WARNING: A Dangerous Time For Stocks Could Be Starting Now – Every Year So Far, Post-Credit Crisis, We’ve Played The Same Game This Time Of Year – Economic Momentum Slows Down, Fears From Europe Resume And The U.S. Stock Market Takes A Nasty Tumble.
Mark Mobius, Executive Chairman at Templeton Emerging Markets Group says the only way to solve the euro zone’s debt crisis is for a default to happen.
Bailouts have not worked, the executive chairman at Templeton Emerging Markets Group told CNBC.
“At the end of the day, you just have to have a default. The default will take place with a longer time period, in other words, they will stretch out payments so that at the end of the day, as the economies recover, they are gradually able to pay off these debts,” Mobius said….
The Bank of Japan’s new governor, Haruhiko Kuroda, has warned that Japan’s debt levels are unsustainable.
His comments follow calls by Japan’s new government for aggressive stimulus measures to help revive the country’s sluggish economy.
Earlier this year, it approved a 10.3tn yen ($116bn; £72bn) stimulus package.
There have been fears that such moves will further increase Japan’s public debt, which is already the highest among industrialised countries.
Japan’s public debt stands at about 230% of its gross domestic product (GDP).
German unemployment unexpectedly rose in March as renewed tensions in financial markets increased concerns the euro region’s recovery will falter.
The number of people out of work increased a seasonally adjusted 13,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists had predicted a decline of 2,000, according to the median of 24 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, slightly above a two-decade low of 6.8 percent.
- *BERSANI TOLD ITALY PRESIDENT HE CAN’T FORM GOVT
- *BERSANI SAYS HE FACED UNACCEPTABLE PRECONDITIONS FROM PARTIES
- *BERSANI: NAPOLITANO WILL CONTINUE TO EVALUATE POSSIBLE OPTIONS
Leaving the door open for the possibility of a ‘caretaker’ or technocrat government but most likely – new elections (and given the increased support for Grillo, this could be yet another storm in a teacup for the US markets to shrug off).
While this scenario was an absolutely certain outcome, here are the possible next steps via OpenEurope:
Bersani throws in the towel and hands his mandate back to President Napolitano
In 2010, 2011, and 2012, the market peaked during one of the four weeks of April… A correction of between 10% and 19% ensued
Every year so far, post-Credit Crisis, we’ve played the same game this time of year – economic momentum slows down, fears from Europe resume and the U.S. stock market takes a nasty tumble.
In 2010, 2011, and 2012, the US stock market peaked during one of the four weeks of April. A correction of between 10% and 19% ensued.
The number one question on everyone’s mind right now (ours included) is whether or not this spring will be yet another Risk Off Extravaganza.
Here’s Jurrien Timmer, co-manager of the Fidelity Global Strategies Fund with his new chart on the topic:
In 2010, it was the end of QE1 and the beginning of the eurozone debt crisis that led to a 17% correction in the S&P 500 from the April high to the July low (based on intraday extremes).
In 2011 it started as…
Those who were transfixed by whether Cypriots would rumble and unleash their anger at the €300/day dispensing ATMs formerly known as bank branches this morning, may have missed what probably was the most important monthly chart coming out of Europe – that showing aggregate money (M3) growth and, far more importantly, loan creation. Those who did pay attention will know that in February M3 grew quite obediently in a Eurozone flush with cash, this time by a respectable €15 billion, or 3.1% y/y, after €37 billion in January (of which, however a whopping €47 billion was M1 so the balance actually declined). Of course, this was the easy part: creating money via various central bank conduits has never been the issue: the concern has always been getting that money into private consumer hands through loan creation.
And it is here that things just keep on getting worse by the day. Because in a continent in which there is no confidence whatsoever:no confidence in the banks, no confidence in the financial system, no confidence in end demand, no confidence in any reported data, no confidence that one’s deposits won’t be confiscated tomorrow, and last but not least no confidence that a sovereign nation won’t just hand over its sovereignty to the Troika tomorrow, nobody is willing to take on additional loans and obligations. This can be seen in the dramatic divergence between European money creation (blue line), and the bank lending to the private sector (brown), which is at or near an all time record year over year low. So much for restoring confidence in Europe.
The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style bank account confiscation is actually in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted. So exactly what in the world is going on here? In addition, as you will see below, it is being reportedthat the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. In other words, that new law would make Cyprus-style bank accountconfiscation the law of the land for the entire EU. I can’t even begin to describe how serious all of this is. From now on, when major banks fail they are going to bail them out by grabbing the money that is in your bank accounts. This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the western world.
What you are about to see absolutely amazed me when I first saw it. The Canadian government is actually proposing that what just happened in Cyprus should be used as a blueprint for future bank failures up in Canada.
The following comes from pages 144 and 145 of “Economic Action Plan 2013″ which you can find right here. Apparently the goal is to find a way to rescue “systemically important banks” without the use of taxpayer funds…
Moments ago, as we prepare to put Q1 2013 to a close with a bout of window dressing that will send the S&P to all time highs, we got the final Q4 2012 GDP revision: a number largely meaningless, although it does put closure to the economy in 2012. And as with all economic numbers in the past year, it was not pretty, coming in at 0.37%, below estimates of a 0.5% print, although modestly better than the second Q4 revision when it was 0.14%. The full breakdown by various components is shown below, with the most notable, Personal Consumption Expenditures, showing a gradual and consistent decline over the past three months as it was revised relentlessly lower, dropping from 1.52% in the first revision, to 1.47% in the second, to 1.28% in the final. Offsetting this was a jump in Fixed Investment which rose to 1.69%, the highest since Q3 2011. Supposedly this implies that capital spending is soaring, when in reality companies continue to curb CapEx plans, instead focusing on short term shareholder gains such as buybacks and dividends, which is to be expected in the absence of any actual end-demand.
BIG MISS: Chicago PMI Falls To 52.4, Production Lowest Since September 2009
Today Egon von Greyerz warned King World News that the chaos we are seeing right now is unprecedented in world history. Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, also cautioned “The confluence of these cycles will cause unimaginable turmoil in the future.” Below is what Greyerz had to say in this remarkable interview:
Eric King: “Clearly the banks in have reopened in Cyprus, your thoughts in the aftermath of all of this?”
Greyerz: “Eric, they have opened, but the problem is still there. Banks still don’t have enough money. The package which has been put forward by the Troika is not going to last. If they ever, which they might not, lift the exchange controls and restrictions on Cyprus banks, then we will see a run on the banks again….