RPT GMTP 2015 03 Peek PDF

NIRP COMES TO AMERICA
First ZIRP, Then NIRP A Destabilizing Policy!
US ECONOMIC UPDATE
GLOBAL MACRO TIPPING POINTS MARCH 2014
2/28/2015
1 March 2015 Edition

Copyright 2015 Gordon T. Long All Rights Reserved
Restricted & Confidential

general@GordonTLong.com
NIRP COMES TO AMERICA

First ZIRP, Then NIRP A Destabilizing Policy
GLOBAL MACRO TIPPING POINTS - MARCH 2015
TIPPING POINTS .................................................................................................................................... 27

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 27
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 27
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 28
Our Assessment ................................................................................................................................................................................................ 28
NEW-James Rickards Global Risk Assessment .............................................................................................................................................. 41
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 89
NEW-LATEST FROM THE MONITORS ........................................................................................................................................................... 89
RESEARCH OF NOTE .................................................................................................................................................................................. 93
NEW-MONITORS - World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ....... 93
NEW-MONITORS - World Bank Says 300M Young People neither Working nor Studying ..................................................................... 94
NEW-MONITORS - IMF warns of new threats to global economy due to excessive risk taking .............................................................. 95
BIS ..................................................................................................................................................................................................................... 98
NEW-BIS - BIS warns on 'violent' reversal of global markets ....................................................................................................................... 98
WEF (WORLD ECONOMIC FORUM) - JANUARY 2014 ............................................................................................................................... 101
WEF GLOBAL RISKS The World Economic Forum - Inequality has become a global challenge .................................................. 101
WEF GLOBAL RISKS The World Economic Forum - 10 Global Risks of Highest Concern ............................................................ 105
WEF GLOBAL RISKS Global Competitive Rankings Fragile 5 & Forgotten 4...................................................................................... 107
WEF GLOBAL RISKS The 17 Biggest Risks to Our Hyper-Connected World ........................................................................................ 109
WEF GLOBAL RISKS Global Economic, Geo-Political & Societal Risks ................................................................................................ 117
IMF ................................................................................................................................................................................................................... 124
NEW-IMF, WORLD ECONOMIC OUTLOOK - OCTOBER 2014 ................................................................................................................ 124
IMF, WORLD ECONOMIC OUTLOOK Prior Year - JANUARY 2014 .................................................................................................. 126
NEW-IMF, FINANCIAL STABILITY REPORT OCTOBER 2014 .............................................................................................................. 132
IMF, FINANCIAL STABILITY REPORT Prior Year - OCTOBER 2013 ................................................................................................ 134
OECD, WORLD ECONOMIC OUTLOOK NOVEMBER 2013 ..................................................................................................................... 137
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 140
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 140
RESEARCH OF NOTE .................................................................................................................................................................................... 141
NEW- IN MAJOR PIVOTAL Speech Putin Unleashes Fury at US Follies ....................................................................................... 141
NEW- Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status .................................................................... 142
NEW- Putin Accuses U.S. of Blackmail, Weakening Global Order ............................................................................................................. 144
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 147
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 158
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 161
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 162
THE RISK CONTINUUM ............................................................................................................................................................................. 165
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 166
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 169
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 171
WINTER 2014 EVENT RISK DOMINATES ............................................................................................................................................... 173
RISK SIGNALS ........................................................................................................................................................................ 180

GEO-POLITICAL RISK Tensions & Conflicts ..................................................................................................................................................... 180
GLOBL GOVERNANCE RISK Failure of Political Leadership & Public Policies ............................................................................................... 182
NEW-EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD ........................................................................................................ 182
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 182
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 184
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 186
NEW- ADVANCING GLOBAL FINANCIAL REPRESSION ............................................................................................................................ 189
NEW-HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ..................................................................................................... 191
KISSINGER- Henry Kissingers World Order ............................................................................................................................................ 191
NEW-G20 MEETING AUSTRALIA SEPTEMBER 2014 .......................................................................................................................... 194
G20- Reaffirms Vow to Boost Global Growth .............................................................................................................................................. 194
G20- G20 nations back Putin to attend November summit ......................................................................................................................... 196
NEW-BRAZIL ELECTIONS ............................................................................................................................................................................ 197
BRAZIL- Incumbent President Dilma Rousseff win Narrow Victory Major Social Entitlement Problems Unresolved ............................. 197
BRAZIL- Markets React Badly Down 6% on Election News .................................................................................................................... 200
BRAZIL- Falling Commodity Exports Leave Little Flexibility to Address Public Demand for Public Services ............................................ 201
BRAZIL- Rousseff represents Continuation and Not Structural Change .................................................................................................. 203
NEW-UKS UKip .......................................................................................................................................................................................... 205
UK- Populism and False Hope .................................................................................................................................................................... 205
EU ELECTIONS .............................................................................................................................................................................................. 207
March 2015 Edition

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RESEARCH WE FOLLOWED .................................................................................................................................................................... 207

CHARTS & TABLES OF NOTE ................................................................................................................................................................... 207
RESEARCH OF NOTE ................................................................................................................................................................................ 210
NEW-EU ELECTION Nationalist Parties Rise to Challenge the EU .................................................................................................... 210
EU ELECTION - Europe Voted: Anti-EU and Protest Parties Take Nearly A Third of All Euro-Parliament Seats ................................. 212
EU ELECTION - European Voters Are Revolting; France Warns "Situation Is Grave for Europe" ........................................................ 219
SITUATIONAL ANALYSIS .......................................................................................................................................................................... 222
LEADERSHIP - 'Value Transformer' Politicians are avoiding politics OR the voters are rejecting .............................................. 226
LEADERSHIP - The Consequences Of A Dysfunctional Political System ....................................................................................... 227
LEADERSHIP - Mapping the Collapse of European Democracy ...................................................................................................... 231
GEO-POLITICAL RISK - Social, Economic & Financial ........................................................................................................................................ 232
NEW-EBOLA PANDEMIC ............................................................................................................................................................................... 232
AFRICA ........................................................................................................................................................................................................ 232
US ................................................................................................................................................................................................................ 237
ISIS /SYRIA CONFLICT .................................................................................................................................................................................. 239
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 239
NEW-ISIS- Kobani Overshadows Larger Battles ..................................................................................................................................... 243
SYRIA........................................................................................................................................................................................................... 245
RESEARCH WE FOLLOWED ................................................................................................................................................................. 245
SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .................................................................................. 246
SYRIA - Syrian War You Are Not Being Told About ........................................................................................................................... 247
SYRIA - 25 Quotes .................................................................................................................................................................................. 248
SYRIA - What Coalition? ........................................................................................................................................................................ 251
SYRIA - US Supporting Fully an "Al Qaeda Operation" ..................................................................................................................... 253
SYRIA - Decision Already Taken to Bomb Syria ................................................................................................................................. 255
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 263
UPDATE-UKRAINE EAST/WEST CONFLICT ............................................................................................................................................ 265
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 266
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 272
GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 275

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 275
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 276
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 276
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 277
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 277
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 277
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 278
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 279
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 279
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 280
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 280
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 282
TIPPING POINTS ..................................................................................................................................................................... 283

TIPPING POINT MAPPING: 2014 YEAR BEGINNING UPDATE ......................................................................................................................... 283
NEW-CHANGES TO RANKINGS Q4 2014 ........................................................................................................................................................ 286
NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 288
NEW-CHANGES TO RANKINGS - Longer Term Benchmarks ............................................................................................................................ 290
TIPPING POINTS: TOP 5 FOCUS - NOVEMBER 2014 ....................................................................................................................................... 293
NEW-I - RISK REVERSAL .............................................................................................................................................................................. 293
NEW-II-GEO-POLITICAL EVENT RISK .......................................................................................................................................................... 294
NEW-III - JAPAN DEBT DEFLATION ............................................................................................................................................................. 295
NEW-IV - EU BANKING CRISIS ..................................................................................................................................................................... 295
NEW-V - CHINA HARD LANDING .................................................................................................................................................................. 296
GLOBAL MACRO ................................................................................................................................. 297

GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................ 299
RESEARCH WE FOLLOWED .............................................................................................................................................................................. 299
CHARTS OF NOTE ............................................................................................................................................................................................... 302
NEW-CHART: Serial Disappointments & Ratcheting Down of Global Growth ....................................................................................... 302
NEW-CHART: Continuous Weakening of Global GDP Estimates ............................................................................................................ 303
NEW-CHART: Reduced Demand Pressures on Energy Prices ................................................................................................................ 303
NEW-CHART: Reduced Demand Pressures on Commodities .................................................................................................................. 304
NEW-CHART: Global Corporate Profit Trends ........................................................................................................................................... 304
NEW-CHART: Stunning Growth in Debt of Developed Economies since Dotcom Bubble Burst ........................................................ 305
NEW-CHART: Worlds FDI Flooding Into Financial Products versus Productive Assets ..................................................................... 306
NEW-CHART: Growth of Asian Middle Class Dominates Next 20 Years ............................................................................................. 307
NEW-CHART: Global Domestic Demand Growth ....................................................................................................................................... 307
NEW-CHART: Global Asset Markets Reflecting a Major Demand Shock Has Hit .................................................................................. 308
CHART: World GDP 2014 Economic Growth Estimates ........................................................................................................................... 308
CHART: World GDP versus World MSCI Stock Index ............................................................................................................................... 309
March 2015 Edition

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CHART: Baltic Dry Perspective Slowing Global Aggregate Demand Growth Rate ............................................................................ 310
CHART: World Trade versus Central Bank Balance Sheet Growth ......................................................................................................... 310
CHART: Falling Global LEI (Leading Economic Indicator) ....................................................................................................................... 311
CHART: World GDP Economic Forecast 2014 ........................................................................................................................................... 312
CHART: World GDP Economic Expectations versus MSCI Equity Index ............................................................................................... 312
CHART: Fiscal Adjustments Required Deficit Reductions for Fiscal Sustainability .......................................................................... 313
CHART: Shifting Global GDP Share ............................................................................................................................................................ 314
CHART: Over $10 Trillion Pumped Into Global Economy by Developed Economies ............................................................................ 315
CHART: Eventually All this Debt Must be Rolled over or Paid Out ......................................................................................................... 315
CHART: Future Economic Growth a Sub 2% Trend .................................................................................................................................. 316
CHART: Debt and Fiscal Drag Are Significant Factors Affecting Global Growth .................................................................................. 316
CHART: Slowing Global Aggregate Demand Shows in Shrinking FDI .................................................................................................... 317
CHART: Liquidity Drain in US in 2H 2014 ................................................................................................................................................... 318
RESEARCH OF NOTE .......................................................................................................................................................................................... 319
NEW-GLOBAL OUTLOOK 3 of 10 Largest Economies Have Fallen into Recession ................................................................................ 319
NEW-GLOBAL OUTLOOK This is the Biggest Risk to the World's Economy............................................................................................ 321
NEW-GLOBAL OUTLOOK What is global market turbulence telling us? .................................................................................................. 325
NEW-GLOBAL OUTLOOK Darker Outlook Has Bond Market Rethinking Odds of Economic Downturn.................................................. 328
NEW-GLOBAL OUTLOOK The Last Days Of The Growth Story? ............................................................................................................. 330
NEW-GLOBAL OUTLOOK The Last Days Of The Growth Story? ............................................................................................................. 332
GLOBAL OUTLOOK - THE ECONOMIC ROADMAP AHEAD: It Isn't That Complicated! ............................................................................ 333
GLOBAL OUTLOOK - 20 Signs That the Global Economic Crisis Is Starting To Catch Fire ................................................................ 338
GLOBAL OUTLOOK - Problems Erupting Everywhere (Signs of Implosion) ......................................................................................... 340
GLOBAL OUTLOOK - Global Debt Crosses $100 Trillion, Rises By $30 Trillion Since 2007 ................................................................ 343
GLOBAL OUTLOOK The US as the Global Consumption Engine to See Sub 2% Trend Growth .................................................... 346
GLOBAL OUTLOOK - Credit Fueled Globalization in Retreat .................................................................................................................. 349
GLOBAL OUTLOOK - Rogoff's Sovereign Debt Default Levels ............................................................................................................... 351
GLOBAL OUTLOOK - Imbalances Continue to Increase Along With Financial Fragility .............................................................................. 354
GLOBAL OUTLOOK - A 67 Million Jobs Gap .............................................................................................................................................. 356
ECONOMIC CUTS ................................................................................................................................................................................................. 360
CHARTS OF NOTE ......................................................................................................................................................................................... 360
CHART IMFs Delusional Forecasting Record 3 ................................................................................................................................... 360
CHART IMFs Delusional Forecasting Record 2 ................................................................................................................................... 363
CHART IMFs Delusional Forecasting Record - 1 .................................................................................................................................... 363
IMF To Slash Economic Growth Forecast... AGAIN - Still Full of Hockey sticks ............................................................................................ 363
IMF CUTS ECONOMIC OUTLOOK ............................................................................................................................................................ 369
OECD CUTS ECONOMIC OUTLOOK AGAIN!............................................................................................................................................ 379
OECD CUTS ECONOMIC OUTLOOK ........................................................................................................................................................ 381
ECONOMIC WARNINGS....................................................................................................................................................................................... 384
G20 WARNS Need to Add $2T in Economic Activity & Tens of Millions of Jobs ........................................................................................ 384
IMF WARNS .................................................................................................................................................................................................... 385
NEW-IMF sees risk of new eurozone .......................................................................................................................................................... 385
IMF Tells Central Europe to Spend More .................................................................................................................................................... 387
Japanese & Spanish Debt Unsustainable ................................................................................................................................................... 390
Global Recovery Faltering, Reduces Global Growth to Just Above 3% Global Recession Level .............................................................. 392
BIS WARNS ..................................................................................................................................................................................................... 394
Monetary Policy At Its Limits ........................................................................................................................................................................ 400
WORLD BANK WARNS ................................................................................................................................................................................. 401
Social Unrest Stems from Shrinking Disposable Income. Jobs are the central issue. ..................................................................... 403
GLOBAL MACRO: INDICATORS ............................................................................................................................................ 405

GLOBAL TRENDS ................................................................................................................................................................................................. 405
CHARTS OF NOTE ......................................................................................................................................................................................... 405
NEW-GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Country/Region .................................................... 405
NEW-GLOBAL TRENDS Changes in 2014 2015 Profit (EPS) Forecasts By Sector .................................................................... 405
NEW-GLOBAL TRENDS G7 Long Run GDP Growth Rates (PPP Weighted) .................................................................................... 406
NEW-GLOBAL TRENDS Falling Population Growth Rate in Developed Economies ........................................................................ 406
NEW-GLOBAL TRENDS Falling Labor Productivity Rate in Developed Economies ........................................................................ 407
NEW-GLOBAL TRENDS Falling Workers Per Retiree in Developed Economies ................................................................................... 407
RESEARCH OF NOTE .................................................................................................................................................................................... 408
NEW-GLOBAL TRENDS The curse of weak global demand .................................................................................................................. 408
NEW-GLOBAL TRENDS Is economic growth permanently lower? Do We Have Secular Stagnation ................................................. 412
GLOBAL TRENDS - The Facts are Clear - the US Standard of Living is Falling ................................................................................. 416
GLOBAL EMPLOYMENT....................................................................................................................................................................................... 417
CHARTS OF NOTE ......................................................................................................................................................................................... 417
CHART Global Employment Rates ........................................................................................................................................................ 417
CHART Global Unemployment ................................................................................................................................................................. 418
CHART Global Unemployment EU Comparison ................................................................................................................................... 418
CHART Unemployment in Advanced Countries .................................................................................................................................. 419
CHART Global Labor Participation Rates ............................................................................................................................................ 419
CHART Global Youth Unemployment By Country ........................................................................................................................... 420
CHART Global Chance of Finding a Job Within Year ......................................................................................................................... 420
RESEARCH OF NOTE .................................................................................................................................................................................... 421
GLOBAL UNEMPLOYMENT - The Beginnings of the Welfare Myth Unwind ........................................................................................ 421
GLOBAL UNEMPLOYMENT - The Unsustainable Welfare Myth ............................................................................................................ 423
March 2015 Edition

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GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 425

GLOBAL SENTIMENT ........................................................................................................................................................................................... 427
CHARTS OF NOTE ......................................................................................................................................................................................... 427
NEW-GLOBAL SENTIMENT Global Business Activity Future Expectations ................................................................................... 427
GLOBAL SENTIMENT Global Jog Prospects Reach 50% - First Time In 7 Years ........................................................................... 427
GLOBAL SENTIMENT Global Consumer Confidence by Country .................................................................................................... 429
GLOBAL SENTIMENT Global Consumer Confidence Trends by Country ....................................................................................... 430
GLOBAL SENTIMENT Northern American Spending Intentions Rise According to Nielsen ......................................................... 431
RESEARCH OF NOTE .................................................................................................................................................................................... 432
NEW-GLOBAL SENTIMENT Global Business Confidence Collapses To Post-Lehman Lows .............................................................. 432
GLOBAL SENTIMENT The State Of Economic 'Misery' Around The World ........................................................................................... 434
GLOBAL SENTIMENT Highest Level Since 2007 ................................................................................................................................ 438
GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 439
GLOBAL SENTIMENT - Complacent ........................................................................................................................................................ 441
GLOBAL SENTIMENT - Nielsens Global Consumer Confidence, Concerns & Spending Intentions ........................................................ 442
GLOBAL CONSUMPTION ..................................................................................................................................................................................... 453
CHARTS OF NOTE ......................................................................................................................................................................................... 453
NEW-GLOBAL CONSUMPTION Rising Consumer Prices are Hurting Global Demand .................................................................. 453
NEW-GLOBAL CONSUMPTION Global Home Prices Are Rolling Over ............................................................................................ 453
NEW-GLOBAL CONSUMPTION Real Domestic Demand US, Japan & EU .................................................................................... 454
RESEARCH OF NOTE .................................................................................................................................................................................... 455
GLOBAL GROWTH ............................................................................................................................................................................................... 456
CHARTS OF NOTE ......................................................................................................................................................................................... 456
NEW-GLOBAL GROWTH Global Leading Indicator Signals Contraction ............................................................................................... 456
NEW-GLOBAL GROWTH Eurozone PMI and GDP ................................................................................................................................ 457
GLOBAL GROWTH World PMI Rankings ................................................................................................................................................ 458
GLOBAL GROWTH Global Leading Indicator Has Now Rolled Over ...................................................................................................... 459
GLOBAL GROWTH Global PMI Business Surveys Fall .......................................................................................................................... 459
GLOBAL GROWTH Baltic Dry Index Collapses 50% .............................................................................................................................. 460
GLOBAL GROWTH Global Slowdown on Verge of Contraction.............................................................................................................. 461
GLOBAL GROWTH - GDP Forecasts Continue to Be Taken Down........................................................................................................... 461
GLOBAL GROWTH Global Leading Indicator Goldmans Swirlogram Getting More Serious ......................................................... 461
GLOBAL GROWTH Global Industrial Production Rolling Over ............................................................................................................. 462
GLOBAL GROWTH Consensus 2014 GDP Forecast - Differential ......................................................................................................... 463
GLOBAL GROWTH G10 Macro Change ................................................................................................................................................. 463
RESEARCH OF NOTE .................................................................................................................................................................................... 464
NEW-GLOBAL GROWTH - World's Busiest Freight Route Rates Plunge To 2014 Lows ......................................................................... 464
NEW-GLOBAL GROWTH - Goldman Global Leading Indicator Drastically Revised, Collapses into "Confirmed Slowdown" .................. 465
GLOBAL GROWTH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................... 467
GLOBAL GROWTH Potential of a Global Recession Mounting ............................................................................................................ 468
GLOBAL GROWTH What the hint of a Fed Taper Did to Global Growth Estimates....................................................................... 472
GLOBAL GROWTH - Uneconomic Energy Problematic ......................................................................................................................... 474
GLOBAL GROWTH - Global Growth Cycle ................................................................................................................................................. 476
GLOBAL GROWTH - Global GDP Contribution .......................................................................................................................................... 477
GLOBAL GROWTH - Slowing Global Growth - Air Cargo Shipments ........................................................................................................ 478
GLOBAL CREDIT .................................................................................................................................................................................................. 479
CREDIT CYCLE - HY Leading the Way ........................................................................................................................................................ 479
CREDIT CYCLE - Reversal Ahead ................................................................................................................................................................ 482
GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 485

GLOBAL CENTRAL BANKING ............................................................................................................................................................................ 485
RESEARCH WE FOLLOWED Global Banking Risk .................................................................................................................................... 485
CHARTS OF NOTE ......................................................................................................................................................................................... 489
NEW-CHARTS Central Bank Policy Rates ............................................................................................................................................ 489
CHARTS Days of Chinese Credit-Driven Growth are numbered ....................................................................................................... 489
CHARTS Major Central Bank Assets versus GDP Forecast .............................................................................................................. 491
CHARTS Major Central Bank Y-o-Y Balance Sheet Growth ............................................................................................................... 491
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2008 .................................................................................. 492
CHARTS Global Central Bank Assets versus World Equity Prices .................................................................................................. 492
CHARTS Cumulative Change in Central Bank Balance Sheets Since 2000 .................................................................................. 493
RESEARCH OF NOTE .................................................................................................................................................................................... 494
NEW-CENTRAL BANKS Economic policies are diverging in the developed world as deflation looms .................................................. 494
NEW-CENTRAL BANKS Central banks can't raise growth potential, says ECB's Weidmann ................................................................ 496
CENTRAL BANKS Axel Merks 2014 Outlook ....................................................................................................................................... 497
CENTRAL BANKS - Japan May Eclipse China Again, as Largest Holder of US Treasuries .............................................................. 500
CENTRAL BANKS - Austerity Now Officially Dead Public Policy ........................................................................................................... 501
CENTRAL BANKS - A Serious Shortage of Quality Collateral - A $10T US Problem Over 10 Years ............................................... 502
CENTRAL BANKS - Global Balance Sheet Expansion .......................................................................................................................... 504
TROUBLING DEVELOPMENTS ..................................................................................................................................................................... 509
TROUBLING DEVELOPMENTS Insider Says Central Banks Making it Up as They Go! ....................................................................... 509
TROUBLING DEVELOPMENTS 2007 Redux: Total public and private debt levels are 30pc higher in the advanced economies
...................................................................................................................................................................................................................... 510
TROUBLING DEVELOPMENTS Polish Pension Confiscation: Coming to a Theater near You .......................................................... 513
TROUBLING DEVELOPMENTS Global Tax Overhaul .......................................................................................................................... 515
BOE - UK ............................................................................................................................................................................................................... 516
March 2015 Edition

5

CHARTS OF NOTE ......................................................................................................................................................................................... 516

NEW-UK Dissent within BOE Set to Continue ..................................................................................................................................... 516
RESEARCH OF NOTE .................................................................................................................................................................................... 516
UK - BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................................... 516
UK - Mark Carney and "Flexible Inflation Targeting" ............................................................................................................................. 518
FED - US ................................................................................................................................................................................................................ 520
CHARTS OF NOTE ......................................................................................................................................................................................... 521
NEW-CHARTS June 2015 Fed Rates Hikes Diminish ......................................................................................................................... 521
NEW-CHARTS Inflation Expectations 1 Yr, 5010Yr, 5Yr/5Yr ........................................................................................................... 521
RESEARCH OF NOTE .................................................................................................................................................................................... 522
US MONETARY - -CAPITAL DISTORTION - Global Acceptance of the Bernankean Theory ............................................................. 522
US MONETARY - FINANCIAL REPRESSION - The Suspension of Price Discovery ........................................................................... 524
US MONETARY - The Fed is stuck in a QE Trap .................................................................................................................................... 527
US MONETARY - 2nd Worst Decade In US Growth in Over 220 Years (And Getting Worse) ........................................................... 529
US MONETARY - Mathematically, The Fed Can Only Fail ..................................................................................................................... 531
US MONETARY - QE Standing Between Inflated Equity Markets and A Recession .......................................................................... 537
US MONETARY - QE Programs versus S&P 500 Movements ............................................................................................................... 538
US MONETARY - BAML Warns If The US Economy Does Not Significantly Accelerate Now, It Never Will ..................................... 540
US MONETARY - Debt Increases $1 Trillion in One Year ...................................................................................................................... 542
GLOBAL ABE-NOMICS The Road Ahead ....................................................................................................................................................... 545
CHARTS OF NOTE ......................................................................................................................................................................................... 545
JAPAN The Third Arrow of ABE-Nomics -I ........................................................................................................................................... 545
JAPAN The Third Arrow of ABE-Nomics II ......................................................................................................................................... 546
JAPAN Japanese Households Remain Pessimistic ............................................................................................................................ 547
RESEARCH OF NOTE .................................................................................................................................................................................... 548
GLOBAL ABE-NOMICS Monetary Expansion Extremely Difficult to Stop Once Started ........................................................................ 548
GLOBAL ABE-NOMICS Monetary Policy Below the Event Horizon ................................................................................................... 550
BOJ JAPAN ......................................................................................................................................................................................................... 552
CHARTS OF NOTE ......................................................................................................................................................................................... 552
NEW- JAPAN Japans Inflation Pressure Ebbs Away .............................................................................................................................. 552
NEW- JAPAN BOJ QE Expansion In Context Debt Monetization......................................................................................................... 553
NEW- JAPAN Japanese Trade Balance .................................................................................................................................................. 554
NEW- JAPAN Japanese Real & Nominal Household Income ................................................................................................................. 554
JAPAN CPI Shoots To 3.3% Y-o-Y ......................................................................................................................................................... 555
JAPAN Japan Government Investment Fund Asset Reallocation ..................................................................................................... 555
JAPAN Falling Real Rates as Financial Repression Takes Hold ....................................................................................................... 555
JAPAN Real Wages Plummet as Financial Repression Takes Hold .................................................................................................. 556
RESEARCH OF NOTE .................................................................................................................................................................................... 558
NEW-JAPAN - "Godfather" Of Abenomics Admits Japanese Policy "Is A Ponzi Game ............................................................................. 558
NEW-JAPAN - How a Limo Ride With Paul Krugman Changed the Course of Abenomics ....................................................................... 560
NEW-JAPAN - Kurodas Former Boss Urges Ditching of BOJ 2% Inflation Target .................................................................................... 563
JAPAN - No Way Out But to Expand the Monetary Base ....................................................................................................................... 565
JAPAN - BOJ to "Own" 100% Of GDP In 5 Years .................................................................................................................................... 566
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history .......................................................................................... 569
JAPAN - Some Policies Have Clearly Hit the Limit ................................................................................................................................. 571
JAPAN - Foreshadows Next Global Crisis .................................................................................................................................................. 572
JAPAN - Japan's Prime Minister Shinzo Abe prepares to print money for the whole world ....................................................................... 577
JAPAN - Shinzo Abes Monetary-Policy Delusions ..................................................................................................................................... 578
JAPAN - BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" .................................................................................. 581
JAPAN - Japanese Economic Policy Goes The Full Ponzi ......................................................................................................................... 582
ECB - EU ................................................................................................................................................................................................................ 584
CHARTS OF NOTE ......................................................................................................................................................................................... 584
NEW-CHARTS Euro-Area Output Still Slightly Below Pre-Crisis Levels ................................................................................................. 584
NEW-CHARTS 5 Year Inflation Swaps Suggests Deflation in the EU ..................................................................................................... 585
NEW-CHARTS Euro-Area Inflation Rate on the Decline Since 2011 ...................................................................................................... 585
NEW-CHARTS Euro-Area Inflation Expectations Decline ....................................................................................................................... 586
NEW-CHARTS Euro-Area Private Sector Loan Creation ........................................................................................................................ 587
NEW-CHARTS Euro-Area Money Supply, Private Sector Lending Growth ............................................................................................ 587
NEW-CHARTS Euro-Area 10 Yr Sovereign Bond Yields......................................................................................................................... 588
CHARTS Slovenia May BE the Next EU Debt Hotspot ............................................................................................................................ 588
CHARTS Spain & Portugal NPL ............................................................................................................................................................... 589
CHARTS ECBs Turn to Expand Its Balance Sheet ................................................................................................................................. 590
CHARTS ECBs Balance Sheet Contracted Y-o-Y ............................................................................................................................... 590
CHARTS Expect Major ECB Policy Announcement in Q2 2014 .............................................................................................................. 591
CHARTS ECB Set to Stay on Hold as Inflation Seen Lower ................................................................................................................... 592
RESEARCH OF NOTE .................................................................................................................................................................................... 593
NEW-EU MONETARY - Draghi Key Statements ........................................................................................................................................ 593
NEW-EU MONETARY - Draghi throws ECB door open to money printing as global prospects dim ......................................................... 594
NEW-EU MONETARY - Economic Recovery Too Weak for ECB to Avoid New Action ............................................................................ 596
EU MONETARY - Euro-Area Data Deterioration Points toward QE ........................................................................................................... 598
EU MONETARY - EU Version of QE Coming -> UST Purchases To Drive Euro Down ............................................................................ 600
MACRO MONETARY INFLATION ..................................................................................................................................................................... 602
CHARTS OF NOTE ......................................................................................................................................................................................... 602
NEW-CHARTS Global Consumer Prices are Rising Significantly ........................................................................................................... 602
CHARTS Global Country Inflation Rates .................................................................................................................................................. 602
March 2015 Edition

6

CHARTS Two Worlds if Inflation EM and DM ....................................................................................................................................... 602

CHARTS Developed Country Inflation Rates ........................................................................................................................................... 604
RESEARCH OF NOTE .................................................................................................................................................................................... 605
INFLATION - Asset & Property inflation means shops have to pay higher rents with higher product prices ............................................. 605
GEO-ECONOMIC INSTABILITIES........................................................................................................................................... 606

GEO-ECONOMIC INDEX ...................................................................................................................................................................................... 606
GEO-ECONOMICS OF ENERGY & PETRO$ - Petro$$ Coming Unglued .......................................................................................................... 607
NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................... 607
RESEARCH OF NOTE .................................................................................................................................................................................... 609
NEW-RUSSIA Energy War ................................................................................................................................................................... 609
NEW-PETRODOLLAR "There Will Be Blood": Petrodollar Death Ignites Liquidity And Oil-Exporting Crisis ................... 612
PETRODOLLAR Collapsing PetroDollar Foundation ........................................................................................................................... 618
UKRAINE - Pulled between EU v Russia ................................................................................................................................................ 622
UKRAINE - Pulled between An Ethnic Eastern and Western Ukraine .................................................................................................... 622
UKRAINE - Pulled between Economic Inequality Factors ....................................................................................................................... 623
UKRAINE - Pulled between the Global Military Balance ......................................................................................................................... 624
UKRAINE - Pulled by Global Financial Markets ...................................................................................................................................... 625
UKRAINE - A Deep State Analysis .......................................................................................................................................................... 628
NEW-ENERGY - OPEC Presents: QE4 And Deflation ........................................................................................................................... 631
NEW-ENERGY - The Sellside Chimes In On The Crude Crush: "This Will Reverberate For Years" ..................................... 635
NEW-ENERGY - OPEC Decision "Major Strike Against", Russian Tycoon Says Shale Oil Doesnt Work < $80bl ............................ 636
NEW-ENERGY - Energy Quakes as OPEC Stands Pat ......................................................................................................................... 638
NEW-ENERGY - World's Largest Rig Operator, The "Recovery" Is Now Worse Than The Post-Lehman Crash ................................. 641
NEW-ENERGY - US "Secret" Deal with Saudis Backfires After Oil Minister Says US Should Cut First ................................................ 644
NEW-ENERGY - The 2014 Oil Price Crash Explained ..................................................................................................................... 648
NEW-ENERGY - Crude and Credit Warn Of The Elongated Cycle Double Peak ....................................................................... 653
ENERGY - Major Inflection Point Coming Near-Term In Energy Prices ................................................................................................. 660
ENERGY - Russia Prepares Mega-Deal with India after Locking Up China With "Holy Grail" Gas Deal ............................................... 663
ENERGY - Putin Prepares To Announce "Holy Grail" Gas Deal With China ................................................................................... 665
ENERGY - The Growing Rift with Saudi Arabia Threatens To Severely Damage the Petrodollar ................................................ 667
CHARTS OF NOTE ......................................................................................................................................................................................... 671
NEW-ENERGY Petro$$ Capital Exports Go Negative for First Time in 18 Years ................................................................................... 671
NEW-ENERGY Falling Inflation Adjusted Gasoline Prices ...................................................................................................................... 672
NEW-ENERGY US v Saudi Oil Production now Equal at near 12B bl/Day ............................................................................................. 673
NEW-ENERGY US Shale Oil Breakeven Prices ...................................................................................................................................... 674
NEW-ENERGY OPEC Announcement Crushes Ruble & WTI Crude ..................................................................................................... 674
NEW-ENERGY USDRUB Rise Means Russian Loans in US$ In Big Trouble- Investment Collapse ..................................................... 675
NEW-ENERGY EM Oil Producers Being Crushed ................................................................................................................................... 675
NEW-ENERGY Market Cap Impacts of OPEC Decision ......................................................................................................................... 676
NEW-ENERGY Oil Supply / Demand and Price....................................................................................................................................... 677
GOLD WARS Failing Developed Economies versus Rising Emerging Economies .................................................................................. 678
CHARTS OF NOTE ......................................................................................................................................................................................... 679
NEW-GOLD WARS Plummeting Gold Holdings at NY Fed from Foreign Repatriation........................................................................... 679
NEW-GOLD WARS Gold : Debt Ratio Correlation Something Seriously Amiss! ................................................................................. 679
NEW-GOLD WARS Nominal & Real Price of Gold 1790-2013 ............................................................................................................. 681
NEW-GOLD WARS Gold v S&P 500 Against True Austrian Money Supply ........................................................................................... 681
NEW-GOLD WARS Swiss National Bank Gold, FX & Total Assets ........................................................................................................ 682
NEW-GOLD WARS Sovereign Gold Holdings According to the World Gold Council ............................................................................. 682
NEW-GOLD WARS European Countries Gold Reserves Repatriation ................................................................................................... 683
RESEARCH OF NOTE .................................................................................................................................................................................... 684
NEW-GOLD WARS - Federal Reserve Confirms Biggest Foreign Gold Withdrawal in Over Ten Years ................................................... 684
NEW-GOLD WARS - European Nations Repatriate Gold Reserves from United States Vaults ................................................................ 685
NEW-GOLD WARS - Gold Shortage, Worst in 21st Century, And India Just Made It Worse .................................................................... 688
NEW-GOLD WARS - Deutsche Bank's Modest Proposal To Central Banks: "Purchase The Gold Held By Private Households" ........... 690
CHINAs CREDIT GROWTH Reverses Direction ............................................................................................................................................ 692
CHARTS OF NOTE ......................................................................................................................................................................................... 693
NEW-CHINA LIQUIDITY Chinese Bank Asset Growth Dwarfs Developed Economies Central Banks .................................................. 693
NEW-CHINA LIQUIDITY Chinas Official GDP Growth Rate Continues to Fall ...................................................................................... 694
NEW-CHINA LIQUIDITY Chinas Deleveraging ....................................................................................................................................... 694
NEW-CHINA LIQUIDITY Chinas Inflation Rate versus Real Interest Rate ............................................................................................. 695
NEW-CHINA LIQUIDITY Bank Loan Growth ........................................................................................................................................... 695
NEW-CHINA LIQUIDITY Policy Rate, RRR and Loan Growth ................................................................................................................ 696
NEW-CHINA LIQUIDITY Declining Private Sector Fixed Asset Investment ............................................................................................ 696
CHINA LIQUIDITY - Third of Chinese GDP Now Goes to Repay Interest and Principle on Existing Loans .............................................. 697
CHINA LIQUIDITY Infrastructure Investment Offsets Weak Real Estate ................................................................................................ 698
CHINA LIQUIDITY Shadow Banks Step Back Into Light ......................................................................................................................... 698
CHINA LIQUIDITY Hopes that Credit Growth Will Spur Property Sales .................................................................................................. 699
CHINA LIQUIDITY Transport, Construction Data Point to Slower Growth .............................................................................................. 699
CHINA LIQUIDITY Little Impetus for Turnaround in Investor Sentiment ................................................................................................. 700
CHINA LIQUIDITY Industrial Output & Exports Continue to Trend the Wrong Way ............................................................................... 701
CHINA LIQUIDITY GDP Growth Trend .................................................................................................................................................... 701
RESEARCH OF NOTE .................................................................................................................................................................................... 702
March 2015 Edition

7

NEW-CHINA LIQUIDITY - Reverses Direction and Begins Easing ............................................................................................................ 702

NEW-CHINA LIQUIDITY - One Rate Cut Probably Not Sufficient to Sustain China's Growth ................................................................... 703
NEW-CHINA LIQUIDITY - Troubling Signs of Deflation in China ............................................................................................................... 704
NEW-CHINA LIQUIDITY - The Next Phase of Chinas Financial Deepening ............................................................................................. 705
NEW-CHINA LIQUIDITY - Steady decline in private sector activity ............................................................................................................ 706
CHINA LIQUIDITY - China Credit Risk Overshadows Outlook for Emerging Equities ............................................................................... 707
CHINA LIQUIDITY - Easy Money Wont Solve Chinas Hard Problems ................................................................................................ 710
CHINA LIQUIDITY - Housing Bubble Restricting PBOC Actions .......................................................................................................... 712
CHINA LIQUIDITY - PBOC Squeezing Banks towards Reducing Speculative Risk ............................................................................ 715
CHINA LIQUIDITY - Overnight Repo at 25% ............................................................................................................................................ 716
CHINA LIQUIDITY - Red Flags ................................................................................................................................................................... 717
CHINA LIQUIDITY - Credit Fueled Growth ............................................................................................................................................... 719
CHINA LIQUIDITY - Shadow Banking System Showing Signs of Implosion ....................................................................................... 724
CHINA LIQUIDITY - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ........................ 727
CHINA LIQUIDITY - Potentially De-Stabilizing Cash Crunch ................................................................................................................. 729
CHINA LIQUIDITY - Chinese Liquidity Pump Unplugged ...................................................................................................................... 730
PRIOR REPORT MINOR UPDATES & EDITIONS ........................................................................................................................................... 732
US$ RESERVE STATUS & ERODING INFLUENCE............................................................................................................................................ 732
RESEARCH OF NOTE .................................................................................................................................................................................... 733
RESERVE CURRENCY - The World Is Beginning To Bypass America's Financial & Legally-Leveraged Political Power ....................... 733
RESERVE CURRENCY - Putin Adviser Proposes "Anti-Dollar Alliance ................................................................................................... 734
RESERVE CURRENCY - Chinese, Swiss Central Banks Sign Bilateral Swap Agreement ....................................................................... 735
RESERVE CURRENCY - France, Brazil, India & Now South Korea Join Russia & China In Post-Dollar World Order ............................ 736
RESERVE CURRENCY - Frances Noyer Says BNP May Prompt Shift Away From Dollar ...................................................................... 738
RESERVE CURRENCY - More Russian Companies Set To Drop Dollar, Switch To Chinese Yuan ........................................................ 739
RESERVE CURRENCY - Russia, China sign deal to bypass U.S. dollar .................................................................................................. 740
RESERVE CURRENCY - Japan May Eclipse China Again, as Largest Holder of US Treasuries ...................................................... 741
INTERNATIONAL BANKING & SHADOW BANKING ........................................................................................................................................... 743
NEW-DEBT Growth of Financial Services ................................................................................................................................................ 746
DEBT REITS & CMBS Growth ................................................................................................................................................................. 746
DEBT - GLOBAL DEBT 313% of GDP........................................................................................................................................................ 748
DEBT - 202M GLOBALLY UNEMPLOYED DEBTORS .............................................................................................................................. 750
FOOD PRICES & SHORTAGES Potential Disruption..................................................................................................................................... 751
CHARTS OF NOTE ......................................................................................................................................................................................... 751
NEW-CHARTS Cost of Thanksgiving Food ............................................................................................................................................. 752
NEW-CHARTS Consumer Price Increases Predominately Food in Emerging Economies ..................................................................... 752
NEW-CHARTS Sticker Shock in Isle 1 ..................................................................................................................................................... 753
NEW-CHARTS Food Importers ................................................................................................................................................................ 753
NEW-CHARTS US Beef Production To Reach 5 Years of Decline ......................................................................................................... 754
CHARTS US CPI Turns Up on Food & Energy ........................................................................................................................................ 755
CHARTS CRB US Spot Foodstuff Index One Year .............................................................................................................................. 755
CHARTS CRB Food Index One Year .................................................................................................................................................... 757
CHARTS Global Food Price Change 2007-2013 ..................................................................................................................................... 758
CHARTS Food Prices Spiking Up ............................................................................................................................................................ 759
CHARTS Food Prices Spiking Up ............................................................................................................................................................ 760
CHARTS Retail Food Services and Drinking Place Sales ....................................................................................................................... 760
CHARTS Retail CRE Price/ Cost Pressures ............................................................................................................................................ 761
CHARTS Retail CRE Price/ Cost Pressures - 2 ....................................................................................................................................... 762
CHARTS Spiking Beef Prices ................................................................................................................................................................... 763
CHARTS Coffee Futures .......................................................................................................................................................................... 763
CHARTS Lean Hog Futures ..................................................................................................................................................................... 764
CHARTS Ukraine Corn and Wheat Prices Up 15% Since YB .............................................................................................................. 764
CHARTS Global Food Imports versus % Y-o-Y US$ Change ................................................................................................................. 765
CHARTS UK Food Retailers v Commodity Food Price Index .................................................................................................................. 765
RESEARCH OF NOTE .................................................................................................................................................................................... 766
FOOD INFLATION - Food Prices Surge as Drought Exacts a High Toll on Crops .................................................................................... 766
FOOD INFLATION - Food Prices, Driver of Social Unrest ....................................................................................................................... 769
FOOD INFLATION - Food Price Manipulation in Thailand.......................................................................................................................... 769
EMERGING & FRONTIER MARKETS - Unfolding 2015 Crisis ....................................................................................................................... 771
CHARTS OF NOTE ......................................................................................................................................................................................... 774
CHARTS BRIC Countries Responsible for 43% of Global Growth .......................................................................................................... 774
CHARTS BRIC & Emerging Market Inflation Rates ................................................................................................................................. 774
CHARTS Emerging Market Default Probability ........................................................................................................................................ 775
CHARTS Emerging Market versus Developed Market Public Debt and External Borrowing Positions .................................................. 775
CHARTS Emerging Market Outflows........................................................................................................................................................ 776
CHARTS Emerging Market Outflows -2 ................................................................................................................................................... 776
CHARTS Developed versus Emerging Equity Markets 1990-2014 ...................................................................................................... 777
CHARTS Total GEM Flows....................................................................................................................................................................... 777
CHARTS The Emerging Markets Have Been Weakening Since 2011 .................................................................................................... 778
RESEARCH OF NOTE .................................................................................................................................................................................... 779
EMERGING MARKETS - Fragile Five: The new focus of currency wars ............................................................................................... 779
March 2015 Edition

8

EMERGING MARKETS - Crisis Redux? ..................................................................................................................................................... 780

EMERGING MARKETS - Losing Their Punch ......................................................................................................................................... 785
EMERGING MARKETS - Risk-On!............................................................................................................................................................. 787
EMERGING MARKETS - Asia, BRIC, Emerging Markets Crater IBM Earnings .................................................................................... 788
EMERGING MARKETS - Crisis Temporarily Halted ................................................................................................................................ 790
EMERGING MARKETS - Increasing Liquidity Problems In Selected Markets .................................................................................... 791
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................... 797
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................... 802
EMERGING MARKETS - EM Crisis will make the 1997 Asian Crisis Seem like an Early Warning ..................................................... 806
EMERGING MARKETS - Global Deleveraging Accelerating and Developing Nations Feeling the Pain .......................................... 808
CYBER SPYING .............................................................................................................................................................................................. 811
CURRENCY WARS BACK ON Rate Wars Reversed With Un-Taper ............................................................................................................... 812
CURRENCY WARS - A Major Shift ............................................................................................................................................................... 812
BATTLEFIELD - Combatants & Belligerents............................................................................................................................................... 816
BATTLEFIIELD - The Race to Debase ......................................................................................................................................................... 817
JAPAN - The Destabilizing Agent .................................................................................................................................................................... 819
EUROPE - Euro Exposed ................................................................................................................................................................................ 819
ARGENTINA - Here we Go Again! .................................................................................................................................................................. 821
VENEZUELLA - Bad Situation ......................................................................................................................................................................... 822
BRAZIL - No One Wants to Listen ................................................................................................................................................................... 822
SWITZERLAND - No Choice ........................................................................................................................................................................... 822
SINGAPORE - Hot Money ............................................................................................................................................................................... 823
UK- Pound Joins War .................................................................................................................................................................................... 824
CYBER WARS Growing Threat & the Security-Surveillance Complex .............................................................................................................. 825
SECURITY-SURVEILLANCE COMPLEX - NSA Whistleblower Example: Booz Hamilton ....................................................................... 828
SECURITY SURVEILLANCE COMPLEX - Growing Without Public Control or Supervision! ................................................................. 831
REGIONAL ............................................................................................................................................. 833

EU DEFLATION IS REAL A Major Problem for Banks & Government Debt .................................................................................................. 834
CHARTS OF NOTE ......................................................................................................................................................................................... 836
NEW--CHARTS - Draghi Had To Deliver or it would have been a Collateral Massacre ............................................................................ 836
NEW--CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends ............................................................................... 836
NEW--CHARTS Eurozone is the Biggest Drag on Global Profits ............................................................................................................ 837
NEW--CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) .............................................................. 837
NEW--CHARTS EU PMIS Rolling Over ................................................................................................................................................... 838
NEW--CHARTS Eurozone Banks Too Big To Be Bailed Out! ................................................................................................................. 839
NEW--CHARTS Eurozone Area Consumer Confidence May Be Misleading .......................................................................................... 840
NEW--CHARTS Eurozone GDP & Recession Pattern ............................................................................................................................. 840
CHARTS EU-Area PMI Shows Sustained Deterioration .......................................................................................................................... 841
CHARTS Euro Area CPI Seen Below 1% for 11th Month ......................................................................................................................... 841
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 .............................................................................. 842
CHARTS Euro Area Inflation Levels ......................................................................................................................................................... 843
CHARTS Geo-Political Tensions May Weigh on Confidence .................................................................................................................. 844
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ..................................................................................................... 844
CHARTS Industrial Production Slows In Line With PMIs ......................................................................................................................... 845
CHARTS ZEW Expectations Signals Slowdown Ahead .......................................................................................................................... 846
CHARTS Euro-Area July PMI ................................................................................................................................................................... 846
CHARTS Corporate Borrowing Spreads Remain Wide ........................................................................................................................... 847
CHARTS ECB Less Accommodative Than the Fed ................................................................................................................................. 847
CHARTS EU Financial Conditions Deteriorating ...................................................................................................................................... 848
CHARTS EU Confidence .......................................................................................................................................................................... 849
CHARTS - Slow Money Growth May Stoke Deflation Concerns ................................................................................................................ 849
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................... 850
CHARTS - Euro-Area Inflation Aggregate ................................................................................................................................................ 851
CHARTS - 10M Part-Time Workers Underemployed in EU ........................................................................................................................ 852
CHARTS - Euro-Area Housing Prices Decline ............................................................................................................................................ 853
CHARTS - Euro-Area Trade Surplus ........................................................................................................................................................... 854
CHARTS - Euro-Area Composite PMI ......................................................................................................................................................... 855
CHARTS - EU Area Weakness ................................................................................................................................................................... 856
CHARTS - EU Area GDP ............................................................................................................................................................................. 857
CHARTS - EU Area PMI .............................................................................................................................................................................. 858
CHARTS - EU Area PMI .............................................................................................................................................................................. 859
CHARTS - EU Real Rates ........................................................................................................................................................................... 860
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................... 861
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ....................................................................................................................... 862
CHARTS - EU PMI ....................................................................................................................................................................................... 862
CHARTS - EU CPI ....................................................................................................................................................................................... 864
CHARTS - Regional Risk-Reward ............................................................................................................................................................... 865
CHARTS - Europe's "Core" Problem is France ...................................................................................................................................... 866
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ............................................................................. 869
CHARTS - Evidence OF Global Slowing Now Indisputable ................................................................................................................... 870
CHARTS - EU Credit Downgrades, France and UK On Tap ..................................................................................................................... 872
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ............................................................................................................. 874
March 2015 Edition

9

CHARTS - Dangerous Delusional Divergences ...................................................................................................................................... 876

CHARTS - IMF Projections for Euro Area and GIIPS ................................................................................................................................. 877
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth .............................................................................................................. 878
CHARTS - Eurozone Misery Indices Never Been Higher ....................................................................................................................... 879
CHARTS - Euro Currency ............................................................................................................................................................................ 881
RESEARCH OF NOTE .................................................................................................................................................................................... 887
NEW--RESEARCH The Broken Model of the Eurozone .......................................................................................................................... 887
NEW--RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts ......................................................................... 888
NEW--RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble ................................................................... 889
RESEARCH Euro Areas Stalling Industry No Support for GDP.............................................................................................................. 891
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case ................................................................................ 891
RESEARCH ECB Rate Decision ............................................................................................................................................................ 893
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................... 896
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................... 897
RESEARCH The ECBs Negative Deposit Rate.................................................................................................................................... 899
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ............................................................................. 901
RESEARCH Beware of EU Banks! ........................................................................................................................................................... 903
RESEARCH Emerging Markets Aggravates Festering Banking Problems ...................................................................................... 903
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ........................................................................ 906
RESEARCH - EFSF Downgraded to AA+ ................................................................................................................................................. 908
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ........................................................................................................ 909
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece ................................................................ 912
SITUATIONAL ASSESSMENT ....................................................................................................................................................................... 914
PROGNOSIS: Why the European Situation Will Get Worse ....................................................................................................................... 914
PROGNOSIS: Increasing Structural Imbalances ........................................................................................................................................ 917
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ................... 919
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ..................................................................................................... 924
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ................................................................................................................. 928
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ......................................................................................................... 930
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ......................................................................................... 931
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" .......................................................................................... 932
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................... 938
ITALY FALLS BACK INTO A TRIPLE-DIP RECESSION ................................................................................................................................... 940
CHARTS OF NOTE ......................................................................................................................................................................................... 940
NEW--CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ...................................................................................................... 940
NEW--CHARTS - ITALY Italian Unemployment ....................................................................................................................................... 941
NEW--CHARTS - ITALY Italian Core Inflation .......................................................................................................................................... 941
NEW--CHARTS - ITALY Italian Industrial Porduction .............................................................................................................................. 942
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................... 943
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................... 944
CHARTS - ITALY Italian Bond Yields ....................................................................................................................................................... 944
CHARTS - ITALY Slips Back Into Recession ........................................................................................................................................... 945
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................... 946
CHARTS - ITALY - Forced Rate Cuts ......................................................................................................................................................... 947
RESEARCH OF NOTE .................................................................................................................................................................................... 948
NEW--RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ............................................................................ 948
RESEARCH - Italys Downward Spiral ........................................................................................................................................................ 951
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ....................................................... 953
SITUATIONAL ASSESSEMENT ..................................................................................................................................................................... 957
ITALIAN ELECTION - What You Need to Know ......................................................................................................................................... 957
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ................................................................... 958
ITALIAN ELECTION - Message Given By the People .............................................................................................................................. 960
ITALIAN ELECTION - Bad Debt Continue to Soar ...................................................................................................................................... 964
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise!............................................................................. 966
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ............................................................................................................................... 967
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ............................................................................................................................... 969
ITALIAN ELECTION - Regional Financial Cracks in Sicily .................................................................................................................... 972
FRANCE ECONOMIC MALAISE SPARKING POTENTIAL POLITICAL CRISIS .............................................................................................. 974
CHARTS OF NOTE ......................................................................................................................................................................................... 974
NEW--CHARTS FRANCE Bankruptcies Soar as Profitability Slumps .................................................................................................. 974
NEW--CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield .............................................................. 974
NEW--CHARTS FRANCE French Job Seekers .................................................................................................................................... 975
NEW--CHARTS FRANCE Inflation Expectations .................................................................................................................................. 975
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ............................................................................................. 976
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................... 976
CHARTS - FRANCE Worlds Worst PMI Ranking in June ....................................................................................................................... 977
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................... 978
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out........................................................................................ 978
CHARTS - FRANCE Manufacturing Divergence With Germany Widens ................................................................................................ 979
CHARTS - FRANCE - GDP ......................................................................................................................................................................... 980
CHARTS - FRANCE - UNEMPLOYMENT .................................................................................................................................................. 981
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................... 982
CHARTS - FRANCE - TAX v GDP .............................................................................................................................................................. 983
CHARTS - FRANCE - BUSINESS CONFIDENCE...................................................................................................................................... 984
March 2015 Edition

10


RESEARCH OF NOTE .................................................................................................................................................................................... 985
NEW--RESEARCH Economic Malaise Sparks Political Crisis in France ................................................................................................ 985
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government ............................................................ 987
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................... 989
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................... 989
RESEARCH - Steady Breakdown Underway ........................................................................................................................................... 992
RESEARCH - France Loses its Coveted and NEEDED AAA Rating ..................................................................................................... 996
SITUATIONAL ASSESSMENT ....................................................................................................................................................................... 998
FRANCE - What You Need to Know ........................................................................................................................................................... 998
FRANCE - Key Indicators ............................................................................................................................................................................ 999
FRANCE: Sharpest Drop in Private Sector Output in Four Years ............................................................................................................ 1002
FRANCE - Quits on Austerity - Never a Doubt This Would Happen...................................................................................................... 1005
FRANCE - Socialism is Expensive ......................................................................................................................................................... 1006
FRANCE - Has Turned back to Socialism ................................................................................................................................................. 1008
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................. 1009
FRANCE - Uncompetitive .......................................................................................................................................................................... 1010
FRANCE - Titan Tire Calls Out French Labor ........................................................................................................................................... 1012
FRANCE - France Responds to Titan Tire ................................................................................................................................................ 1014
FRANCE - What Happens In France When Companies Fire People ....................................................................................................... 1016
FRANCE - Hollande's Economically Insane campaign Promise ............................................................................................................... 1017
GERMANY GERMANY IN RECESSION.......................................................................................................................................................... 1019
CHARTS OF NOTE ....................................................................................................................................................................................... 1019
NEW--CHARTS - GERMANY - 1.179% 30 Year Bond Yield ................................................................................................................... 1019
NEW--CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative ................................................................................................. 1020
NEW--CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................... 1020
NEW--CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close ................................................................... 1021
NEW--CHARTS - GERMANY 10 Y European Yields ............................................................................................................................. 1022
NEW--CHARTS - GERMANY German Unemployment ......................................................................................................................... 1023
NEW--CHARTS - GERMANY German Core Inflation ............................................................................................................................ 1023
NEW--CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................... 1023
CHARTS - GERMANY Expectations Component Peaked In January ................................................................................................... 1024
CHARTS - GERMANY Ifo Rolls-Over..................................................................................................................................................... 1024
CHARTS - GERMANY 10 Year Bund Below 1% ................................................................................................................................... 1025
CHARTS - GERMANY - Inflation ............................................................................................................................................................... 1025
CHARTS - GERMANY - IFO Investor Confidence .................................................................................................................................... 1026
CHARTS - GERMANY - ZEW Expectations .............................................................................................................................................. 1027
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1029
RESEARCH OF NOTE .................................................................................................................................................................................. 1029
NEW--RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian ............................................... 1029
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September .......................................... 1032
RESEARCH - Germany close to recession as ECB admits recovery is weak.......................................................................................... 1034
RESEARCH - Merkel's Third Chancellorship Challenges .................................................................................................................... 1035
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners........................................................................................... 1039
RESEARCH - Europe's Shadow Economy: As Big As Germany.............................................................................................................. 1040
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1044
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ......................................................................... 1045
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ..................................................................... 1046
GERMANY - Call for End of "Coercive Euro Association" ........................................................................................................................ 1048
UK EXPECT RATE INCREASE BY SPRING 2015.......................................................................................................................................... 1050
CHARTS OF NOTE ....................................................................................................................................................................................... 1050
NEW--CHARTS - UK - Deficit One of Worst of Developed Economies .................................................................................................... 1050
NEW--CHARTS - UK Private Sector Surplus Eliminated ....................................................................................................................... 1050
CHARTS - UK Self-Employment At Record High ...................................................................................................................................... 1051
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................. 1052
CHARTS - UK Below 2% Target But 2nd Highest in EU ......................................................................................................................... 1052
CHARTS - UK CPI Below Target for 7th Month ...................................................................................................................................... 1053
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ......................................................................................................... 1054
CHARTS - UK Wage-Neutral Unemployment Rate Falling .................................................................................................................... 1054
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................. 1055
CHARTS - UK GDP ................................................................................................................................................................................ 1056
CHARTS - UK Population Growth .......................................................................................................................................................... 1056
CHARTS - UK - Crushed Disposable Income ........................................................................................................................................... 1057
CHARTS - UK - BOE Balance Sheet Growth ............................................................................................................................................ 1058
CHARTS - UK - Lending ............................................................................................................................................................................ 1059
CHARTS - UK - Unemployment ................................................................................................................................................................ 1060
CHARTS - UK - GDP - Pre and Post Recession Levels ........................................................................................................................... 1061
CHARTS - UK - GDP ................................................................................................................................................................................. 1061
CHARTS - UK - BOE Rates ....................................................................................................................................................................... 1062
RESEARCH OF NOTE .................................................................................................................................................................................. 1063
NEW--RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November .................................................. 1063
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls ........................................................................................ 1065
RESEARCH - UK workers' wage squeeze is longest since the 1870s ..................................................................................................... 1068
UK - What you need to Know..................................................................................................................................................................... 1069
March 2015 Edition

11

UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1070

UK - Specter of Stagflation Haunts UK ...................................................................................................................................................... 1071
UK - Public Policy turns Against Austerity and PM Cameron ............................................................................................................ 1072
UK - Doomsday Debt Machine .................................................................................................................................................................. 1073
UK - QE Extension Coming ....................................................................................................................................................................... 1076
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ..................................................................................... 1078
UK - Technically in a Depression ........................................................................................................................................................... 1079
IBERIAN PENINSULA LOW RATES MASK SERIOUS PERCULATING PROBLEMS ................................................................................... 1082
CHARTS OF NOTE ............................................................................................................................................................................................. 1082
NEW--CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ........................................................................................................ 1082
NEW--CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low .................................................................................................. 1082
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ..................................................................................................................... 1083
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................. 1084
RESEARCH OF NOTE .................................................................................................................................................................................. 1085
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs .............................................................................................. 1085
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion .............................................................. 1087
RESEARCH - The Spanish Government's 'Bad Bank' Scam .............................................................................................................. 1088
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................. 1090
IBERIA - Regional Bailout Bailouts a Massive Problem ...................................................................................................................... 1091
IBERIA - NPL Going Ballistic .................................................................................................................................................................. 1092
IBERIA - Spanish Funding Problem ....................................................................................................................................................... 1093
IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ............................................................................................... 1098
IBERIA - Mal-Investment Coming Home to Roost..................................................................................................................................... 1100
IBERIA - Now a Capital Investment Problem ............................................................................................................................................ 1103
IBERIA - Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................ 1104
ASIA FALLING CURRENCIES, RISING DEBT & SLOWING GROWTH.............................................................................. 1113

CHINA THE NEXT PEG TO FALL ............................................................................................................................................................... 1113
CHARTS OF NOTE ....................................................................................................................................................................................... 1127
NEW--CHARTS - CHINA Falling Chinese Industrial Profits .................................................................................................................... 1127
NEW--CHARTS - CHINA Something Up (or rather down) with Chinese Currency? .............................................................................. 1127
NEW--CHARTS - CHINA Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks .................................................. 1128
NEW--CHARTS - CHINA Corporate Bond Yields ................................................................................................................................... 1128
NEW--CHARTS - CHINA New Retail Stock Trading Accounts ............................................................................................................... 1129
NEW--CHARTS - CHINA Credit Growth 30% Above Trend for Private Sector Debt to GDP ................................................................ 1129
NEW--CHARTS - CHINA Falling Foreign Currency Reserves ................................................................................................................ 1130
NEW--CHARTS - CHINA 2 Year Yield Goes Negative .......................................................................................................................... 1131
th
NEW--CHARTS - CHINA China Used More Cement in Last 3 Years than US in Entire 20 Century .................................................. 1132
NEW--CHARTS - CHINA China Real Activity Indicators Steel, Cement & Electricity ........................................................................ 1132
NEW--CHARTS - CHINA Chinese Coal Consumption Falls .................................................................................................................. 1133
NEW--CHARTS - CHINA Chinese Y-o-Y Outstanding Credit & M2 ...................................................................................................... 1133
NEW--CHARTS - CHINA Chinas Bank Reserve Requirement Ratio ................................................................................................... 1134
NEW--CHARTS - CHINA New Stock Market Trading Accounts ............................................................................................................ 1135
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1136
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1136
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1137
CHARTS Industrial Output A Concern.................................................................................................................................................... 1137
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1138
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1139
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1140
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1141
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1141
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1141
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1142
CHARTS China Equity Flows ................................................................................................................................................................. 1143
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1143
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1144
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1144
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1145
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1146
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1147
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1148
CHARTS Shadow Banking System ........................................................................................................................................................ 1148
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1150
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1151
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1152
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1153
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1154
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1155
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1156
CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1157
CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1158
RESEARCH WE FOLLOWED THIS TRI-SEMSTER .................................................................................................................................... 1159
March 2015 Edition

12

RESEARCH OF NOTE .................................................................................................................................................................................. 1160

NEW--CHINA The Next Peg To Fall The Yuan or Hong Kong Dollar? ...................................................................................... 1160
NEW--CHINA Yuan Diverging From Its Trading Basket .................................................................................................................... 1166
NEW--CHINA Signs of Madness in the Global Financial System .................................................................................................... 1169
NEW--CHINA Reverses Direction and Begins Easing....................................................................................................................... 1170
NEW--CHINA China's Economic Reporting Possibly a Deception .................................................................................................. 1171
CHINA Yuan Diverging From Its Trading Basket ............................................................................................................................... 1172
CHINA - China Credit Risk Overshadows Outlook for Emerging Equities ................................................................................................ 1175
CHINA - Easy Money Wont Solve Chinas Hard Problems ...................................................................................................................... 1177
CHINA - China's Rehypothecation............................................................................................................................................................. 1180
CHINA - Asian Marginal Utility ................................................................................................................................................................... 1182
CHINA - Is China is Exporting Deflation Worldwide by Driving Down Yuan? ........................................................................................... 1184
CHINA - Someone Is Betting That The Chinese Currency Collapses By The End Of 2014Low-Hanging Fruit ............................. 1187
CHINA - Problems in the Target Redemption Forwards Derivatives market & Dim-Sum Bonds ................................................... 1188
CHINA - Absence Of A Letter Of Credit!.................................................................................................................................................... 1189
CHINA - China Cracks down on Commodity Credit .................................................................................................................................. 1192
CHINA - Falling Yuan ................................................................................................................................................................................. 1194
CHINA - What Happens After the Low-Hanging Fruit Has Been Picked? .......................................................................................... 1196
CHINA SHADOW BANKING - CCFD (Chinese Commodity Funding Deals) ....................................................................................... 1199
CHINA - Cracks Beginning to Show ....................................................................................................................................................... 1202
CHINA - Has an Inflation Problem ............................................................................................................................................................. 1203
CHINA - Chinese Coal Producer Collapse a Major Shadow Banking Problem ................................................................................. 1204
CHINA - China Orders Its Smaller Banks to Load Up On Cash .......................................................................................................... 1207
CHINA - How the Chinese Economic Disaster Scenario Could Unfold ............................................................................................. 1212
CHINA - Skilled Labor Shortages & Losing Labor Cost Advantage ................................................................................................... 1214
CHINA - Launches Crackdown On "Off Balance Sheet" Credit .......................................................................................................... 1219
CHINA - China's Stunning $15 Trillion in New Liquidity - Part II......................................................................................................... 1223
CHINA - China's Stunning $15 Trillion In New Liquidity ...................................................................................................................... 1226
RESEARCH OF NOTE PREVIOUS REPORT (Reference) ...................................................................................................................... 1230
RESEARCH - China's Stunning $15 Trillion in New Liquidity ............................................................................................................. 1230
RESEARCH - Dr. Copper Ready to Top and Head Lower .................................................................................................................... 1234
RESEARCH - China's $1 Trillion GDP Lie .............................................................................................................................................. 1235
RESEARCH - What the Deceleration Could Portend ............................................................................................................................ 1237
RESEARCH - Credit Bubble: 240% Of GDP And Soaring .................................................................................................................... 1240
RESEARCH - Forget Taper risk: China is a bigger threat ....................................................................................................................... 1244
RESEARCH - Sustainability Requires a Slowdown in Investment ............................................................................................................ 1246
RESEARCH - China Likely to Continue Interest Rate Liberalization ........................................................................................................ 1248
RESEARCH - China #1 in Broad Array of Key Areas ............................................................................................................................... 1251
RESEARCH - Global Business Confidence Sliding Rapidly ............................................................................................................... 1252
RESEARCH - Investors Worried and Losing Confidence .................................................................................................................... 1255
RESEARCH - China Stampeding into Gold ........................................................................................................................................... 1256
RESEARCH - China "Will introduce some measures to arrest the slowdown of growth in the next couple of quarters" ........... 1258
RESEARCH - Slower Growth In the Cards & Endorsed by New Chinese Leadership ..................................................................... 1259
RESEARCH - Is a PBOC Controlled Speculation Bust Possible or Will It Get Out of Control ........................................................ 1261
RESEARCH - PBOC Liquidity Squeeze ................................................................................................................................................. 1262
RESEARCH - Chinese Housing Bubble Restricting PBOC Actions .................................................................................................... 1264
RESEARCH - PBOC Squeezing Banks towards Reducing Speculative Risk .................................................................................... 1266
RESEARCH - Chinese Overnight Repo at 25% ...................................................................................................................................... 1268
RESEARCH - Red Flags ........................................................................................................................................................................... 1269
RESEARCH - Credit Fueled Growth in China ....................................................................................................................................... 1271
RESEARCH - PBOC Wants to Hold the Line on Explosive Credit Expansion through A Liquidity Squeeze ................................ 1276
RESEARCH - A Potentially De-Stabilizing Cash Crunch ..................................................................................................................... 1278
SITUATIONAL ANALYSIS & KEY NOTES ................................................................................................................................................... 1279
CHINA SHADOW BANKING - Shadow Banking System Showing Signs of Implosion ..................................................................... 1282
CHINA SHADOW BANKING - Shadow Banking and Credit Growth .................................................................................................... 1285
CHINA SHADOW BANKING - The US Sub-Prime / CDO All Over Again ............................................................................................. 1288
CHINA SHADOW BANKING - Report ....................................................................................................................................................... 1292
CHINA SHADOW BANKING - Situation ................................................................................................................................................. 1293
CHINA RESERVES - Distorted Foreign Reserve Levels ...................................................................................................................... 1294
CHINA RESERVES - Declining Reserve Accumulation ............................................................................................................................ 1296
CHINA RESERVES - Has Caught the Gold Bug big time! .................................................................................................................... 1298
CHINA CURRENCY WARS - Hot Money into China .............................................................................................................................. 1300
CHINA - Withdraws Liquidity .................................................................................................................................................................. 1301
CHINA - Socit General Sees a Likely Soft Landing! ......................................................................................................................... 1303
CHINA - True Debt is Orders of Magnitude More than Officially Being Reported ............................................................................ 1313
CHINA - Evidence OF Slowing Now Indisputable ................................................................................................................................ 1316
CHINA - PMI Improvement....................................................................................................................................................................... 1317
CHINA - Political Transition & Ongoing Emergence as a Super Power ............................................................................................ 1320
CHINA - An Implicit Social Contract .......................................................................................................................................................... 1322
CHINA - Manipulated Statistics due to Upcoming Decade Long Regime Change ........................................................................... 1324
CHINA - Increasing Leverage is China's Way of Monetary Easing .................................................................................................... 1325
CHINA - Possible Interest-Rate Liberalization........................................................................................................................................... 1326
CHINA - Global Impact of China's Slowdown ....................................................................................................................................... 1327
CHINA - Shanghai Composite at 2008 Low Levels .............................................................................................................................. 1330
CHINA - Shanghai Composite Warnings Signs .................................................................................................................................... 1331
CHINA - Credit to GDP ............................................................................................................................................................................. 1333
CHINA - A Slow Recovery Through 2013 ................................................................................................................................................. 1334
March 2015 Edition

13

CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 1336

JAPAN: JAPAN GOES ALL IN ............................................................................................................................................................................ 1341
CHARTS OF NOTE ....................................................................................................................................................................................... 1349
NEW--CHARTS - JAPAN 1.174% 30 Year Bond Yield ......................................................................................................................... 1349
NEW--CHARTS - JAPAN 2 Year Yield Goes Negative.......................................................................................................................... 1349
NEW--CHARTS - JAPAN Savings Rate Goes Negative ........................................................................................................................ 1350
NEW--CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages ................................................................... 1350
NEW--CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ...................................................................................... 1351
NEW--CHARTS - JAPAN Shifting Demographics - Birth versus Deaths ............................................................................................... 1351
NEW--CHARTS JAPAN Nikkei Strength is all Relative .................................................................................................................... 1352
NEW--CHARTS - JAPAN Trade Balance ............................................................................................................................................... 1352
NEW--CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) .......................................................................................... 1353
NEW--CHARTS - JAPAN BOJ Reserve Balances ................................................................................................................................. 1354
NEW--CHARTS - JAPAN Macro Crisis Zones ....................................................................................................................................... 1355
NEW--CHARTS - JAPAN Demographics ............................................................................................................................................... 1356
NEW--CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ..................................................................................................... 1356
NEW--CHARTS - JAPAN Japans Economy versus the Rest of the World ........................................................................................... 1357
NEW--CHARTS - JAPAN Japans Decline in Real Interest Rates ......................................................................................................... 1358
NEW--CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ................................................................................................................ 1359
NEW--CHARTS - JAPAN Bankruptcies Due to Depreciating Yen ......................................................................................................... 1360
NEW--CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ........................................................................... 1360
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 1362
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 1362
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 1363
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 1363
CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 1364
CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 1365
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 1365
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 1366
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 1366
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 1367
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 1368
CHARTS - GDP Trend ............................................................................................................................................................................... 1368
CHARTS - CPI Trend ................................................................................................................................................................................. 1369
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 1369
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 1370
RESEARCH WE FOLLOWED THIS TRI-SEMESTER ................................................................................................................................. 1371
RESEARCH OF NOTE .................................................................................................................................................................................. 1372
NEW--JAPAN The BOJ Ups The Ante ................................................................................................................................................. 1372
NEW--JAPAN Is Japan Kaput? ............................................................................................................................................................. 1373
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 1376
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1378
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 1381
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 1383
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1384
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 1386
JAPAN - Abe Approval Rating Plunges ................................................................................................................................................. 1388
JAPAN - What the Japanese been Buying ............................................................................................................................................. 1389
JAPAN - Japan May Matter More Than Tapering .................................................................................................................................. 1391
JAPAN - Japan Finances Worse than at Wars End ............................................................................................................................. 1394
JAPAN - BOJ: "The days of constructive ambiguity is over! ......................................................................................................... 1395
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 1396
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ......................................................................................................... 1398
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ....................................................... 1399
JAPAN - The Abe-nomics Failure ........................................................................................................................................................... 1402
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 1404
JAPAN - What You Need to Know............................................................................................................................................................. 1406
JAPAN - No Way Out But to Expand the Monetary Base ..................................................................................................................... 1409
JAPAN - BOJ to "Own" 100% of GDP in 5 Years .................................................................................................................................. 1409
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ........................................................................................ 1413
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 1414
JAPAN - ABE-nomics About Lowering Real Interest Rates ................................................................................................................ 1415
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk ........................................................................................................ 1416
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ................................................................ 1420
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics........................................... 1422
JAPAN - A Credit Squeeze Leads Deflationary Leg Down .................................................................................................................. 1425
JAPAN - Some Japanese Policies Have Clearly Hit the Limit ............................................................................................................. 1426
JAPAN - The ABE (Asset Bubble Evaluator) Index ............................................................................................................................... 1428
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 1429
JAPAN - Now the Frontrunner of Outright Monetization. .................................................................................................................... 1430
JAPAN - Yen Devaluation ........................................................................................................................................................................ 1431
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years ............................................................................................................. 1432
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ........................................................................................... 1434
JAPAN - Third Straight Quarter of Recession ....................................................................................................................................... 1436
JAPAN - Full Out War on Deflation ......................................................................................................................................................... 1436
March 2015 Edition

14

JAPAN - First Test of the new found dominance of the Central Banks .......................................................................................... 1438
JAPAN - BOJ Was Next Up. No Surprise .............................................................................................................................................. 1441
JAPAN - Negative Current Account Balance and -3.5% Recession ................................................................................................... 1443
JAPAN - A 50% Over-Valued Yen Has Undermined Self Confidence & Drive ................................................................................... 1446
JAPAN - Proves QE's Low Cost of Capital Does Structural Damage to Economy ........................................................................... 1448
JAPAN - BOJ Being Pressured to "Rip-Up Government Debt"1 ........................................................................................................ 1450
JAPAN - Easy Money Has Hurt Corporate Profitability in the Longer Term ..................................................................................... 1456
JAPAN - The Biggest Debtor with the Biggest Problem! .................................................................................................................... 1459
JAPAN - A Magnitude Larger Problem than Europe ................................................................................................................................. 1463
JAPAN - QE 9 A Complete Failure - Actually "Tightens" versus It's Intended Easing .............................................................................. 1469
JAPAN - Japanese Yen Continuously Under Attack ................................................................................................................................. 1474
JAPAN - Vast foreign US$ Coming Home for "Claim" .............................................................................................................................. 1475
JAPAN - PMI Breakdown ........................................................................................................................................................................... 1477
JAPAN - Exports Continue To Tumble .................................................................................................................................................. 1479
JAPAN - Intervention Fails Again - It's a Whole new Ball Game ........................................................................................................ 1480
JAPAN - First Signs of Massive Debt Monetization After Next Election ................................................................................................... 1483
JAPAN - Japan to the ESM's Rescue ..................................................................................................................................................... 1483
EMERGING MARKETS RUSSIA UNDER FINANCIAL SIEGE ..................................................................................................... 1485

BRICS ............................................................................................................................................................................................................ 1491
NEW--BRICS Population, GDP,GDP per Capita ................................................................................................................................. 1491
BRICS Responsible for 43% of Global Growth in 2013 .................................................................................................................... 1492
BRICS A Short Term Dead Cat Bounce? ........................................................................................................................................ 1492
BRICS Inflation Problems Abound ...................................................................................................................................................... 1494
BRICS - EU Major Contributor to EM Current Account Deficit Growth .............................................................................................. 1495
BRICS - Insufficient Levels Prompt Russian-Chinese Support .......................................................................................................... 1496
BRICS - A Development Bank-Forex Reserve Pool-African Integration ............................................................................................ 1498
BRICS - 40% of World Population and 25% of World GDP .................................................................................................................. 1499
BRICS - $3 to $13B GDP in Ten Years ................................................................................................................................................... 1502
BRICS- A World Wide Distrust of Financial Markets Building ............................................................................................................ 1505
BRAZIL........................................................................................................................................................................................................... 1507
NEW-BRAZIL - Brazils Economy Just Imploded! ..................................................................................................................................... 1507
NEW-BRAZIL - Brazils economy slips into recession .............................................................................................................................. 1509
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 1512
BRAZIL - Sharpest Decline in 2013 Growth Forecast ............................................................................................................................... 1513
RUSSIA - Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................. 1516
NEW - RUSSIA 2015 Russia Consensus GDP Forecast ...................................................................................................................... 1517
NEW - RUSSIA Foreign Exchange Reserves ........................................................................................................................................ 1517
NEW - RUSSIA Exchange and Interest Rate ......................................................................................................................................... 1518
NEW - RUSSIA - Real GDP and Car Sales .............................................................................................................................................. 1518
NEW - RUSSIA Inflation Rate ................................................................................................................................................................. 1519
NEW - RUSSIA GDP Forecast versus USDRUB ................................................................................................................................... 1519
NEW - RUSSIA WTI Crude versus Ruble .............................................................................................................................................. 1520
NEW - RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ............................................................................ 1520
NEW - RUSSIA Russian CDS Spreads .................................................................................................................................................. 1521
NEW - RUSSIA Winners and Losers of Oil Price Plunge....................................................................................................................... 1522
NEW - RUSSIA CDS Spreads Has Widened 250bp Since Mid-June .................................................................................................... 1523
NEW - RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks ......................................................................................... 1524
NEW - RUSSIA Crude Oil in Rubles....................................................................................................................................................... 1525
NEW - RUSSIA Russian Reserves versus USDRUB ............................................................................................................................ 1525
NEW - RUSSIA Falling Oil Price Weighs on Economy and the Ruble .................................................................................................. 1526
NEW - RUSSIA Russian Ruble versus Reserves .................................................................................................................................. 1527
NEW - RUSSIA Russian Breakeven Oil Prices versus Liquids Production ........................................................................................... 1528
NEW - RUSSIA Russian Refining & Upstream Economics-1 ................................................................................................................ 1529
NEW - RUSSIA Russian Refining & Upstream Economics-2 ................................................................................................................ 1530
NEW - RUSSIA Russian Holdings of US Treasuries ............................................................................................................................. 1531
NEW - RUSSIA Russian 9 Year Gold Buying Spree .............................................................................................................................. 1532
NEW - RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ............................................................................................ 1532
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 1534
INDIA.............................................................................................................................................................................................................. 1534
NEW-INDIA CAPEX Bottom Out? .......................................................................................................................................................... 1534
INDIA Real GDP and Car Sales ............................................................................................................................................................. 1535
INDIA Inflation ......................................................................................................................................................................................... 1536
INDIA - Inflation .......................................................................................................................................................................................... 1537
INDIA - WPI ................................................................................................................................................................................................ 1538
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 1539
INDIA - Panic in India ................................................................................................................................................................................. 1540
INDIA - India Rupee Collapse Showing Signs of Exhaustion ............................................................................................................. 1542
INDIA - Watch Out For RE-Emergence of Food Price Inflation ........................................................................................................... 1543
SOUTH AFRICA ............................................................................................................................................................................................ 1545
EMERGING MARKETS ....................................................................................................................................................................................... 1547
CHARTS OF NOTE ....................................................................................................................................................................................... 1547
NEW--CHARTS Falling EM Currencies .................................................................................................................................................. 1547
CHARTS Post-China 16 ......................................................................................................................................................................... 1548
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 1549
March 2015 Edition

15

CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 1549

CHARTS - Reserves versus World ............................................................................................................................................................ 1549
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 1551
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 1552
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 1553
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 1554
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 1555
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 1556
RESEARCH OF NOTE .................................................................................................................................................................................. 1557
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ............................................... 1557
EMERGING MARKETS - Crisis Temporarily Halted .............................................................................................................................. 1558
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ................................................. 1559
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 1564
EMERGING MARKETS - "TAPER" Shock Waves Across Asia ........................................................................................................... 1564
EMERGING MARKETS - Global Bond Yields React Together ............................................................................................................. 1566
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 1568
EMERGING MARKETS - Stunning Withdrawals.................................................................................................................................... 1574
EMERGING MARKETS - Bond Outflows Accelerating ......................................................................................................................... 1575
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning .......................................................... 1577
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration ........................................... 1579
EMERGING MARKETS - The Impact of "TAPER" ................................................................................................................................. 1582
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 1586
EMERGING MARKETS - Comparative Ease of Doing Business........................................................................................................... 1588
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ................................................................. 1589
ASEAN ........................................................................................................................................................................................................... 1592
NEW--ASEAN: A New Common Market.................................................................................................................................................... 1592
ASIA ............................................................................................................................................................................................................... 1596
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 1596
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 1596
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 1598
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 1598
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 1600
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 1601
ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 1601
ASIA: CHARTS A Short Term Dead Cat Bounce? .......................................................................................................................... 1602
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................ 1603
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ...................................................................................... 1603
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 1604
ASIA - Regional Risk-Reward .................................................................................................................................................................... 1606
ASIA - Credit Contraction Problems ...................................................................................................................................................... 1607
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ............................................. 1609
ASIA - Synchronized Markets .................................................................................................................................................................... 1611
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 1613
ASIA - Export Growth Looks Similar to Pre-2008 ................................................................................................................................. 1614
ASIA - Global Slowing Quickly a Worsening Situation Across Asia ................................................................................................. 1618
ASIA - Risks All on the Downside for Asia ........................................................................................................................................... 1619
ASIA - Demographic Headwinds ............................................................................................................................................................ 1622
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 1623
LATIN AMERICA ........................................................................................................................................................................................... 1625
VENEZUELA Signs of a Crack-up Boom and Dictatorship .............................................................................................................. 1625
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................ 1625
MIDDLE EAST ............................................................................................................................................................................................... 1627
TURKEY ..................................................................................................................................................................................................... 1627
US ECONOMY ..................................................................................................................................... 1628

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 1630
MACRO - US Macro Data .................................................................................................................................................................................... 1630
CHARTS OF NOTE ....................................................................................................................................................................................... 1630
NEW-MACRO Commodity Indexs Nosedive Points to Clear Global Slowdown ................................................................................... 1630
NEW-MACRO Goldman Sachs Global Leading Indicator Has Plummeted ........................................................................................... 1631
NEW-MACRO Goldmans GLI Momentum versus Global Industrial Production Goes Into Contraction ............................................... 1631
NEW-MACRO 2015 World GDP Growth versus World Stocks .............................................................................................................. 1632
NEW-MACRO World GDP Annual Estimates versus World Stocks ...................................................................................................... 1632
NEW-MACRO World Economies Cutting Rates to Avoid Economic Contraction .................................................................................. 1633
NEW-MACRO World Economies Cutting Rates to Avoid Economic Contraction By Country ............................................................ 1633
NEW-MACRO US Macro in Q1 2015 versus Prior First Quarters Says Something is Wrong ........................................................... 1634
NEW-MACRO US Q4 GDP versus S&P 500 Suggests a Major Divergence Must Be Corrected ......................................................... 1634
MACRO Divergence between Income/Job Growth and Fed Balance Sheet & Financial Markets ........................................................ 1635
MACRO US Economic Surprises Rising While EMU Declines .............................................................................................................. 1635
MACRO US Macro Surprise Index ......................................................................................................................................................... 1635
MACRO Growing Unallocated Global Currency Reserves? ................................................................................................................ 1636
MACRO World Trade Volumes ............................................................................................................................................................... 1638
MACRO Marginal Utility .......................................................................................................................................................................... 1638
MACRO Global Manufacturing PMI ........................................................................................................................................................ 1639
March 2015 Edition

16

MACRO Credit Markets Diverging .......................................................................................................................................................... 1639

MACRO US Macro Complacency ........................................................................................................................................................... 1640
MACRO Macro Implied Vols ................................................................................................................................................................... 1640
MACRO Markets Stretched .................................................................................................................................................................... 1641
RESEARCH OF NOTE ........................................................................................................................................................................................ 1642
NEW-MACRO Recovery? Central Banks Are Easing Policy For 50% of The World's Population............................................................ 1642
MACRO A World Recession? ..................................................................................................................................................................... 1644
MACRO - US the Safehaven in a Best of a Bad Lot Choice ...................................................................................................................... 1645
MACRO The Ambivalent Superpower ..................................................................................................................................................... 1647
MACRO Things Worse than Slow Growth ................................................................................................................................................. 1649
MACRO - US & Global Growth Will Slow Dramatically on a Per Capita Basis ............................................................................................ 1652
MACRO - Serious Structural US Problems Impeding Global Competitiveness ........................................................................................... 1654
MACRO - Output Gap .................................................................................................................................................................................... 1661
US INVESTMENT CYCLE ...................................................................................................................................................... 1670

CHARTS OF NOTE ............................................................................................................................................................................................. 1670
NEW-CHART Current Economic Cycle Is Getting Old In The Tooth ...................................................................................................... 1670
NEW-CHART US Recession Cycle Suggests Cycle May Be Close To Ending ......................................................................................... 1672
CHART US Recession Cycle Suggests Cycle May Be Close To Ending ................................................................................................... 1672
CHART $77T in Household Net Worth Growth Keeps an Illusion Going ................................................................................................... 1673
CHART - Economy in Decline from Consuming More than it Produces ....................................................................................................... 1674
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 1674
ECONOMIC INDICATORS .................................................................................................................................................................................. 1676
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 1676
RESEARCH - The US Economy Continues to Tank under Obama.......................................................................................................... 1676
REFERENCE CHARTS ............................................................................................................................................................................. 1678
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 1683
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 1683
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 1685
NEW-SOME HIGHLIGHTS............................................................................................................................................................................ 1685
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1689
NEW-CHARTS Big January Jump In Number of People Who Went from Not in the Labor Force to Employed ................................ 1689
NEW-CHARTS Non-Farm Payrolls Monthly and Yearly Change ....................................................................................................... 1689
NEW-CHARTS Civilian Unemployment Rate ......................................................................................................................................... 1690
NEW-CHARTS JOLTS-Total Job Openings ........................................................................................................................................... 1690
NEW-CHARTS New Jobless Claims w/ 4 Week Moving Average......................................................................................................... 1690
NEW-CHARTS Non-Farm Payrolls ........................................................................................................................................................ 1691
CHARTS US Monthly Job Growth .......................................................................................................................................................... 1692
CHARTS Labor Market Improving with Troublesome Signs .................................................................................................................. 1692
CHARTS Non-Farm Payrolls & Unemployment Rate ............................................................................................................................ 1693
CHARTS - Corporate Profits versus Wages .............................................................................................................................................. 1693
CHARTS - Standard of Living Decline and Bear Market in Real Terms Reflect Labor Participation ....................................................... 1693
CHARTS - Underemployment Gap ............................................................................................................................................................ 1695
CHARTS - Participation Rate..................................................................................................................................................................... 1696
CHARTS - Part Time Employment ............................................................................................................................................................ 1696
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 1697
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 1698
RESEARCH OF NOTE .................................................................................................................................................................................. 1703
NEW-RESEARCH - Gallup CEO: "America's 5.6% Unemployment Is One Big Lie"................................................................................ 1703
NEW-RESEARCH - This Is Why Hewlett-Packard Is Firing 58,000 ......................................................................................................... 1704
NEW-RESEARCH - American Express to cut more than 4,000 jobs........................................................................................................ 1705
RESEARCH - US Employment Trend Remains Chronic .......................................................................................................................... 1706
RESEARCH - Labor Force Participation Rates ......................................................................................................................................... 1709
RESEARCH - Bridging Jobs to Confidence & Sentiment.......................................................................................................................... 1712
RESEARCH - Participation Rate at 1979 Carter Levels ........................................................................................................................... 1715
SITUATIONAL SUMMARY & ANALYSIS ..................................................................................................................................................... 1716
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 1722
A GRAPHIC HIGHLIGHT .............................................................................................................................................................................. 1722
CHARTS & TABLES ...................................................................................................................................................................................... 1723
NEW-CHARTS UMich Consumer Sentiment Tumbles Most In 16 Months ........................................................................................... 1723
NEW-CHARTS Consumer Comfort Plunges Most In 10 Months ........................................................................................................... 1724
CHARTS Only 16% Think Future Employment Opportunities Will Be Better ........................................................................................ 1725
CHARTS Inequality Eventually Leads to Economic Adjustments Often Precipitously ....................................................................... 1725
CHARTS - NFIB Small Business Sentiment .............................................................................................................................................. 1726
CHARTS - Orange Book ............................................................................................................................................................................ 1726
RESEARCH OF NOTE .................................................................................................................................................................................. 1727
RESEARCH Small Business Confidence is a Major Problem in America ............................................................................................. 1727
RESEARCH Americas Crisis of Trust .................................................................................................................................................... 1729
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 1731
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 1731
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 1736
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 1736
NEW-American Association of Independent Investors ................................................................................................................................. 1737
March 2015 Edition

17

NEW-Investors Intelligence ........................................................................................................................................................................... 1737

NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 1738
NEW-Small Business Optimism .................................................................................................................................................................... 1740
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 1742
NEW-Margin Levels ....................................................................................................................................................................................... 1743
NEW-Real Margin Debt as % of GDP ........................................................................................................................................................... 1749
NEW-Margin Debt versus S&P 500............................................................................................................................................................... 1749
NEW-Mutual Fund Cash Levels v S&P 500 .................................................................................................................................................. 1751
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 1754
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 1754
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 1755
NEW-TRIN ..................................................................................................................................................................................................... 1756
NEW-McClellan Oscillator ............................................................................................................................................................................. 1757
CHARTS OF NOTE ............................................................................................................................................................................................. 1758
NEW-CHARTS Asset Allocation Global Equities .................................................................................................................................... 1758
NEW-CHARTS Asset Allocation Global Bonds ....................................................................................................................................... 1758
NEW-CHARTS Active versus Passive Funds Allocation ........................................................................................................................... 1759
NEW-CHARTS Investors Intelligence Survey of % Bears ......................................................................................................................... 1759
NEW-CHARTS Sentiment at Post 2008 Crisis Highs ................................................................................................................................ 1761
NEW-CHARTS CNBC Viewership Steadily Falling .................................................................................................................................... 1762
NEW-CHARTS Investor Allocation Trends for Stocks, Bonds and Cash .................................................................................................. 1763
NEW-CHARTS Uptick in Feds Financial Stress Index Composite ........................................................................................................... 1764
CHARTS Fear Barometer Diverges with VIX, CDS IG Index ................................................................................................................. 1765
CHARTS Extreme Complacency Seen Near End of Cycles .................................................................................................................. 1765
CHARTS Complacency Seen In PE/VIX ................................................................................................................................................. 1766
CHARTS Post Crisis Sentiment Profile Shows a Clear Ending Pattern ................................................................................................. 1766
CHARTS Smart Money Flows ................................................................................................................................................................ 1768
CHARTS Fed Assets versus Bullish Sentiment ..................................................................................................................................... 1768
CHARTS Macro Support Has Technically Broken Down ....................................................................................................................... 1769
CHARTS US Surprise Index Setting Up for Downturn ........................................................................................................................... 1769
CHARTS The Public No Longer Trusts the Market Feel it is Manipulated and Ineffectively Regulated ......................................... 1770
RESEARCH OF NOTE ........................................................................................................................................................................................ 1771
NEW-SENTIMENT: "Everything Is Awesome" American Consumers Are The Happiest In 11 Years ......................................................... 1771
NEW-SENTIMENT: For CNBC, 2014 Was The Worst Year. Ever. .............................................................................................................. 1772
NEW-SENTIMENT: An Astounding Number Of Americans Aren't Investing A Cent.................................................................................... 1773
SENTIMENT: US Households to Withdraw $430 Billion From Stocks In 2014 ............................................................................................ 1778
SENTIMENT: Elliott Wave's View from the Top ............................................................................................................................................ 1781
SITUATIONAL SUMMARY & ANALYSIS .................................................................................................................................................. 1785
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 1789
LATEST ..................................................................................................................................................................................................... 1789
NEW-CHARTS Retail Sales Have 2 Mo Change Drop Dating Back to 2009 ........................................................................................ 1793
NEW-CHARTS Retails Sales Mo-o-Mo Drops ....................................................................................................................................... 1793
NEW-CHARTS Estimated Change in Monthly Sales for Retail & Food Services by Kind .................................................................... 1794
NEW-CHARTS What Americans Spent Their "Gas Savings" On .......................................................................................................... 1794
NEW-CHARTS Retail Sales-Previous Month Comparisons ................................................................................................................... 1796
NEW-CHARTS No Offset to Plunging Gas Sales in Ex-Auto, Ex Gas .................................................................................................. 1797
NEW-CHARTS Deflated Retail (ex Auto) Christmas and Aftermath ...................................................................................................... 1797
NEW-CHARTS Retail Sales Control Group Y-o-Y and Sequential Change .......................................................................................... 1798
NEW-CHARTS Total Household Debt Added Since the Great Financial Crisis .................................................................................... 1798
NEW-CHARTS Total Household Debt Added in Q4 2014 ..................................................................................................................... 1799
NEW-CHARTS Real Personal Consumption ......................................................................................................................................... 1799
CHARTS Discretionary Retail Sales ....................................................................................................................................................... 1800
CHARTS False Signal of Consumer Re-Leveraging .............................................................................................................................. 1802
CHARTS Sub-Prime Lending Drives Spending ..................................................................................................................................... 1803
CHARTS Retail Sales ............................................................................................................................................................................. 1803
CHARTS Retail Sales - Details ............................................................................................................................................................... 1805
CHARTS Consumer Credit Growth Since Cycle Peak ........................................................................................................................... 1806
CHARTS Real Income is The Key Driver of Consumption Spending .................................................................................................... 1806
CHARTS Consumer Credit Drove Household Debt in Q2 Mortgage Debt Lagged ............................................................................ 1807
CHARTS Discretionary Spending Showing Signs of Cracking .............................................................................................................. 1807
CHARTS - Real Disposable Personal Income .......................................................................................................................................... 1808
CHARTS - Real Consumption Expenditure ............................................................................................................................................... 1810
CHARTS - Consumer Credit Deleveraging ............................................................................................................................................... 1811
CHARTS - Core Retail Growth .................................................................................................................................................................. 1812
RESEARCH OF NOTE .................................................................................................................................................................................. 1813
NEW-RESEARCH - Headwinds for US Consumers & Home Buyers ....................................................................................................... 1813
NEW-RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting ................................................................. 1814
RESEARCH - Golden Era of the 1950s/60s Was an Anomaly, Not the Default Setting .......................................................................... 1815
RESEARCH - 95% of Consumer Credit Lending Going towards Student & Car Loans ........................................................................... 1817
RESEARCH - Thanksgiving Retail Sales Results ..................................................................................................................................... 1819
RESEARCH - Gallup Survey Shows -10% Reduction in Christmas Buying Plans ................................................................................... 1822
RESEARCH - The Wal-Mart Measure or How the US Consumer Is the Global Engine .......................................................................... 1823
RESEARCH - A Sequential Decline in Wages .......................................................................................................................................... 1824
March 2015 Edition

18

RESEARCH - Final Sales Signals Pending Potential Recession on the Horizon ..................................................................................... 1825
RESEARCH - Consumers Using Savings to Maintain Life Style .............................................................................................................. 1825
RESEARCH - The Destruction of America's Middle Class ....................................................................................................................... 1828
RESEARCH - Dramatic Slowing in Restaurant Business ......................................................................................................................... 1828
RESEARCH - Signs of Serious Troubles .................................................................................................................................................. 1829
RESEARCH - Falling Real Disposable Income means Falling Consumption ........................................................................................... 1832
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 1840
LATEST ..................................................................................................................................................................................................... 1841
xNEW-CHARTS Ratio of Coincident-to-Lagging Conference Board Indices ........................................................................................ 1844
NEW-CHARTS GDP Q4 2014 Revised Components Table .................................................................................................................. 1845
NEW-CHARTS Quarterly Change in % Contributions to GDP .............................................................................................................. 1845
NEW-CHARTS Three Reasons CAPEX is Faltering .............................................................................................................................. 1845
NEW-CHARTS ISM Rally Has Petered Out & Expected Inflation Has Fallen ....................................................................................... 1846
NEW-CHARTS Philly Fed Rolling Over .................................................................................................................................................. 1847
NEW-CHARTS US Profits & Sales Have Stalled ................................................................................................................................... 1848
NEW-CHARTS Real GDP versus CAPEX ............................................................................................................................................. 1848
NEW-CHARTS Change In Inventories Inflated from Lack of Demand ............................................................................................... 1849
NEW-CHARTS US GDP Revision for Q4-2014 ..................................................................................................................................... 1850
NEW-CHARTS Quarterly GDP by Component Breakdown ................................................................................................................... 1850
CHARTS Long Term US GDP Growth Estimates FOMC versus CBO ............................................................................................... 1852
CHARTS US Real Domestic Product Running Out of Runway .......................................................................................................... 1852
CHARTS Steadily Falling Real US Growth Estimates ........................................................................................................................... 1854
CHARTS US Power Consumption Tells the Real Story of US Growth & De-Industrialization .............................................................. 1855
CHARTS US Real Trade Gap (Ex-Petroleum) ....................................................................................................................................... 1855
CHARTS Consecutive Quarters of Contracting Growth Looming .......................................................................................................... 1856
CHARTS Bloombergs Consensus GDP Forecasts 2011-2014.......................................................................................................... 1857
CHARTS GDP Growth During Current Recovery Lags Past Expectations ........................................................................................... 1857
CHARTS Trends of Output, Hours and Productivity .............................................................................................................................. 1858
CHARTS Weak US Capacity Utilization ................................................................................................................................................. 1859
CHARTS A US Recession Likely IF Liquidity is not increased and TAPER Sustained ......................................................................... 1859
CHARTS Barrons Sees 4% Growth The Ultimate Contrarian Indicator ............................................................................................. 1860
CHARTS Firms Revising Lower Q1 Growth on Weakening Retail Sales .............................................................................................. 1861
CHARTS Negative Economic Surprises Began in November ............................................................................................................... 1861
CHARTS What Americans Experience Daily and its Isnt Growth ......................................................................................................... 1862
CHARTS - Manufacturing .......................................................................................................................................................................... 1863
CHARTS - Exports ..................................................................................................................................................................................... 1863
CHARTS - Durable Goods ......................................................................................................................................................................... 1864
CHARTS - NFIB Small Business CAPEX .................................................................................................................................................. 1864
CHARTS - US Manufacturing Conditions Deteriorating ............................................................................................................................ 1865
RESEARCH OF NOTE .................................................................................................................................................................................. 1866
NEW-RESEARCH - BEA Revises 4th Quarter 2014 GDP Growth Downward to 2.18% ......................................................................... 1866
NEW-RESEARCH - The U.S. Economy is Dead ...................................................................................................................................... 1867
NEW-RESEARCH - Q4 GDP Revised Down To 2.2% From 5.0%: Full Breakdown ............................................................................... 1870
RESEARCH - US Q1 GDP ........................................................................................................................................................................ 1872
RESEARCH - US GDP Growth Forecasts ................................................................................................................................................ 1877
RESEARCH - Economic Recoveries Don't Look Like This! ...................................................................................................................... 1877
RESEARCH - 2nd Worst Decade in Over 220 Years (And Getting Worse) ............................................................................................. 1878
RESEARCH - US Economy is being fundamentally transformed ............................................................................................................. 1880
RESEARCH - Shrinking CAPEX, Expanding Buybacks and Dividends ................................................................................................... 1883
REFERENCE - Prior Posts ............................................................................................................................................................................ 1887
RESEARCH - US Economic Recovery Has Peaked ................................................................................................................................. 1887
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 1896
US PUBLIC POLICY STATE OF THE UNION DIRECTION & PRIORITES .......................................................................... 1904
NEW-LATEST ............................................................................................................................................................................................ 1905
BEGINNINGS OF SOCIAL UNREST & THE MILITARIZATION OF POLICE .......................................................................................... 1905
CORPORATE INVERSIONS ..................................................................................................................................................................... 1906
FERGUSON ............................................................................................................................................................................................... 1906
MILITARIZATION OF POLICE .................................................................................................................................................................. 1907
POLLS ........................................................................................................................................................................................................ 1908
INCARCERATION ..................................................................................................................................................................................... 1908
FLAWED TAX POLICY .............................................................................................................................................................................. 1909
MINIMUM WAGE ....................................................................................................................................................................................... 1909
SOCIAL CANCERS ................................................................................................................................................................................... 1909
CORRUPTION & MALFEASANTS ............................................................................................................................................................ 1909
INEQUALITY .............................................................................................................................................................................................. 1909
CREEPING SOCIALISM ............................................................................................................................................................................ 1909
POLICIAL PARALYSIS .............................................................................................................................................................................. 1910
STATE OF THE UNION ............................................................................................................................................................................. 1910
NSA-SECURITY-SURVEILLANCE COMPLEX......................................................................................................................................... 1910
OBAMACARE ............................................................................................................................................................................................ 1911
March 2015 Edition

19

GENERAL PUBLIC POLICY...................................................................................................................................................................... 1913

STATE OF THE UNION - Direction & Priorities ............................................................................................................................................ 1914
th
NEW-STATE OF THE UNION Remarks by the President in State of the Union Address January 20 , 2015 .................................. 1914
NEW-STATE OF THE UNION Free College Wasn't Just a Give Away It Was A Trial Balloon .......................................................... 1924
NEW-CHARTS The Cost of Healthcare By Country Spending Per Person........................................................................................ 1927
NEW-CHARTS The Bankrupt US Healthcare System......................................................................................................................... 1927
NEW-CHARTS Rise in Number of Homeless Children .......................................................................................................................... 1928
NEW-CHARTS One-Third of All Homeless Live in These 10 Cities ...................................................................................................... 1929
NEW-CHARTS Trends in American Public Schooling Since 1970 ........................................................................................................ 1930
NEW-CHARTS Size of US Army Since 1946 ......................................................................................................................................... 1930
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 1931
CHARTS Changing Presidential Stance ................................................................................................................................................ 1932
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 1932
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 1933
RESEARCH OF NOTE .................................................................................................................................................................................. 1934
NEW-POLICY - A 'Shadow" State of the Union ........................................................................................................................................ 1934
NEW-POLICY - Banks Remove the "Heart" of Dodd-Frank ...................................................................................................................... 1937
NEW-POLICY - Wall Street Moves to Put Taxpayers on the Hook for Derivatives Trades ...................................................................... 1941
NEW-POLICY - The Death Cross of American Business ......................................................................................................................... 1944
POLICY - The Death Cross of American Business ................................................................................................................................... 1944
POLICY - The State of the Union I have a Dream! .............................................................................................................................. 1947
POLICY - A self-destructive path toward oblivion...................................................................................................................................... 1951
POLICY - Indictment of US Public, Fiscal & Monetary Policy ................................................................................................................... 1956
POLICY - The Crisis of Trust Continues to Worsen .................................................................................................................................. 1969
POLICY - The Stunning Truth about Inequality In America....................................................................................................................... 1970
POLICY - Pointing US towards Government Dependence ....................................................................................................................... 1971
POLICY - Yet another Game of Deception ................................................................................................................................................ 1975
POLICY - Obamacare A Flawed Public Policy Implementation ................................................................................................................ 1979
POLICY - Financial Repression and Manipulated Illusions ....................................................................................................................... 1982
Manipulating Bad Financial Data ........................................................................................................................................................... 1982
Manipulating Bad Nuclear Facts ............................................................................................................................................................ 1983
Manipulating Oil Spill Info ....................................................................................................................................................................... 1984
Manipulating Data on Other Environmental Issues ............................................................................................................................... 1984
Manipulating Food Safety Data .............................................................................................................................................................. 1985
Manipulating Health Safety Data ........................................................................................................................................................... 1985
Manipulating Metrics for War ................................................................................................................................................................. 1985
The Core Problem .................................................................................................................................................................................. 1985
POLICY - US Economic Decline is Obvious to Anyone Caring to Look ................................................................................................... 1986
POLICY - Policy Uncertainty and Confidence in Monetary Policy Direction is exposed........................................................................... 1989
POLICY - "What is good for GM is good for America" is no longer correct .............................................................................................. 1991
POLICY - Where is the Logic In US Public Policy ..................................................................................................................................... 1992
POLICY - What is the Real Driving Force Behind the New Immigration Law? ......................................................................................... 1995
POLICY - Crony Capitalism and How America Lost its Way! ................................................................................................................... 1998
MONETARY POLICY TAPER IGNITES GLOBAL DOLLAR STRENGTH ........................................................................... 2007

RESEARCH WE FOLLOWED ............................................................................................................................................................................. 2007
NEW-LATEST ................................................................................................................................................................................................ 2007
TAPER IMPLEMENTATION & 2ND HALF LIQUDITY SQUEEZE ................................................................................................................. 2008
THE BERNANKE YELLEN/FISHER TRANSITION ................................................................................................................................... 2010
FED POST DECEMBER TAPER ............................................................................................................................................................... 2012
FED PRE-DECEMBER TAPER ................................................................................................................................................................. 2013
TAPER ........................................................................................................................................................................................................... 2016
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2019
NEW-CHARTS: Fed is Allowing Adjusted Monetary Base to Fall ................................................................................................................ 2019
NEW-CHARTS: Federal Reserve Monetary Base Since 1918 ..................................................................................................................... 2020
NEW-CHARTS: US Nominal GDP & Credit Market Debt Owed Since 1952 ............................................................................................... 2020
NEW-CHARTS: Fed Balance Sheet & Policy Rate Target ........................................................................................................................... 2021
NEW-CHARTS: Cash Balances versus Total Reserve Balances................................................................................................................. 2021
NEW-CHARTS: Fed Balance Sheet and QE Versions ................................................................................................................................. 2022
NEW-CHARTS: Major US Financial Institutional Leverage Ratios ............................................................................................................... 2024
NEW-CHARTS: Fed Balance Sheet Composition ........................................................................................................................................ 2025
NEW-CHARTS: Cash Bank Holdings............................................................................................................................................................ 2026
CHARTS: Debt Needed to Create $1 GDP ................................................................................................................................................... 2027
CHARTS: Markets May be Ahead of Slowing Liquidity Flow Rates ............................................................................................................. 2027
CHARTS: Primary Dealer Repo Fails............................................................................................................................................................ 2028
CHARTS: Repo Volumes .............................................................................................................................................................................. 2028
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2029
CHARTS: Repo volumes Agency + MBS ................................................................................................................................................... 2029
CHARTS: Feds Reverse Repo Agreements ................................................................................................................................................ 2030
CHARTS: Why Does the Fed Need Such a Large Options Trading Contract with ALL Exchanges? .......................................................... 2031
CHARTS: 10 Year Yield Suggests End to Yellen Honeymoon ..................................................................................................................... 2032
CHARTS: Capitalism Doesnt Work Without Savings for Investment Where is the Savings? ................................................................. 2032
CHARTS: Net National Savings Rate............................................................................................................................................................ 2033
CHARTS: Mispricing of Risk Reaching Extremes ......................................................................................................................................... 2033
March 2015 Edition

20

CHARTS: Unless you were a Banker, ZIRP Has Accomplished Zilch! ........................................................................................................ 2034
CHARTS: Ratio of Capital v Consumer Goods Production .......................................................................................................................... 2035
CHARTS: Feds Targeted Credit Growth Opportunities................................................................................................................................ 2036
CHARTS: 90 Day Delinquent Loans by Type Student Loans a Growing Problem .................................................................................... 2036
CHARTS: A Third of US GDP is Now Going to Repay Interest & Principle on Loans ................................................................................. 2037
CHARTS: M2 Money Velocity ....................................................................................................................................................................... 2039
CHARTS: Net Foreign Purchases of US Treasuries ..................................................................................................................................... 2039
CHARTS: US Increase in Money Printing versus GDP ................................................................................................................................ 2040
CHARTS: US Consumers Failed Attempt at Deleveraging .......................................................................................................................... 2041
CHARTS: Traditional Bank Liabilities v GDP ................................................................................................................................................ 2042
NEW- RATES: Is There a Zero Bound for US Rates? .................................................................................................................................. 2043
RATES: Historical Policy Rates ..................................................................................................................................................................... 2044
RATES: Debt ................................................................................................................................................................................................. 2045
RATES: Stages of Fed Forward Guidance ................................................................................................................................................... 2045
RATES: Real Interest Rates .......................................................................................................................................................................... 2046
RATES: Eight Rate Issues for the Fed Up or Down................................................................................................................................... 2047
NEW-INFLATION: Market-Based Inflation Expectations on the Rebound ................................................................................................... 2048
NEW-INFLATION: US Inflation Education-Medical-Food-Housing versus CPI ......................................................................................... 2048
INFLATION: Price Inflation through Decline in Purchasing Power of the Dollar .......................................................................................... 2050
INFLATION: Official Inflation Picture Remains Subdued .............................................................................................................................. 2050
INFLATION: Cost of Eating ........................................................................................................................................................................... 2051
INFLATION: The Cost of Breakfast ............................................................................................................................................................... 2052
th
INFLATION: July 4 Cost of Beef Burger ...................................................................................................................................................... 2053
INFLATION: Bloombergs July 4th Barbecue Index ....................................................................................................................................... 2053
INFLATION: Butter on a Roll ......................................................................................................................................................................... 2054
INFLATION: Back to School Shocker............................................................................................................................................................ 2055
INFLATION: Where Inflation Isnt (Yet) - Energy .......................................................................................................................................... 2056
INFLATION: Most Commonly Used Items are rising faster than CPI ........................................................................................................... 2057
INFLATION: Back to School Shocker............................................................................................................................................................ 2057
RESEARCH OF NOTE ........................................................................................................................................................................................ 2058
NEW-RESEARCH Global Currency Wars & Deflationary Pressures ........................................................................................................ 2058
NEW-RESEARCH Debt is a promise of something of value in the future ................................................................................................. 2064
NEW-RESEARCH Is NIRP Coming To America? ..................................................................................................................................... 2071
NEW-RESEARCH Deflation is a Problem for the Fed With Shrinking Growth Rates ............................................................................... 2074
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2081
REPO FAILS .................................................................................................................................................................................................. 2082
REVERSE REPO Feds Stealth Program to Protect Markets .................................................................................................................... 2083
FISCAL POLICY A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................. 2085
RESEARCH WE FOLLOWED ............................................................................................................................................................................. 2085
A SHRINKING BUDGET DEFICIT IS NOT ALL GOOD NEWS ................................................................................................................... 2085
20 U.S. companies that paid 0% in taxes ............................................................................................................................................................ 2085
FISCAL MATTERS ........................................................................................................................................................................................ 2087
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 2089
NEW-CHARTS US Federal Government Debt to GDP ............................................................................................................................. 2089
NEW-CHARTS Mandatory versus Discretionary Spending ....................................................................................................................... 2089
NEW-CHARTS Drivers of US Debt ............................................................................................................................................................ 2090
NEW-CHARTS State & Local Tax Revenues ............................................................................................................................................ 2091
NEW-CHARTS Total Government Expenditures versus Real GDP .......................................................................................................... 2091
NEW-CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ............................................................................................ 2092
NEW-CHARTS US Debt About to Pass $18T and 102% of GDP ............................................................................................................. 2092
NEW-CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax .............................................................................................. 2093
NEW-CHARTS
Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ............................ 2094
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 2097
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 2097
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 2097
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 2098
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 2099
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 2099
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 2100
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 2100
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 2100
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 2101
CHARTS - US Trade Balance Improvement ................................................................................................................................................. 2101
CHARTS - Growth & Jobs ............................................................................................................................................................................. 2102
CHARTS - Taxes & Spending ....................................................................................................................................................................... 2106
CHARTS - Politics & Policy ........................................................................................................................................................................... 2109
CHARTS - The Stakes ................................................................................................................................................................................... 2110
CHARTS - Official Fiscal Deficit & Debt ........................................................................................................................................................ 2112
CHARTS - Payroll Tax Holiday ...................................................................................................................................................................... 2113
CHARTS - Tax Rate Comparisons ................................................................................................................................................................ 2114
CHARTS - Risk Perceptions .......................................................................................................................................................................... 2115
CHARTS - 2013 Quarterly Impact ................................................................................................................................................................. 2116
CHARTS - Budget Deficit .............................................................................................................................................................................. 2117
CHARTS - Sovereign Debt ............................................................................................................................................................................ 2120
March 2015 Edition

21

CHARTS - State & Local Government Drag ................................................................................................................................................. 2121

CHARTS - Government Dependence ........................................................................................................................................................... 2124
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 2125
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 2129
BUDGET - What You Need to Know ................................................................................................................................................................... 2131
BUDGET - Political Budget Cowardice and Capitulation .............................................................................................................................. 2132
BUDGET - Political Budget Cowardice and Capitulation - 2 ......................................................................................................................... 2134
BUDGET - The Ultimate in Political Can-Kicking! ......................................................................................................................................... 2136
BUDGET - The Next Step in the Collapse Of The Dollar .............................................................................................................................. 2139
BUDGET - As Represented and Spun for the Public .................................................................................................................................... 2142
BUDGET - Implications .................................................................................................................................................................................. 2143
BUDGET - A Budget That Institutionalizes Big Government ........................................................................................................................ 2145
BUDGET - The Secrets in The Budget ......................................................................................................................................................... 2149
RESEARCH OF NOTE ........................................................................................................................................................................................ 2152
NEW-RESEARCH Private Pension Fund Levels Fall Behind .................................................................................................................... 2152
NEW-RESEARCH - State & Local Government Crisis ................................................................................................................................. 2156
NEW-RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed ................................................................................. 2162
NEW-RESEARCH - $89.5 trillion in liabilities ................................................................................................................................................ 2164
NEW-RESEARCH - The Federal Government is "cooking the books"! ........................................................................................................ 2168
NEW-RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ............................................................................................ 2172
NEW-RESEARCH NIA 2015 U.S. Debt Crisis Report ............................................................................................................................... 2175
RESEARCH - Budget Deficit Shrinking ......................................................................................................................................................... 2185
RESEARCH - Avoiding Taxes ....................................................................................................................................................................... 2187
RESEARCH - A Confluence Of Risky Economic Events .............................................................................................................................. 2188
RESEARCH - Everyone Hates Sequestration, But Few Can Agree On What to Cut .................................................................................. 2189
RESEARCH - $70T Off-Balance Sheet Federal Liabilities ........................................................................................................................... 2191
BUDGET SELLOUT ............................................................................................................................................................................................. 2194
BUDGET AGREEMENT ................................................................................................................................................................................ 2197
GOVERNMENT SHUTDOWN ....................................................................................................................................................................... 2198
SITUATIONAL SUMMARY & ANALYSIS ............................................................................................................................................................ 2199
KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 2201

EMPLOYMENT .................................................................................................................................................................................................... 2205
LATEST ..................................................................................................................................................................................................... 2206
CHARTS & TABLES ...................................................................................................................................................................................... 2209
NEW-CHARTS Industries That Have Been Hiring ................................................................................................................................. 2209
NEW-CHARTS Top 5 Industry Cuts ....................................................................................................................................................... 2209
NEW-CHARTS Employees in the US by Industry .................................................................................................................................. 2209
NEW-CHARTS Workers Aged 55 and Over ........................................................................................................................................... 2210
NEW-CHARTS Percentage of Over 65 in Labor Force.......................................................................................................................... 2211
NEW-CHARTS Non Participation Has Stabilized? ................................................................................................................................. 2211
NEW-CHARTS Share of Population Retired .......................................................................................................................................... 2212
NEW-CHARTS Goods Producing Workers versus Government Payroll ............................................................................................. 2212
NEW-CHARTS Not in the Labor Force................................................................................................................................................... 2213
NEW-CHARTS Labor Force Participation versus Not in the Labor Force ............................................................................................. 2213
CHARTS Small Business Not the Focus of A Consolidating Banking Industry ..................................................................................... 2215
CHARTS Those Leaving Work Force Likely Not to Return .................................................................................................................... 2215
CHARTS Workers Not In the Labor Force Soars ................................................................................................................................... 2216
CHARTS The Trend of a Breadwinner Economy ................................................................................................................................ 2216
CHARTS Trend of a Goods Producing Economy .................................................................................................................................. 2217
CHARTS Trend of a Part Time Working Economy .............................................................................................................................. 2217
CHARTS Jobs in HES = Health, Education and Social Services .......................................................................................................... 2218
CHARTS NFP Jobs Less HES ............................................................................................................................................................... 2218
CHARTS 1,446,000 Fewer People Working Full Time Aug 14 the Aug 08.......................................................................................... 2219
CHARTS Employment is Part Time in Food Services and Drinking Places .......................................................................................... 2219
CHARTS QE Has A Diminishing Effect on US Job Creation ................................................................................................................. 2220
CHARTS Labor Participation Rate ......................................................................................................................................................... 2220
CHARTS US Industrial Production versus Manufacturing Jobs............................................................................................................. 2221
CHARTS Total Compensation Growth Lingering at 2.9 Percent ........................................................................................................... 2221
CHARTS The Startling Long Term Unemployed Statistics .................................................................................................................... 2222
CHARTS Finding Work That Pays Enough to Support a Family Is Nearly Impossible ......................................................................... 2223
CHARTS Labor Force Participation by Age ........................................................................................................................................... 2224
CHARTS - America Becoming a Country of Part Time Workers .............................................................................................................. 2225
CHARTS - Wages & Salary Accruals / GDP ............................................................................................................................................. 2226
CHARTS US Employment/Population Ratio Total in Labor Force ......................................................................................................... 2226
CHARTS US Industrial Production v Manufacturing Jobs...................................................................................................................... 2227
CHARTS - Part-Time Employment ............................................................................................................................................................ 2227
CHARTS - Nonfarm Payrolls Y-O-Y DECLINE ......................................................................................................................................... 2227
CHARTS - Hiring Stalled at 200K Per Month (Approximates ONLY the New People Entering Workforce)............................................ 2228
CHARTS - The Under-Employment Gap ................................................................................................................................................... 2228
CHARTS Staycations A Sign of the FEAR of Job Loss & Competition for Jobs ................................................................................... 2229
RESEARCH OF NOTE .................................................................................................................................................................................. 2230
EMPLOYMENT - Job = Just Over Broke................................................................................................................................................... 2230
EMPLOYMENT - Working Age Americans without a Job Has Risen By 27 Million Since 2000 .............................................................. 2233
March 2015 Edition

22

EMPLOYMENT - At the Core of the US Chronic Unemployment is a Lack of Private Investment.......................................................... 2235
EMPLOYMENT - With and Without Obama's Recovery Plan ................................................................................................................... 2237
EMPLOYMENT - Millennials Devastated As American Dream Becomes Nightmare for Most ................................................................ 2238
EMPLOYMENT - 30 Mind-blowing Statistics about Americans Under The Age Of 30............................................................................. 2240
EMPLOYMENT - Going Nowhere Even With All Jobs Becoming Temporary Jobs and the Participation Rate Plummeting .................. 2243
EMPLOYMENT - Low-Wage Jobs Bias Continues to Hamper U.S. Recovery......................................................................................... 2244
EMPLOYMENT - A REAL Family Wage versus Part Time & HES ........................................................................................................... 2245
EMPLOYMENT - It is as much About the Quality, as the Quantity of Jobs .............................................................................................. 2252
1- CAPITAL SPENDING ............................................................................................................................................................................ 2255
2- SMALL BUSINESS OPTIMISM ............................................................................................................................................................. 2258
3- DEMOGRAPHIC SHIFT ........................................................................................................................................................................ 2262
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 2273
LATEST ..................................................................................................................................................................................................... 2273
STUDENT LOANS ..................................................................................................................................................................................... 2273
CHARTS & TABLES ...................................................................................................................................................................................... 2276
NEW-CHARTS Real Median Household Income in the United States .................................................................................................. 2276
NEW-CHARTS Food Stamps Number of Participants ........................................................................................................................ 2276
NEW-CHARTS Food Stamps Number of Participants per Employed ................................................................................................ 2277
NEW-CHARTS Food Stamps Cost Per Participant per Month ........................................................................................................... 2277
NEW-CHARTS Food Stamps Annual Program Cost .......................................................................................................................... 2278
NEW-CHARTS Education, Medical, Food, Housing Costs versus CPI ................................................................................................. 2278
NEW-CHARTS Rising Sub-Prime .......................................................................................................................................................... 2279
NEW-CHARTS Early Delinquencies on US Car Loans Has Been Rising ............................................................................................. 2281
NEW-CHARTS Student Loan Default Rates By Graduating Year ......................................................................................................... 2282
NEW-CHARTS Student Loan Graduating Debt Levels Class 2009 ................................................................................................... 2282
NEW-CHARTS Student Loan Borrowing Trends ................................................................................................................................... 2284
NEW-CHARTS Increasing Government Entitlement Dependency ........................................................................................................ 2284
CHARTS Increasing Government Entitlement Dependency .................................................................................................................. 2285
CHARTS US Household Balance Sheet ................................................................................................................................................ 2285
CHARTS Middle Class Not Sharing In Per Capita GDP ........................................................................................................................ 2286
CHARTS Real Personal Consumption Expenditures ............................................................................................................................. 2287
CHARTS Inflation Adjusted Net Worth for Typical Family Falls 36% in 10 Years ................................................................................. 2288
CHARTS Even Wal-Mart Discounting Cant Keep Up With Government Inflation ................................................................................ 2288
CHARTS Food Stamps Now Part of the American Way of Life ............................................................................................................. 2289
CHARTS Inflation Adjusted Hourly Earnings Remain Weak .................................................................................................................. 2290
CHARTS the Countrys Central Economic Challenge according to EPI ................................................................................................ 2291
CHARTS The New Sub-Prime Boom Auto Loans ............................................................................................................................... 2291
CHARTS Real Median Income Falls as Real Rates Turn Negative....................................................................................................... 2292
CHARTS Disposable Personal Income Per Capita ................................................................................................................................ 2292
CHARTS Real Disposable Income is Now Contracting ......................................................................................................................... 2293
CHARTS This is a Structural .................................................................................................................................................................. 2293
CHARTS Growing Temp Wages Impacting Real Disposable Income in America .............................................................................. 2294
CHARTS Real Disposable Income per Capita ....................................................................................................................................... 2295
CHARTS - Household Incomes a Sign of a Collapsing Middle Class ....................................................................................................... 2295
CHARTS - Food Stamps Now 14% of US Grocery Store Sales ............................................................................................................... 2296
RESEARCH OF NOTE .................................................................................................................................................................................. 2297
NEW-RESEARCH Fed's Household Credit Report Confirms It Is A Student And Car Loan "Recovery".............................................. 2297
RESEARCH How Can a 70% Consumption Have a Recovery When Real DI/Capital Falls ................................................................. 2299
RESEARCH - The Facts are clear. The US Standard of Living is Falling ................................................................................................ 2301
RESEARCH - The Facts are clear. The US Standard of Living is falling .................................................................................................. 2302
RESEARCH - Standards of Living and Artificial Expectations .................................................................................................................. 2305
RESEARCH - A Lack of Demand in US Economy .................................................................................................................................... 2307
RESEARCH - Full Time Jobs or Food Stamps & Disability? .................................................................................................................... 2308
STANDARD OF LIVING - Salary Compression ........................................................................................................................................ 2310
DISPOSABLE INCOME - 66M (20%) Below $28.8/Year Subsistence Level ........................................................................................... 2311
FOOD STAMPS - 46,405,204 Individuals, 22,257,647 Households below Poverty Line ......................................................................... 2312
DISPOSABLE INCOME - Bad Even in Nominal Terms ............................................................................................................................ 2314
INFLATION - It's There but the Government Doesn't Account for it. ........................................................................................................ 2314
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 2316
LATEST ..................................................................................................................................................................................................... 2316
CHARTS & TABLES ...................................................................................................................................................................................... 2320
NEW-POLICY San Francisco Y/Y Price Increase Indicator ................................................................................................................... 2320
NEW-POLICY Meaningful Housing Recovery On Hold Until Spring...................................................................................................... 2321
NEW-POLICY Housing Starts ................................................................................................................................................................ 2321
NEW-POLICY Existing & New Home Sales ........................................................................................................................................... 2322
NEW-POLICY Home Ownership Rate versus Rental Rate ................................................................................................................... 2322
NEW-POLICY Mortgages Past Due and Foreclosure Starts .............................................................................................................. 2323
NEW-POLICY Mortgage Spreads .......................................................................................................................................................... 2323
NEW-POLICY Lumber Sales .................................................................................................................................................................. 2324
CHARTS Total Real Estate Sales Activity vs. Mortgage Rates ............................................................................................................. 2326
CHARTS Home Price Slowdown Underlines Weak Demand ................................................................................................................ 2327
CHARTS National Home Price Medians & Indexes ............................................................................................................................... 2328
March 2015 Edition

23

CHARTS Multi-Family Shift Underway In America ................................................................................................................................. 2328

CHARTS Housing Completions Show Shift to Multi-Family Units ......................................................................................................... 2328
CHARTS New Home Prices ................................................................................................................................................................... 2329
CHARTS Housing Starts and Completions ............................................................................................................................................ 2330
CHARTS DJ Home Construction Index .................................................................................................................................................. 2330
CHARTS Consumer Attitudes About Home Ownership ......................................................................................................................... 2331
CHARTS Trailing 12 Month Average Median US New Home Sale Prices ............................................................................................ 2332
CHARTS US New Home Demand Still Flagging .................................................................................................................................... 2332
CHARTS Housing Completions Single Family Versus Multifamily ..................................................................................................... 2333
CHARTS Troubling Technicals in Housing Starts .................................................................................................................................. 2333
CHARTS NAHB Sentiment versus Mortgage Applications .................................................................................................................... 2334
CHARTS - Serious Housing & Household Spending Headwinds ............................................................................................................. 2334
CHARTS - Double Top in Construction Index ........................................................................................................................................... 2334
CHARTS - The Real Cost of Buying a Home 6.7 X Average Salary......................................................................................................... 2335
CHARTS - Household Formations ............................................................................................................................................................. 2335
CHARTS Falling Originations ................................................................................................................................................................. 2336
CHARTS Falling Credit Scores ............................................................................................................................................................... 2337
CHARTS Falling Down payments ........................................................................................................................................................... 2337
CHARTS Household Formations & First Time Buyers Collapse............................................................................................................ 2338
CHARTS Classic Technical Analysis Chart Showing Housing in an Uncompleted Corrective Wave ................................................... 2338
CHARTS - Housing Starts ......................................................................................................................................................................... 2339
CHARTS - Composition of Housing Sales ................................................................................................................................................ 2339
CHARTS - New Home Sales ..................................................................................................................................................................... 2340
CHARTS - Existing Residential Supply ..................................................................................................................................................... 2340
CHARTS - Housing Starts ......................................................................................................................................................................... 2341
RESEARCH OF NOTE .................................................................................................................................................................................. 2343
RESEARCH - BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble ......................................................... 2343
RESEARCH - A Single Family Income Insufficient and In Many Cases Two Is Insufficient ..................................................................... 2344
RESEARCH - Insight: A new wave of U.S. mortgage trouble threatens ................................................................................................... 2346
RESEARCH - Household Formation Drives Residential Real Estate ....................................................................................................... 2348
OVERVIEW ................................................................................................................................................................................................ 2351
CURRENT HOME OWNERSHIP TRENDS .............................................................................................................................................. 2357
$6.5 TRILLION IN MIDDLE CLASS NET WORTH EVAPORATES .......................................................................................................... 2360
NATIONAL STATISTICS: PRICE .............................................................................................................................................................. 2361
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................... 2363
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................ 2365
HOUSING: Even a Never Seen Before 30 Year Mortgage Rate can't Help Housing ............................................................................... 2366
HOUSING: Soaring FHA Delinquencies .................................................................................................................................................... 2368
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 2373
LATEST ..................................................................................................................................................................................................... 2373
NEW-CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ........................................................................................................... 2377
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 2377
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 2378
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 2378
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 2379
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 2380
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 2380
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 2381
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 2382
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 2383
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 2384
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 2384
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 2385
RESEARCH OF NOTE .................................................................................................................................................................................. 2387
COMMERCIAL REAL ESTATE - Capture market share and get the most out of the consumers that are in our stores ......................... 2387
COMMERCIAL REAL ESTATE - McDonalds Has Worst Month In A Decade ......................................................................................... 2388
COMMERCIAL REAL ESTATE - August Retail Sales: Post-Winter Bounce Fading Fast ....................................................................... 2388
COMMERCIAL REAL ESTATE - Weakness reported in restaurants, food service and processors and some retailers ........................ 2393
COMMERCIAL REAL ESTATE - Why Aren't "Confident" Consumers Spending? ................................................................................... 2394
COMMERCIAL REAL ESTATE - Retail Sales Have not Recovered to the 2007 Pre-Recession Level .................................................. 2396
COMMERCIAL REAL ESTATE - Why Retail Sales Are Faltering - 60% of Households Have No Real Income Gains .......................... 2399
COMMERCIAL REAL ESTATE - Wal-Mart Reduces Guidance - Again! ................................................................................................. 2402
COMMERCIAL REAL ESTATE - 35,000 Franchise Operators in Trouble ............................................................................................... 2403
COMMERCIAL REAL ESTATE - Retail Furniture Sales Collapse ............................................................................................................ 2404
COMMERCIAL REAL ESTATE - Lower Prices & Discounting Taking a Toll ........................................................................................... 2405
COMMERCIAL REAL ESTATE - Retail Sales Weaken on Price Discounting.......................................................................................... 2406
COMMERCIAL REAL ESTATE - Wal-Mart Looks to Grow by Embracing Smaller Stores ...................................................................... 2407
COMMERCIAL REAL ESTATE - INEQUALITY leads to Economic Adjustments .................................................................................... 2413
COMMERCIAL REAL ESTATE - A Bad Start to the Q Earnings Season ................................................................................................ 2414
COMMERCIAL REAL ESTATE - Gallup Highlights Consumers are straining against rising prices" ..................................................... 2415
COMMERCIAL REAL ESTATE - Markets Being "Duped" by Misinterpreting Misleading Data ............................................................... 2418
COMMERCIAL REAL ESTATE - Rising Beef Costs ................................................................................................................................. 2419
COMMERCIAL REAL ESTATE - - Rising "Prime" Retail Rents ............................................................................................................... 2423
March 2015 Edition

24

COMMERCIAL REAL ESTATE - Tablets Are Making Waiters Obsolete ................................................................................................. 2425
COMMERCIAL REAL ESTATE - Weakness in RETAIL Broadens ........................................................................................................... 2427
COMMERCIAL REAL ESTATE - Credit Spending Marginally Increasing - But Now on More Expensive Non-Discretionary ................. 2428
COMMERCIAL REAL ESTATE - Darden Results Disappoint as Olive Garden Sales Keep Declining & Sells Red Lobster .................. 2429
COMMERCIAL REAL ESTATE - Commercial Mortgage-Backed Securities: Hot ... But Very Dangerous .............................................. 2431
COMMERCIAL REAL ESTATE - The Dollar Tree Uptick in its earnings before following economic downturns ..................................... 2438
COMMERCIAL REAL ESTATE - E-Commerce Industry Is About To Explode......................................................................................... 2440
COMMERCIAL REAL ESTATE - Retailers' Profits Miss By Most In 13 Years: "Consumer Is Not Back" ................................................ 2441
COMMERCIAL REAL ESTATE - Imploding Retail Floor Space Requirements ....................................................................................... 2443
COMMERCIAL REAL ESTATE - Family Dollar to cut jobs, shut 370 stores as sales fall ........................................................................ 2446
COMMERCIAL REAL ESTATE - The Death of a 71% Consumption Driven Economy ........................................................................... 2449
COMMERCIAL REAL ESTATE - Getting Worse Fast .............................................................................................................................. 2450
COMMERCIAL REAL ESTATE - Unfolding Implosion .............................................................................................................................. 2452
COMMERCIAL REAL ESTATE - Unfolding Implosion - II ......................................................................................................................... 2453
COMMERCIAL REAL ESTATE - Financial Crisis II Coming..................................................................................................................... 2458
COMMERCIAL REAL ESTATE - Indoor Mall Retail in Trouble ................................................................................................................ 2465
COMMERCIAL REAL ESTATE - Mortgage bonds reflect diverging fortunes of US malls ....................................................................... 2468
COMMERCIAL REAL ESTATE - Dead Mall Syndrome: The Self-Reinforcing Death Spiral of Retail ..................................................... 2470
COMMERCIAL REAL ESTATE - The First Domino to fall: Retail-CRE (Commercial Real Estate) ......................................................... 2472
COMMERCIAL REAL ESTATE - After Seven Lean Years: US Commercial Real Estate: The Present Position and Future Prospects 2476
COMMERCIAL REAL ESTATE - Retail Sales Cannibalization ................................................................................................................ 2482
COMMERCIAL REAL ESTATE - Tsunami of Retail Store Closings and Downsizings Coming ............................................................... 2483
COMMERCIAL REAL ESTATE - Thanksgiving Retail Sales Results ....................................................................................................... 2486
OVERVIEW ................................................................................................................................................................................................ 2490
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE ....................................................................................................................... 2491
SPECIAL FOCUS .................................................................................................................................................................. 2497

NEW-YELLENS HUMPHREY HAWKINS TESTIMONY .................................................................................................................................... 2497
NEW-RESEARCH WE FOLLOWED ............................................................................................................................................................. 2497
The Testimony was More about Whether to Audit the Fed or Not? .......................................................................................................... 2497
AUDIT THE FED .................................................................................................................................................................................................. 2497
CHARTS OF NOTE ....................................................................................................................................................................................... 2499
NEW-HUMPHREY-HAWKINS 5-to-10 Year Forward Inflation .............................................................................................................. 2499
NEW-HUMPHREY-HAWKINS Wealth to Income Ratio ......................................................................................................................... 2499
NEW-HUMPHREY-HAWKINS Consumer Sentiment and Income Expectations .................................................................................. 2500
NEW-HUMPHREY-HAWKINS Private Housing Starts and Permits ...................................................................................................... 2501
NEW-HUMPHREY-HAWKINS New and Existing Home Sales .............................................................................................................. 2501
NEW-HUMPHREY-HAWKINS Mortgage Interest Rates and Refinance Activity .................................................................................. 2502
NEW-HUMPHREY-HAWKINS US Trade and Current Account ............................................................................................................. 2503
NEW-HUMPHREY-HAWKINS US Net Financial Flows ......................................................................................................................... 2503
NEW-HUMPHREY-HAWKINS Change is Real Government Expenditures On Consumption and Investment .................................... 2504
NEW-HUMPHREY-HAWKINS Yield On Nominal US Treasury Securities ............................................................................................ 2504
NEW-HUMPHREY-HAWKINS Bank Holding Company Profitability...................................................................................................... 2505
RESEARCH OF NOTE .................................................................................................................................................................................. 2506
NEW-HUMPHREY-HAWKINS Prepared Testimony - Transcript .......................................................................................................... 2506
NEW-HUMPHREY-HAWKINS Congressional Monetary Report ........................................................................................................... 2509
NEW-HUMPHREY-HAWKINS Yellen Secures More Flexibility for 'Patient' Fed .................................................................................. 2510
NEW-HUMPHREY-HAWKINS Should the Fed be Independent? 100 Points In Examining the Feds Track Record .......................... 2512
NEW-HUMPHREY-HAWKINS Yellen Encourages More Levered Risk Taking in Markets ................................................................... 2521
SPECIAL SUPPLEMENT....................................................................................................................................................... 2528

FLOWS ................................................................................................................................................................................................................. 2528
NEW-LIQUIDITY FLOWS QE Is Debt Cancellation ................................................................................................................................... 2528
NEW-LIQUIDITY FLOWS The Most Profitable Organization In History .................................................................................................... 2529
NEW-LIQUIDITY FLOWS Now On The Endangered Species List: Bond Traders .................................................................................... 2530
NEW-LIQUIDITY FLOWS The ECBs Bazooka Should Send European Stocks Higher ........................................................................... 2533
NEW-LIQUIDITY FLOWS Downdraft Hits Emerging-Market Capital Flows - Bloomberg ......................................................................... 2534
NEW-LIQUIDITY FLOWS 2015 Could Be A Tough Year For Stocks ........................................................................................................ 2535
NEW-LIQUIDITY FLOWS EU Stocks negatively correlated to the ECB's own B/S .................................................................................. 2536
NEW-LIQUIDITY FLOWS Positive Thoughts on 2015............................................................................................................................... 2539
NEW-LIQUIDITY FLOWS Global Liquidity Is Drying Up ............................................................................................................................ 2543
NEW-LIQUIDITY FLOWS This Is What 6 Years Of Central Bank Liquidity Injections Look Like ............................................................. 2545
NEW-LIQUIDITY FLOWS Austrian Money Supply Growth Sending Early Warning ................................................................................. 2546
NEW-LIQUIDITY FLOWS Drying Up Quickly On Multiple Front................................................................................................................ 2551
NEW-LIQUIDITY FLOWS A Dramatic Change in the Liquidity Environment ............................................................................................ 2552
NEW-LIQUIDITY FLOWS China Central Bank Cuts Interest Rates to Support Growth ........................................................................... 2557
LIQUIDITY FLOWS 3 Month Advanced Fed Balance Sheet versus S&P 500 .......................................................................................... 2558
LIQUIDITY FLOWS Lurking Problems in Repo Land Rising Failures .................................................................................................... 2559
LIQUIDITY FLOWS Eating the Seed Corn of Capitalisms Savings. .................................................................................................... 2564
LIQUIDITY FLOWS Reverse Repos The Feds New Magic Trick ........................................................................................................ 2567
LIQUIDITY FLOWS Fed Magic Trick ....................................................................................................................................................... 2569
LIQUIDITY FLOWS - Current QE Experiment is simply not working!! .......................................................................................................... 2571
LIQUIDITY FLOWS Liquidity is Becoming a Serious Issue Due to Japanese Bond Market Problems .................................................... 2576
LIQUIDITY FLOWS - In A Sea Of Money Printing, What Happened To All The Liquidity? .......................................................................... 2579
LIQUIDITY FLOWS - Why "Tapering" Is a Mirage and the Fed May Be Loosening Instead ....................................................................... 2583
March 2015 Edition

25

LIQUIDITY FLOWS Half a Trillion More Demand than Supply Means Lower US Treasury Yields .......................................................... 2584
March 2015 Edition

26


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NIRP COMES TO AMERICA

First ZIRP, Then NIRP A Destabilizing Policy!

GLOBAL MACRO TIPPING POINTS MARCH 2014

1 March 2015 Edition

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NIRP COMES TO AMERICA

TIPPING POINTS .................................................................................................................................... 27

RISK SIGNALS ........................................................................................................................................................................ 180

March 2015 Edition

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RESEARCH WE FOLLOWED .................................................................................................................................................................... 207

GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 275

TIPPING POINTS ..................................................................................................................................................................... 283

GLOBAL MACRO ................................................................................................................................. 297

March 2015 Edition

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GLOBAL MACRO: INDICATORS ............................................................................................................................................ 405

March 2015 Edition

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GLOBAL UNEMPLOYMENT - Global Financial Sector Job Cuts ............................................................................................................... 425

GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING .......................................................................................... 485

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CHARTS OF NOTE ......................................................................................................................................................................................... 516

March 2015 Edition

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CHARTS Two Worlds if Inflation EM and DM ....................................................................................................................................... 602

GEO-ECONOMIC INSTABILITIES........................................................................................................................................... 606

March 2015 Edition

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NEW-CHINA LIQUIDITY - Reverses Direction and Begins Easing ............................................................................................................ 702

March 2015 Edition

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EMERGING MARKETS - Crisis Redux? ..................................................................................................................................................... 780

REGIONAL ............................................................................................................................................. 833

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CHARTS - Dangerous Delusional Divergences ...................................................................................................................................... 876

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RESEARCH WE FOLLOWED ......................................................................................................................................................................... 985

March 2015 Edition

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UK - Joins Currency War - Down 8% YTD ............................................................................................................................................. 1070

ASIA FALLING CURRENCIES, RISING DEBT & SLOWING GROWTH.............................................................................. 1113

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RESEARCH OF NOTE .................................................................................................................................................................................. 1160

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CHINA - Manufacturing PMI in Contraction Territory .......................................................................................................................... 1336