AMERICA MUST CHOOSE THE ROAD AHEAD (77 Page FULL REPORT .pdf)
An Election for the Sole of America

AMERICA MUST CHOOSE THE ROAD AHEAD (26 Page COMMENTARY ONLY .pdf)
An Election for the Sole of America

We have predicted since before the Dotcom Bubble implosion that the direction in America was a centrist view towards stronger totalitarian regimes. This was confirmed during the Presidencies of both George Bush II and Barack Obama

The Presidential Primaries have further illustrated this direction.

Our abstraction model still suggests that a global fiat failure lies ahead at which time a “New World Order” will be brought into existence during the ensuing chaos. We can only hope it will be in the best interests of all people. Certainly it will be sold as such. We are now conditioned to believe much of what we are told without questioning it and that the government is the answer to most problems.

The 2016US Election will be more than an election. It will be about the sole of America though most won't recognize it as such!

THE NEXT CRISIS HAS BEGUN (60 Page FULL REPORT .pdf)
The 2008 Set-Up

THE NEXT CRISIS HAS BEGUN (13 Page COMMENTARY ONLY .pdf)
The 2008 Set-Up

We can see that the Global Financial Stress Index is strongly trended upward. This is not because of BREXIT though that has definitely been a contributor. The GMTP report showed that the TED spread and OIS-Libor measures have been increasingly significantly, as has also international sovereign Credit Default premiums.

An accelerating collapse in global bond yields cannot be perceived as anything other than a clear warnins. This is particularly true when the divergence between stocks and bond yield is so pronounced. Since the end of Federal Reserve stimulus programs the world has felt the impact.

Expect more stimulus soon!

THE G-7 SENDAI DISCHORD (71 Page FULL REPORT .pdf)
Shanghai Accord Crumbles with G-7 Sendai Discord

THE G-7 SENDAI DISCHORD (21 Page COMMENTARY ONLY .pdf)
Shanghai Accord Crumbles with G-7 Sendai Discord

We have discussed the Shanghai Accord in a number of previous reports. The results have left us with little doubt that whether implicitly or explicitly, some sort of understanding was reached at the G-20 Shanghai meeting in late February between country finance ministers and central bankers. Like any agreement there is give and take with the expectations that all are better served with the accord. What is obvious is that the agreement was not a winner for Chairperson Janet Yellen. Her body language was obvious. She had been forced to accept something very painful. Like a student being handed a paper with an “F” on it her demeanor spoke volumes without someone actually knowing the results.

What Janet had to deliver was a weakened US dollar which meant no rate increases, least of all the four she had been signaling since assuming full control of the reigns of the Federal Reserve.

So Yellen really had no choice but to play this game. China however is far from stupid and can be counted on to have played a new card at the special U.S.-China Strategic & Economic Dialogue just held June 6-7. We will have to wait to see what the real outcome was?

A FAILING SOCIAL CONTRACT (70 Page FULL REPORT .pdf)
There is an Unwritten Contract between the Governing and the Governed

A FAILING SOCIAL CONTRACT (20 Page COMMENTARY ONLY .pdf)
There is an Unwritten Contract between the Governing and the Governed

We believe that what the Economic Cycles are telling us is that there is a massive social change about to occur in the US. A change being brought on by lost faith in the system.

Our Annual Thesis this year was entitled “Crisis of Trust”. Last year it was entitled “Fiduciary Failure”. The titles are telling about an increasing degree of lost faith in the status quo.

Inequality has become so blatant that the current US Presidential Primaries have been “set on their ear” by massive turnout for candidates who are talking about the degree of corruption, incompetence and ineffectiveness of the US government.  The electorate is frustrated and getting angry.

The citizenship now believes that the system is no longer working for them.  They see that when they do all the right things (go to school, train, work hard) it no longer delivers on expectations. The American Dream is no longer a reality for the vast majority of Americans. It is a broken dream.

What has happened is the Social Contract has broken down. 

The Social Contract is the unwritten agreement between the Citizenship and Government, that if a person does the right things, the government will create an environment such that they will be rewarded. Instead what they now see is; not only this not happening, but those closest to the government (such as Crony Capitalists, Government Employees, those living off the government) doing well but everyone else hurting.

Corruption is often tolerated by the citizenship until a person can no longer live the life they want. They then resent the government free loaders and demand change and or revolt. When they no longer can support their family - they revolt. It my opinion we are nearing that point in America.

Maybe more frightening is the possibility that this may not be unique to America. We are seeing similar patterns with fringe parties taking controlling positions around the world. The status quo and social contract is now under fire in all developed economies!

Promised entitlements are now being called into question as time has come for governments to deliver on their promises.

CRIPPLED CAPITALISM (76 Page FULL REPORT .pdf)
Capitalism versus Financialism

CRIPPLED CAPITALISM (16 Page COMMENTARY ONLY .pdf)
Capitalism versus Financialism

We now have massive headwinds which will stymie and frustrate continued government efforts. Three factors alone may prove insurmountable to create the inflation needed to manage the unsustainable US debt.

1. Technology - Information Revolution now "Kicking in"!
2. Demographics - Dent's Spending Cycle
3. Globalization - Corporate Labor Arbitrage

The problem in America and the Developed Economies of the world is too much debt and not enough growth. It is unsustainable and inextinguishable. The problem will not be solved primarily due to a lack of leadership & a true understanding of the problem by the political apparatus.  While economies are presently manipulated and fragile governments must still push for Inflation to cheapen debt burden. Unfortunately a crisis is inevitable at some point in the future.

CAPITALISM

• Efficient Allocation of Capital IS NOT Happening
• Risk Incorrectly Priced,
• There is a Lack of Price Discovery,
• Excessive and too sustained a period of Malinvestment
• Household Savings IS NOT Happening. There is no Savings for Investment. Rather we have Credit Creation for Consumption
• Quarterly Corporate Results Reporting
• Penalizes Longer Term Investment which would create major breakthrough growth areas,
• Penalizes for Risk Taking,
• Penalizes CAPEX expenditure.
• Corporations are not Investing but rather simply “Stripping Out Costs”
• Cheap Money has created Over Supply rather than the Wealth Effect intended to create Demand Pull (Even if successful is limited in time and scope). Rather what we face will be a demand hole which will be deflationary as Pricing Power is lost.
• Leveraged Buyouts are now sought for Growth where costs are stripped. There is now little corporate organic growth.
• Corporate Buybacks are stripping investable capital from productive use. This occurs when Corporations Don't See Risk Free Growth                         

What we have is:

FINANCIALISM instead of CAPITALISM

CREDITISM instead of CAPITALISM

CENTRAL BANK INTERVENTION COMING! (90 Page FULL REPORT .pdf)
Too Many Cracks to Allow Further Delay

CENTRAL BANK INTERVENTION COMING! (24 Page COMMENTARY ONLY .pdf)
Too Many Cracks to Allow Further Delay

It is important not to lose perspective from all the economic data coming at us about where we likely are within the Economic Cycle. History has show that economies follow various cycles which have tremendous influence on asset valuations and market pricing. The global economic cycle may be more important today than ever before as sovereign economies become increasingly inter-dependent.

We see in the chart below by BoA Merril Lynch’s Global Fund Manager Survey that it is felt that the mid Cycle has turned down hard but that the Late Cycle hasn’t turned yet. These surveys by their nature are delayed, as often the sentiment supporting them in lagging. I suspect the Late Cycle has already turned down hard as illustrated by a turn in the Credit Cycle, which we have discussed in previous reports. One look at Global Trade data and the Baltic Dry shipping index will confirm this even for the most skeptical.

UNCERTAINTY & APPREHENSIVE UNEASINESS (68 Page FULL REPORT .pdf)
Sentiment Takes on a Tone of Worry

UNCERTAINTY & APPREHENSIVE UNEASINESS (20 Page COMMENTARY ONLY .pdf)
Sentiment Takes on a Tone of Worry

Over the past few quarters our monthly reports have focused on the rapidly decaying fundamentals around the world. There is little doubt any longer of the degree of global slowdown we are experiencing, and the fact the US is now being impacted. I am already reading mainstream writers talking about a potential US recession in 2016. The purpose of the GMTP mission to warn early has been achieved. None of this should come as any surprise to our subscribers

It is time to shift our attention to what we now need to be focused on. That is what global events will dictate the seriousness of the outcome in 2016. Maybe more specifically, what will trigger the next round of central bank and government policy initiatives? We need not focus on the US, as it is going to be the "tail on the dog" reacting to events.

This chart of global reserves shows something quite startling. Reserves are not growing and in fact are shrinking! The same players who were the biggest builders of foreign reserves are now the ones falling the fastest. Who? China and the major (non US) Energy Exporters.

That is where we will look in this report.

ANNUAL THESIS DOCUMENT

REPORT

Week Ending January 16th, 2016

GLOBAL SOWDOWN STEEPENING (71 Page FULL REPORT .pdf)
Credit Cycle is Reacting

GLOBAL SOWDOWN STEEPENING (22 Page COMMENTARY ONLY .pdf)
Credit Cycle is Reacting

QE:  A FAILED EXPERIMENT

 In March in “QE: A Failed Experiment” I started writing about how Quantitative Easing was becoming more about over supply than about its intended purpose of creating economic demand.
Cheap money may help consumers’ ability to consume but it was having a much more profound impact on suppliers. It turns out that the expected wealth effect for consumers, paled in comparison to allowing producers to ramp up production and in turn for their suppliers to meet these rising abilities.

At some point it can be expected that demand and supply will come into balance. That balance can be preceded by a massive overshoot of supply if money is made too cheap for too long a period of time.
Too many suppliers chasing slowing demand growth leads to lost pricing power. Margin and profit problems can be hidden and with easy credit. Zombie companies can be kept alive and they in turn bring further pricing power pressures. This is the stage we are in now and I have also written about this.
What we are going to discuss here is we have entered another stage in this rebalancing. Specifically, we have a turn in the credit cycle as cash flows shrink and the requisite credit ratings for new loans are under pressure.

QE FOR THE PEOPLE (87 Page FULL REPORT .pdf)
Helicopter Money (OMF) Coming During the Next Drawdown

QE FOR THE PEOPLE (42 Page COMMENTARY ONLY .pdf)
Helicopter Money (OMF) Coming During the Next Drawdown

THE COMING GLOBAL ABYSS (66 Page FULL REPORT .pdf)
Too Much Supply & Too Many Brands Combining with Too Much Credit

THE COMING GLOBAL ABYSS (25 Page COMMENTARY ONLY .pdf)
Too Much Supply & Too Many Brands Combining with Too Much Credit

THE ECHO BOOM - Revisited (40 Page FULL REPORT .pdf)
Current Market Volatility is a part of the "Echo Boom"

THE ECHO BOOM - Revisited (13 Page COMMENTARY ONLY .pdf)
Current Market Volatility is a part of the "Echo Boom"

VALUE VORTEX (63 Page FULL REPORT .pdf)
Why Value is Getting Harder To Find

VALUE VORTEX (13 Page COMMENTARY ONLY .pdf)
Why Value is Getting Harder To Find

PENSION POVERTY AHEAD (47 Page FULL REPORT .pdf)
Pensions Are Underfunded and No Longer Risk Free!

PENSION POVERTY AHEAD (14 Page COMMENTARY ONLY .pdf)
Pensions Are Underfunded and No Longer Risk Free!

WAR ON CASH (45 Page FULL REPORT .pdf)
Is the War on Cash Just an Extension of the War on Gold?

WAR ON CASH (12 Page COMMENTARY ONLY .pdf)
Is the War on Cash Just an Extension of the War on Gold?

WORRIED BANKERS (81 Page FULL REPORT .pdf)
They Are Seeing Things We Only Presently Suspect

WORRIED BANKERS (14 Page COMMENTARY ONLY .pdf)
They Are Seeing Things We Only Presently Suspect

QE: A FAILED EXPERIMENT (74 Page FULL REPORT .pdf)
A Macro Experiment De-Stabilizng the Micro

QE: A FAILED EXPERIMENT (21 Page COMMENTARY ONLY .pdf)
A Macro Experiment De-Stabilizng the Micro

IS NIRP COMING TO AMERICA? (64 Page FULL REPORT .pdf)
The Coming Negative Interest Rate Policy

IS NIRP COMING TO AMERICA? (13 Page COMMENTARY ONLY .pdf)
The Coming Negaticve Interest Rate Policy

CRACKS IN THE FACADE (76 Page FULL REPORT .pdf)
Chaotic Turmoil A Sign of What is to Come

CRACKS IN THE FACADE (19 Page COMMENTARY ONLY .pdf)
Chaotic Turmoil A Sign of What is to Come

ANNUAL THESIS - January 18th, 2015

Thesis-2015 - FIDUCIARY FAILURE

ARE CENTRAL BANKERS LOSING CONTROL? (80 Page FULL REPORT .pdf)
Is the Emperor Wearing Any Clothes?

ARE CENTRAL BANKERS LOSING CONTROL? (18 Page COMMENTARY ONLY .pdf)
Is the Emperor Wearing Any Clothes?

EVENT RISK SUDDENLY MATTERS (78 Page FULL REPORT .pdf)
Geo-Political Event Risk is beginning to dominate

EVENT RISK SUDDENLY MATTERS (16 Page COMMENTARY ONLY .pdf)
Geo-Political Event Risk is beginning to dominate

THE CRONY TRIBUTE SYSTEM (72 Page FULL REPORT .pdf)
Lobbying, Influence Peddling & Campaign Contributions are Sooo Passé

THE CRONY TRIBUTE SYSTEM (14 Page COMMENTARY ONLY .pdf)
Lobbying, Influence Peddling & Campaign Contributions are Sooo Passé

12 WAYS QE IS DESTROYING CAPITALISM (61 Page FULL REPORT .pdf)
Sustained QE, ZIRP & Negative Interest Rates are Poison to Effective Working CAPITALism

12 WAYS QE IS DESTROYING CAPITALISM (11 Page COMMENTARY ONLY .pdf)
Sustained QE, ZIRP & Negative Interest Rates are Poison to Effective Working CAPITALism

THE LOOMING M&A WAVE (50 Page FULL REPORT .pdf)
Resulting from Sustained Low Interest Rates, Government Tax Incentives & Regulatory Forbearance

THE LOOMING M&A WAVE (15 Page COMMENTARY ONLY .pdf)
Resulting from Sustained Low Interest Rates, Government Tax Incentives & Regulatory Forbearance

LIQUIDITY IS NEITHER WEALTH NOR COLLATERAL (57 Page FULL REPORT .pdf)
The Fed Can’t Create Wealth & Only Temporary Collateral

LIQUIDITY IS NEITHER WEALTH NOR COLLATERAL (11 Page COMMENTARY ONLY .pdf)
The Fed Can’t Create Wealth & Only Temporary Collateral

THE MYSTERIOUS BUYER OF US TREASURIES (59 Page FULL REPORT .pdf)
Who Is Really Behind the Belgium Buying?

THE MYSTERIOUS BUYER OF US TREASURIES (20 Page REPORT .pdf)
Who Is Really Behind the Belgium Buying?

FINANCIAL REPRESSION GOES GLOBAL (62 Page FULL REPORT .pdf)
Accelerating Stealth Policy and Regulatory Responses

FINANCIAL REPRESSION GOES GLOBAL (8 Page FULL REPORT .pdf)
Accelerating Stealth Policy and Regulatory Responses

The Russian Pivot (60 Page FULL REPORT .pdf)
Russia Turns Towards the China and the East

The Russian Pivot (21 Page FULL REPORT .pdf)
Russia Turns Towards the China and the East

The Free Money War (53 Page FULL REPORT .pdf)
The New Corporate Siege Mentality

The Free Money War (10 Page FULL REPORT .pdf)
The New Corporate Siege Mentality

Shadow Banking Re-Emergence (42 Page FULL REPORT .pdf)
New Acronyms & Vehicles, Same Game

Shadow Banking Re-Emergence (21 Page Commentary Only REPORT .pdf)
New Acronyms & Vehicles, Same Game

JANUARY 2014

ANNUAL THESIS REPORT

THE GLOBALIZATION TRAP

Political Paralysis (57 Page FULL REPORT .pdf)
A Global Governance Failure

Political Paralysis (12 Page Commentary Only REPORT .pdf)
A Global Governance Failure

The Fragile 5 & CEE (42 Page FULL REPORT .pdf)
The Peripheral Echo Boom Ahead

The Fragile 5 & CEE (10 Page Commentary Only REPORT .pdf)
The Peripheral Echo Boom Ahead

The Caper Taper (49 Page FULL REPORT .pdf)
A Disguised G20 Summit

The Caper Taper (14 Page Commentary Only REPORT .pdf)
A Disguised G20 Summit

The Echo Boom (50 Page FULL REPORT .pdf)
A 2007 Asian Crisis Repeat - But Potentially Worse

The Echo Boom (16 Page Commentary Only REPORT .pdf)
A 2007 Asian Crisis Repeat - But Potentially Worse

The Globalization Trap (42 Page FULL REPORT .pdf)
Most Sense Something Is Terribly Wrong, But What?

The Globalization Trap (15 Page Commentary Only REPORT .pdf)
Most Sense Something Is Terribly Wrong, But What?

Bond Scare (44 Page FULL REPORT .pdf)
The Fed's "TAPER": A Disguised Haircut 'Trim' for Investors

Bond Scare : (19 Page Commentary Only REPORT .pdf)
The Fed's "TAPER": A Disguised Haircut 'Trim' for Investors

"Mr Global & The Great Rotation : (33 Page FULL REPORT .pdf)
The Coming Debt for Equity Transfer Game

"Mr Global & The Great Rotation : (11 Page Commentary Only REPORT .pdf)
The Coming Debt for Equity Transfer Game

SLOWING GLOBAL GROWTH : (36 Page FULL REPORT .pdf)
A Structural Problem, Not A Cyclical Pattern

SLOWING GLOBAL GROWTH : (18 Page COMMENTARY .pdf)
A Structural Problem, Not A Cyclical Pattern

A GLOBAL GOVERNANCE FAILURE : (40 Page FULL REPORT .pdf Report)
The Relentless Failure of Fiscal, Monetary and Public Policy

A GLOBAL GOVERNANCE FAILURE : (18 Page MONTHLY COMMENTARY REPORT .pdf Report)
The Relentless Failure of Fiscal, Monetary and Public Policy

DESTABILIZING CURRENCY WARS : (37 Page FULL REPORT .pdf Report)
A Global Economy at Stall Speed is Susceptible to any Shock

DESTABILIZING CURRENCY WARS : (17 Page FULL REPORT .pdf Report)
A Global Economy at Stall Speed is Susceptible to any Shock

CRISIS OF TRUST : (32 Page FULL REPORT .pdf Report)
Losing Confidence in the "System"

CRISIS OF TRUST : (18 Page FULL REPORT .pdf Report)
Losing Confidence in the "System"

The January Edition is the ANNUAL THESIS.

It was released Monday January 14th, 2013

COUNTERFEITING "RISK FREE" : (45 Page FULL REPORT .pdf Report)
The Currency Cartel, a Fiat Failure & the Risk of Collateral Contagion

COUNTERFEITING "RISK FREE" : (26 Page FULL REPORT .pdf Report)
The Currency Cartel, a Fiat Failure & the Risk of Collateral Contagion

THE P/E COMPRESSION GAME: (48 Page FULL REPORT .pdf Report)
An Old Game with a Different Twist to Misprice RISK

THE P/E COMPRESSION GAME: (28 Page COMMENTARY TOPIC.pdf Report)
An Old Game with a Different Twist to Misprice RISK

CURRENCY WARS: The Fighting Resumes (27 Page FULL COMMENTARY .pdf Report)
The "Race to the Bottom" Monetary Policy Programs Accelerates

CURRENCY WARS: The Fighting Resumes (12 Page COMMENTARY TOPIC.pdf Report)
The "Race to the Bottom" Monetary Policy Programs Accelerates

Consumption Crisis (31 Page FULL COMMENTARY .pdf Report)
Consumption has Expectantly Peaked at an Obscene 71% of US Economy

Consumption Crisis (44 Page FULL COMMENTARY .pdf Report)
Consumption has Expectantly Peaked at an Obscene 71% of US Economy

Monetary Malpractice (44 Page FULL COMMENTARY .pdf Report)
Moral Hazard, Unintended Consequences & Dysfunctional Markets

Monetary Malpractice (29 Page FULL COMMENTARY .pdf Report)
Moral Hazard, Unintended Consequences & Dysfunctional Markets

Moral Metastasis (30 Page FULL COMMENTARY .pdf Report)
Malfeasance, Manipulation & Malpractice

Moral Metastasis (17 Page Misguided Public Policy FOCUS .pdf Report)
Malfeasance, Manipulation & Malpractice

Misguided Public Policy (36 Page FULL COMMENTARY.pdf Report)
Could Irresponsible Populist Policies be Steadily Destroying the System?

Misguided Public Policy (22 Page Misguided Public Policy Focus.pdf Report)
Could Irresponsible Populist Policies be Steadily Destroying the System?

EUROSIS : It's Contagious (33 Page FULL COMMENTARY.pdf Report)
The Prognosis Calls for Immediate Amputation

EUROSIS : It's Contagious (23 Page Eurosis .pdf Report)
The Prognosis Calls for Immediate Amputation

FINANCIAL REPRESSION : Going Global (31 Page FULL COMMENTARY.pdf Report)
No Longer the Exclusive Domain of US Policy Makers

FINANCIAL REPRESSION : Going Global (23 Page FINANCIAL REPRESSION.pdf Report)
No Longer the Exclusive Domain of US Policy Makers

GREECE: A Dubious Deal (43 Page FULL COMMENTARY.pdf Report)
Unintended Consequences Looming

GREECE: A Dubious Deal (28 Page DUBIOUS DEAL.pdf Report)
Unintended Consequences Looming

Ponzi Bonds (35 Page .pdf Report)
The Games to Hide the Cracks in the Foundation

ANNUAL THESIS : Saturday January 14th, 2011  

Global Uncertainty: fear of Contagion (24 Page .pdf Report)
Fear is Washing over the Global Markets - Time for an EU Resolution

Euro Experiment: Frantic Four Weeks (27 Page .pdf Report)
The EU & G-2- Fail to Deliver the Bazooka - They Took a Squirt Gun to a Forest Fire!

Euro Experiment: Test Results Are In (26 Page .pdf Report)
Can Global Central Bankers Save the Euro?

Stealth QE III (30 Page .pdf Report)
Is the Federal Reserve Already in the Process of Implementing a Stealth QE III?

Global Debt Crisis Escalates (31 Page .pdf Report)
We need viable solutions - Not Political Solutions to Systemic Problems!

European Summer, American Autumn (42 Page .pdf Report)
The Arab Spring has set the Stage for the European Summer