Japan enters bear market, RBS and IBM announce job cuts
Asian markets were down in overnight trading with the Nikkei plunging 6.4% . The Shanghai Composite which resumed trading after the Dragon Boat holiday was down 2.8%. Europe is also selling off and U.S. futures are lower.
Stocks fell 6.4% in Tokyo, as the Nikkei entered a bear market. Stocks were impacted on concerns of Fed tapering. The Nikkei is down more than 20% from its recent closing high which is how the bear market is defined.
IBM has announced that it will spend $1 billion on severance and other costs to lay off employees. Laurence Balter of Oracle Investment Research told Bloomberg this would amount to between 6,000 and 8,000 global job cuts.
The Royal Bank of Scotland announced 2,000 job cuts as it restructures its investment bank. CEO Stephen Hester will also step down by the end of the year.
Felix Zulauf – Japan Will Be the Root Cause of the Next Global Crisis
I do believe that this will be the root cause of the next big global crisis whenever it breaks out, probably sometime over the next 12 to 18 months or so. First of all, I think the Japanese situation is very dangerous because Japan’s tax revenues, when you look at the numbers, they have to use almost 50% to service their government debt—their Federal government debt. So if interest rates rise further, Japan is basically bust…I think this is a very dangerous thing that the Japanese are starting and I believe it will most likely be the trigger for the next big global crisis in financial markets and the world economy.
“The Market Would Have Collapsed” Had The PBOC Drained: Chinese Liquidity Shortage Hits All Time High
Those who have been following our coverage of the bipolar Chinese liquidity situation (most recently here and here) are well aware of the unique position the world’s fastest (if only on paper) growing economy finds itself in: on one hand, it is the target of massive external hot money flows from both the Fed and the BOJ, which are pushing select inflation in the country higher, manifesting itself best in the real-estate market now higher for 12 consecutive months. On the other hand, the local banking system is in such dire need of liquidity, that not only have various short-term SHIBORs soared to multi-year highs but as Market News reported last week, China Everbright Bank failed to repay 6b yuan ($977m) borrowed from Industrial Bank on time yesterday because of tight liquidity, leading to “chain effect” borrowing in the market overnight and almost ushering in the first bank failure in China.
The unprecedented liquidity shortage in China is seen best on the overnight SHIBOR chart below which just hit an all time high. In a nutshell there is zero free liquidity in the system.
World Bank Warns Of A Possible ‘Sharp’ Slowdown And Current High Levels of Investment Look Unsustainable
The World Bank has slashed its growth forecast for China’s economy this year to 7.7 percent from 8.4 percent, warning of a potential “sharp” slowdown triggered by a fall in investment.
The projection is lower than the 7.8 percent expansion the country recorded in 2012, which was its weakest in 13 years, and comes as a slew of data indicate the economy is struggling to pick up pace.
“The main risk related to China remains the possibility that high investment rates prove unsustainable, provoking a disorderly unwinding and sharp economic slowdown,” the World Bank said.
NIKKEI Down over 6% last night. Heavy selling of the Dollar!
A Bit Of A Global Bloodbath Is Happening In Markets, And Here’s What Traders Are Talking About
California, Illinois on Brink of Pension Crisis; New Actuarial Rules Will Force States to Admit Problems
Many states, especially California and Illinois, have had severe pension underfunding problems for many years.
However, new actuarial pension rules will finally force states to admit the problem. Thus, it should not be surprising that talk of “technical bankruptcy” and “service insolvency” is growing.
Here are some pertinent ideas from California on the Brink: Pension Crisis About to Get Worse
Read more at http://globaleconomicanalysis.blogspot.com/2013/06/california-illinois-on-brink-of-pension.html#7w1HuJDtH3tQiPgP.99
The Big Money Is Bailing On Argentina, Again, Over Fears Of Fresh Crisis
Sea Of Red
… As is Italy.
Turk – A Massive Black Swan Is Going To Rock World Markets
With Japan’s Nikkei plunging a massive 5.5%, today James Turk warned King World News that markets may be very close to witnessing another “black swan” that would create chaos once again in the global financial system. Turk also spoke about the recent action in gold and silver and what investors should expect to see going forward.
Eric King: “James, as you know a lot of times something will come and blind-side markets that nobody really has their eye on. Do you have anything that might be a ‘black swan’ that nobody is focused on?”
Doc Copper creating bearish pattern! Suggesting global slowdown ahead?
CLICK ON CHART TO ENLARGE
While the Nikkei (now down 20% in a few weeks) and the Yen (carry trade starting to unwind) seem to be front and center in the media, an equally important leading indicator looks to be creating a bearish pattern that suggests lower prices are ahead and a possible global slowdown is right around the corner.
Copper has formed a “Bearish Descending Triangle” of late!
If you don’t think Ascending/Descending triangles are important, think again! Silver has rallied between 31% and 148% on bullish ascending triangles and fell sharply of late when support broke on a descending triangle in the chart below (See triangle post here)
CLICK ON CHART TO ENLARGE
While many are focused on the ripple effects from the Nikkei decline of late, extreme moves in currencies and will the Fed stop some of its easy money policies, don’t overlook the importance of the message that could come from Copper in the upcoming weeks and months!!!
Metals Members recently bought Copper on support and sold it 5 weeks later for a gain of 4%+ in 5 weeks, when it hit resistance. If your portfolio construction would benefit by staying on top of Doc Copper’s twists and turnsand macro messages it sends and how it impacts your stock and bond portfolio construction, I would be honored to have you as a members of our Metals research report.