The World Is Becoming Increasingly Unstable, Global Markets Could Be Due For A Shock
China Could ‘Shock’ Markets With Big GDP Miss
Weak trade data for China has left investors expecting more doom and gloom with next week’s release of second-quarter numbers, and according to Lombard Street Research, the world’s second-largest economy could shock markets with a quarter-on-quarter contraction in gross domestic product (GDP).
“Global markets could be due for a shock,” Charles Dumas, an economist at Lombard Street Research said in a research note on Wednesday.
“Assuming the trade data are taken at face value, rather than some obscure adjustment being needed for the dodgy data vis-a-vis Hong Kong, there is an even chance that on our estimation procedure next week’s real GDP will be down rather than up from [first quarter],” he said.
Monday’s GDP data will be keenly watched by investors aware that the days of double digit growth are firmly behind China. A Reuters poll predicts a 1.8 percent quarter-on-quarter rise and a 7.5 percent rise on a yearly basis. That would be slowest pace of growth (year-on-year) since the third quarter of last year. But Dumas believes these figures could be generously overstated.
SocGen: We See A ‘Definite Deceleration’ In Chinese Second Quarter Growth
Portuguese President Re-Ignites “Time-Bomb”; Threatens Early Elections
Despite being told last week of the successful solution that the politicians of Portugal had procured – and thusly seeing Portuguese bonds and stocks surge in a renewed bluster of hope and faith that all is well again; it seems that, shocker, nothing is fixed. AsReuters reports, Portugal’s political crisis re-deepened today after the President rejected a plan to heal a government rift and critics accused him of igniting a “time-bomb’ by calling for early elections. Anibal Cavaco Silva rejected a cabinet re-shuffle, and proposed a coalition to guarantee support for the Troika-imposed austerity measures (which theoretically means Portugal will exit its bailout next year) to be followed by elections – implicitly showing little faith that any party can rule effectively through the middle of next year. “The announcement… comes as a surprise, … adding anothe problem to the one that already existed,” noted one analyst.
BOOOM – ‘The wheels are coming off the whole of southern Europe. Europe’s debt-crisis strategy is near collapse’
Europe’s debt-crisis strategy is near collapse. The long-awaited recovery has failed to take wing. Debt ratios across southern Europe are rising at an accelerating pace. Political consent for extreme austerity is breaking down in almost every EMU crisis state. And now the US Federal Reserve has inflicted a full-blown credit shock for good measure.
Gregor Peter‏@L0gg0l4 min
Spain – El Mundo says a “pre-revolutionary” mood is taking hold.
Russian Market‏@russian_market4 h
Greek unemployment rate is still growing despite the summer holiday season.
Markit Economics‏@MarkitEconomics4 h
Greek unemployment up from +26.8% in March to 26.9% in April
In a highly critical book, Hohler explains how the “Iron Chancellor” is threatening the future of the European Union, the euro and the countries rescued, deconstructs the strategy and explains how Angela Merkel came to power.
Europe bailing out China now? ECB PREPARING CNY800 BLN SWAP LINE WITH CHINA PBOC, MNI SAYS!!!
Gregor Peter‏@L0gg0l5 min
@4xguy Europe bailing out China now? but right, Dollar negative $DXY
Gregor Peter‏@L0gg0l12 min
ECB PREPARING CNY800 BLN SWAP LINE WITH CHINA PBOC, MNI SAYS
Gregor Peter‏@L0gg0l2 min
Another round of forex chaos about to unfold after U.S open
Should we be concerned about these Real Estate breakdowns?
CLICK ON CHART TO ENLARGE
Whether you rent or own Real Estate, the direction of Real Estate values is very important to the health of the overall economy! Unless you liver under a rock, I’m not telling you anything new when I share that the weakness in Home Construction stocks in 2005 and Real Estate back in 2006 had a big impact on the economy and stock markets in 2007/2008!
The rally over the past few years, after the huge declines in Real Estate, has been impressive to say the least. The 4-pack above reflects a variety of leading Real Estate index’s, ETF’s and one stock that is key to home improvements. What do they all have in common? After huge rallies they all formed bearish rising wedges with support lines being broke of late!
CLICK ON CHART TO ENLARGE
On 5/3 the Power of the Pattern suggest “interest rates were ready to blast off and it could hurt bonds big time”! (see post here)
The above chart reflects that since the posting, the inverse bond ETF (TBF) is up 14% in 9 weeks…gaining as much in 9 weeks as the S&P 500 has Year-to-date. Could the sharp rally in interest rates be the reason that Real Estate has been week of late?
Josh Brown of the Reformed Broker, wrote an outstanding article back in October of 2012…..33 times, You poor dumb bastards (see article here) Josh wrote this article very near the highs in bond prices/lows in yields…a must read!
Regardless of the reason Real Estate has been week of late, what happens from here in this key industry will have an impact and ripple effects on the economy and stock markets going forward. Keep a close eye on the Real Estate industry in the weeks ahead, they will again send a key message for investors!!!
Worldwide corruption on the rise as public trust plummets – report
The following are 19 reasons to be deeply concerned about the global economy as we head into the second half of 2013…
#1 The velocity of money in the United States has plunged to an all-time low. It is extremely difficult to have an “economic recovery” if banks arenot lending money and people are not spending it…
#2 The fall of the Egyptian government threatens to bring even more instability to the Middle East. In response to the events in Egypt, the price of oil rose to more than 101 dollars a barrel on Wednesday.
#3 Every time the average price of a gallon of gasoline in the United States has risen over $3.80 in the past three years, a stock market declinehas always followed.
#4 As the world becomes increasingly unstable, massive citizen protest movements have been rising all over the globe…
The protests have many different origins. In Brazil people rose up against bus fares, in Turkey against a building project. Indonesians have rejected higher fuel prices, Bulgarians the government’s cronyism.
In the euro zone they march against austerity, and the Arab spring has become a perma-protest against pretty much everything. Each angry demonstration is angry in its own way.
#5 The European sovereign debt crisis is flaring up once again. This time it is Portugal’s turn to take center stage…
From Greece to Cyprus, Slovenia to Spain and Italy, and now most pressingly Portugal, where the finance and foreign ministers resigned in the space of two days, a host of problems is stirring after 10 months of relative calm imposed by the European Central Bank.
Portuguese Prime Minister Pedro Passos Coelho told the nation in an address late on Tuesday that he did not accept the foreign minister’s resignation and would try to go on governing.
If his government does end up collapsing, as is now more likely, it will raise immediate questions about Lisbon’s ability to meet the terms of the 78-billion-euro bailout it agreed with the EU and International Monetary Fund in 2011.
#6 It is being projected that Italy will need a major EU bailout within six months.
#7 Bond investors are starting to panic. In fact, even prominent firmssuch as Pimco are seeing investors pull massive amounts of money out right now…
In June, investors pulled $9.6bn from Bill Gross’s flagship fund at Pimco, the largest single month of outflows at the fund since Morningstar records began in 1993, the investment research firm said.
The outflows came after investors pulled $1.3bn from the fund in May, which marked the first outflows since December 2011.
Overall, a whopping 80 billion dollars was pulled out of bond funds during June.
#8 Central banks are selling off staggering amounts of U.S. Treasury bonds right now.
#9 U.S. mortgage bonds just suffered their largest quarterly declinein nearly 20 years.
#10 We continue to buy far more from the rest of the world than they buy from us. The U.S. trade deficit for the month of May was 45.0 billion dollars.
#11 The severe drought that the western half of the United States is suffering never seems to end. What will it do to food prices if ranchers and farmers out west have to go through another summer like they did last year?
#12 European car sales have fallen to a 20 year low.
#13 Unemployment in the eurozone is at an all-time high.
#14 Could the paper gold Ponzi scheme be on the verge of crumbling? There are reports that there is now a 100 day delay for gold owners to take physical delivery of their gold from some warehouses owned by the London Metal Exchange…
We’re told that bullion-buyers in London must now wait more than 100 days to take delivery of the bullion for which they have already paid.
The comedic drones at Bloomberg, and officials of the London Metal Exchange itself would have us believe this is due to “warehouse queues.” While precious metals bulls undoubtedly appreciate the imagery implied of a 100-day line-up of armored cars waiting to load their bullion – in the middle of this “bear market” – the implication is fallacious.
In an era of just-in-time inventories; the notion that there can be a 100-day backlog to load bullion into armored cars with the metal already sitting in the warehouse is ludicrous. Clearly what the LME is really reporting here is a greater-than-three-month delay to refine the gold (or silver) being purchased here – and then ship it to their warehouse.
In other words, the “bullion” which traders believe they are purchasing today is in fact merely ore which hasn’t even been dug out of the ground yet.
#15 The number of mortgage applications in the United States is falling at the fastest rate in more than 3 years.
#16 Real disposable income in the United States is falling at the fastest rate in more than 4 years.
#17 The percentage of companies issuing negative earnings guidance for this quarter is at a level that we have never seen before.
#18 Is the dark side of derivatives trading about to be exposed? EU officials claim that 13 major international banks have been colluding to control the trading of derivatives…
The European Commission says many of the world’s largest investment banks appear to have colluded to block attempts by exchanges to trade and offer more transparent prices for financial products known as credit derivatives.
The commission, the executive arm of the European Union, said Monday it has informed 13 banks — including Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley — as well as the industry association for derivatives itself, the International Swaps and Derivatives Association, ISDA, of the preliminary conclusions of an investigation that began in March.
#19 There are 441 trillion dollars of interest rate derivatives sitting out there and interest rates have risen rapidly over the past few weeks. What is going to happen to those derivatives if interest rates keep going higher?
So what do you think?