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For the Record (Read 173393 times)
perceptions_now
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Re: For the Record
Reply #1335 - Nov 18th, 2015 at 1:10pm
 
The Economic News Isn't Getting Better


Summary
More and more economies seem to be experiencing slower growth; Japan, Germany, France, and others, and the prospects for a faster expansion seem dim.
Economic leadership seems to be missing and, as a consequence, officials seem to be trying this suggestion or that suggestion in order to help things out in the short run.
The economic solutions needed may not be of a short-term nature, but may need to have a longer-term focus...but how do the nations get a longer-term focus.

It was announced over the weekend, Japan has entered a new recession.

Late last week, we heard that the eurozone is not doing well. Growth in the whole community fell to 0.3 percent quarter over quarter, down from 0.4 percent in the third quarter.

Germany, Italy, and France all posted declines in growth rates from the second quarter to the third quarter. Portugal failed to grow at all, and Greece and Finland experienced negative growth rates.

Concern still exists for the economies of merging nations. Brazil and Argentina seem to be in a mess. Not helping at all is the fact that commodity prices, especially the price of oil and copper have reached near-term lows.

On Monday morning, the price of oil threatened to fall to $40.00 per barrel. In general, indexes of commodity prices reached new lows on Friday. Volatility has increased in financial markets, as world affairs seem incapable of settling down.

In terms of economic policy, the Federal Reserve System seems clueless, stating that any moves it makes in December will be "data driven."

And, the Keynesian fundamentalists, like Paul Krugman, continue to call for more and more fiscal stimulus. But, at this stage, this is not really providing much in the way of leadership.

Right now, a long-term vision seems to be missing from most of the efforts to combat economic problems. And, in the United States, all we seem to be getting right now is a president that is primarily interested in his legacy, something that at this stage he has very little control over, and a cadre of politicians that are attempting to gain voters' attention by proposing one short-term gimmick after another.

There are two things, I believe, that can be drawn from this.

First, the short-run policy prescriptions that are being proposed in the western economies will only serve as an extension of the current economic dilemmas that they are facing. These policy prescriptions are only fighting the last battle and will have very little impact on changing economies as they need to be changed.

Just spending on infrastructure will not accomplish what is needed because future competition is going to be driven by improvements and advancements in human capital that come about through life-time education.

More and more, the spread of information is driving the modern world. Unless our economies change to reflect this fact, the news will continue to be "not so good."

http://seekingalpha.com/article/3688676-the-economic-news-isnt-getting-better?if...
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The fact is, Politicians (Globally) have missed the boat, change was needed decades ago, But the Pollies & their backers have been interested far too much in their own short term interests & those of the "Supporters" & they didn't take those Long Term ACTIONS, which were for the good of all!
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Re: For the Record
Reply #1336 - Nov 20th, 2015 at 12:16pm
 
The Baltic Dry Shipping Index Just Collapsed To An All-Time Record Low


I was absolutely stunned to learn that the Baltic Dry Shipping Index had plummeted to a new all-time record low of 504 at one point on Thursday.

Not even during the darkest moments of the last financial crisis did the Baltic Dry Shipping Index drop this low.  Something doesn’t seem to be adding up, because the mainstream media keeps telling us that the global economy is doing just fine.  In fact, the Federal Reserve is so confident in our “economic recovery” that they are getting ready to raise interest rates.  Of course the truth is that there is no “economic recovery” on the horizon.  In fact, as I wrote about yesterday, there are signs all around us that are indicating that we are heading directly into another major economic crisis.  This staggering decline of the Baltic Dry Shipping Index is just another confirmation of what is directly ahead of us.

Overall, the Baltic Dry Index is down more than 60 percent over the past 12 months.  Global demand for shipping is absolutely collapsing, and yet very few “experts” seem alarmed by this.  If you are not familiar with the Baltic Dry Shipping Index, the following is a pretty good definition from Investopedia…

A shipping and trade index created by the London-based Baltic Exchange that measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. The Baltic Exchange directly contacts shipping brokers to assess price levels for a given route, product to transport and time to delivery (speed).

The Baltic Dry Index is a composite of three sub-indexes that measure different sizes of dry bulk carriers (merchant ships) – Capesize, Supramax and Panamax. Multiple geographic routes are evaluated for each index to give depth to the index’s composite measurement.

It is also known as the “Dry Bulk Index”.

Much of the decline of the Baltic Dry Shipping Index is being blamed on China.  The following comes from a Bloomberg report that was posted on Thursday…

The cost of shipping commodities fell to a record, amid signs that Chinese demand growth for iron ore and coal is slowing, hurting the industry’s biggest source of cargoes.

The Baltic Dry Index, a measure of shipping rates for everything from coal to ore to grains, fell to 504 points on Thursday, the lowest data from the London-based Baltic Exchange going back to 1985.

So many of the exact same patterns that we witnessed back in 2008 are playing out once again in front of our very eyes.  Below, I have shared a chart that was posted by Zero Hedge, and it shows how the Baltic Dry Shipping Index absolutely collapsed in 2008 as we headed into a major financial crisis.  Well, now the Index is collapsing again, and it is already lower than it was at any point back in 2008…
...

The evidence continues to mount that we are steamrolling toward a deflationary economic slowdown that is worldwide in scope.

Just look at the price of U.S. oil.  It just keeps on falling, and as I write this article it is sitting at $40.40.

The price of oil collapsed just before the financial crisis of 2008, and the same pattern is happening again.

And look at what is happening to commodities. The Thomson Reuters/CoreCommodity CRB Commodity Index has plummeted to the lowest level that we have seen since the last recession. It is now down more than 30 percent over the past 12 months, and it continues to fall.
https://www.corecommodityllc.com/ChartImg.axd?i=charts_0/chart_0_1.png&g=d165c23...

So don’t be fooled by the temporary “stock market recovery” that we have witnessed.  The underlying economic fundamentals continue to decline.  We are entering a global deflationary recession, and the stock market will get the memo at some point just like we saw in 2008.

At this moment, global financial markets are teetering on the brink, and all it is going to take is some kind of major trigger event to send them tumbling over the edge.

It wouldn’t take much to push the financial world into full-blown panic mode.  A major regional war in the Middle East, a terror attack that kills thousands, or an earthquake or volcanic eruption that affects a large U.S. city are all potential examples of “black swan events” which could fit the bill.

The global financial system has never been more primed for another 2008-style crisis.  Thanks to the fragility of the system, it could literally happen any day now.

http://www.infiniteunknown.net/2015/11/19/the-baltic-dry-shipping-index-just-col...
============================================
As I said some time ago, "the end result seems fairly clear, but the final timing is somewhat difficult, as it will probably be set in motion by an event or events that have not/can not been factored in".
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Re: For the Record
Reply #1337 - Nov 25th, 2015 at 6:52pm
 
Ageing population a global problem: RBA


The increasing number of retirees in parts around the world and record low interest rate are a problem for the global economy.

Reserve Bank governor Glenn Stevens says while many believe the US Federal Reserve is likely to raise its interest rate next month the pace of subsequent increases are likely to be slow.

Meanwhile, central banks in Japan and Europe which also have an ageing population are a long way from considering an interest rate rise.

He added that China's working age population is also shrinking as people move into retirement.

Mr Stevens said the problem with an ageing population was that there were less people in jobs causing a drag on the economy and the ability to pay welfare and public health care costs.

"Instead of five or six people for every retired person there's two or two and a half," he said.

"It may be that jobs will be robotised ... in the long run we may need that to some extent."
Mr Stevens says the share of services in most economies will continue to increase with health and aged care obvious areas for expansion because of an ageing population.
"The thing we have to most grapple with is to make our children more productive so they can earn enough to pay the taxes and help the capital return to keep us in our dotage," he said.

Mr Stevens said continued low interest rates around the world would make it hard for people to fund their retirement.
"In a low interest rate world, the problems of providing retirement incomes will become ever more prominent," he said.


"Overall, in a world where a higher proportion of the population wants to be retired and living - even if only in part - off the return on their savings, those returns are likely, all other things equal, to be lower.
"And there are more of such people, living longer."


http://www.news.com.au/finance/business/breaking-news/ageing-population-a-global...
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There is an "old phrase", which comes to mind here -
No Sh!t, Sherlock!

These issues have been known or should have been known, for quite some time, UNYET GOVERNMENTS (OF BOTH MAJOR PERSUASIONS) & THE RBA DID NOT TAKE THE APPROPRIATE ACTIONS, IN THE LONG TERM BEST INTERESTS OF ALL  AUSTRALIANS, THEY CONTINUED WITH THE SHORT TERM BEST INTERESTS OF THEMSELVES & A SELECT FEW!
However, in the final wrap up, the select few will also be losers, along with ALL AUSTRALIANS!

Oh & btw, Demographgics are not the only issue/s now in play!!!
Similar issues are also in play, overseas!
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Re: For the Record
Reply #1338 - Nov 25th, 2015 at 11:20pm
 
US$index briefly traded above 100.00, a little earlier & is now trading just under around 99.991

When the US$ is up like this, it is one of the indicators that all is not well, with the Economy!
http://www.marketwatch.com/investing/index/dxy
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Re: For the Record
Reply #1339 - Nov 30th, 2015 at 5:52am
 

No wonder we haven't heard that S word mentioned for quite a while now.

surplus.....lol

I wouldn't blame the Senate but rather put the blame squarely on BAD economic social policy.

Maybe the Senate is waiting for the government to get the money from the big end of town, you know, the multi-national companies that pay no or minimal tax.

As I've said for the last five years or so, there will be no surplus for decades, maybe many, many decades.


Australia's budget deficit to blow out by additional $38bn by 2019 – report


Budget deficits to 2018-19 will blow out to $38bn larger than expected, says a Deloitte Access Economics report, which blames the China slowdown and “gridlock” in the Senate for a cut in revenue.

Analysis Chinese economic slowdown or a slow rebalancing?
Debate rages on over whether China is stuck in an industrial rut or rebalancing towards services
Read more
Deloitte’s budget monitor report by economist Chris Richardson says while 90% of the problem was due to the China’s economic growth slowing down, decisions in the Senate were not helping.

Richardson calculates the Senate is “sitting on” expenditure savings worth $67bn over the next decade.

http://www.theguardian.com/australia-news/2015/nov/30/australias-budget-deficit-...



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"When the power of love overcomes the love of power, the world will know peace." Hendrix
andrei said: Great isn't it? Seeing boatloads of what is nothing more than human garbage turn up.....
 
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Re: For the Record
Reply #1340 - Dec 3rd, 2015 at 5:47pm
 
Oil Will Come Under More Pressure As Supply Will Continue To Far Exceed Demand


Summary
Why oil supply will remain robust.
U.S. dollar, interest rates and oil.
Russia and OPEC not interested in production agreement - never have been.
Devastation will continue in 2016


All oil companies have been hoping estimates of higher demand heading into 2016 would be a game changer over the next year; resulting in higher oil prices without the need for production to be cut back. I see that as now being a scenario that has little, if any chance of how it plays out.

The idea is the price of oil in the range of $40 to $50 isn't sustainable, so there will have to be a change in production if the expected demand doesn't come about. I don't believe it's going to.

Generally, there was a growing consensus that demand was going to jump, driven by the low price of oil. That hasn't stopped high levels of production bringing more supply to the market, which makes the assumption of higher demand a mute point going forward.

Adding to the dismal narrative is the high probability there will be a hike in the interest rate by the Federal Reserve, which will push oil down further.

On the production side, as I've mentioned a number of times, all the reports of Russia getting together with Saudi Arabia and OPEC to lower production in order to support the price of oil is illusory. Stories that Saudi Arabia is now open to moving forward with some type of agreement with other major producers is hype. The sooner investors understand that, the better.

Oil supply and Saudi Arabia
One interesting development in the decision by Saudi Arabia to aggressively attack its competitors with higher production levels, was it revealed to many investors and those watching the industry how vulnerable Saudi Arabia really is to the low price of oil and losing market share. It's now clear it probably only has a couple of years under the current market conditions before it would have to take drastic steps in order to support the price of oil.

I draw that conclusion from Saudi Arabia having at best five years of reserves left to fulfill its promises to its people. It will have to start seriously dealing with that reality before it has to continue drawing upon its reserves and increasing its debt via the bond market in order to meet budgetary demands.

Saudi Arabia is caught between its quest to maintain market share and not being able to spend as it has in the past because of the price of oil. Continuing to produce at current levels means it has to sacrifice reserves and weaken its credit position in order to operate as it has. Either that or it has to be willing to give up market share by lowering production. By doing that, it will also give up some influence and power it has had in the market.

It hasn't been able to crush the U.S. shale market or reduce Russian supply, which suggests the oil will continue to flow.

Russian oil
When measured by value, oil and natural gas account for about 50 percent of Russian export revenue. It has the third-largest oil reserves in the world, and is the top oil producer in the world as a standalone country.

The idea it's going to cut back on production to appease OPEC or Saudi Arabia is wishful thinking. It has no interest in doing so, and it won't. That's why it's not sending anyone of importance to the next OPEC meeting, even though it was invited.

Federal Reserve, interest rates and oil
Under the best-cast-scenario, oil supply would drop in 2016 while demand increased. Even if that were to happen to some degree, which I don't believe will be the case, the upcoming decision by the Federal Reserve to boost interest rates will result in the U.S. dollar getting stronger. That will drive the price of oil lower.

Add to that the high probability supply will remain at levels exceeding demand, oil could vastly underperform most predictions in 2016. Barring something unforeseen, such as geopolitical events, that is how I expect it to play out next year.

Conclusion
A lot of the outlook for oil and oil prices in 2016 has been based upon the assumption oil lower than $50 per barrel isn't sustainable. For that reason, expectations are some producer is going to blink and cave. I'm not sure any major producer is willing to do so.

In my view, Saudi Arabia has played its hand. All it can do is continue to produce at high levels in hopes of forcing a competitor to capitulate, or cut back on production itself, along with other OPEC members.

Now that supply is seen to be remaining at high levels, it's difficult to see what catalyst, outside of a decrease in production, could force oil reserves to be drawn down.

For those who believe there is going to be a rebalancing in 2016, they are going to be disappointed.

There's not enough pain yet in the market. It's coming, but it may not arrive until 2017, maybe even a little further out.

http://seekingalpha.com/article/3719026-oil-will-come-under-more-pressure-as-sup...
=============================================
So, what happens, WHEN DEMAND COLLAPSES, as I suspect it will over the period ahead, when the GFC revisits the Global Economy, possibly under the name o GFC2?

If Demand continues to head South, then any rebound in Price will not be likely, at least not for some time & not until Supply is confirmed as heading South!
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Re: For the Record
Reply #1341 - Dec 4th, 2015 at 12:21am
 
Well, something seems to be afoot?

Not quite sure, just yet, BUT markets are all over the place, MUCH LIKE A BAD RASH!

A few hours ago DOW Futures were around 17,870, then it sank to 17,660 & now it is at 17,770 and don't know what to do next.
http://www.investing.com/indices/us-30-futures-advanced-chart

A few hours ago, the German DAX was around 11,300, then it sank to 10,793 & now it is at 10,940.
http://www.investing.com/indices/germany-30

As I said, something is afoot???
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Re: For the Record
Reply #1342 - Dec 4th, 2015 at 12:10pm
 
perceptions_now wrote on Dec 4th, 2015 at 12:21am:
Well, something seems to be afoot?

Not quite sure, just yet, BUT markets are all over the place, MUCH LIKE A BAD RASH!

A few hours ago DOW Futures were around 17,870, then it sank to 17,660 & now it is at 17,770 and don't know what to do next.
http://www.investing.com/indices/us-30-futures-advanced-chart

A few hours ago, the German DAX was around 11,300, then it sank to 10,793 & now it is at 10,940.
http://www.investing.com/indices/germany-30

As I said, something is afoot???


As I suggested, "something is afoot"!
Dow finished DOWn 251 @ 17,479 - off 1.41%
DAX finished DOWn 401 @ 10,789 - off 3.58%

US$index went from 100 to 98 - off 2 full cents
OZ All Ords - currently Down 87 @ 5,190

Someone doesn't like, where WE are heading?



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Re: For the Record
Reply #1343 - Dec 5th, 2015 at 11:31am
 
Global Crisis: Goldman Sachs Says That Brazil Has Plunged Into 'An Outright Depression'


One of the most important banks in the western world says that the 7th largest economy on the entire planet has entered a full-blown economic depression. Brazil's  economy has now contracted for three quarters in a row, and many analysts believe that things are going to get far worse before they have a chance to get any better.

The surging U.S. dollar is absolutely crushing emerging markets such as Brazil, and if the Fed raises interest rates this month, that is going to make the pain even worse. The global financial system is more interconnected than ever before, and the decisions made by the Federal Reserve truly do have global consequences.

So much of the "hot money" that was created by the Fed poured into emerging markets such as Brazil during the good times, but now the process is starting to reverse itself. At this point, it is hard to see how much of South America is going to avoid a complete and total economic disaster.

The following comes from a Bloomberg article that was just posted entitled "Goldman Warns of Brazil Depression After GDP Plunges Again"…

Latin America's largest economy shrank more than analysts forecast, as rising unemployment and higher inflation sapped domestic demand, pulling the nation deeper into what Goldman Sachs now calls "an outright depression."

Gross domestic product in Brazil contracted 1.7 percent in the three months ended in September, after a revised 2.1 percent drop the previous quarter, the national statistics institute said in Rio de Janeiro. That's worse than all but three estimates from 44 economists surveyed by Bloomberg, whose median forecast was for a 1.2 percent decline. It also marks the first three-quarter contraction since the institute's series began in 1996, and a seasonally adjusted annual drop of 6.7 percent.

And when you look deeper into the numbers they become even more disturbing.

Unemployment is rising, consumer spending is way down, and investment spending is absolutely collapsing. Here is some of the data that Goldman Sachs just released that comes via Zero Hedge…

Private consumption has now declined for three consecutive quarters (at an average quarterly rate of -8.5% qoq sa, annualized), and investment spending for nine consecutive quarters (at an average rate of -10.0% qoq sa, annualized).

The term "economic depression" is not something that should be used lightly, because it conjures up images of the Great Depression of the 1930s. And the Brazilian economy is very important to the global economic system.

So if Brazil is feeling pain, it is going to affect all of us.

Of course, Brazil is far from alone. The third largest economy on the globe, Japan, has also now slipped into recession territory. So has Russia. And just today we learned that Canadian GDP is plunging…

Who could have seen that coming? It appears, for America's northern brethren, low oil prices are unequivocally terrible. Against expectations of a flat 0.0% unchanged September, Canadian GDP plunged 0.5% - its largest MoM drop since March 2009 and the biggest miss since Dec 2008.


It is just a matter of time before this global economic downturn catches up with us here in the U.S. too.

Another indicator that I am watching is the velocity of money.

When an economy is healthy, money tends to flow fairly freely. I buy something from you, and then you buy something from someone else, etc.

But when economic conditions start to get tough, people start to hold on to their money. That means that money doesn't change hands as quickly and the velocity of money goes down. As you can see below, the velocity of money has declined during every single recession since 1960…

...

When a recession ends, the velocity of money normally starts going back up.

But a funny thing happened when the last recession ended. The velocity of money ticked up slightly, but then it started going down steadily. In fact, it has kept on declining ever since and it has now hit a brand new all-time record low.


This is not normal. Yes, Wall Street is temporarily flying high for the moment, but the underlying economic fundamentals are all screaming that something is horribly wrong.

A global crisis has begun, and the U.S. will not be immune from it.
I truly believe that we are heading toward the worst economic downturn that any of us have ever experienced.
But there are many out there that insist that nothing is the matter and that happy times are ahead.

http://seekingalpha.com/article/3726466-global-crisis-goldman-sachs-says-that-br...
==============================================
Well, I tend to agree!
The Real World indicators, which can be trusted, unlike some "Government Spin", are tending to indicate the Global Economy is in Decline and there is nothing in the Global Economic Basics, which would suggest any bounce back is on the way!
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« Last Edit: Dec 5th, 2015 at 6:18pm by perceptions_now »  
 
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Re: For the Record
Reply #1344 - Dec 7th, 2015 at 12:50pm
 
Japan's Back In A Recession: We're Next


Summary
Why Japan's economy crashed.
Why Japan's efforts to stimulate the economy are destined to fail.
What we can expect to see in their economic future.

As we forecast decades ago, Japan was the first developed country to go off the demographic cliff. Their massive baby boom and the real estate and stock bubbles that came with it, all burst.

Japan has already gone through what the rest of the developed world has since or will go through shortly… but nobody gets it. Japan didn't see it coming, and neither will Germany, Europe, or the U.S. ahead.

Never has an emerging country rose to wealth and developed country status as fast as Japan, in just three decades from the 1960s through the 1980s. And never has such a major economic and military power fallen so rapidly.

Japan's steep demographic slide was so strong that, even while the rest of the world saw the greatest global boom in history (as we also forecast), everything crashed.

Japanese stocks went down 60% in the early 1990s and real estate followed the same amount. Stocks eventually went down 80% in 2003, and real estate has never bounced - still down 60% today in residential, and 80% in commercial.

But Abe Shinzo, Japan's prime minister, and Haruhiko Kuroda, its central bank head, still think they can just stimulate their way out of the endless demographic landslide. They're convinced this is just a monetary problem of not enough inflation to get consumers to spend.

Hate to break it to them, but not only do aging consumers spend less and less, especially on real estate - they die.

In early 2013, this dynamic duo declared war on deflation (which is laughable) and aggressively increased QE, to more than double that of the Fed and the ECB at their peak rates. But then, they increased it another 60% in late 2014 to triple.

And sure, their stock market doubled - as pumping up stocks seems to be about the only thing QE's capable of - but their debt has risen to the highest in the world at 246% GDP, and 680% for total private and government!

Look at some stats since the tripling of QE in early 2013, compared to growth in private consumption and GDP.
...

The Bank of Japan's balance sheet has increased by 120%, which just blows my mind. No government has ever come close to these extremes. And yet, inflation has only risen 2% in this time frame of just over 2 years. How could this be with such massive money creation?

The answer is that they're fighting massive deflationary forces from aging and record debt levels. Private consumption from consumers has actually fallen 2%, or just less than 1% a year.

Economists blame this on the rise in sales taxes from 5% to 8% in early 2014 to help offset their huge government deficits and debt. That's when they upped QE another 60%. That didn't work either, as aging and demographics is the real problem.

Make no mistake: Japan's efforts have been an abysmal failure. They're mortgaging their future with QE and rising debt as their population and workforce ages predictably, even decades into the future. And it gets worse. After their millennials end their upswing from 2003 to 2020, their demographics worsen forever!

The final judgment is coming. Japan just entered an official recession with 0.8% declines in GDP in each of the last two quarters. The worst sector, business investment, is down 5% in Q3 and Q2.


We continue to not learn from Japan's lead. We're following them into a coma economy with similar policies of denial, instead of restructuring our debt and deleveraging it.

http://seekingalpha.com/article/3730126-japans-back-in-a-recession-were-next?ifp...
=============================================
So, who is next, when will be the turn of OZ & how deep will it go?
AND, WHAT WILL IT TAKE, FOR THE POLITICIANS & CB'S, IN OZ & ELSEWHERE, TO UNDERSTAND THAT THIS TIME IS DIFFERENT & FOR THEM TO START ACTING DIFFERENTLY???
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Re: For the Record
Reply #1345 - Dec 12th, 2015 at 11:39am
 
Well, something was again afoot, with overnight trading -
Dow finished DOWn 310 @ 17,265 - off 1.76%
DAX finished DOWn 259 @ 10,340 - off 2.44%
http://www.investing.com/indices/major-indices

Based on the above & the Economic basics, it is quite possible, the OZ All Ords MAY go into the number range beginning with 4 on Monday?

That said, it is also likely that the All Ords will trade with a number beginning with a 2, at some point in the not too distant future AND THAT WILL HAPPEN IRRESPECTIVE OF WHICH POLITICAL PARTY IS IN POWER IN OZ!

Oh & Wti Oil finished last night @ $35.35!
http://www.investing.com/commodities/crude-oil
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Re: For the Record
Reply #1346 - Dec 12th, 2015 at 2:15pm
 
Global Cooling: The World's Dangerously Slowing Economy In 4 Simple Charts


Summary
Despite the rhetoric, the world's economy is slowing dramatically.
This is particularly dangerous now with the disconnect in record high stock, bond, real estate markets.
Four simple charts tell the real story behind the slowing global economy.

Despite the political rhetoric of the economic experts and market media pundits, the world economy is slowing and likely to slow even more dramatically in the short months and years ahead.

The reason this is dangerous right now is that most financial markets across the developed economies of the world have yet to appropriately discount this significant market risk and economic reality.

With financial markets now entering the 8th year of our long running 5-7 year boom-to-bust market cycle, this can and will likely change at any moment.


The following 4 simple charts are all you need to see.
1. CRUDE OIL
...
Energy is the lifeblood of economic activity, and crude oil and fossil fuels still supply over 80% of the world's energy output. Despite 'peak oil' supply concerns and an increase in alternative energy production over the past decade, oil prices are now in record free-fall. Although crude oil supply has grown significantly, depressed oil prices may indicate that world demand for oil is slowing dramatically too - with oil prices off over 65% in 18 months.


2. COPPER
...
With copper's widespread use in many sectors of the global economy, the market price of copper often reflects on the overall health of the global economy. 'Dr. Copper', as noted above, has been in relative 'crash mode' since late in 2011, dropping nearly 55%.

3. INTEREST RATES
...
...
World interest rates and government bond yields are arguably the most important leading indicator to the world's economic prosperity. With the record low interest rates and the global 'cost-of-money' also in free-fall across the developed world, a deep economic deflation is now unfolding despite the global central banking rhetoric and spin.
Further evidence of a worldwide deflation is the European Financial Stability Facility (EFSF). The EFSF was created to safeguard financial stability in Europe by providing financial assistance to euro area member states. As you can see from the current negative bond yields above, European debt and the European economy is on life support too.

4. U.S. DOLLAR
...
Last but not least, the world's reserve currency and global de facto safe haven remains the US Dollar. As a rule, capital will seek out safe haven currencies and investments when concerns for the economy and markets turn precarious and troubling.
With this in mind, note the clear evidence of a significant ongoing flight-to-quality over the last 18 months with the massive international capital flight into the USA as illustrated in the rising US Dollar Index above. The US Dollar Index is up over 25% over this short period, with near 25% direct upside performance versus major core economy currencies including the EURO and Japanese YEN.

As the world continues to cool (economically), the world's central bankers outside of the US are aggressively cutting interest rates and devaluing their local currencies in an attempt to export their economies into prosperity. A new global currency war is well underway. As a result, we expect that the rising US Dollar still has a long way to go.

With real market prices reflecting the aggregate sum of all economic and investor input in real time, it is real market pricing that remains the most important and reliable market indicator of future economic activity.

Despite the constant rhetoric to the contrary, price never lies. Price matters.

The world economy is dangerously slowing. Invest accordingly.

http://seekingalpha.com/article/3745156-global-cooling-the-worlds-dangerously-slowing-economy-in-4-simple-chartsifp=0
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It should be noted that -
1) The Decline in Energy Prices is NOT restricted to just Oil, see Coal for starters!
2) The Decline in General Commodity Prices is NOT restricted to just Copper, see Iron Ore for starters!

It should also be noted that these Declines relate NOT to Supply, But to Demand Decline!
It should also be noted that, Demand Decline relates mainly to Demographics, which are set to continue for quite some time!
And, irrespective of what any Politician may say, Demand Decline will continue & Economic Growth will Decline!

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Re: For the Record
Reply #1347 - Dec 16th, 2015 at 2:53pm
 
Baltic Dry Index falls to 484, down 24


Today, Tuesday, December 15 2015, the Baltic Dry Index decreased by 24 points, reaching 484 points.

Baltic Dry Index is compiled by the London-based Baltic Exchange and covers prices for transported cargo such as coal, grain and iron ore. The index is based on a daily survey of agents all over the world.

Baltic Dry hit a temporary peak on May 20, 2008, when the index hit 11,793.


The lowest level ever reached was on Tuesday, December 15, 2015, when the index dropped to 484 points.


http://www.hellenicshippingnews.com/baltic-dry-index-falls-to-484-down-24/
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http://www.bloomberg.com/quote/BDIY:IND

The Baltic Dry Index is a leading economic indicator because it predicts future economic activity, based on the Rise & Fall & Demand & Supply, of dry bulk carriers,  for commodities shipped aboard dry bulk carriers, such as building materials, coal, metallic ores, and grains.
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Re: For the Record
Reply #1348 - Dec 26th, 2015 at 7:25pm
 
A Sudden Deterioration Throughout Our Economy Points To A Recession


Summary
In just the past two months several key sectors of our economy have notably weakened. Many of these are considered leading indicators.
These sectors are trucking, high end retail, higher short term interest rates, manufacturing, drug companies, and junk bonds.


Additionally further deterioration in numerous other sectors, increasing foreign weakness, weak retail sales despite huge fuel savings, and the age of the expansion, point to heightened risk of a recession.

What has happened in the past two months? Well every high end retailer in the U.S. reported big misses and warned going forward. Trucking is the canary in the coal mine. The majority of U.S. trucking firms warned things are slowing. Commodities, not just oil, have continued to drop. Manufacturing turned negative.
Drug companies are facing price pushback they never faced before. Subprime consumer loans are suddenly seeing increased delinquencies. Junk bonds are declining in price and facing liquidity pressure, short term interest rates increased, IPOs have dried up, and exports are accelerating their decline. These issues are mostly sudden and sobering. Further, a whole host of industries that were weak a year ago have gotten weaker.

The trucking industry is one of the best leading indicators of the economy, a canary in the coal mine. It is particularly useful as it is less affected by foreign economies than many other industries. In the third quarter, most trucking companies reported good results but many warned that demand was softening and analysts indicated there is pricing pressure.

Almost every higher end retailer surprised the stock market with weak earnings last quarter.

Some attributed the problems to a shift in consumer buying online, the warm weather, less foreigners buying in the U.S. due to the strong dollar, and to tired fashions. Weather was only a factor in one month of the last quarter. The strong dollar has been an issue all year, not just lately. Online sales have also been an issue for a while not just in the past few months. The suddenness and size of the misses indicates it is something more.
...

The Fed increased the Fed Funds rate for the first time in close to a decade on December 16, 2015 from a range of 0% to 0.25% to 0.25% to 0.50%. In my opinion, the Fed missed its window of opportunity to raise rates two years ago. Raising rates now is too late and adds salt to the wound.

On December 1, 2015 the Institute for Supply Management published its monthly Manufacturing Report for October. The latest headline PMI was 48.6 percent, a decrease of 1.5% from the previous month and below the Investing.com forecast of 50.5. A reading below 50 is a contraction.

Junk bonds have decreased in price and increased in yield in the past two months for several reasons. First of all, it appears increasingly likely that many of the bonds of overleveraged commodities and oil companies are going to default. For some like Arch Coal (NYSE:ACI) default is imminent. If oil prices stay where they are, a major portion of the crude oil production and oil service industry will default in 2016, due to negative cash flow, high leverage and little liquidity.

Weak Markets that have gotten Weaker Over the Past Year
The sectors shown below were in recession or struggling a year ago. Each has deteriorated since then. A brief discussion of each follows the list.

Steel
Aluminum
Copper
Coal
Gold
Oil
Oil Service
Agriculture
Mining Equipment
For Profit Colleges
Newspapers
Teen Apparel
Dry Bulk Shipping
Terrestrial Radio

Steel, aluminum and copper are all markets that traditionally have done well at this point in the economic cycle. For steel, the auto production and commercial construction markets are strong. This has been more than offset by foreign imports, particularly from China, and a strong dollar. China has the largest steel industry in the world and currently has significant overcapacity due to a slowdown in construction. Despite large overcapacity, the Chinese government is keeping factories open at a loss to preserve jobs.

Coal is the most depressed of the sectors listed above. What is happening in China is even a bigger factor. Due to unhealthy levels of pollution, the Chinese government is moving away from coal.

The current price of about $35 per WTI barrel is below breakeven for more producers in the U.S. than in most other countries around the world. This means the impact here will be greater, and production here is likely to fall more than in most other countries.




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Re: For the Record
Reply #1349 - Dec 26th, 2015 at 7:35pm
 
A Sudden Deterioration Throughout Our Economy Points To A Recession (Cont)


Factors Negatively Affecting the Economy
In addition to the industries struggling listed above, the following headwinds are impacting our economy; lower exports, higher short term interest rates, federal government spending and IPOs.

Exports were $184.1 billion in October, 2015, down from $188.6 billion in June, 2015 and $197.5 billion in October, 2014. Exports are being reduced by the strong dollar and slowing economies overseas.

The massive fiscal stimulus of 2008 and 2009 has not only worn off, but spending cuts at the national level have turned Federal spending from a stimulus to a neutral. Monetary stimulus is not evident at this point. Quantitative easing is over, and the Fed has started to raise interest rates.

A recent phenomenon is the drying up of the IPO market. This is primarily a cyclical result of an overly hot IPO market the past two years. Expectations were raised too high and many are now feeling the pain.

Conclusion
I believe a recession is likely in the next 12 months for the following reasons.

1. The amount of sectors, and economic factors, of the economy that are deteriorating is large and increasing. The amount of sectors, and economic factors, that are strengthening is not increasing. Some such as low interest rates are starting to go away. Others such as auto sales and airlines have little room to improve further.

2. A very recent and sudden decline in leading indicator industries such as trucking, higher end retail, IPOs, junk bonds and subprime lending.

3. Retail has been weak despite huge consumer savings in fuel prices, and is now well below average and declining.

4. The length of the current recovery and expansion is now reaching its seventh year. This is relatively long compared to historical averages.

5. Major foreign economies such as China are slowing and others such as Brazil and Russia and many emerging markets are in recession and weakening. Japan is just treading water and Europe is still weak. India is the only major foreign economy showing strength right now and that is largely due to a move toward more capitalism.

6. Stimulus from the Fed forced investors to move to higher risk investments such as junk bonds and higher weighting of equities. This will unwind as the Fed reduces stimulus and/or the economy weakens.

The issues noted above indicate a recession is at least 50% likely in the next twelve months. My recommendation is to raise cash.

http://seekingalpha.com/article/3771416-a-sudden-deterioration-throughout-our-ec...
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Well timing these issues is always "somewhat" difficult, because of the inputs of all of the involved players.

That said, I concur that 2016 may well be a difficult year & I expect that the Global Economy will start to Decline AND that Decline is likely to be Long & Steep!
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