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Wed. June 5th , 2013
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America No Longer Innovative Driven 29 Minutes, 25 Slides
What Are Tipping Poinits? |
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"BEST OF THE WEEK " |
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Labels & Tags | TIPPING POINT or 2013 THESIS THEME |
HOTTEST TIPPING POINTS |
Theme Groupings |
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We post throughout the day as we do our Investment Research for: LONGWave - UnderTheLens - Macro Analytics |
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TRAPPED - USA Must SOMEHOW Continue to Expand Total Credit Exponetially, To Keep the Economy from Contracting (Imploding) in REAL Terms! |
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DEBT SATURATION - There is Simply Insufficient Wealth Creation Within Developed Nations A gordontlong.com MATA Study INTEREST RATES Have been Declining Since 1790
INTEREST RATES Have been brought down at an Even Faster Rate since the "Volcker' Save EXTREMELY WELL MANAGED Interest Rate Decline INTEREST RATE DECLINE HAS HIDDEN the exploding Growth of Credit & Its Burden (Until the 2008 Crisis)
GROWTH TO CARRY DEBT SATURATION is not Sufficient THE RATE OF WEALTH CREATION IS INSUFFICENT EQUITY (WEALTH) is not being created at sufficient enough rate to support expanding debt burden (ECONOMIC BLEED) VALUATIONS, INTRINSIC VALUE AND EV are fundamentally defined by DFCF (Discounted Free Cash Flow) THIS IS SMALLER THAN THE RATE OF INFLATION = CONTRACTION or IMPLOSION
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06-05-13 | ANALYTICS STUDY |
17 - Credit Contraction II |
"TAPER" PERSPECTIVE - A Scare Before the 'OPMF' Storm A gordontlong.com MATA Study ERA OF FINANCIAL REPRESSION "TAPER" IN PERSPECTIVE 'TAPER' is the equivalent of the 'old time' school bus driver "Tapping" on the brakes to make the'children sit down' before hitting the gas pedal AGAIN! It's Not Growth 'Hopes' That Has Backed Up Rates 06-04-13 Barclays' via ZH While the back up in interest rates over the last few weeks has been heralded by those with a bias for these things as some indication of growth expectations improving - confirming the equity exuberance they stand on as sensible; it appears, if one actually takes a look a little deeper into market movements, that in fact this is 'all' about 'Taper' concerns and nothing to do with growth. The driver of this reasoning is straightforward. If the move higher in rates were really about perceived improvement in the growth outlook, we would expect credit markets to rally - as they have during all prior periods of rate spikes. This time is different as they sold off together. Simply put, this is not a growth-driven rate reversion, it is short-term fears (and JGB VaR shock driven concerns) of a Fed worried about bubbles and taking its foot off the throttle modestly. The past three weeks have seen intraday spread moves correlate extremely closely with rates - suggesting Fed Taper concerns - not growth at all - as the flow may slow. Chart: Barclays |
06-05-13 | ANALYTICS STUDY |
17 - Credit Contraction II |
CANARIES - Problems Erupting Everywhere (Signs of Implosion) 18 Signs That Massive Economic Problems Are Erupting Everywhere 06-03-13 Zero Hedge This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have "kicked the can down the road" by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the "sugar high" produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world - it is just a matter of time. But for the moment, there are a lot of skeptics out there. For the moment, there are a lot of people that are declaring that the problems of the past have been fixed and that we are heading for incredibly bright economic times ahead. Unfortunately, those people appear to be purposely ignoring the economic horror that is breaking out all over the globe. The following are 18 signs that massive economic problems are erupting all over the planet... #1 The eurozone is now in the midst of its longest recession ever. Economic activity in the eurozone has declined for six quarters in a row. #2 Italy's economy has now been contracting for seven quarters in a row. #3 Industrial production in Italy has fallen for 15 months in a row. It has now fallen to its lowest level in about 25 years. #4 The number of people that are considered to be "seriously deprived" in Italy has doubled over the past two years. #5 Consumer confidence in France has just hit a new all-time low. #6 The number of unemployed workers seeking a job in France has hit a brand new all-time record high. Many unemployed workers in France are utterly frustrated at this point...
#7 Unemployment in the eurozone as a whole has just hit a brand new all-time record high of 12.2 percent. #8 Youth unemployment continues to soar to unprecedented heights in Europe. The following is from an article that was recently posted on the website of the Guardian that detailed how bad things are getting in some of the worst countries...
#9 Youth unemployment is being partially blamed for the worst rioting that Sweden has seen in many years. The following is how the Daily Mail described the riots...
#10 An astounding 10 percent of all banking deposits were pulled out of banks in Cyprus during the month of April alone. #11 Economic growth in India is the slowest that it has been in an entire decade. #12 Suddenly Australia is experiencing some tremendous economic challenges. The following quotes are from a recent Zero Hedge article...
#13 The financial system in Japan is beginning to spin wildly out of control. The Japanese stock market has now declined about 15 percent from the peak, and many believe that the yen will continue to get weaker and that interest rates in Japan will start to rise significantly. #14 Global cash flow is declining at a rate not seen since the last recession. This indicates that we could be headed for a global credit crunch. #15 Real wages continue to decline in the United States. Even though we are being told that the U.S. is experiencing an "economy recovery", real weekly earnings have declined from $297.79 in 2010 to $295.49 in 2011 to $294.83 in 2012. (The preceding calculation is based on 1982-1984 dollars) #16 Wall Street is buzzing about the fact that "the Hindenburg Omen" appeared at the end of last week. So exactly what is "the Hindenburg Omen"? The following are the criteria that are used to determine whether it has appeared or not...
When the Hindenburg Omen makes an appearance, it supposedly means that the U.S. stock market is likely to experience a serious decline within the next 40 days. #17 As I wrote about the other day, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years. That means that lots of "smart money" has been getting out of the market and lots of "dumb money" has been pouring in. #18 Margin debt on the New York Stock Exchange has set a new all-time high. The following is from a recent Market Oracle article...
Whenever margin debt spikes like this, a stock market crash almost always follows. If you doubt this, just check out the chart in this article. Wall Street has had a good couple of years, but it has been a "false prosperity" that has been pumped up by reckless money printing by the Federal Reserve. Just like all of the other stock market bubbles that we have seen in recent years, this one is going to burst too. And as Marc Faber recently pointed out, this bubble has been particularly beneficial to the wealthy...
The fact that the U.S. stock market has set new all-time record high after new all-time record high in recent months means very little. At this point, the stock market has become completely divorced from economic reality. When this current bubble bursts, the adjustment is going to be very painful. Wall Street will likely whine and complain and ask for more bailouts, but they may find that authorities are not nearly as sympathetic this time. Much of the rest of the world is already experiencing the next major wave of the economic collapse. Reckless money printing by the Fed and reckless borrowing and spending by the federal government may have delayed the inevitable in the United States for a little while, but those measures have also made our long-term problems even worse. There was one piece of advice that Ben Bernanke included in his commencement speech to students at Princeton recently that I thought was particularly ironic...
Will he take his own advice when the next great financial crisis strikes the United States? That seems very unlikely. Unfortunately, things are not going to be so easy to fix this next time. What happened back in 2008 was just a preview. What is coming next is going to absolutely shock the world. |
06-05-13 | OUTLOOK | MACRO ECONOMICS |
MOST CRITICAL TIPPING POINT ARTICLES THIS WEEK - June 2nd - June 8th |
RISK REVERSAL | 1 | ||
JAPAN - DEBT DEFLATION | 2 | ||
BOND BUBBLE | 3 | ||
EU BANKING CRISIS |
4 |
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SOVEREIGN DEBT CRISIS [Euope Crisis Tracker] | 5 | ||
CHINA BUBBLE | 6 | ||
CHINA - Slowing moves to CONTRACTION CHINA'S MANUFACTURING SECTOR IS CONTRACTING 06-02-13 BI China's unofficial HSBC manufacturing PMI report is out and its disappointing. The headline number fell to 49.2 from 50.4 a month ago. This was worse than economists' expectation fo 49.6. A reading below 50 signals contraction. Here are the key points from Markit:
From HSBC's Hongbin Qu:
On Friday, we learned that China's official PMI report unexpectedly climbed to 50.8 from 50.6 in April. Economists were looking for a decline to 50.0. All of this comes on renewed fears that China is slowing down again. China's HSBC PMI report has a greater weight toward small and medium sized enterprises, which tend to be more sensitive to economic swings. |
06-03-13 | CHINA INDICATORS CYCLE GROWTH |
6 - China Hard Landing |
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MACRO News Items of Importance - This Week | |||
GLOBAL MACRO REPORTS & ANALYSIS |
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GLOBAL PMI - Barely Above Stagnation Global Manufacturing Is Barely Above Stagnation 06-03-13 BI The world's biggest economies have published their May manufacturing PMI reports. This is our scorecard.
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06-04-13 | INDICATORS CYCLE GROWTH |
MACRO ECONOMICS |
US ECONOMIC REPORTS & ANALYSIS |
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CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES | |||
CENTRAL BANKERS - Simply Are Not Going to Tell You (Assuming they Know?) "Markets Under The Spell Of Monetary Easing" Bank Of International Settlements Finds... Same As "Then" 06-02-13 Zero Hedge Then....Ben Bernanke 7/1/2022, CNBC interview:
Ben Bernanke 10/20/05 – Testimony before the Joint Economic Committee, Congress
Ben Bernanke 3/28/07 – Testimony before the Joint Economic Committee, Congress
Ben Bernanke 5/17/07 – Remarks before the Federal Reserve Board of Chicago
Ben Bernanke 1/10/08 – Response to a Question after Speech in Washington, D.C.
Ben Bernanke 2/27/08 – Testimony before the Senate Banking Committee
Ben Bernanke 4/2/08 – New York Times article after the collapse of Bear Stearns
Ben Bernanke 6/10/08 – Remarks before a bankers’ conference in Chatham, Massachusetts
Ben Bernanke 7/16/08 – Testimony before House Financial Services Committee
Two months later: 9/24/08 – Response to a question after JEC testimony… during the TARP debate, two weeks before the Fed initiates its liquidity facility for commercial paper markets
* * * ... And NowEDITORS NOTE: The tone of the problems is now worse than above, more concern is being expressed, yet we are told everything is all right by those who didn't see the Financial Crisis coming (or would tell us then either) Jeremy Stein, February 7, 2021 speech "Overheating in Credit Markets: Origins, Measurement, and Policy Responses"
Minutes of May 1, 2021 FOMC Meeting
May 17, Record of Meeting of the Federal Advisory Council and the Board of Governors, unleased after FOIA requests were submitted
BIS Quarterly Review June 2013
Larry Fink, May 2013 CNBC interview: "It just doesn't matter"
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06-03-13 | MONETARY | CENTRAL BANKS |
Market Analytics | |||
TECHNICALS & MARKET ANALYTICS |
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EARNINGS ESTIMATES - PE Expansion Hides Risk and is itself Unjustified Counterintuitive Stock Market Trend 06-03-13 BI When stock prices rise faster than earnings, you are witnessing something called earnings multiple expansion. In other words, stocks are getting more expensive. Earnings multiples have expanded and contracted since the beginning of the stock market. Unfortunately, if you have been a stock market bear lately banking on falling earnings growth expectations, then your prediction has only been half right. In a new report, FactSet's John Butters takes a brief look at evolving Q2 earnings expectations, which have only been coming down for months.
This has occurred as stocks have only been going up. And according to Butters, this dynamic is not that unusual:
Some warn that this trend of stock prices rallying with no earnings growth is getting dangerous for investors. But for now, it'll continue to make the bears look like fools. Here's the chart from FactSet's John Butters:
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06-04-13 | FUND-MENTALS EARNINGS |
ANALYTICS |
FUNDAMENTALS - Cash Flow and CAPEX Show Me The Money Flow: Global Free Cash Flow And Capital Spending Contract To 2010 Levels 06-02-13 Zero Hedge In a world in which glaringly misreporting factual news no longer generates much more than a shrug, the latest lie reported so often by the mainstream media and various 'expert' pundits it has almost become "the truth", is that that the key missing link to a global recovery - free cash flow, and its derivative, capital expenditures - are now once more rising. After all, corporations can not grow revenue (as confirmed by the most recent reported quarterly earnings) without investing in themselves, and they can't spend for maintenance or growth unless they generate Free Cash Flow: this is simple finance 101. So in order to put this pervasive lie to rest, we present the following chart showing free cash flow and Capex in the developed "G-4" region as a % of world GDP, which have now round-tripped back to 2010 levels, and ask a simple question: what growth? PS. Yes, it is the Fed's fault.
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06-03-13 | MACRO FUND-MENTALS CASHFLOW CAPEX
STUDY BRIEF
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ANALYTICS |
COMMODITY CORNER - HARD ASSETS | PORTFOLIO | ||
PRIVATE EQUITY - REAL ASSETS | PORTFOLIO | ||
PATTERNS - Emerging Market Interest Rebounding Hedge Funds Are Cranking Up Their Bets On Emerging Markets 06-02-13 BofA Merrill Lynch -Stephen Suttmeier via BI Emerging market (EM) assets – currencies, debt, and stocks – all had a pretty terrible month in May. Poor performance in emerging markets was so pronounced during the month of May alone that several Wall Street shops are now out with big calls declaring the "end of the bull market." However, despite the wave of negative sentiment that has hit emerging markets, macro hedge funds were in there buying up EM last month. "Based on our exposure analysis, Macros bought EM exposure to the highest since October 2011, while maintaining their net long positions in [Europe, Australasia, and the Far East]," writes BofA Merrill Lynch analyst Stephen Suttmeier in the investment bank's latest Hedge Fund Monitor report. It looks like either the macro funds are taking a bath on their increased exposure to EM, or they see the latest movements in the market as a good buying opportunity.
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06-04-13 | EM ANALYTICS PATTERNS |
PRIVATE EQUITY |
AGRI-COMPLEX | PORTFOLIO | ||
SECURITY-SURVEILANCE COMPLEX | PORTFOLIO | ||
THESIS Themes | |||
2013 - STATISM |
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2012 - FINANCIAL REPRESSION |
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2011 - BEGGAR-THY-NEIGHBOR -- CURRENCY WARS |
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2010 - EXTEN D & PRETEND |
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CORPORATOCRACY - CRONY CAPITALSIM | |||
BILDERBERG MEETING - The Upper Crust
The Full List Of 2013's Bilderberg Attendees 06-03-13 Zero Hedge The only thing more ominous for the world than a Hindenburg Omen sighting is a Bilderberg Group meeting. The concentration of politicians and business leaders has meant the organisation, founded at the Bilderberg Hotel near Arnhem in 1954, has faced accusations of secrecy. Meetings take place behind closed doors, with a ban on journalists. We suspect the agenda (how the US and Europe can promote growth, the way 'big data' is changing 'almost everything', the challenges facing the continent of Africa, and the threat of cyber warfare) has been somewhat re-arranged as market volatility picks up and the status quo begins to quake once again. The annual gathering of the royalty, statesmen, and business leaders, conspiratorially believed to run the world (snubbing their Illuminati peers and Freemason fellows), will take place this week at the Grove Hotel in London, England. The Telegraph provides the full list of attendees below - for those autogrpah seekers - including Britain's George Osborne, US' Henry Kissinger, Peter Sutherland (the chairman of Goldman Sachs), the Fed's Kevin Warsh, Jeff Bezos?, Peter Thiel, Italy's Mario Monti, and Spain's de Guindos. Bilderberg delegates in full
via the Telegraph |
CRONY CAPITALISM
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CRONY CAPITALISM - It Pays to have Friends in High Places
THE pressure on tax-avoiders is mounting. In the latest episode Tim Cook, Apple’s boss, was called before a Senate subcommittee to explain why the tech giant had paid no tax on $74 billion of its profits over the past four years—though it has done nothing illegal. This comes at a time when America's corporate profits are at a record high, thanks to
Meanwhile corporation tax, which makes up 10% of the taxman’s total haul (down from about a third in the 1950s) has plummeted. An increase in businesses structuring themselves as partnerships and "S" corporations, which subject profits to individual rather than corporate income tax, is in part to blame. But tax havens are also culprits, as they lower their tax levels to lure in bigger firms. |
CRONY CAPITALISM
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GLOBAL FINANCIAL IMBALANCE | |||
SOCIAL UNREST |
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CENTRAL PLANNING |
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STANDARD OF LIVING |
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CORRUPTION & MALFEASANCE | |||
NATURE OF WORK | |||
CATALYSTS - FEAR & GREED | |||
GENERAL INTEREST |
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Tipping Points Life Cycle - Explained
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