraveling ......................................................................................................... 1239
EMERGING MARKETS - Moodys warns on EM dollar finance costs ...................................................................................................... 1244
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................. 1245
EMERGING MARKETS - Crisis Redux? ................................................................................................................................................... 1246
EMERGING MARKETS - Losing Their Punch ....................................................................................................................................... 1251
EMERGING MARKETS - Risk-On!........................................................................................................................................................... 1253
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................. 1254
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1256
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................. 1257
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1263
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1268
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ................................................... 1272
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain ........................................ 1275
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................. 1278
CHARTS OF NOTE ....................................................................................................................................................................................... 1279
NEW-CHINA LIQUIDITY Chinese Reserves Have Fallen Steadily Since the Completion of US TAPER ............................................ 1279
NEW-CHINA LIQUIDITY Chinese Reserve Total and Monthly Change ................................................................................................ 1279
CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .......................................................... 1280
CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall .............................................................................................. 1282
CHINA LIQUIDITY Chinas Deleveraging ............................................................................................................................................... 1282
CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate .................................................................................................... 1283
CHINA LIQUIDITY Bank Loan Growth ................................................................................................................................................... 1283
CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ........................................................................................................................ 1284
CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ................................................................................................... 1284
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans ............................................ 1285
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate .............................................................................................. 1286
CHINA LIQUIDITY Shadow Banks Step Back Into Light ....................................................................................................................... 1286
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales ................................................................................................ 1287
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth ............................................................................................ 1287
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ............................................................................................... 1288
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................. 1289

12

CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1289

RESEARCH OF NOTE .................................................................................................................................................................................. 1291
NEW-CHINA LIQUIDITY - PBOC Injects Massive $60 Billion Liquidity - Most In 3 Years; China Stocks, Yuan Drop ............................ 1291
NEW-CHINA LIQUIDITY - "China 2016 Is US 2008" Felix Zulauf Warns "The Outcome of A Major Yuan Devaluation Would Be
Disastrous" ................................................................................................................................................................................................. 1293
NEW-CHINA LIQUIDITY - Pressures on the Yuan Held in Check by Reserve Currency Depletion ........................................................ 1297
CHINA LIQUIDITY - Hugh Hendry - Why China's Biggest Bear, Became One Of Its Biggest Bulls ........................................................ 1299
CHINA LIQUIDITY - Three Reasons China May Cut the Reserve Requirement Ratio ............................................................................ 1303
CHINA LIQUIDITY - Reverses Direction and Begins Easing .................................................................................................................... 1305
CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ........................................................................... 1306
CHINA LIQUIDITY - Troubling Signs of Deflation in China ....................................................................................................................... 1307
CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening .................................................................................................... 1309
CHINA LIQUIDITY - Steady decline in private sector activity ................................................................................................................... 1310
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................. 1311
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems .............................................................................................. 1314
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions ........................................................................................................ 1316
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk .......................................................................... 1319
CHINA LIQUIDITY - Overnight Repo at 25% .......................................................................................................................................... 1320
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................. 1321
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 1324
CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ..................................................................................... 1329
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ...................... 1332
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ............................................................................................................... 1334
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged .................................................................................................................... 1335
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................. 1337
CHARTS OF NOTE ....................................................................................................................................................................................... 1337
NEW-CURRENCY WARS Falling US$ PEGS of Oil Exporter Nations ................................................................................................. 1337
RESEARCH OF NOTE .................................................................................................................................................................................. 1337
NEW-CURRENCY WARS - Square Holes and Currency Pegs ................................................................................................................ 1337
NEW-CURRENCY WARS - Pegs under pressure - Currency pegs are still in fashion, but some are creaking ...................................... 1341
NEW-CURRENCY WARS - Another Petro-State Throws In the Towel: The Last Nail In The Petrodollar Coffin .................................... 1344
NEW-CURRENCY WARS - A Currency War That Few Economists And Analysts Notice, Much Less Understand ............................... 1345
CURRENCY WARS - A Major Shift............................................................................................................................................................... 1349
BATTLEFIELD - Combatants & Belligerents ................................................................................................................................................. 1354
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 1355
JAPAN - The Destabilizing Agent .................................................................................................................................................................. 1357
EUROPE - Euro Exposed .............................................................................................................................................................................. 1357
ARGENTINA - Here we Go Again! ................................................................................................................................................................ 1359
VENEZUELLA - Bad Situation ....................................................................................................................................................................... 1360
BRAZIL - No One Wants to Listen ................................................................................................................................................................. 1360
SWITZERLAND - No Choice ......................................................................................................................................................................... 1360
SINGAPORE - Hot Money ............................................................................................................................................................................. 1361
UK- Pound Joins War .................................................................................................................................................................................... 1362
PRIOR REPORT UPDATES & EDITIONS .......................................................................................................................................................... 1363
US$ RESERVE STATUS & ERODING INFLUENCE.......................................................................................................................................... 1363
RESEARCH WE FOLLOWED DE=DOLLARIZATION ............................................................................................................................ 1363
CHARTS OF NOTE ....................................................................................................................................................................................... 1367
DE-DOLLARIZATION - Countries that have joined the China-led Asian Infrastructure Investment Bank ............................................... 1367
DE-DOLLARIZATION - AIIBs Founding Members ................................................................................................................................... 1367
DE-DOLLARIZATION - Asias Infrastructure Legs & the AIIBs Expected Capital Structure ................................................................... 1368
DE-DOLLARIZATION - AIIB Infrastructure Investment ............................................................................................................................. 1369
DE-DOLLARIZATION - The Rise & Fall of Modern Empires .................................................................................................................... 1369
RESEARCH OF NOTE .................................................................................................................................................................................. 1371
DE-DOLLARIZATION - U.S. Looks to Work with China-Led Infrastructure Fund..................................................................................... 1371
DE-DOLLARIZATION - US Hegemony, Dollar Dominance Are Officially Dead ....................................................................................... 1375
DE-DOLLARIZATION - The BRICS New Development Bank (NDB) with its Own SDRs Is Coming ....................................................... 1377
DE-DOLLARIZATION - China Takes Aim At Dollar Reserve Status: Promotes Yuan In Investment Bank ............................................. 1379
DE-DOLLARIZATION - Kazakhstan Authorities Announce Plans To De-Dollarize Economy .................................................................. 1381
DE-DOLLARIZATION - China to urge firms to sell bonds overseas to fund new Silk Road to Europe .................................................... 1383
DE-DOLLARIZATION - Is This The Most Important Chart For The Future Of The World's Reserve Currency? ..................................... 1383
DE-DOLLARIZATION - Is Russia Planning A Gold-Based Currency? ..................................................................................................... 1387
DE-DOLLARIZATION - De-Dollarization Accelerates: Russia Launches SWIFT-Alternative Linking 91 Entities .................................... 1389
DE-DOLLARIZATION - What if China, Russia Succeed in Going off the Dollar?..................................................................................... 1390
RESERVE CURRENCY - Asian Infrastructure Investment bank challenges U.S. supremacy ................................................................ 1391
RESERVE CURRENCY - March the moment the US lost its role as the underwriter of the global economic system.......................... 1393
RESERVE CURRENCY - - It just happened: The moment the United States lost its role . . . ............................................................... 1395
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ..................... 1396
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................. 1397
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ..................................................................... 1398
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order .......................... 1399
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar .................................................................... 1402
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ...................................................... 1403
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar ................................................................................................ 1405
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries .................................................... 1406

13

GOLD WARS Failing Developed Economies versus Rising Emerging Economies......................................................................................... 1408
CHARTS OF NOTE ....................................................................................................................................................................................... 1410
GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation .................................................................................. 1410
GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ......................................................................................... 1410
GOLD WARS Nominal & Real Price of Gold 1790-2013 .................................................................................................................... 1412
GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ................................................................................................... 1412
GOLD WARS Swiss National Bank Gold, FX & Total Assets ................................................................................................................ 1413
GOLD WARS Sovereign Gold Holdings According to the World Gold Council ..................................................................................... 1413
GOLD WARS European Countries Gold Reserves Repatriation ........................................................................................................... 1414
RESEARCH OF NOTE .................................................................................................................................................................................. 1416
GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ........................................................... 1416
GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ....................................................................... 1417
GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse ............................................................................ 1420
GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ................... 1422
INTERNATIONAL BANKING & SHADOW BANKING ......................................................................................................................................... 1424
DEBT Growth of Financial Services ....................................................................................................................................................... 1427
DEBT REITS & CMBS Growth ............................................................................................................................................................... 1427
DEBT - GLOBAL DEBT 313% of GDP...................................................................................................................................................... 1429
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS ............................................................................................................................ 1431
FOOD PRICES & SHORTAGES Potential Disruption...................................................................................................................................... 1432
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 1432
CHARTS OF NOTE ....................................................................................................................................................................................... 1433
CHARTS Cost of Thanksgiving Food ..................................................................................................................................................... 1433
CHARTS Consumer Price Increases Predominately Food in Emerging Economies ............................................................................ 1433
CHARTS Sticker Shock in Isle 1 ............................................................................................................................................................. 1434
CHARTS Food Importers ........................................................................................................................................................................ 1434
CHARTS US Beef Production To Reach 5 Years of Decline ................................................................................................................. 1435
CHARTS US CPI Turns Up on Food & Energy ...................................................................................................................................... 1436
CHARTS CRB US Spot Foodstuff Index One Year ............................................................................................................................ 1436
CHARTS CRB Food Index One Year .................................................................................................................................................. 1438
CHARTS Global Food Price Change 2007-2013 ................................................................................................................................... 1439
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1440
CHARTS Food Prices Spiking Up .......................................................................................................................................................... 1441
CHARTS Retail Food Services and Drinking Place Sales ..................................................................................................................... 1441
CHARTS Retail CRE Price/ Cost Pressures .......................................................................................................................................... 1443
CHARTS Retail CRE Price/ Cost Pressures - 2 ..................................................................................................................................... 1444
CHARTS Spiking Beef Prices ................................................................................................................................................................. 1445
CHARTS Coffee Futures ........................................................................................................................................................................ 1445
CHARTS Lean Hog Futures ................................................................................................................................................................... 1446
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB ............................................................................................................ 1446
CHARTS Global Food Imports versus % Y-o-Y US$ Change ............................................................................................................... 1447
CHARTS UK Food Retailers v Commodity Food Price Index ................................................................................................................ 1447
RESEARCH OF NOTE .................................................................................................................................................................................. 1448
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................. 1448
FOOD INFLATION - Food Prices, Driver of Social Unrest ..................................................................................................................... 1451
FOOD INFLATION - Food Price Manipulation in Thailand........................................................................................................................ 1452
CYBER WARS Growing Threat & the Security-Surveillance Complex ............................................................................................................ 1454
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ..................................................................... 1457
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ............................................................... 1460
CYBER SPYING ............................................................................................................................................................................................ 1461
REGIONAL ........................................................................................................................................... 1462

EU DIS-INFLATION MOVING TOWARDS DEFLATION ...................................................................................................... 1463
CHARTS OF NOTE ....................................................................................................................................................................................... 1465
NEW-CHARTS Main Migrant Route to Germany ................................................................................................................................... 1465
NEW-CHARTS Many Migrant Routes Being Taken ............................................................................................................................... 1466
NEW-CHARTS Many Migrant Routes Being Taken- Air, Land and Sea ............................................................................................... 1467
NEW-CHARTS Migrants Entering Hungary ........................................................................................................................................... 1467
NEW-CHARTS Schengen Non Shengen EU Countries ..................................................................................................................... 1468
NEW-CHARTS Schengen Non Shengen EU Countries-2 .................................................................................................................. 1469
NEW-CHARTS Migrant Detentions ........................................................................................................................................................ 1470
NEW-CHARTS German Asylum Applications...................................................................................................................................... 1471
NEW-CHARTS Euro Area and EU28 Unemployment Rates ................................................................................................................. 1472
NEW-CHARTS Unemployment Rates by Country Seasonally Adjusted ............................................................................................ 1473
NEW-CHARTS Inflation Tracks Commodity Prices ................................................................................................................................ 1473
NEW-CHARTS Tracing EU Dis-Inflation towards Deflation .................................................................................................................... 1474
CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ......................................................................................... 1476
CHARTS Eurozone GDP Since 1999 ..................................................................................................................................................... 1476
CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" .................................................... 1477
CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ..................................................... 1478
CHARTS "Over 1/2 of all government bonds yield less than 1%." ......................................................................................................... 1479

14

CHARTS A weaker Euro has been good for the STOXX 600 ................................................................................................................ 1480
CHARTS Eurozone equity inflows continue to rise ................................................................................................................................ 1481
CHARTS YTD flows into European equity funds ................................................................................................................................... 1481
CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ........................................................................................... 1481
CHARTS Negative Yields Have Become the New Norm in the Euro area .......................................................................................... 1482
CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ............................................................... 1482
CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. .................................................................................................................... 1483
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre..................................................................................... 1483
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ........................................................................................ 1484
CHARTS Eurozone is the Biggest Drag on Global Profits ..................................................................................................................... 1484
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ....................................................................... 1485
CHARTS EU PMIS Rolling Over ............................................................................................................................................................ 1486
CHARTS Eurozone Banks Too Big To Be Bailed Out! .......................................................................................................................... 1487
CHARTS Eurozone Area Consumer Confidence May Be Misleading ................................................................................................... 1488
CHARTS Eurozone GDP & Recession Pattern ...................................................................................................................................... 1488
CHARTS EU-Area PMI Shows Sustained Deterioration ........................................................................................................................ 1489
CHARTS Euro Area CPI Seen Below 1% for 11th Month ....................................................................................................................... 1489
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 ............................................................................ 1490
CHARTS Euro Area Inflation Levels ....................................................................................................................................................... 1491
CHARTS Geo-Political Tensions May Weigh on Confidence ................................................................................................................ 1492
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ................................................................................................... 1492
CHARTS Industrial Production Slows In Line With PMIs ....................................................................................................................... 1493
CHARTS ZEW Expectations Signals Slowdown Ahead ........................................................................................................................ 1494
CHARTS Euro-Area July PMI ................................................................................................................................................................. 1494
CHARTS Corporate Borrowing Spreads Remain Wide ......................................................................................................................... 1495
CHARTS ECB Less Accommodative Than the Fed ............................................................................................................................... 1495
CHARTS EU Financial Conditions Deteriorating .................................................................................................................................... 1496
CHARTS EU Confidence ........................................................................................................................................................................ 1497
CHARTS - Slow Money Growth May Stoke Deflation Concerns .............................................................................................................. 1498
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................. 1499
CHARTS - Euro-Area Inflation Aggregate .............................................................................................................................................. 1499
CHARTS - 10M Part-Time Workers Underemployed in EU ...................................................................................................................... 1500
CHARTS - Euro-Area Housing Prices Decline .......................................................................................................................................... 1501
CHARTS - Euro-Area Trade Surplus ......................................................................................................................................................... 1502
CHARTS - Euro-Area Composite PMI ....................................................................................................................................................... 1503
CHARTS - EU Area Weakness ................................................................................................................................................................. 1504
CHARTS - EU Area GDP ........................................................................................................................................................................... 1505
CHARTS - EU Area PMI ............................................................................................................................................................................ 1506
CHARTS - EU Area PMI ............................................................................................................................................................................ 1507
CHARTS - EU Real Rates ......................................................................................................................................................................... 1508
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................. 1509
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ..................................................................................................................... 1510
CHARTS - EU PMI ..................................................................................................................................................................................... 1510
CHARTS - EU CPI ..................................................................................................................................................................................... 1512
CHARTS - Regional Risk-Reward ............................................................................................................................................................. 1513
CHARTS - Europe's "Core" Problem is France .................................................................................................................................... 1514
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ........................................................................... 1517
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................. 1518
CHARTS - EU Credit Downgrades, France and UK On Tap ................................................................................................................... 1520
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ........................................................................................................... 1522
CHARTS - Dangerous Delusional Divergences .................................................................................................................................... 1524
CHARTS - IMF Projections for Euro Area and GIIPS ............................................................................................................................... 1525
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth ............................................................................................................ 1526
CHARTS - Eurozone Misery Indices Never Been Higher ..................................................................................................................... 1527
CHARTS - Euro Currency .......................................................................................................................................................................... 1529
RESEARCH OF NOTE .................................................................................................................................................................................. 1535
NEW-RESEARCH Migrant Crisis Sparks Balkan Border Battles As EU Buckles Under Overwhelming Refugee Flow ....................... 1535
NEW-RESEARCH Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU ................................................................. 1539
NEW-RESEARCH "The End of The EU": Merkel's "Heroic" Refugee Response May Destroy Union, Slovakia Warns ...................... 1540
NEW-RESEARCH Europe's Refugee Crisis "Out of Control", Hungary PM Rages "This Is A German Problem, Not An EU Problem"
.................................................................................................................................................................................................................... 1547
RESEARCH The Broken Model of the Eurozone ................................................................................................................................... 1550
RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................. 1552
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ............................................................................ 1553
RESEARCH Euro Areas Stalling Industry No Support for GDP............................................................................................................ 1555
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case .............................................................................. 1555
RESEARCH ECB Rate Decision .......................................................................................................................................................... 1557
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................. 1560
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................. 1561
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................. 1563
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ........................................................................... 1565
RESEARCH Beware of EU Banks! ......................................................................................................................................................... 1567
RESEARCH Emerging Markets Aggravates Festering Banking Problems .................................................................................... 1568
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ...................................................................... 1570
RESEARCH - EFSF Downgraded to AA+ ............................................................................................................................................... 1572
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ...................................................................................................... 1573
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece .............................................................. 1576

15

SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1578

PROGNOSIS: Why the European Situation Will Get Worse ..................................................................................................................... 1578
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................... 1582
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................. 1584
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................... 1590
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................... 1594
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ....................................................................................................... 1597
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ....................................................................................... 1598
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ........................................................................................ 1599
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................. 1606
ITALY FALLING BIRTH RATE & "MIGRANT BOAT PEOPLE" MOUNTING PROBLEMS ............................................................................. 1608
CHARTS OF NOTE ....................................................................................................................................................................................... 1609
NEW-CHARTS - ITALY Non-Performing Loans by Region ................................................................................................................... 1609
NEW-CHARTS - ITALY Gross Italian Impaired Loans ........................................................................................................................... 1610
NEW-CHARTS - ITALY Italian Government Debt .................................................................................................................................. 1610
NEW-CHARTS - ITALY Banks Non-Performing Loans ......................................................................................................................... 1611
CHARTS - ITALY Quarterly GDP Growth .............................................................................................................................................. 1612
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ............................................................................................................... 1612
CHARTS - ITALY Italian Unemployment ................................................................................................................................................ 1614
CHARTS - ITALY Italian Core Inflation ................................................................................................................................................... 1614
CHARTS - ITALY Italian Industrial Porduction ....................................................................................................................................... 1615
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................. 1616
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................. 1617
CHARTS - ITALY Italian Bond Yields ..................................................................................................................................................... 1617
CHARTS - ITALY Slips Back Into Recession ......................................................................................................................................... 1618
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................. 1619
CHARTS - ITALY - Forced Rate Cuts ....................................................................................................................................................... 1620
RESEARCH OF NOTE .................................................................................................................................................................................. 1621
NEW-RESEARCH Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable" . 1621
NEW-RESEARCH Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis 09-02-15 Zero Hedge ....... 1623
NEW-RESEARCH Italy Non-Performing Loans Hit A New Record High............................................................................................ 1629
RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low ............................................................................. 1633
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ..................................................................................... 1635
RESEARCH - Italys Downward Spiral ...................................................................................................................................................... 1639
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ..................................................... 1641
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1645
ITALIAN ELECTION - What You Need to Know ....................................................................................................................................... 1645
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................. 1647
ITALIAN ELECTION - Message Given By the People ............................................................................................................................ 1649
ITALIAN ELECTION - Bad Debt Continue to Soar .................................................................................................................................... 1653
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!........................................................................... 1656
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................. 1657
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................. 1659
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................. 1662
FRANCE FRENCH DEBT & BANK EXPOSURES BIGGER THAN MOST APPRECIATE ............................................................................. 1664
CHARTS OF NOTE ....................................................................................................................................................................................... 1664
NEW-CHARTS FRANCE Total Net Government Liabilities ................................................................................................................ 1664
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. ........................................................ 1664
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ........................................................................................................... 1665
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ....................................................................... 1665
CHARTS FRANCE French Job Seekers ............................................................................................................................................. 1665
CHARTS FRANCE Inflation Expectations ........................................................................................................................................... 1666
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ........................................................................................... 1667
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................. 1667
CHARTS - FRANCE Worlds Worst PMI Ranking in June ..................................................................................................................... 1668
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................. 1669
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out...................................................................................... 1669
CHARTS - FRANCE Manufacturing Divergence With Germany Widens .............................................................................................. 1670
CHARTS - FRANCE - GDP ....................................................................................................................................................................... 1671
CHARTS - FRANCE - UNEMPLOYMENT ................................................................................................................................................ 1672
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................. 1673
CHARTS - FRANCE - TAX v GDP ............................................................................................................................................................ 1674
CHARTS - FRANCE - BUSINESS CONFIDENCE.................................................................................................................................... 1675
RESEARCH OF NOTE .................................................................................................................................................................................. 1676
NEW-RESEARCH Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction in Debt Burden........ 1676
NEW-RESEARCH When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) ....................... 1680
RESEARCH Economic Malaise Sparks Political Crisis in France ......................................................................................................... 1681
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government .......................................................... 1683
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................. 1685
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................. 1685
RESEARCH - Steady Breakdown Underway ......................................................................................................................................... 1688
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ................................................................................................... 1692
SITUATIONAL ASSESSMENT ..................................................................................................................................................................... 1694
FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ..................................................... 1694
FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ....................................................................... 1694
FRANCE - What You Need to Know ......................................................................................................................................................... 1696

16

FRANCE - Key Indicators .......................................................................................................................................................................... 1697

FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1701
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1704
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1705
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1707
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1708
FRANCE - Uncompetitive .......................................................................................................................................................................... 1709
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1711
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1713
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1715
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1716
GERMANY REFUGEE PROBLEM AT DANGEROUS TIPPING POINT ......................................................................................................... 1718
CHARTS OF NOTE ....................................................................................................................................................................................... 1718
CHARTS - GERMANY GDP Growth ...................................................................................................................................................... 1718
CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ................................................................................. 1719
CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY .............................................................................................. 1720
CHARTS - GERMANY Germany now leading the way back up in Euro Zone ...................................................................................... 1720
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 ..... 1721
CHARTS - GERMANY - 1.179% 30 Year Bond Yield .............................................................................................................................. 1722
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ............................................................................................................ 1722
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1722
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close .............................................................................. 1723
CHARTS - GERMANY 10 Y European Yields........................................................................................................................................ 1724
CHARTS - GERMANY German Unemployment .................................................................................................................................... 1725
CHARTS - GERMANY German Core Inflation ....................................................................................................................................... 1725
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury .............................................................................................. 1725
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1726
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1726
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1727
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1727
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1728
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1729
RESEARCH OF NOTE .................................................................................................................................................................................. 1731
NEW-RESEARCH - U.S. Will Station New Nuclear Weapons in Germany against Russia ..................................................................... 1731
NEW-RESEARCH - Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience ..................... 1732
NEW-RESEARCH - Why Volkswagen Is Systematically Important For Germany And Europe ............................................................... 1736
NEW-RESEARCH - Europe's Woes: The Escalating Cost to Germany ................................................................................................... 1739
RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo .................................................................................................... 1742
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian.......................................................... 1743
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1746
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1748
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1749
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1753
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1754
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1759
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1760
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1762
UK WHO IS JEREMY CORBYN? ..................................................................................................................................................................... 1764
CHARTS OF NOTE ............................................................................................................................................................................................. 1764
CHARTS - UK - U.K. productivity growth remains dismal. ........................................................................................................................ 1764
CHARTS - UK - The UK's increasingly polarized politics .......................................................................................................................... 1764
CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. .................... 1765
CHARTS - UK The UK's financial sector has the highest exposure to China ........................................................................................ 1765
CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years ..... 1765
CHARTS - UK - Deficit One of Worst of Developed Economies ............................................................................................................... 1766
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................. 1767
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1768
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1769
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1769
CHARTS - UK CPI Below Target for 7th Month ...................................................................................................................................... 1770
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1771
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1771
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1772
CHARTS - UK GDP ................................................................................................................................................................................ 1773
CHARTS - UK Population Growth .......................................................................................................................................................... 1773
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1774
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1775
CHARTS - UK - Lending ............................................................................................................................................................................ 1776
CHARTS - UK - Unemployment ................................................................................................................................................................ 1777
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1778
CHARTS - UK - GDP ................................................................................................................................................................................. 1778
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1779
RESEARCH OF NOTE .................................................................................................................................................................................. 1780
NEW-RESEARCH British General Threatens Military Coup If Corbyn Elected ..................................................................................... 1780
NEW-RESEARCH The End of Britain? Martin Armstrong On Jeremy Corbyn's Resurrection Of Marx ............................................... 1781

17

NEW-RESEARCH What is Jeremy Corbyn's programme for government? .......................................................................................... 1785

NEW-RESEARCH What does Jeremy Corbyn stand for? Jeremy Corbyn's policies and views explained .......................................... 1791
NEW-RESEARCH Who is Jeremy Bernard Corbyn? ............................................................................................................................. 1795
NEW-RESEARCH The City Of London Has Turned Britain into A "Civilized Mafia State".................................................................... 1800
RESEARCH What Remains of the UK Middle? ..................................................................................................................................... 1801
RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ..................................................................................................... 1802
RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading .................................. 1805
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................. 1808
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1810
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1813
UK - What you need to Know..................................................................................................................................................................... 1814
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1815
UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1816
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1817
UK - Doomsday Debt Machine .................................................................................................................................................................. 1818
UK - QE Extension Coming ....................................................................................................................................................................... 1821
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1823
UK - Technically in a Depression ........................................................................................................................................................... 1824
IBERIAN PENINSULA SPANISH ELECTION & ASCENDING PORTUGAL SOCIALISTS SIGNAL TROUBLES ......................................... 1827
CHARTS OF NOTE ............................................................................................................................................................................................. 1827
NEW-CHARTS - SPAIN Spains Debt-to-GDP........................................................................................................................................ 1827
NEW-CHARTS - SPAIN Spains & Portugals Unemployment Rate June 2015 Seasonally Adjusted ................................................ 1827
CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ................................................................................... 1827
CHARTS - PORTUGAL Share of Lower Skilled Workers ....................................................................................................................... 1828
CHARTS - PORTUGAL Non-Performing Loans...................................................................................................................................... 1829
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ............................................................................................................... 1830
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................. 1830
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1831
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1832
RESEARCH OF NOTE .................................................................................................................................................................................. 1833
NEW-RESEARCH - Spain's Economic Recovery Is "One Big Lie" ..................................................................................................... 1833
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1836
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ............................................................................................... 1839
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1843
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1845
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1846
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1848
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1849
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1850
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1851
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1856
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1858
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1861
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1862
CHINA: YUAN DEVALUATION RATTLES FX WORLD ................................................................................................................... 1871

CHARTS OF NOTE ....................................................................................................................................................................................... 1871
NEW-CHARTS Sinking Li Keqiamg Index Contrasts With Stable GDP ................................................................................................ 1871
NEW-CHARTS China is the Undisputed Engine of Global Growth ....................................................................................................... 1872
NEW-CHARTS China Has Been Consuming Mind-Boggling Amounts of Raw Materials ..................................................................... 1872
NEW-CHARTS Fixed Asset Investment & Consumption in China Y-o-Y Growth .............................................................................. 1873
NEW-CHARTS Fixed Asset Investment Rises Least Since 2000.......................................................................................................... 1874
NEW-CHARTS Economic Indicators Point to Lower Growth than the Headline Figures ...................................................................... 1874
NEW-CHARTS Gains of Real Estate Development Investment 1/10th of 2010 Pace ........................................................................... 1875
NEW-CHARTS Foreign Exports to China as a % of GDP ..................................................................................................................... 1876
NEW-CHARTS Foreign Exports to China for Chinas Domestic Use as a % of GDP ........................................................................... 1876
NEW-CHARTS China & Belgium Treasury Holdings vs China FX Reserves ........................................................................................ 1877
NEW-CHARTS Breakdown of Chinese Imports ..................................................................................................................................... 1878
NEW-CHARTS Chinese Imports Slow to 5 Year Low ............................................................................................................................ 1879
NEW-CHARTS Chinas Increasing Substitution of Imports for Made in China Products .................................................................... 1879
NEW-CHARTS Developing Economies Exposure to Chinese Domestic Demand ................................................................................ 1880
NEW-CHARTS Chinas GDP Monthly Tracker and Target .................................................................................................................... 1881
NEW-CHARTS China Matters Less for US Consumers than for Stock Investors ................................................................................. 1881
NEW-CHARTS Monthly Change in Foreign Reserves........................................................................................................................... 1882
NEW-CHARTS Monthly FX Purchases .................................................................................................................................................. 1883
NEW-CHARTS Chinas Estimated Productivity Growth Based on IP & Employment Shifts ................................................................. 1883
NEW-CHARTS Shanghai Composite Index Profits% Y-o-Y ............................................................................................................... 1884
NEW-CHARTS Corporate & Household Debt as % GDP ...................................................................................................................... 1884
NEW-CHARTS Weak Yuan Supported Much of 21-Year Export Rise to U.S. ...................................................................................... 1885
NEW-CHARTS xxxx ............................................................................................................................................................................... 1886
NEW-CHARTS Outstanding Balance of Margin Finance Shanghai Composite ................................................................................. 1886
NEW-CHARTS Currency Rout Goes Global as Risk Seen of 50% Loss .............................................................................................. 1886
NEW-CHARTS Yuan Trading Band ....................................................................................................................................................... 1887
NEW-CHARTS Historical Yuan FX Pattern ............................................................................................................................................ 1888

18

CHARTS China Plans to Spend Billions on Infrastructure in Pakistan .................................................................................................. 1889

CHARTS Chinas Proposed Silk Road Routes....................................................................................................................................... 1890
CHARTS China Activity Proxy & Official GDP........................................................................................................................................ 1891
CHARTS China Relaxes Commercial Bank Reserves ........................................................................................................................... 1892
CHARTS Chinese Balance of Payments ................................................................................................................................................ 1892
CHARTS Chinese Hot Money Flows ...................................................................................................................................................... 1893
CHARTS Falling Chinese Industrial Production ..................................................................................................................................... 1893
CHARTS Commodity Prices % Change Since July 2014 ...................................................................................................................... 1894
CHARTS Chinese Steel Demand, Iron Ore ............................................................................................................................................ 1894
CHARTS Chinese Rail Freight ............................................................................................................................................................... 1895
CHARTS Chinese Bank Assets versus US Bank Assets ....................................................................................................................... 1896
CHARTS Chinese Leverage and Underlying Nominal GDP .................................................................................................................. 1896
CHARTS Measures of Real & Nominal GDP Growth in China .............................................................................................................. 1897
CHARTS Chinese Total Debt & Breakdown........................................................................................................................................... 1897
CHARTS New Chinese Retail Stock Market Accounts .......................................................................................................................... 1898
CHARTS New Chinese Retail Stock Market Accounts-2 ....................................................................................................................... 1899
CHARTS Plummeting Chinese Consumer Confidence .......................................................................................................................... 1899
CHARTS Chinese PMI ............................................................................................................................................................................ 1900
CHARTS Chinese Exports versus Taiwan-Korea-Japan ....................................................................................................................... 1901
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 1902
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 1902
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 1903
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 1903
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 1904
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 1904
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 1905
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 1906
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 1906
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 1907
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 1908
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 1908
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 1908
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 1909
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1910
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1910
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1911
CHARTS Industrial Output A Concern.................................................................................................................................................... 1911
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1912
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1913
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1914
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1915
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1915
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1915
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1916
CHARTS China Equity Flows ................................................................................................................................................................. 1917
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1917
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1918
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1918
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1919
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1920
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1921
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1922
CHARTS Shadow Banking System ........................................................................................................................................................ 1922
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1924
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1925
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1926
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1927
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1928
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1929
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1930
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1931
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1932
RESEARCH OF NOTE .................................................................................................................................................................................. 1933
NEW-CHINA China's Economy Continues To Crumble As Key Data Is Worst In 15 Years ................................................................. 1933
NEW-CHINA China Outflows Said To Surpass A Staggering $300 Billion in Under Three Months ..................................................... 1936
NEW-CHINA China FX Reserve Drop Is Collateral Damage from Yuan Fall ........................................................................................ 1939
NEW-CHINA This Isn't 1994: China and That First U.S. Rate Hike ....................................................................................................... 1942
NEW-CHINA Expect Regional Ripples, Not Global Waves, From China Selloff ................................................................................... 1944
NEW-CHINA China Risks Downward Spiral of Falling Markets, Growth ............................................................................................... 1945
NEW-CHINA China to the Rescue ......................................................................................................................................................... 1947
NEW-CHINA Yuan Devaluation Helps Attain U.S. Monetary Tightening Without Fed Rate Hikes ....................................................... 1948
NEW-CHINA Devaluation Promises to Boost Exports, But Adds Stability Risk .................................................................................... 1950
NEW-CHINA Risk of a Vicious Circle on Market, Profit Declines .......................................................................................................... 1952
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1953
CHINA "New Silk Road" Could Change Global Economics Forever ..................................................................................................... 1953
CHINA Beginning to Panic - China Easing to Combat The 'Darkest Period' of 2015 .................................................................... 1957
CHINA Skewed Heavily To The Downside," BNP Says ..................................................................................................................... 1958

19

CHINA Economists seek to ease fears on Chinas record capital outflow..................................................................................... 1963
CHINA China sets up $16B Gold fund as part of Silk Road initiative .................................................................................................... 1966
CHINA The Real Reason China Is Buying Up the World's Gold ...................................................................................................... 1966
CHINA China could crash US dollar with 30,000 tons of gold ............................................................................................................... 1969
CHINA Hard Landing Clearly Evident ................................................................................................................................................. 1972
CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ................................................................................................. 1975
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1981
CHINA Signs of Madness in the Global Financial System ............................................................................................................... 1983
CHINA Reverses Direction and Begins Easing ................................................................................................................................. 1984
CHINA China's Economic Reporting Possibly a Deception ............................................................................................................. 1985
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1987
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1990
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1992
CHINA - China's Rehypothecation............................................................................................................................................................. 1995
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1997
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 1999
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 2002
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 2003
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 2004
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 2007
CHINA - Falling Yuan ................................................................................................................................................................................. 2009
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 2011
CHINA - SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ..................................................................................... 2014
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 2017
CHINA - Has an Inflation Problem ............................................................................................................................................................. 2018
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 2019
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 2022
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 2027
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 2029
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 2034
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 2038
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 2041
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 2045
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 2048
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 2051
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 2054
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 2058
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 2059
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 2060
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 2062
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 2064
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 2066
CHINA - Withdraws Liquidity .................................................................................................................................................................. 2067
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 2069
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 2079
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 2082
CHINA - PMI Improvement....................................................................................................................................................................... 2083
CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 2086
CHINA - An Implicit Social Contract .......................................................................................................................................................... 2088
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 2090
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 2091
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 2092
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 2093
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 2096
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 2097
CHINA - Credit to GDP ............................................................................................................................................................................. 2099
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 2100
CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 2102
JAPAN: NOTHING SEEMS TO BE WORKING AS ABENOMICS LOSES SUPPORT ............................................................................. 2107

CHARTS OF NOTE ....................................................................................................................................................................................... 2108
NEW-CHARTS - JAPAN Real Y-o-Y Cash Earnings with Abenomics .................................................................................................. 2108
NEW-CHARTS - JAPAN BOJs Accelerating Purchases of Equity Funds Seen as Driving Force of Tokyo Share Markets................ 2108
NEW-CHARTS - JAPAN More than a Fourth of Japans Population is Over the Age of 65 .................................................................. 2109
NEW-CHARTS - JAPAN IMFs Forecast of Japanese Population Growth ............................................................................................ 2109
NEW-CHARTS - JAPAN Prefectures with More Seniors Saw Steeper GDP Losses ............................................................................ 2110
NEW-CHARTS - JAPAN Aging Population Will Continue Dragging Down Growth ............................................................................... 2110
NEW-CHARTS - JAPAN Fewer, Older Citizens Facing Larger Debt Burden ........................................................................................ 2111
NEW-CHARTS - JAPAN 20 Years Later China Follows Japans Pattern .............................................................................................. 2112
CHARTS - JAPAN Financial Repression Gets Heavier in Japan .......................................................................................................... 2112
CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat ............................................................................................................... 2113
CHARTS - JAPAN 48 Month Trade Balance Deficit .............................................................................................................................. 2114
CHARTS - JAPAN Y-o-Y Contracting Imports ....................................................................................................................................... 2114
CHARTS - JAPAN Monetary Base versus USDJPY .............................................................................................................................. 2115
CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000......................................................................................... 2115
CHARTS - JAPAN 1.174% 30 Year Bond Yield .................................................................................................................................... 2117

20

CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 2117

CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 2117
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 2118
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 2118
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 2119
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 2119
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 2120
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 2121
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 2122
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 2123
CHARTS - JAPAN Demographics .......................................................................................................................................................... 2124
CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 2124
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 2125
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 2126
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 2127
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 2128
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 2128
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 2130
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 2130
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 2131
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 2131
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 2132
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 2133
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 2133
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 2134
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 2134
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 2135
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 2136
CHARTS - GDP Trend ............................................................................................................................................................................... 2136
CHARTS - CPI Trend ................................................................................................................................................................................. 2137
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 2137
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 2138
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 2139
RESEARCH OF NOTE .................................................................................................................................................................................. 2140
NEW-JAPAN Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan .............................................. 2140
NEW-JAPAN S&P Downgrades Japan from AA- To A+ On Doubts Abenomics Will Work - Full Text ........................................ 2142
NEW-JAPAN Elderly Japanese Population Hits New Record - Demographic Death-Rattle Continues....................................... 2144
NEW-JAPAN Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!" ................... 2148
NEW-JAPAN Abe Ratings Crash to Record Lows, Japan Lowers Minimum Voting Age ............................................................. 2149
JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ................................................................................. 2152
JAPAN Japan Still the Worlds Top Credit? ....................................................................................................................................... 2153
JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target ........................................................................................ 2154
JAPAN Japanese trading firms to cut investments, sell assets ...................................................................................................... 2155
JAPAN The BOJ Ups The Ante ............................................................................................................................................................ 2157
JAPAN Is Japan Kaput? ........................................................................................................................................................................ 2158
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 2161
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2163
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 2166
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 2168
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 2169
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 2171
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 2173
JAPAN - What the Japanese been Buying ............................................................................................................................................. 2174
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 2176
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 2179
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 2180
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 2181
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 2184
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 2185
JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 2188
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 2190
JAPAN - What You Need to Know............................................................................................................................................................. 2192
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 2195
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 2195
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 2199
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 2200
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 2201
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 2202
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 2205
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 2207
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 2210
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 2211
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 2213
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 2214
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 2215
JAPAN - Yen Devaluation ........................................................................................................................................................................ 2216
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 2217

21

JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 2219
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 2221
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 2221
JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 2223
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 2226
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 2228
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 2231
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 2233
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 2235
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 2241
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 2244
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 2248
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 2254
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 2259
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 2260
JAPAN - PMI Breakdown ........................................................................................................................................................................... 2262
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 2264
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 2265
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 2268
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 2268
EMERGING MARKETS FX ROUT CONTINUES ...................................................................................................................... 2270

EMERGING MARKETS ....................................................................................................................................................................................... 2270
CHARTS OF NOTE ....................................................................................................................................................................................... 2270
NEW-CHARTS MSCI EM FX Index - New 6 Year Lows ....................................................................................................................... 2270
NEW-CHARTS EM FX Loses Since FOMC Meeting Brazil Noticeably Worse .................................................................................. 2271
NEW-CHARTS EM FX Debasement By Country Since FOMC ............................................................................................................. 2271
NEW-CHARTS EM FX Debasement By Country Since 9/7/09 .............................................................................................................. 2271
NEW-CHARTS Brazilians Scramble to Protect their Store of Value (Coming to Other Countries) ....................................................... 2272
NEW-CHARTS Brazil Real GDP Y-o-Y% ............................................................................................................................................... 2273
NEW-CHARTS Brazil Real / US$ versus Brazil 5Y CDS ...................................................................................................................... 2273
NEW-CHARTS Brazil Change in Yields Compared to Turkey and Mexico ........................................................................................ 2275
NEW-CHARTS Brazil Sovereign Gross Debt/GDP Government versus BI Simulation .................................................................. 2275
NEW-CHARTS Brazil Number of days to start a business Worst in the Major Countries! .............................................................. 2276
NEW-CHARTS Brazil Real Reaches Record Low as Budget Pessimism Rises ................................................................................ 2276
NEW-CHARTS 5Y CDS Spreads Brazil, Russia, Turkey, Indonesia, Colombia & Peru .................................................................... 2277
CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000 ..................................................................................................... 2277
CHARTS AFRICA-Foreign Direct Investment & Trade .......................................................................................................................... 2278
CHARTS AFRICA-Geographic Comparisons ......................................................................................................................................... 2279
CHARTS Emerging Markets Corporate Defaults ................................................................................................................................... 2279
CHARTS Emerging Markets Economic Surprise Index ......................................................................................................................... 2280
CHARTS Emerging Markets Currency Change versus USD ................................................................................................................. 2280
CHARTS Emerging Markets Change in Nominal Policy Rate ............................................................................................................... 2281
CHARTS EM Vulnerability to an external shock Resilience Indicator .............................................................................................. 2282
CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ................................................... 2283
CHARTS Falling EM Currencies ............................................................................................................................................................. 2284
CHARTS Post-China 16 ......................................................................................................................................................................... 2285
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 2286
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 2286
CHARTS - Reserves versus World ............................................................................................................................................................ 2286
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 2288
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 2289
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 2290
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 2291
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 2292
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 2293
RESEARCH OF NOTE .................................................................................................................................................................................. 2294
NEW-EMERGING MARKETS - Why Asian Markets Are Collapsing .................................................................................................... 2294
NEW-EMERGING MARKETS - History Suggests Asia Can Handle Fed Tightening ......................................................................... 2296
EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" .......................................... 2298
EMERGING MARKETS - North Korea: Chinese Outsourcing Giant ................................................................................................... 2300
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 2302
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 2304
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 2304
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 2310
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 2310
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 2312
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 2314
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 2320
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 2321
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 2323
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 2325
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 2327
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 2331
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 2333

22

EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 2334
ASEAN ........................................................................................................................................................................................................... 2337
ASEAN: A New Common Market .............................................................................................................................................................. 2337
ASIA ............................................................................................................................................................................................................... 2341
NEW- ASIA: CHARTS The Most Leveraged Region Today Corporate Leverage Debt/EBITDA ....................................................... 2341
NEW -ASIA: CHARTS Entering More Adverse Part of the Credit Cycle ............................................................................................... 2341
NEW- ASIA: CHARTS Real GDP Slowing, Real Funding Costs Are Rising ......................................................................................... 2342
ASIA: CHARTS Demographic Peaks of Working Age Populations ....................................................................................................... 2343
ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth............................................................................................ 2344
ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports ........................................................................................................ 2345
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 2346
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 2346
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 2348
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 2348
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 2350
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 2351
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 2351
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 2352
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 2353
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 2353
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 2354
ASIA - Regional Risk-Reward .................................................................................................................................................................... 2356
ASIA - Credit Contraction Problems ...................................................................................................................................................... 2357
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 2359
ASIA - Synchronized Markets .................................................................................................................................................................... 2361
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 2363
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 2364
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 2368
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 2369
ASIA - Demographic Headwinds ............................................................................................................................................................ 2372
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 2373
LATIN AMERICA ........................................................................................................................................................................................... 2375
NEW-LATIN AMERICA Latin America Shouldn't Blame the Federal Reserve ................................................................................ 2375
NEW-COLUMBIA Colombian Peso Leads Currency Declines as Crude Falls ................................................................................ 2377
NEW-ARGENTINA Fewer Reserves Are a Plus for Argentine Bondholders................................................................................... 2377
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 2378
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 2379
MIDDLE EAST ............................................................................................................................................................................................... 2381
TURKEY ..................................................................................................................................................................................................... 2381
BRICS................................................................................................................................................................................................................... 2388
BRICS Population, GDP,GDP per Capita ............................................................................................................................................ 2388
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 2389
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 2389
BRICS Inflation Problems Abound ...................................................................................................................................................... 2391
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 2392
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 2393
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 2395
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 2396
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 2399
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 2401
BRAZIL........................................................................................................................................................................................................... 2403
NEW-BRAZIL - Brazil Budget Cuts Not Enough to Avoid More Downgrades .......................................................................................... 2403
NEW-BRAZIL - Brazil's Economy Is Now A Job Destruction Machine ..................................................................................................... 2404
NEW-BRAZIL - Local Rates Hit Hardest by Swift S&P Sovereign Downgrade to Junk ........................................................................... 2407
NEW-BRAZIL - Recession and High Rates Doomed Brazils Investment-Grade Rating ......................................................................... 2409
NEW-BRAZIL - Why Brazil Is Not Coming Back Anytime Soon ............................................................................................................... 2411
NEW-BRAZIL - Brazil Returns to Junk as Developing Nations Feel the Squeeze ................................................................................... 2411
BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ...................................................................................................... 2414
BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ............................................................................................. 2421
BRAZIL - Brazils Depressed Consumer Confidence Index ...................................................................................................................... 2421
BRAZIL - Brazils Collapsing Confidence in the Construction Sector ....................................................................................................... 2422
BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ............................................................................................................... 2422
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 2424
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 2427
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 2430
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 2431
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 2434
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 2435
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 2435
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 2436
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 2436
RUSSIA Inflation Rate ............................................................................................................................................................................ 2437
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 2437
RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 2438
RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 2438

23

RUSSIA Russian CDS Spreads ............................................................................................................................................................. 2439

RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 2440
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 2441
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 2442
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 2443
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 2443
RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 2444
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 2445
RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 2446
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 2447
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 2448
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 2449
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 2450
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 2450
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 2452
RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ............................................................................................................... 2452
INDIA.............................................................................................................................................................................................................. 2453
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 2453
INDIA Real GDP and Car Sales ............................................................................................................................................................. 2454
INDIA Inflation ......................................................................................................................................................................................... 2455
INDIA - Inflation .......................................................................................................................................................................................... 2456
INDIA - WPI ................................................................................................................................................................................................ 2457
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 2458
INDIA - Panic in India ................................................................................................................................................................................. 2459
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 2461
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 2462
SOUTH AFRICA ............................................................................................................................................................................................ 2464
US ECONOMY ..................................................................................................................................... 2466

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 2468
MACRO - US Macro Data .................................................................................................................................................................................... 2468
CHARTS OF NOTE ....................................................................................................................................................................................... 2468
NEW-MACRO EM Wave is the Third Wave in the Global Financial Crisis ............................................................................................ 2468
NEW-MACRO Deteriorating EM FX, Equity and Debt ........................................................................................................................ 2469
NEW-MACRO Global Slowdown Only Getting Worse - China .............................................................................................................. 2470
NEW-MACRO Global Slowdown Only Getting Worse - India ................................................................................................................ 2471
NEW-MACRO Global Import-Export Trends .......................................................................................................................................... 2472
NEW-MACRO Developed World Import-Export Trends Has Nearly Halved Since 2000 ...................................................................... 2473
NEW-MACRO Emerging Market Import-Export Trends Has Also Fallen .............................................................................................. 2474
NEW-MACRO September US Macro versus S&P 500 .......................................................................................................................... 2475
MACRO June US Macro versus S&P 500 .............................................................................................................................................. 2475
MACRO 10 Year View of US Macro versus S&P 500 Historic Divergence ........................................................................................ 2476
MACRO US Macro Not This Low Since 2008 Financial Crisis ............................................................................................................... 2476
MACRO S&P 500 versus High Yield (HY) Bond Yield ........................................................................................................................... 2477
MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ............................................................................................. 2477
MACRO Goldman Sachs Global Leading Indicator Has Plummeted..................................................................................................... 2479
MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ........................................................ 2479
MACRO 2015 World GDP Growth versus World Stocks ....................................................................................................................... 2480
MACRO World GDP Annual Estimates versus World Stocks ................................................................................................................ 2480
MACRO World Economies Cutting Rates to Avoid Economic Contraction ........................................................................................... 2481
MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ..................................................................... 2481
MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ..................................................................... 2482
MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ................................................................... 2482
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 2483
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 2483
MACRO US Macro Surprise Index ......................................................................................................................................................... 2483
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 2484
MACRO World Trade Volumes ............................................................................................................................................................... 2486
MACRO Marginal Utility .......................................................................................................................................................................... 2486
MACRO Global Manufacturing PMI ........................................................................................................................................................ 2487
MACRO Credit Markets Diverging .......................................................................................................................................................... 2487
MACRO US Macro Complacency ........................................................................................................................................................... 2488
MACRO Macro Implied Vols ................................................................................................................................................................... 2488
MACRO Markets Stretched .................................................................................................................................................................... 2489
RESEARCH OF NOTE ........................................................................................................................................................................................ 2490
MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population ..................................................................... 2490
MACRO A World Recession? ..................................................................................................................................................................... 2492
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 2493
MACRO The Ambivalent Superpower ..................................................................................................................................................... 2495
MACRO Things Worse than Slow Growth ................................................................................................................................................. 2497
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 2500
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 2502
MACRO - Output Gap .................................................................................................................................................................................... 2509
US INVESTMENT CYCLE ...................................................................................................................................................... 2518

24

CHARTS OF NOTE ............................................................................................................................................................................................. 2519

NEW-CHART Financial Cycles and Crisis Are Becoming Longer & Deeper ............................................................................................ 2519
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2519
NEW-CHART The Business, Credit and Rate Cycles ............................................................................................................................... 2520
NEW-CHART A Secular Problem on the Verge of Also Being a Business /Credit /Rate Cycle Problem ................................................. 2520
NEW-CHART Business Cycle Surprise Index............................................................................................................................................ 2521
NEW-CHART Boom-Bust Cycle In Stocks ................................................................................................................................................. 2521
CHART Net Investment as a Share of Net Domestic Product ................................................................................................................... 2522
CHART Net Worth to GDP ......................................................................................................................................................................... 2522
CHART % of Unprofitable IPOs .................................................................................................................................................................. 2523
CHART US Private Construction Spending ............................................................................................................................................... 2524
CHART SPX versus 12 MMA Due for a Momentum Sell Period .......................................................................................................... 2524
CHART Current Economic Cycle Is Getting Old in The Tooth ................................................................................................................ 2525
CHART US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending ............................................................... 2526
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ................................................................................................... 2526
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ................................................................................................... 2527
CHART - Economy in Decline from Consuming More than it Produces ....................................................................................................... 2528
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 2528
ECONOMIC INDICATORS .................................................................................................................................................................................. 2530
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 2530
NEW-RESEARCH - 8 Charts That Prove The US Is Already In A Recession.......................................................................................... 2530
NEW-RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here .................................... 2535
RESEARCH - The US Economy Continues to Tank under Obama.......................................................................................................... 2538
REFERENCE CHARTS ............................................................................................................................................................................. 2540
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 2545
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 2545
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 2547
SOME HIGHLIGHTS ..................................................................................................................................................................................... 2547
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 2551
NEW-CHARTS October NFP 60K below Estimates at 142K ................................................................................................................. 2551
NEW-CHARTS Change in Civilian Employment: August 2015 .............................................................................................................. 2551
NEW-CHARTS Peaks In LMCI Leads Declines in Employment ............................................................................................................ 2553
NEW-CHARTS September 2015 Monthly Job Change by State Bottoms up Says 22K Jobs Lost ................................................... 2553
NEW-CHARTS Initial Jobless Claims ..................................................................................................................................................... 2554
NEW-CHARTS Increased Job Openings not a Sign of Better Employment .......................................................................................... 2556
CHARTS Full Time Jobs Approach 2007 Highs ..................................................................................................................................... 2557
CHARTS Full Time versus Part Time Jobs ............................................................................................................................................ 2557
CHARTS April Jobs Added By Industry .................................................................................................................................................. 2557
CHARTS Wages of Production & Non-Supervisory Employees Y-0-Y % Change ................................................................................ 2558
CHARTS US Labor Productivity ............................................................................................................................................................. 2560
CHARTS Wages of All Employees Y-o-Y % Change ............................................................................................................................. 2560
CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed.......................................... 2561
CHARTS Non-Farm Payrolls Monthly and Yearly Change ................................................................................................................. 2562
CHARTS Civilian Unemployment Rate................................................................................................................................................... 2562
CHARTS JOLTS-Total Job Openings .................................................................................................................................................... 2563
CHARTS New Jobless Claims w/ 4 Week Moving Average .................................................................................................................. 2563
CHARTS Non-Farm Payrolls .................................................................................................................................................................. 2564
CHARTS US Monthly Job Growth .......................................................................................................................................................... 2564
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 2565
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 2565
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 2566
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 2566
CHARTS - Underemployment Gap ............................................................................................................................................................ 2568
CHARTS - Participation Rate..................................................................................................................................................................... 2569
CHARTS - Part Time Employment ............................................................................................................................................................ 2569
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 2570
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 2571
RESEARCH OF NOTE .................................................................................................................................................................................. 2578
NEW-RESEARCH - Payrolls Disaster: Only 142K Jobs Added In September With Zero Wage Growth; August Revised Much Lower 2578
NEW-RESEARCH - The September Jobs Report Was Even Worse: U.S. States Lost A Total Of 22,000 Jobs ..................................... 2581
NEW-RESEARCH - 698K Native-Born Americans Lost Their Job in August: Why This Suddenly Is The Most Important Jobs Chart .. 2582
NEW-RESEARCH - Since 2007: 1.4 Million Manufacturing Jobs Lost; 1.4 Million Waiter/Bartender Jobs Gained ................................ 2586
NEW-RESEARCH - Goldman Demolishes Jobless Claims Hype: "This Does Not Signal A Booming Labor Market" ............................ 2587
RESEARCH - Part-Time Jobs Soar By 437,000; Full-Time Jobs Tumble, Stay Firmly Under Pre-Recession Highs .............................. 2591
RESEARCH - The "Illegal Immigrant" Recovery? The Real Stunner In The Jobs Report ....................................................................... 2592
RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie" ......................................................................................... 2597
RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ................................................................................................................... 2599
RESEARCH - American Express to cut more than 4,000 jobs ................................................................................................................. 2600
RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 2601
RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 2604
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 2607
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 2610

25

SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 2611

NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2617
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 2617
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 2617
NEW-CHARTS Global Consumer Confidence Begins Reversal from Trend Resistance...................................................................... 2621
NEW-CHARTS US Economic Index Steadily Eroding ........................................................................................................................... 2621
NEW-CHARTS UMich Consumer Confidence with Biggest Miss on Record ........................................................................................ 2622
CHARTS Falling NFIB Small Business Optimism .................................................................................................................................. 2622
CHARTS Falling Small Business Hiring Plans ....................................................................................................................................... 2622
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ..................................................................................................... 2623
CHARTS Consumer Comfort Plunges Most In 10 Months..................................................................................................................... 2624
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 2625
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 2625
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 2626
CHARTS - Orange Book ............................................................................................................................................................................ 2626
RESEARCH OF NOTE .................................................................................................................................................................................. 2627
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 2627
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 2629
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 2631
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 2631
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 2635
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 2637
NEW-American Association of Independent Investors ................................................................................................................................. 2638
NEW-Investors Intelligence ........................................................................................................................................................................... 2638
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 2639
NEW-Small Business Optimism .................................................................................................................................................................... 2640
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 2643
NEW-Margin Levels ....................................................................................................................................................................................... 2644
Real Margin Debt as % of GDP ..................................................................................................................................................................... 2650
Margin Debt versus S&P 500 ........................................................................................................................................................................ 2650
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 2652
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 2655
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 2655
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 2656
NEW-TRIN ..................................................................................................................................................................................................... 2657
NEW-McClellan Oscillator ............................................................................................................................................................................. 2658
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 2659
NEW-CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce .................................................................. 2659
NEW-CHARTS Nominal & Real Household Spending Expectations ........................................................................................................ 2660
NEW-CHARTS Household Spending Expectations by Income Bucket ..................................................................................................... 2660
NEW-CHARTS A Very Neutral (Highly Unusual) Bull Market .................................................................................................................... 2661
NEW-CHARTS Historical Swings in Sentiment ......................................................................................................................................... 2661
NEW-CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About? ............................................................ 2663
NEW-CHARTS Investors Intelligence Bulls & Bears ................................................................................................................................. 2663
NEW-CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ................................................................................ 2664
NEW-CHARTS Smart Money OEX Open Interest Put/Call Ratio Now Off the Charts! ......................................................................... 2664
CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ......................................................................................................... 2665
CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................................ 2666
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ............................................................................................ 2667
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ........................................................................... 2667
CHARTS - NFIB Small Business Sentiment ................................................................................................................................................. 2668
CHARTS - Orange Book ................................................................................................................................................................................ 2668
CHARTS Asset Allocation Global Equities .............................................................................................................................................. 2669
CHARTS Asset Allocation Global Bonds ................................................................................................................................................ 2669
CHARTS Active versus Passive Funds Allocation ..................................................................................................................................... 2670
CHARTS Investors Intelligence Survey of % Bears ................................................................................................................................... 2670
CHARTS Sentiment at Post 2008 Crisis Highs .......................................................................................................................................... 2672
CHARTS CNBC Viewership Steadily Falling ............................................................................................................................................. 2673
CHARTS Investor Allocation Trends for Stocks, Bonds and Cash ............................................................................................................ 2674
CHARTS Uptick in Feds Financial Stress Index Composite ..................................................................................................................... 2675
CHARTS Fear Barometer Diverges with VIX, CDS IG Index .................................................................................................................... 2676
CHARTS Extreme Complacency Seen Near End of Cycles ...................................................................................................................... 2676
CHARTS Complacency Seen In PE/VIX ..................................................................................................................................................... 2677
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern .................................................................................................... 2677
CHARTS Smart Money Flows .................................................................................................................................................................... 2679
CHARTS Fed Assets versus Bullish Sentiment ......................................................................................................................................... 2679
CHARTS Macro Support Has Technically Broken Down ........................................................................................................................... 2680
CHARTS US Surprise Index Setting Up for Downturn ............................................................................................................................... 2680
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ............................................. 2681
RESEARCH OF NOTE ........................................................................................................................................................................................ 2682
NEW-SENTIMENT Oblivious To Risk - Complacency Still Reigns ........................................................................................................ 2682
NEW-SENTIMENT UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record ......................................... 2686
NEW-SENTIMENT Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ............................... 2687
SENTIMENT: The "Smart Money" Has Never Been More Bearish .............................................................................................................. 2688

26

SENTIMENT: US Economic Confidence Crashes Most Since July to Lowest Since December ................................................................. 2691
SENTIMENT: We Are All Bulls Now .............................................................................................................................................................. 2694
SENTIMENT: No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says .............................................. 2695
SENTIMENT: One Heckuva Bull Market but Momentum Weakening! ......................................................................................................... 2696
SENTIMENT: Small Business Confidence is a Major Problem in America .................................................................................................. 2698
SENTIMENT: Americas Crisis of Trust ......................................................................................................................................................... 2700
SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years .................................................................. 2702
SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. ........................................................................................................................ 2702
SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent ............................................................................................. 2704
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ............................................................................................ 2709
SENTIMENT: Elliott Wave's View from the Top ............................................................................................................................................ 2712
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 2716
NEW-CHARTS October Retail Sales Control Group Y-o-Y & Sequential Change ................................................................................ 2720
NEW-CHARTS October Retail Y-o-Y Sales ........................................................................................................................................... 2720
NEW-CHARTS Retail Sales Ex Autos M-o-M ........................................................................................................................................ 2721
NEW-CHARTS Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2721
NEW-CHARTS Consumer Credit Car Loans ......................................................................................................................................... 2722
NEW-CHARTS Consumer Loans Owned by the Government .............................................................................................................. 2722
NEW-CHARTS Student & Car Loans ..................................................................................................................................................... 2724
NEW-CHARTS Total Non-Revolving Credit ........................................................................................................................................... 2724
NEW-CHARTS August Sequential Change in Revolving and Non-Revolving Credit ............................................................................ 2725
NEW-CHARTS Gas Prices Below $2/Gallon by December? ................................................................................................................. 2725
NEW-CHARTS Aggregate Income Proxy versus Retail Sales ex Auto and Gas .................................................................................. 2726
NEW-CHARTS Consumption Items Sampling - Y-o-Y Growth .............................................................................................................. 2726
CHARTS Retail Sales Control Group Y/Y and Sequential Change ....................................................................................................... 2728
CHARTS Retail Sales Y-0-Y ................................................................................................................................................................... 2728
CHARTS Retail Sales Ex Auto ............................................................................................................................................................... 2729
CHARTS VICE Index and Discretionary Spending ................................................................................................................................ 2730
CHARTS Value of Manufacturers New Orders for Consumer Goods Industries .................................................................................. 2731
CHARTS y-0-y Chain Store Sales .......................................................................................................................................................... 2731
CHARTS Y-0-Y Factory Orders .............................................................................................................................................................. 2732
CHARTS Annual Growth in Retail Sales ................................................................................................................................................ 2732
CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 .................................................................................................. 2733
CHARTS Retails Sales Mo-o-Mo Drops ................................................................................................................................................. 2733
CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .............................................................................. 2734
CHARTS What Americans Spent Their "Gas Savings" On .................................................................................................................... 2735
CHARTS Retail Sales-Previous Month Comparisons ............................................................................................................................. 2737
CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas ............................................................................................................ 2738
CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ............................................................................................................... 2738
CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .................................................................................................... 2739
CHARTS Total Household Debt Added Since the Great Financial Crisis .............................................................................................. 2739
CHARTS Total Household Debt Added in Q4 2014 ............................................................................................................................... 2740
CHARTS Real Personal Consumption ................................................................................................................................................... 2740
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 2741
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 2743
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 2744
CHARTS Retail Sales ............................................................................................................................................................................. 2744
CHARTS Retail Sales - Details ............................................................................................................................................................... 2746
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 2747
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 2747
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 2748
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 2748
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 2749
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 2751
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 2752
CHARTS - Core Retail Growth .................................................................................................................................................................. 2753
RESEARCH OF NOTE .................................................................................................................................................................................. 2754
NEW- RECESSION Retail Implosion Proves we are in a Recession .................................................................................................... 2754
RESEARCH - Headwinds for US Consumers & Home Buyers ................................................................................................................ 2760
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2761
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 2763
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ........................................................................... 2765
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 2767
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ................................................................................... 2770
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................................... 2771
RESEARCH - A Sequential Decline in Wages .......................................................................................................................................... 2772
RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ..................................................................................... 2773
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 2780
NEW-CHARTS Strong Dollar, High Inventories to Slow US Factory Output ......................................................................................... 2784
NEW-CHARTS US ISMs 3 Mo MA ......................................................................................................................................................... 2785
NEW-CHARTS September Survey Data versus Non Farm Payrolls ..................................................................................................... 2786

27

NEW-CHARTS Regional Surveys for September versus ISM PMI (August)......................................................................................... 2787
NEW-CHARTS Regional Manufacturing Surveys versus Forward EPS Estimates ............................................................................... 2788
NEW-CHARTS Historical Regional Index Comparisons Last Seen in 2008....................................................................................... 2788
NEW-CHARTS Predicted US Quarterly GDP Grow Q-o-Q Annualized ............................................................................................. 2789
NEW-CHARTS Predicted US Annual Growth % Through 2024 ............................................................................................................ 2789
NEW-CHARTS Predicted US Growth Compared to UK and Eurozone ................................................................................................. 2790
CHARTS US Q2 GDP Consensus Forecast versus Atlanta Feds 0.7% ............................................................................................... 2790
CHARTS Q1 2015 US GDP Growth Consensus Estimate .................................................................................................................... 2792
CHARTS US Business Investment Current versus Previous Recoveries .......................................................................................... 2792
CHARTS US Vehicle Miles 12 Month Total All Roads ..................................................................................................................... 2793
CHARTS CAPEX Use of Cash ............................................................................................................................................................ 2794
CHARTS Change in Total Private Industries.......................................................................................................................................... 2794
CHARTS US Private Construction Spending ......................................................................................................................................... 2795
CHARTS Ratio of Coincident-to-Lagging Conference Board Indices .................................................................................................... 2796
CHARTS GDP Q4 2014 Revised Components Table ............................................................................................................................ 2797
CHARTS Quarterly Change in % Contributions to GDP ........................................................................................................................ 2797
CHARTS Three Reasons CAPEX is Faltering ....................................................................................................................................... 2797
CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ................................................................................................. 2798
CHARTS Philly Fed Rolling Over ........................................................................................................................................................... 2799
CHARTS US Profits & Sales Have Stalled ............................................................................................................................................. 2800
CHARTS Real GDP versus CAPEX ....................................................................................................................................................... 2800
CHARTS Change In Inventories Inflated from Lack of Demand ......................................................................................................... 2801
CHARTS US GDP Revision for Q4-2014 ............................................................................................................................................... 2802
CHARTS Quarterly GDP by Component Breakdown ............................................................................................................................. 2802
CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 2804
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 2804
CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 2806
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 2807
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 2807
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 2808
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 2809
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 2809
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 2810
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 2811
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 2811
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 2812
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 2813
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 2813
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 2814
CHARTS - Manufacturing .......................................................................................................................................................................... 2815
CHARTS - Exports ..................................................................................................................................................................................... 2815
CHARTS - Durable Goods ......................................................................................................................................................................... 2816
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 2816
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 2817
RESEARCH OF NOTE .................................................................................................................................................................................. 2818
NEW-RESEARCH - The Divergence in ISM Surveys Shows a Troubling Path for U.S. Growth ............................................................. 2818
NEW-RESEARCH - Conference Board "Leading Indicators" Plunges To Lowest Since March 2013 ..................................................... 2819
NEW-RESEARCH - xxxx ........................................................................................................................................................................... 2820
RESEARCH - Biggest Inventory Build In History Prevents Total Collapse Of The US Economy ............................................................ 2820
RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ................................................................................... 2822
RESEARCH - The U.S. Economy is Dead ................................................................................................................................................ 2824
RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ......................................................................................... 2826
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 2829
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 2834
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 2839
US PUBLIC POLICY RUSSIA & IRAN ESCALATE SYRIAN CONFLICT ............................................................................ 2847
NEW-SYRIA RUSSIA & IRAN ENTER THE FRAY ................................................................................................................................ 2848
NEW-TRANS PACIFIC PARTNERSHIP (TPP) ......................................................................................................................................... 2851
NEW-US GUN CONTROL (DEBATED AGAIN) ........................................................................................................................................ 2853
CHARLESTOWN SHOOTING ............................................................................................................................................................... 2853
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 2854
BALTIMORE RIOTS............................................................................................................................................................................... 2854
FERGUSON ........................................................................................................................................................................................... 2855
MILITARIZATION OF POLICE............................................................................................................................................................... 2855
POLLS ........................................................................................................................................................................................................ 2856
CORPORATE INVERSIONS ..................................................................................................................................................................... 2857
INCARCERATION ..................................................................................................................................................................................... 2857
FLAWED TAX POLICY .............................................................................................................................................................................. 2857
MINIMUM WAGE ....................................................................................................................................................................................... 2857
SOCIAL CANCERS ................................................................................................................................................................................... 2858
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 2858
INEQUALITY .............................................................................................................................................................................................. 2858
CREEPING SOCIALISM ............................................................................................................................................................................ 2859

28

POLICIAL PARALYSIS .............................................................................................................................................................................. 2859

STATE OF THE UNION ............................................................................................................................................................................. 2859
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 2859
OBAMACARE ............................................................................................................................................................................................ 2861
GENERAL PUBLIC POLICY...................................................................................................................................................................... 2863
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 2864
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 2864
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 2865
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 2866
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 2867
CHARTS Size of US Army Since 1946................................................................................................................................................... 2867
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 2868
CHARTS Changing Presidential Stance ................................................................................................................................................ 2869
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 2869
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 2870
RESEARCH OF NOTE .................................................................................................................................................................................. 2871
POLICY - A 'Shadow" State of the Union .................................................................................................................................................. 2871
POLICY - Banks Remove the "Heart" of Dodd-Frank ............................................................................................................................... 2874
POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ............................................................................... 2878
POLICY - The Death Cross of American Business ................................................................................................................................... 2881
POLICY - The State of the Union I have a Dream! .............................................................................................................................. 2883
POLICY - A self-destructive path toward oblivion...................................................................................................................................... 2887
POLICY - Indictment of US Public, Fiscal & Monetary Policy ................................................................................................................... 2892
POLICY - The Crisis of Trust Continues to Worsen .................................................................................................................................. 2905
POLICY - The Stunning Truth about Inequality In America....................................................................................................................... 2906
POLICY - Pointing US towards Government Dependence ....................................................................................................................... 2907
POLICY - Yet another Game of Deception ................................................................................................................................................ 2911
POLICY - Obamacare A Flawed Public Policy Implementation ................................................................................................................ 2915
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 2918
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ................................................................................................... 2922
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed........................................................................... 2925
POLICY - "What is good for GM is good for America" is no longer correct .............................................................................................. 2927
POLICY - Where is the Logic In US Public Policy ..................................................................................................................................... 2928
POLICY - What is the Real Driving Force Behind the New Immigration Law? ......................................................................................... 2931
POLICY - Crony Capitalism and How America Lost its Way! ................................................................................................................... 2934
STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 2938
STATE OF THE UNION Remarks by the President in State of the Union Address January 20th, 2015 ............................................ 2938
STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon ................................................................... 2948
MONETARY POLICY GLOBAL SLOW DOWN FORCES FED TO HOLD ON RATE INCREASE ......................................................... 2956
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2956
NEW-CHARTS: US Monetary Velocity Declines as Excess Leverage Weighs on Consumption ................................................................ 2956
NEW-CHARTS: Velocity of Money Shows Transmission System Broken ................................................................................................... 2956
NEW-CHARTS: Interest Rates Reflect Economic Growth & Inflation .......................................................................................................... 2957
NEW-CHARTS: Fed Balance Sheet Change versus S&P 500 ..................................................................................................................... 2957
NEW-CHARTS: Fed Policy Initiatives versus S&P 500 Actions ................................................................................................................... 2958
NEW-CHARTS: Total US Credit Old versus New Series........................................................................................................................... 2958
NEW-CHARTS: Banks Treasuries Stash Boosts Case for Fed Delay ........................................................................................................ 2959
NEW-CHARTS: US Treasuries Purchased by Domestic Mutual Funds ....................................................................................................... 2959
NEW-CHARTS: Total Debt and Loans versus US GDP ............................................................................................................................... 2960
NEW-CHARTS: Credit Markets Instruments All Sectors- Liability Levels ................................................................................................. 2960
CHARTS: ZIRP Policy Results Compared to Previous Falling or Steady Rate Targets .............................................................................. 2961
CHARTS: Producer Price Index is Plummeting Complete Lack of Pricing Power .................................................................................... 2962
CHARTS: Liquidity Problems in Bond Market Are Only Getting Worse ....................................................................................................... 2962
CHARTS: Lending is Coming From the Fed Not the Banks ...................................................................................................................... 2963
CHARTS: Debt Service Ratio for Prior Expansions ...................................................................................................................................... 2963
CHARTS: Why Interest Rates Cant Come Up Derivative Collateral Underpinnings ................................................................................ 2964
CHARTS: Total Credit Market Debt + Fed B/S versus Nominal GDP Growth ............................................................................................. 2964
CHARTS: Fed is Allowing Adjusted Monetary Base to Fall .......................................................................................................................... 2965
CHARTS: Federal Reserve Monetary Base Since 1918............................................................................................................................... 2965
CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ......................................................................................................... 2966
CHARTS: Fed Balance Sheet & Policy Rate Target ..................................................................................................................................... 2966
CHARTS: Cash Balances versus Total Reserve Balances .......................................................................................................................... 2967
CHARTS: Fed Balance Sheet and QE Versions ........................................................................................................................................... 2967
CHARTS: Major US Financial Institutional Leverage Ratios ........................................................................................................................ 2969
CHARTS: Fed Balance Sheet Composition .................................................................................................................................................. 2970
CHARTS: Cash Bank Holdings ..................................................................................................................................................................... 2971
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2972
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2972
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2973
CHARTS: Repo Volumes .............................................................................................................................................................................. 2973
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2974
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2974
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2975

29

CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2976
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2977
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2977
CHARTS: Net National Savings Rate............................................................................................................................................................ 2978
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2978
CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2979
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2980
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2981
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2981
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2982
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2984
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2984
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2985
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2986
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2987
NEW-RATES: Market-Implied Odds of a Rate Hike ..................................................................................................................................... 2988
NEW-RATES: Probability of Fed Rate Move Fed Funds Futures.............................................................................................................. 2988
NEW-RATES: Feds Mixed Signals Loses It Credibility ................................................................................................................................ 2989
RATES: Almost a Third of All Trades Have Known Only ZIRP ..................................................................................................................... 2990
RATES: Is There a Zero Bound for US Rates? ............................................................................................................................................. 2991
RATES: Historical Policy Rates ..................................................................................................................................................................... 2992
RATES: Debt ................................................................................................................................................................................................. 2993
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2993
RATES: Real Interest Rates .......................................................................................................................................................................... 2994
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2995
NEW-INFLATION: Core PCE and 5Y/5Y Forward Breakeven ..................................................................................................................... 2996
INFLATION: Inflation Targeting is Clearly Not Working ................................................................................................................................ 2996
INFLATION: Market-Based Inflation Expectations on the Rebound ............................................................................................................. 2997
INFLATION: US Inflation Education-Medical-Food-Housing versus CPI .................................................................................................. 2997
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2999
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2999
INFLATION: Cost of Eating ........................................................................................................................................................................... 3000
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 3001
INFLATION: July 4th Cost of Beef Burger ...................................................................................................................................................... 3002
INFLATION: Bloombergs July 4th Barbecue Index ....................................................................................................................................... 3002
INFLATION: Butter on a Roll ......................................................................................................................................................................... 3003
INFLATION: Back to School Shocker............................................................................................................................................................ 3004
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 3005
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 3006
INFLATION: Back to School Shocker............................................................................................................................................................ 3006
RESEARCH OF NOTE ........................................................................................................................................................................................ 3007
NEW-RESEARCH Fed Quietly Revises Total US Debt From 330% To 350% Of GDP, After "Discovering" Another $2.7 Trillion In Debt
....................................................................................................................................................................................................................... 3007
NEW-RESEARCH Fed Admits "Changes In Asset Prices", "Decline In Equity Prices" Influenced Rate Decision ................................... 3011
RESEARCH Bank Reserves & Loans: The Fed is pushing On A String ................................................................................................... 3011
RESEARCH Global Currency Wars & Deflationary Pressures .................................................................................................................. 3015
RESEARCH Debt is a promise of something of value in the future ........................................................................................................... 3021
RESEARCH Is NIRP Coming To America? ............................................................................................................................................... 3028
RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ......................................................................................... 3031
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 3038
REPO FAILS .................................................................................................................................................................................................. 3039
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 3040
FISCAL POLICY HERE WE GO AGAIN WITH THE DEBT CEILING CHARADE! ............................................................................ 3041
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 3043
NEW-PEURTO RICO .................................................................................................................................................................................... 3043
NEW-ILLINOIS & CHICAGO ......................................................................................................................................................................... 3043
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 3045
FISCAL MATTERS ........................................................................................................................................................................................ 3047
FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 3049
CHARTS OF NOTE ....................................................................................................................................................................................... 3049
NEW-FINANCING The Debt Ceiling Debt Limit is Likely to Fall in November ........................................................................................... 3049
FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .............................................................. 3049
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ........................................................................... 3050
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ........................................................................... 3050
FINANCING CHINA SELLING China & Belgium Holdings Change ........................................................................................................ 3051
FINANCING Breakdown of US Debt Holdings as of 2014 .......................................................................................................................... 3051
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 3052
CHARTS Drivers of US Debt ...................................................................................................................................................................... 3053
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 3054
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 3054
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 3055
NEW-RESEARCH - Lew moves up by two days to Nov. 3 the deadline by which Congress must raise the nations debt limit ................. 3056
NEW-RESEARCH - With Republicans In Disarray, All Eyes Turn To November 18 When The US Runs Out Of Cash ............................ 3058
NEW-RESEARCH - As Debt Ceiling "Accident" Looms, Ron Paul .............................................................................................................. 3059

30

RESEARCH - $70T Off-Balance Sheet Federal Liabilities ........................................................................................................................... 3061

FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 3065
NEW-CHARTS Where Did Every Dollar in Spending Go? ........................................................................................................................ 3065
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 3065
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 3066
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 3067
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 3067
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 3068
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 3068
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 3069
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 3069
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 3071
BUDGET - President Obama's Entire Budget In One Chart ......................................................................................................................... 3072
BUDGET - A Budget That Institutionalizes Big Government ........................................................................................................................ 3073
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 3078
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 3079
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 3081
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 3085
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 3089
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 3099
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 3099
RESEARCH - Almost Half of US States Are Officially Broke ........................................................................................................................ 3099
RESEARCH - State & Local Government Crisis ........................................................................................................................................... 3104
RESEARCH - State & Local Government Drag ............................................................................................................................................ 3110
UNFUNDED LIABILITIES .................................................................................................................................................................................... 3115
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 3115
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 3119
US REGULATORY COSTS ................................................................................................................................................................................. 3122
CHARTS Annual Cost of Federal Regulation 2012, $1.863T ................................................................................................................. 3122
RESEARCH Investor Uncertainty............................................................................................................................................................... 3122
US TAX POLICY & ISSUES ................................................................................................................................................................................ 3124
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 3124
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 3126
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 3128
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 3128
CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 3129
RESEARCH - Tax Rate Comparisons .......................................................................................................................................................... 3130
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 3130
RESEARCH - Taxes & Spending .................................................................................................................................................................. 3131
RESEARCH - Avoiding Taxes ....................................................................................................................................................................... 3135
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 3138
CHARTS Competing Visions of Government ............................................................................................................................................. 3138
CHARTS - Sovereign Debt ............................................................................................................................................................................ 3139
CHARTS - Growing Government Dependence ............................................................................................................................................. 3140
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 3140
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 3144
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 3146
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 3148

EMPLOYMENT .................................................................................................................................................................................................... 3154
LATEST ..................................................................................................................................................................................................... 3155
CHARTS & TABLES ...................................................................................................................................................................................... 3158
NEW-CHARTS Labor Force Participation Rate versus Food Stamp Participants ................................................................................. 3158
NEW-CHARTS World Youth Unemployment A Crisis ......................................................................................................................... 3158
NEW-CHARTS Change in Civilian Employment since December 2007 ................................................................................................ 3159
NEW-CHARTS Total Foreign-Born versus Native-Born Workers Since Dec 2007 ............................................................................... 3160
NEW-CHARTS Manufacturers versus Waiter/Bartenders Since 2007 .................................................................................................. 3161
NEW-CHARTS Food Service & Drinking Place Workers (Waiters & Bartenders) Since 2010 ............................................................. 3161
CHARTS DOW Industrials versus Employed Population ....................................................................................................................... 3162
CHARTS Employment to Working Age Population ................................................................................................................................ 3162
CHARTS The Real American Economy ................................................................................................................................................. 3162
CHARTS Full Time versus Part Time ..................................................................................................................................................... 3163
CHARTS Cumulative Workers Added by Age Group ............................................................................................................................. 3163
CHARTS Wages of Production and Non-Supervisory Employees ........................................................................................................ 3164
CHARTS Wages of Supervisory Employees Y-0-Y % Change ............................................................................................................. 3164
CHARTS Industries That Have Been Hiring ........................................................................................................................................... 3165
CHARTS Top 5 Industry Cuts ................................................................................................................................................................. 3165
CHARTS Employees in the US by Industry ............................................................................................................................................ 3166
CHARTS Workers Aged 55 and Over .................................................................................................................................................... 3166
CHARTS Percentage of Over 65 in Labor Force ................................................................................................................................... 3167
CHARTS Non Participation Has Stabilized? .......................................................................................................................................... 3167
CHARTS Share of Population Retired .................................................................................................................................................... 3168

31

CHARTS Goods Producing Workers versus Government Payroll ....................................................................................................... 3168

CHARTS Not in the Labor Force ............................................................................................................................................................ 3169
CHARTS Labor Force Participation versus Not in the Labor Force ....................................................................................................... 3169
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 3171
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 3171
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 3172
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 3172
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 3173
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 3173
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 3174
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 3174
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 3175
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 3175
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 3176
CHARTS Labor Participation Rate ......................................................................................................................................................... 3176
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 3177
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 3177
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 3178
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 3179
CHARTS Labor Force Participation by Age ........................................................................................................................................... 3180
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 3181
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 3182
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 3182
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 3183
CHARTS - Part-Time Employment ............................................................................................................................................................ 3183
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 3183
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 3184
CHARTS - The Under-Employment Gap ................................................................................................................................................... 3184
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 3185
RESEARCH OF NOTE .................................................................................................................................................................................. 3186
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 3186
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 3189
EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 3191
EMPLOYMENT - With and Without Obama's Recovery Plan ................................................................................................................... 3193
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ................................................................ 3194
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30............................................................................. 3196
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting .................. 3199
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 3200
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ........................................................................................................... 3201
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs .............................................................................................. 3208
REFERENCE - Prior Posts ............................................................................................................................................................................ 3211
1- CAPITAL SPENDING ............................................................................................................................................................................ 3211
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................. 3214
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 3218
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 3229
LATEST ..................................................................................................................................................................................................... 3229
STUDENT LOANS ..................................................................................................................................................................................... 3231
CHARTS & TABLES ...................................................................................................................................................................................... 3233
NEW-CHARTS Average Hourly Earnings of all Employees Total Private .......................................................................................... 3233
NEW-CHARTS Individuals Annually Receiving Foods Stamps ............................................................................................................. 3233
NEW-CHARTS Homeless among Students is Growing ......................................................................................................................... 3234
NEW-CHARTS Stagnant Middle Class Wages ...................................................................................................................................... 3234
NEW-CHARTS Median Earnings by Sex ............................................................................................................................................... 3235
NEW-CHARTS Disconnect Between Productivity and Typical Workers Compensation 1948-2014 ................................................. 3236
NEW-CHARTS Unemployment Rate is close to 24% according to Shadow Stats ................................................................................ 3237
NEW-CHARTS Non-Farm Payrolls less HES Complex ......................................................................................................................... 3237
NEW-CHARTS Childcare Costs Surge Past Rent, Tuition in Most of US ............................................................................................. 3238
NEW-CHARTS Illinois the Biggest User of Food Stamps in Mid-West .................................................................................................. 3239
NEW-CHARTS Illinois has Regained Few Manufacturing Jobs Since the Great Recession ................................................................ 3239
NEW-CHARTS Food Stamps Outpace Manufacturing Jobs 25-1 in Illinois .......................................................................................... 3239
NEW-CHARTS Debt by Generation ....................................................................................................................................................... 3240
CHARTS US Personal Savings Rate as a % of Disposable Income ..................................................................................................... 3241
CHARTS US Corporate Profits versus US Median Household Income ................................................................................................. 3242
CHARTS Death of the American Middle Class ...................................................................................................................................... 3242
CHARTS Income Gap being Filled With Credit ...................................................................................................................................... 3243
CHARTS Peak Spending Years ............................................................................................................................................................. 3244
CHARTS Real Per Capita Sum of Corporate Profits After Tax, Disposable Personal Income and Government Receipts .............. 3245
CHARTS Real Median Household Income in the United States ............................................................................................................ 3246
CHARTS Food Stamps Number of Participants .................................................................................................................................. 3247
CHARTS Food Stamps Number of Participants per Employed .......................................................................................................... 3247
CHARTS Food Stamps Cost Per Participant per Month ..................................................................................................................... 3248
CHARTS Food Stamps Annual Program Cost .................................................................................................................................... 3248
CHARTS Education, Medical, Food, Housing Costs versus CPI ........................................................................................................... 3249
CHARTS Rising Sub-Prime .................................................................................................................................................................... 3249
CHARTS Early Delinquencies on US Car Loans Has Been Rising ....................................................................................................... 3251

32

CHARTS Student Loan Default Rates By Graduating Year ................................................................................................................... 3252

CHARTS Student Loan Graduating Debt Levels Class 2009 ............................................................................................................. 3252
CHARTS Student Loan Borrowing Trends ............................................................................................................................................. 3253
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3253
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 3254
CHARTS US Household Balance Sheet ................................................................................................................................................ 3254
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 3255
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 3256
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 3257
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 3257
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 3258
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 3259
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 3260
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 3260
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 3261
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 3261
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 3262
CHARTS This is a Structural .................................................................................................................................................................. 3262
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 3263
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 3264
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ....................................................................................................... 3264
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................... 3265
RESEARCH OF NOTE .................................................................................................................................................................................. 3266
NEW-RESEARCH Typical male worker earned less in 2014 than in 1973. .......................................................................................... 3266
NEW-RESEARCH Why This Feels Like A Depression For Most People .............................................................................................. 3268
NEW-RESEARCH The Story of America's Debt In 6 Easy Graphics .................................................................................................... 3272
RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery" ....................................................... 3277
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 3280
RESEARCH - The Facts are clear. The US Standard of Living is Falling ................................................................................................ 3281
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 3282
RESEARCH - Standards of Living and Artificial Expectations .................................................................................................................. 3285
RESEARCH - A Lack of Demand in US Economy .................................................................................................................................... 3287
RESEARCH - Full Time Jobs or Food Stamps & Disability? .................................................................................................................... 3288
REFERENCE - Prior Posts ............................................................................................................................................................................ 3290
STANDARD OF LIVING - Salary Compression ........................................................................................................................................ 3290
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level ........................................................................................... 3291
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ......................................................................... 3292
DISPOSABLE INCOME - Bad Even in Nominal Terms ............................................................................................................................ 3294
INFLATION - It's There but the Government Doesn't Account for it. ........................................................................................................ 3294
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 3296
LATEST ..................................................................................................................................................................................................... 3296
CHARTS & TABLES ...................................................................................................................................................................................... 3300
NEW-POLICY US Cities with Highest Median Prices of Single-Family Homes..................................................................................... 3300
NEW-POLICY NAHB Sentiment Much Higher than Permits and Starts? .............................................................................................. 3300
NEW-POLICY Flattenening NAHB Sentiment ........................................................................................................................................ 3301
POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ........................................ 3302
POLICY Mortgage Purchase Application Index versus Fed Balance Sheet .......................................................................................... 3303
POLICY Total News Home Sales v Median New Home Sale Price ...................................................................................................... 3304
POLICY San Francisco Y/Y Price Increase Indicator ............................................................................................................................. 3304
POLICY Meaningful Housing Recovery On Hold Until Spring ............................................................................................................... 3306
POLICY Housing Starts .......................................................................................................................................................................... 3306
POLICY Existing & New Home Sales ..................................................................................................................................................... 3307
POLICY Home Ownership Rate versus Rental Rate ............................................................................................................................. 3307
POLICY Mortgages Past Due and Foreclosure Starts ........................................................................................................................ 3308
POLICY Mortgage Spreads .................................................................................................................................................................... 3308
POLICY Lumber Sales ............................................................................................................................................................................ 3309
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 3311
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 3312
CHARTS National Home Price Medians & Indexes ............................................................................................................................... 3313
CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 3313
CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 3314
CHARTS New Home Prices ................................................................................................................................................................... 3314
CHARTS Housing Starts and Completions ............................................................................................................................................ 3315
CHARTS DJ Home Construction Index .................................................................................................................................................. 3315
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 3316
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 3317
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 3317
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 3318
CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 3318
CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 3319
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 3319
CHARTS - Double Top in Construction Index ........................................................................................................................................... 3319
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary......................................................................................................... 3320
CHARTS - Household Formations ............................................................................................................................................................. 3320
CHARTS Falling Originations ................................................................................................................................................................. 3321

33

CHARTS Falling Credit Scores ............................................................................................................................................................... 3322

CHARTS Falling Down payments ........................................................................................................................................................... 3322
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 3323
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 3323
CHARTS - Housing Starts ......................................................................................................................................................................... 3324
CHARTS - Composition of Housing Sales ................................................................................................................................................ 3324
CHARTS - New Home Sales ..................................................................................................................................................................... 3325
CHARTS - Existing Residential Supply ..................................................................................................................................................... 3325
CHARTS - Housing Starts ......................................................................................................................................................................... 3326
RESEARCH OF NOTE .................................................................................................................................................................................. 3328
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 3328
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 3329
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 3331
RESEARCH - Household Formation Drives Residential Real Estate ....................................................................................................... 3333
OVERVIEW ................................................................................................................................................................................................ 3336
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 3342
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 3345
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 3346
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 3348
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 3350
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ............................................................................... 3351
HOUSING: Soaring FHA Delinquencies .................................................................................................................................................... 3353
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 3358
LATEST ...................................................................................................................................................................................................... 3358
CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 3362
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 3362
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 3363
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 3363
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 3364
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 3365
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 3365
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 3366
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 3367
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 3368
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 3369
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 3369
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 3370
RESEARCH OF NOTE .................................................................................................................................................................................. 3372
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 3372
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 3373
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 3373
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 3378
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ................................................................................... 3379
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level .................................................. 3381
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 3384
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 3387
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 3388
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 3389
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 3390
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 3391
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ...................................................................... 3392
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 3398
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 3399
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 3400
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 3403
COMMERCIAL REAL ESTATE - Rising Beef Costs ................................................................................................................................. 3404
COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 3408
COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete ................................................................................................. 3410
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 3412
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 3413
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 3414
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous .............................................. 3416
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ..................................... 3423
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode......................................................................................... 3425
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ................................................ 3426
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements ....................................................................................... 3428
COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ........................................................................ 3431
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ........................................................................... 3434
COMMERCIAL REAL ESTATE - Getting Worse Fast .............................................................................................................................. 3435
COMMERCIAL REAL ESTATE - Unfolding Implosion .............................................................................................................................. 3437
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ......................................................................................................................... 3438
COMMERCIAL REAL ESTATE - Financial Crisis II Coming..................................................................................................................... 3443
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ................................................................................................................ 3450

34

COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 3453
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 3455
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 3457
COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 3461
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 3467
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 3468
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 3471
OVERVIEW ................................................................................................................................................................................................ 3475
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 3476
SPECIAL FOCUS QE FOR THE PEOPLE ....................................................................................................................... 3482

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

US RECESSION RUMBLINGS ........................................................................................................................................................................... 3491
CHARTS OF NOTE ....................................................................................................................................................................................... 3492
NEW-RECESSION We are already in a US GDP Recession ................................................................................................................ 3492
NEW-RECESSION HY Close to 2001 Recession Levels ...................................................................................................................... 3492
NEW-RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending........................................ 3493
NEW-RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ........................................................................... 3493
NEW-RECESSION Current Economic Cycle Is Getting Old In The Tooth.......................................................................................... 3494
NEW-RECESSION Average Monthly Job Growth Deteriorating ........................................................................................................... 3494
NEW-RECESSION Annual Percent Change In Real GDP .................................................................................................................... 3495
NEW-RECESSION US Manufacturing Sector Recession...................................................................................................................... 3495
NEW-RECESSION Large Profit Margin Declines Coincides With Recessions ..................................................................................... 3496
NEW-RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ..................................... 3496
NEW-RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative ................................................................ 3497
NEW-RECESSION US Recession Estimates Pop ................................................................................................................................. 3497
NEW-RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds .................................................................... 3498
NEW-RECESSION Real S&P 500 Index with Historical Recessions .................................................................................................... 3498
NEW-RECESSION September Survey Data versus Non Farm Payrolls .............................................................................................. 3499
NEW-RECESSION Regional Surveys for September versus ISM PMI (August) .................................................................................. 3499
NEW-RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates ........................................................................ 3500
NEW-RECESSION Historical Regional Index Comparisons Last Seen in 2008 ................................................................................ 3500
NEW-RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds .................................... 3501
NEW-RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ........................................................................... 3502
RECESSION CT 2015 Revenue Recession .......................................................................................................................................... 3502
RECESSION Q2 2015 Revenue Recession .......................................................................................................................................... 3503
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................. 3503
RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted.......................................................................... 3504
RECESSION Top 10 US Market Areas Signal Retail Problem Underway ............................................................................................ 3504
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ....................................................... 3505
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................. 3506
RECESSION Wholesale Inventories vs GDP Trends ............................................................................................................................ 3506
RECESSION Auto Inventories to Sales ................................................................................................................................................. 3507
RECESSION Falling Collateral and Residuals Undermine Real Growth ............................................................................................ 3507
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................. 3508
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................. 3508
RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ...................................................................... 3509
RECESSION Real Gross Domestic Investment versus Recessions ..................................................................................................... 3509
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................. 3510
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................. 3511
RECESSION ISM Composite Index versus Recessions........................................................................................................................ 3512
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................. 3512
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................. 3513

35

RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions......................................................................... 3513
RECESSION Major Economic Trends.................................................................................................................................................... 3514
NEW-RESEARCH OF NOTE ........................................................................................................................................................................ 3515
NEW- RECESSION Economists are starting to warn about the risk of a new U.S. recession .............................................................. 3515
NEW- RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................... 3518
RECESSION Retail Sales Slump on Deck ............................................................................................................................................. 3520
RECESSION This Is another "Subprime" Waiting To Blow ................................................................................................................... 3523
RECESSION Record Gap between US Inventories and Sales Screams Recession ............................................................................ 3526
RECESSION August spending was the weakest in nominal dollar terms since 2012 ........................................................................... 3528
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................. 3533

36

MONTHLY PROCESS OF ABSTRACTION

The Global Macro Tipping Points (GMTP) Service is an integral part of our monthly Process of Abstraction research
methodology. The process starts monthly with the Tipping Points and completes with a final Synthesis. The
sequence is optimized to align with the established Macro Economic Data releases.
Plan
Release
Date
III.
Monday following
4th Saturday
of the Month
IV.
II.
Monday following
2tnd Saturday of the
Month
Tuesday following
3rd Saturday
of the Month
Service
Coverage
Tipping Points
Tipping Points
Abstraction
Global Macro
Abstraction
US Economy
Technical Analysis
Technical Analysis
Market Analytics
Fundamental Analysis
Market Analytics
Risk Analysis
Synthesis
Commentary
Synthesis
Commentary
Thesis
Conclusions
Global Macro Tipping Points

(GMTP)
Market Analytics & Technical

Analysis (MTA)
Monthly Market Commentary

(MMC)

37
Focus


RPT GMTP 2016 02 PEEK

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UNCERTAINTY & APPREHENSIVE

GLOBAL MACRO & TIPPING POINTS

GLOBAL MACRO TIPPING POINTS - FEBRUARY 2016

1 FEBRUARY 2016 Edition

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UNCERTAINTY & APPREHENSIVE UNEASINESS

GLOBAL MACRO TIPPING POINTS - FEBRUARY 2016

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

February 2016 Edition

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Global Conflict & Protest Intensity ............................................................................................................................................................... 179

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 240

GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 259

February 2016 Edition

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YEMEN ............................................................................................................................................................................................................ 315

GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 385

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 419

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 429

February 2016 Edition

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NEW-I BOND BUBBLE................................................................................................................................................................................. 436

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 478

February 2016 Edition

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GLOBAL MACRO: INDICATORS ............................................................................................................................................ 627

February 2016 Edition

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GLOBAL GROWTH Global Leading Indicator Signals Contraction ......................................................................................................... 659

February 2016 Edition

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Restricted & Confidential

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 751

February 2016 Edition

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Restricted & Confidential

CHARTS OF NOTE ......................................................................................................................................................................................... 846

February 2016 Edition

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February 2016 Edition

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Restricted & Confidential

CHARTS Developed Country Inflation Rates ......................................................................................................................................... 1039

GEO-ECONOMIC INSTABILITIES......................................................................................................................................... 1044

February 2016 Edition

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February 2016 Edition

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CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................. 1289

February 2016 Edition

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REGIONAL ........................................................................................................................................... 1462

February 2016 Edition

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