THE NEXT CRISIS HAS BEGUN

The 2008 Setup!

SECTIONAL UPDATE

GLOBAL MACRO TIPPING POINTS - JULY 2016

6/27/2016

1 JULY 2016 Edition

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THE NEXT CRISIS HAS BEGUN

The 2008 Setup
GLOBAL MACRO TIPPING POINTS - JULY 2016

GLOBAL RISK ......................................................................................................................................... 24

GLOBAL MACRO: RISK ASSESSMENT .................................................................................................................................. 24
POSITIONAL FRAMEWORK: "WE ARE HERE!".................................................................................................................................................... 24
LIQUIDITY is Neither WEALTH nor COLLATERAL ................................................................................................................................................ 25
Our Assessment ................................................................................................................................................................................................ 25
James Rickards Global Risk Assessment ........................................................................................................................................................ 38
MACRO MONITORING INSTITUTIONS ................................................................................................................................................................. 86
IMF ..................................................................................................................................................................................................................... 90
NEW-IMF Dark economic cloud over IMF-World Bank meeting ................................................................................................................. 90
NEW-IMF World faces 'lost year' as policymakers sleepwalk towards fresh crisis, warns IMF .................................................................. 91
NEW-IMF Beware self-fulfilling prophecy of crashing markets, IMF warns as growth is cut again ............................................................ 95
NEW-IMF IMFS WORLD ECONOMIC OUTLOOK REPORT Too Slow for Too Long ......................................................................... 99
NEW-IMF IMFs GLOBAL FINANCIAL STABILITY REPORT (GFSR) Potent Policies for a Successful Normalization ...................... 101
NEW-IMF IMFs FISCAL MONITOR Acting Now, Acting Together ....................................................................................................... 103
IMF IMF warns of stagnation threat to G7 economies .............................................................................................................................. 104
IMF IMF Fears $3 Trillion Credit Crunch ................................................................................................................................................... 106
IMF Tells Regulators to Brace for Global Liquidity Shock ......................................................................................................................... 108
IMF- Lagarde warns of lopsided global growth .......................................................................................................................................... 113
IMF warns of new threats to global economy due to excessive risk taking ................................................................................................ 114
OECD ............................................................................................................................................................................................................... 116
NEW-OECD "Negative Rates Are Dangerous" OECD Chair Warns "Our Entire System Is Unstable" ................................................... 116
OECD World cannot spend its way out of a slump, warns OECD chief .................................................................................................. 124
OECD OECD Chief Economist: It's Time To "Temper The Frothiness" In Markets ................................................................................ 126
OECD Leading Indicator Casts Doubt on US Economic Rebound .......................................................................................................... 128
OECD Warns 40 Million People Will Be Out of Work Next Year .............................................................................................................. 129
OECD Cuts Global Growth Projections Again ............................................................................................................................................. 132
WORLD BANK ................................................................................................................................................................................................. 132
WB Key Takeaways From the World Bank/IMF Meetings ....................................................................................................................... 132
WB Federal Reserve rate rise would cause panic and turmoil, warns World Bank .................................................................................. 133
WB World Bank - Global Economic Prospects Report .............................................................................................................................. 134
WB Warns Developing Nations Growth Slowing 2.8% Global 2015 Growth ........................................................................................ 135
WB Global Growth Outlook ........................................................................................................................................................................ 138
WB- World Bank warns 100M Unemployed, 447M Working Poor, 600M Required for Population Growth Alone ................................. 139
WB- World Bank Says 300M Young People neither Working nor Studying ............................................................................................... 140
BIS ................................................................................................................................................................................................................... 142
BIS BIS Warns of Major Faultlines In Global Debt Bubble ..................................................................................................................... 142
BIS - BIS Quarterly Report ........................................................................................................................................................................... 144
BIS - BIS Slams The Fed: The Solution To Bubbles Is Not More Bubbles ................................................................................................. 144
BIS - Former BIS Chief Economist: "The System Is Dangerously Unanchored ......................................................................................... 145
BIS - Even the BIS Is Shocked At How Broken Markets Have Become ..................................................................................................... 147
BIS - Perhaps The BIS Can Share Its Next "Debt Trap" Warnings With Its Own Board Of Directors First ................................................ 151
BIS - The Next Time The BIS Wants To Warn About Monetary Kool-Aid, Bubbles, Lack Of Liquidity Or Complacency .......................... 154
BIS - "Low Volatility Everywhere" - BIS Sounds Alarm Alert On Pervasive Complacency Masking Systemic Shocks ............................. 155
BIS - BIS warns on 'violent' reversal of global markets ............................................................................................................................... 160
WEF WORLD ECONOMIC FORUM ............................................................................................................................................................ 164
WEF Global Business Risks ..................................................................................................................................................................... 166
WEF The 2015 Global Risk Landscape ................................................................................................................................................... 167
WEF Evolving Risk Landscape (2007-2015) ............................................................................................................................................ 168
WEF Global Risk Exposures By Region ................................................................................................................................................... 169
SITUATIONAL ANALYSIS ..................................................................................................................................................................................... 170
RESEARCH WE FOLLOWED ......................................................................................................................................................................... 170
CHARTS OF NOTE ......................................................................................................................................................................................... 172
Credit Denominated in US Dollars ............................................................................................................................................................... 172
IMFs Global GDP Outlook ........................................................................................................................................................................... 172
IMF Economic Forecasts Are So Consistently Bad That it Says they Dont Understand the Problem! .................................................... 173
Total Global Credit-Market Debt Owed as % of GDP ................................................................................................................................. 174
57T Increase in Total Debt Since 2007 and $112T Since 2000 Dotcom Bubble Implosion ....................................................................... 175
Global Risk Landscape Grid ........................................................................................................................................................................ 176
Geopolitical Risks Are Climbing: Interstate Conflict is Highest Risk in 2015 .............................................................................................. 177
Global Risks of Highest Concern ................................................................................................................................................................. 177
Global Risks Versus Impact ......................................................................................................................................................................... 178
The economic balance of the world is shifting ............................................................................................................................................. 179
Global Conflict Intensity is heating up.......................................................................................................................................................... 180

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World Conflict Map ....................................................................................................................................................................................... 181

World Conflict Map Details........................................................................................................................................................................ 182
Global Conflict & Protest Intensity ............................................................................................................................................................... 183
Deutsche Banks Key Global Risk ............................................................................................................................................................... 183
Political and Financial Risk Now Outnumber Real Economy Risks ............................................................................................................ 184
RESEARCH OF NOTE .................................................................................................................................................................................... 185
Why Are The IMF, The UN, The BIS And Citi All Warning That An Economic Crisis Could Be Imminent? ............................................... 185
The G-30 Group Of Central Bankers Warn They Can "No Longer Save The World" ................................................................................. 187
A Generation in Crisis- - The World Needs 5 Million Jobs-Month To Stymie Youth Extremism................................................................. 190
Presenting SocGen's 5 Black Swans For 2016 ........................................................................................................................................... 191
Paul Brodsky: "Expect The Unexpected. It Might Be Time To Duck And Cover" ....................................................................................... 194
McKinsey Institute says global debt is $199 Trillion and UNSUSTAINABLE .............................................................................................. 197
Deutsche Bank's Ominous Warning: A "Perfect Storm" Is Coming In 2018 ............................................................................................... 201
Global Conflict Intensity Spikes To 7-Year High.......................................................................................................................................... 204
These Are 2015's "Black Swans" According To SocGen ............................................................................................................................ 205
"Globalization Is Turning In On Itself And It Is Each Man For Himself"....................................................................................................... 207
Putin Unleashes Fury at US Follies in Major Pivotal Speech ................................................................................................................... 210
Putin Warns Of Risk of Major Conflict, Says Dollar Losing Reserve Currency Status ............................................................................... 211
Putin Accuses U.S. of Blackmail, Weakening Global Order ....................................................................................................................... 212
REFERENCE PAPERS Position Reminders Lest We Forget ................................................................................................................... 215
FOURTH TURNING ACCELERATING ....................................................................................................................................................... 215
AMERICAS GLOBAL RETREAT ................................................................................................................................................................ 226
THE OLD WORLD ORDER IS OVER ......................................................................................................................................................... 229
THE DEMOGRAPHIC THREAT TO DEVELOPED NATIONS ................................................................................................................... 230
THE RISK CONTINUUM ............................................................................................................................................................................. 233
GLOBAL TRENDS THE SIX FRAMING MEGATRENDS ........................................................................................................................ 235
GLOBAL THEMES TEN STRUCTURALTHEMES FOR STRATEGY ..................................................................................................... 237
DEBT SATURATION - A COLLAPSING PONZI SCHEME......................................................................................................................... 239
WINTER 2015 EVENT RISK DOMINATES ........................................................................................................................................... 241

GLOBAL MACRO: RISK SIGNALS ......................................................................................................................................... 248

GEO-POLITICAL RISK - SOCIAL, ECONOMIC & FINANCIAL ........................................................................................................ 250
EU REFUGEE CRISIS Tearing EU Apart........................................................................................................................................................... 250
NEW-EU REFUGEE - Latest Shock in Europe's Refugee Crisis: Austria Right-Wing Party Sweeps 1st Round of Presidential Election ..... 250
NEW-EU REFUGEE - Turkey Blackmails Europe on Visa-Free Travel ......................................................................................................... 252
NEW-EU REFUGEE - Switzerland Readies Military in Preparation For A New Wave Of Migrants ............................................................... 255
NEW-EU REFUGEE - Is Sweden Facing Another Migrant Invasion? ............................................................................................................ 261
NEW-EU REFUGEE - "There .......................................................................................................................................................................... 267
GROWING ELECTORATE ANGER Failing Social Contract .............................................................................................................................. 268
NEW-ELECTORATE - Why Voters Will Stay Angry ....................................................................................................................................... 268
PARIS SHOCKER ISIS Reality ........................................................................................................................................................................... 276
TERRORISM - "There's No Such Thing As ISIS": Journalist Destroys West's Terror Narrative, Warns Of Crackdown On "Dissidents" ..... 276
TERRORISM - Secretary of Defense Chuck Hagel: ISIL poses a threat greater than 9/11. ....................................................................... 277
TERRORISM - Two Reasons the 'War On Terror' Will Always Fail ................................................................................................................ 278
TAXATION Setting the Stage for the Coming Taxation Explosion ..................................................................................................................... 280
RESEARCH OF NOTE .................................................................................................................................................................................... 280
TAXATION Taxes must be paid, says George Osborne, as he backs crackdown on havens. ............................................................... 280
TAXATION The Coming Tax Tsunami Will Erode Wealth and Capital at a Shocking Pace ................................................................... 282
DEMOGRAPHICS Aging Population & Youth Unempolyment........................................................................................................................... 284
CHART OF NOTE............................................................................................................................................................................................ 284
YOUTH UNEMPLOYMENT Global Population ........................................................................................................................................ 284
YOUTH UNEMPLOYMENT Global Aging ................................................................................................................................................ 284
YOUTH UNEMPLOYMENT Global Aging By Country ............................................................................................................................. 285
RESEARCH OF NOTE .................................................................................................................................................................................... 287
YOUTH UNEMPLOYMENT - "A Generation In Crisis" - The World Needs 5 Million Jobs/Month To Stymie Youth Extremism ............... 287
YOUTH UNEMPLOYMENT - Four Ticking Global Time-Bombs Few Even Hear ...................................................................................... 288

GEO-POLITICAL RISK TENSIONS & CONFLICTS..................................................................................................................... 293

NEW-SAUDI-IRAN CONFLICT A Persian/Arab Sunni/Shiite Conflict ...................................................................................................... 293
NEW-SAUDI-IRAN Saudi Arabia Shows Obama How Dissatisfied they are With His Administration and the Iran Deal. .................. 293
NEW-SAUDI-IRAN - Deep Rifts With Saudi Arabia Overshadow Obamas Trip .................................................................................... 293
NEW-SAUDI-IRAN - Saudi Arabia, U.S. drifting apart despite Obamas efforts Russian media ......................................................... 295
ISIS .................................................................................................................................................................................................................. 298
ISIS THE SUNNI / SHIA /KURD PROBLEM ............................................................................................................................................ 299
ISIS - An Undercover Look Inside ISIS .................................................................................................................................................... 303
ISIS - Obama Says ISIS War Powers Request Not About 'Another Ground War' .................................................................................. 305
ISIS - President Obama Explains His "Boots On The Ground" ISIS-War Strategy................................................................................. 305
ISIS- Kobani Overshadows Larger Battles .............................................................................................................................................. 306
SYRIA .............................................................................................................................................................................................................. 309
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 309
SYRIA - Pipeline Politics: Russia, Turkey Clash Over Energy As Syria Rift Shifts Focus To German Line ............................... 310
SYRIA - Putin Kills "South Stream" Pipeline, Will Build New Massive Pipeline To Turkey Instead ............................................. 313
SYRIA - Is The US Going To War With Syria Over A Natural Gas Pipeline? .................................................................................... 315
SYRIA - Why Did Obama Choose Syria? ............................................................................................................................................. 318

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SYRIA - Syria "Welcomes" Larger Russia Presence .......................................................................................................................... 319

SYRIA - This has the Earmarks of the Kennedy Ear "Cuban Missile" Crisis .................................................................................. 320
SYRIA - Syrian War You Are Not Being Told About ........................................................................................................................... 322
SYRIA - 25 Quotes .................................................................................................................................................................................. 323
SYRIA - What Coalition? ........................................................................................................................................................................ 326
SYRIA - US Supporting Fully an "Al Qaeda Operation" ..................................................................................................................... 328
SYRIA - Decision Already Taken to Bomb Syria ................................................................................................................................. 330
SYRIA - Market Patterns Before and Immediately After Conflict Begins ................................................................................................ 338
SOUTH CHINA SEA TERRITORIAL PROBLEMS ......................................................................................................................................... 340
CHINA SEA - Why China Wants Control of The South China Sea In 10 Charts .............................................................................. 341
CHINA SEA - "Strongly Dissatisfied" China Warns US "Accident" Is "Highly Likely" In South China Sea ................................. 347
CHINA SEA - PLA Officer: China Must Establish South China Sea ADIZ; Will "Fight .................................................................... 348
IRAN ................................................................................................................................................................................................................. 351
RESEARCH OF NOTE ................................................................................................................................................................................ 351
IRAN A Mistake of Historic Proportion! Bibi Netanyanhu ................................................................................................................... 351
IRAN NBC Special Report: Nuclear Agreement Reached With Iran .................................................................................................... 354
YEMEN ............................................................................................................................................................................................................ 355
CHARTS OF NOTE ..................................................................................................................................................................................... 355
YEMEN Strategic Position .................................................................................................................................................................... 355
YEMEN al-Houthis and Saleh Concentrations ..................................................................................................................................... 356
YEMEN The Decisive Storm Coalition ............................................................................................................................................... 356
YEMEN Global Oil Chokepoints ........................................................................................................................................................... 357
YEMEN Middle Eastern Oil Production & Chokepoints ........................................................................................................................ 357
YEMEN Chinese Import Countries & Oil Routes .................................................................................................................................. 359
YEMEN Major Crude Oil Trade Flows in the South China Sea ............................................................................................................ 360
YEMEN Regional Territorial Claims in the South China Sea ............................................................................................................... 361
RESEARCH OF NOTE ................................................................................................................................................................................ 362
YEMEN Risk of World War between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day .......................... 362
YEMEN Yemen Ground Invasion by Saudi, Egyptian Troops Imminent .............................................................................................. 364
YEMEN Middle East Proxy War: Presenting The Massive "Decisive Storm" Coalition ....................................................................... 367
YEMEN Saudi Arabia Imposes Naval Blockade on Red Sea Strait, Deploys 150,000 Troops ........................................................... 368
YEMEN Another Middle East War Breaks Out: Saudis Begin Bombing Yemen, US Military Taking Action ....................................... 370
YEMEN Presenting The Theater Of War; Who Controls Yemen? ....................................................................................................... 375
YEMEN US-Armed Rebels Force Yemen President To Flee Country As Saudis Prepare For War ................................................... 377
UKRAINE EAST/WEST CONFLICT The New Colder War ..................................................................................................................... 382
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 383
RESEARCH OF NOTE ................................................................................................................................................................................ 389
NEW-COLD WAR - "They Should Be Met By Force" - US General Warns Russia Future Fly-Bys "Won't End Well For You" ............. 389
UKRAINE - Putin Is Becoming A "Vulture" Bond Investor ....................................................................................................................... 390
UKRAINE - West Further Infuriates & Antagonizes Russia with Debt Restructuring Pressures ............................................................ 391
UKRAINE - Congress Approves Funding for Ukraine Arms Shipments.................................................................................................. 395
UKRAINE - US Taxpayers to Fund Ukraine Bailout via Bond Guarantee ............................................................................................... 399
UKRAINE - Congress Approves Funding for Ukraine Arms .................................................................................................................... 400
UKRAINE - White House Explains Where Your $1.3 Billion Went In Ukraine ........................................................................... 403
UKRAINE - Putin Says Attempts To Tip Nuclear Balance Don't Scare Russia, Moscow Will Uncover "Schemes" ............................... 406
UKRAINE - Putin Security Council Slams Obama Attempts at "New World Order" ............................................................................... 407
UKRAINE- A Russian Viewpoint .......................................................................................................................................................... 409
UKRAINE- This Is What Is Really Taking Place Behind The Scenes Of The Second US-Russian Cold War....................... 423

GEO-POLITICAL RISK GLOBAL GOVERNANCE FAILURE......................................................................................................... 425

NEW-BREXIT ......................................................................................................................................................................................................... 425
NEW-BREXIT Brexit Is No Business of U.S.................................................................................................................................................. 425
NEW-BREXIT Cameron could not have asked for more from Obama's Brexit warning .............................................................................. 425
NEW-BREXIT The G-30 Group of Central Bankers Warn They Can "No Longer Save The World" ........................................................... 426
NEW-BREXIT TTIP is a Very Bad Excuse to vote for Brexit ........................................................................................................................ 427
GENERAL .............................................................................................................................................................................................................. 428
GOVERNANCE The G-30 Group of Central Bankers Warn They Can "No Longer Save The World" ........................................................ 428
ASIAN INFRASTRUCTURE INVESTMENT BANK A Threat to World Bank and US$ Reserve Status ..................................................... 432
RESEARCH WE FOLLOWED ..................................................................................................................................................................... 432
CHARTS OF NOTE ..................................................................................................................................................................................... 435
AIIB Demanding Infrastructure .............................................................................................................................................................. 435
RESEARCH OF NOTE ................................................................................................................................................................................ 436
AIIB - The Nepo-Cold War, The World Bank and the AIIB Threat .............................................................................................. 436
AIIB - Washington Blinks: Will Seek Partnership With China-Led Development Bank ........................................................................... 438
AIIB - China "Is Not Another US", Does Not Seek "Yuan Hegemony" .................................................................................................... 439
AIIB - Obama administration proposes co-financing projects with new Asian Infrastructure Investment Bank ............. 441
AIIB - Qatar, Jordan, Oman, Kuwait AND Saudi Arabia have applied Goodbye Petrodollar! .............................................................. 444
AIIB - Obama continues to be humiliated by the rising anti-dollar alliance ............................................................................. 446
AIIB - Did De-Dollarization Just Reach Escape Velocity? ....................................................................................................................... 448
EMERGING BRICS ALLIANCE NEW MULTI-POLAR WORLD .................................................................................................................. 452
MULTI-POLAR-Money Supply The New World Economy ....................................................................................................................... 452
MULTI-POLAR-Financial Globalist Impose Monetary Hegemony .............................................................................................................. 454
MULTI-POLAR-Financial Globalists Controlling the Political Process ........................................................................................................ 456
ADVANCING GLOBAL FINANCIAL REPRESSION ....................................................................................................................................... 459
HENRY KISSINGER CALLS FOR NEW WORLD ORDER (NWO) ............................................................................................................... 461
KISSINGER- Henry Kissingers World Order ............................................................................................................................................ 461

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GLOBAL MACRO: RISK LEVELS ........................................................................................................................................... 464

AGGREGATED GLOBAL FINANCIAL RISK INDEX ............................................................................................................................................. 464
NEW-BANKING RISK - LIBOR-OIS SPREAD ................................................................................................................................................ 465
NEW-BANKING RISK - TED SPREAD ........................................................................................................................................................... 465
NEW-CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS ....................................................................................................................... 466
NEW-CREDIT RISK - EU CREDIT DEFAULT SWAPS .................................................................................................................................. 466
NEW-CONSUMER RISK - HOUSING - RATE OF CHANGE ......................................................................................................................... 467
NEW-ECONOMIC RISK - ECRI LEADING INDEX ......................................................................................................................................... 468
NEW-INFLATION RISK - MONEY SUPPLY GROWTH - M3 ......................................................................................................................... 470
NEW-INFLATION RISK - MONEY VELOCITY ............................................................................................................................................... 470
MONETARY RISK - BANK LIABILITIES ......................................................................................................................................................... 471
NEW-COST OF MONEY RISK - INTEREST RATES .................................................................................................................................... 472
AGGREGATED RISK LEVEL ................................................................................................................................................................................ 473

GLOBAL MACRO: TIPPING POINTS ...................................................................................................................................... 474

OVERALL CATEGORY RANKINGS Q2 2016 ................................................................................................................................................... 474
CURRENT RANKINGS Versus Longer Term Benchmarks ............................................................................................................................... 475
TREND NOTES...................................................................................................................................................................................................... 479
CHANGES TO RANKINGS - Longer Term Benchmarks ...................................................................................................................................... 480
CHANGES TO MACRO MAP$ ROADMAP$ - Longer Term Trends .................................................................................................................... 481
TIPPING POINTS: TOP 5 FOCUS - MAY 2016 .................................................................................................................................................... 483
NEW-I - RISK REVERSAL .............................................................................................................................................................................. 483
NEW-II - CHINA HARD LANDING .................................................................................................................................................................. 497
NEW-III - EU BANKING CRISIS ...................................................................................................................................................................... 501
NEW-IV BOND BUBBLE .............................................................................................................................................................................. 508
NEW-V- GEO-POLITICAL EVENT RISK ........................................................................................................................................................ 516

REGIONAL ............................................................................................................................................. 520

UK THE SHOCKING BREXIT REFERENDUM VOTE ....................................................................................................................................... 520
CHARTS OF NOTE ............................................................................................................................................................................................... 521
NEW-CHARTS - UK A Shocking Outcome Cameron Resigns ............................................................................................................. 521
NEW-CHARTS - UK The Regional Brexit Vote Will Scotland Revisit its Referendum? ....................................................................... 522
NEW-CHARTS - UK 400 Richest Lose $127B ON Friday BREXIT Announcement Alone ..................................................................... 522
NEW-CHARTS - UK Banks to Be Most Impacted by BREXIT ................................................................................................................. 523
NEW-CHARTS - UK Danske Bank Expecting A Recession in UK .......................................................................................................... 523
NEW-CHARTS - UK Brexit Polls .............................................................................................................................................................. 524
NEW-CHARTS - UK Current Account Deficit & Sterling Trade-Weighted Exchange Rate ..................................................................... 524
NEW-CHARTS - UK Since the Post GFC Stimulus Recovery, A Steady GDP Decline ........................................................................... 525
NEW-CHARTS - UK Steady Long Term GDP Erosion ............................................................................................................................ 525
NEW-CHARTS - UK Net Trade an Economic Drag ................................................................................................................................. 526
NEW-CHARTS - UK US versus UK Productivity Growth ......................................................................................................................... 527
NEW-CHARTS - UK Global Leader in Financial Services Net Exports ................................................................................................... 527
NEW-CHARTS - UK Global Leader in Exports as % of GDP .................................................................................................................. 528
CHARTS - UK - U.K. Productivity growth remains dismal........................................................................................................................... 528
CHARTS - UK - The UK's increasingly polarized politics ............................................................................................................................ 528
CHARTS - UK GBPUSD Volume trended higher into the election - above peak seen around the Scottish referendum. ...................... 529
CHARTS - UK The UK's financial sector has the highest exposure to China .......................................................................................... 529
CHARTS - UK UK retail sales -0.5% in March, biggest fall since May last year and breaking longest run of increases in 5 years ....... 530
CHARTS - UK - Deficit One of Worst of Developed Economies ................................................................................................................. 530
CHARTS - UK Private Sector Surplus Eliminated .................................................................................................................................... 531
CHARTS - UK Self-Employment At Record High ........................................................................................................................................ 532
CHARTS - UK Rate Voting Shows Preference for Inflation Report Months ............................................................................................... 533
CHARTS - UK Below 2% Target But 2nd Highest in EU ........................................................................................................................... 533
CHARTS - UK CPI Below Target for 7th Month ........................................................................................................................................ 534
CHARTS - UK Real-Wage Decline Longest Since At Least 1964 ........................................................................................................... 535
CHARTS - UK Wage-Neutral Unemployment Rate Falling ...................................................................................................................... 535
CHARTS - UK CPI Too Low for BOE and Falling .................................................................................................................................... 536
CHARTS - UK GDP .................................................................................................................................................................................. 537
CHARTS - UK Population Growth ............................................................................................................................................................ 537
CHARTS - UK - Crushed Disposable Income ............................................................................................................................................. 538
CHARTS - UK - BOE Balance Sheet Growth .............................................................................................................................................. 539
CHARTS - UK - Lending .............................................................................................................................................................................. 540
CHARTS - UK - Unemployment .................................................................................................................................................................. 540
CHARTS - UK - GDP - Pre and Post Recession Levels ............................................................................................................................. 541
CHARTS - UK - GDP ................................................................................................................................................................................... 541
CHARTS - UK - BOE Rates ......................................................................................................................................................................... 542
RESEARCH OF NOTE .................................................................................................................................................................................... 543
NEW-RESEARCH Brexit: the worlds most complex divorce begins ....................................................................................................... 543
NEW-RESEARCH Ratings agency Moody's says Britain at risk of credit downgrade ............................................................................ 545
NEW-RESEARCH S&P says Britain's 'AAA' credit rating untenable after Brexit vote ............................................................................. 546
NEW-RESEARCH The Banks Hardest Hit Because of Brexit .................................................................................................................. 546
NEW-RESEARCH The Brexit Delusion .................................................................................................................................................... 548

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NEW-RESEARCH Brexit: 5 Things Investors Need to Know .................................................................................................................. 552

NEW-RESEARCH Brexit vote would affect UK's top credit score, says Standard & Poor's ................................................................... 556
NEW-RESEARCH Mark Carney issues stark warning on global growth as storm clouds gather ........................................................... 557
RESEARCH British General Threatens Military Coup If Corbyn Elected ................................................................................................ 558
RESEARCH The End of Britain? Martin Armstrong On Jeremy Corbyn's Resurrection Of Marx ........................................................... 560
RESEARCH What is Jeremy Corbyn's programme for government? ...................................................................................................... 563
RESEARCH What does Jeremy Corbyn stand for? Jeremy Corbyn's policies and views explained ...................................................... 569
RESEARCH Who is Jeremy Bernard Corbyn? ........................................................................................................................................ 573
RESEARCH The City Of London Has Turned Britain into A "Civilized Mafia State" ............................................................................... 578
RESEARCH What Remains of the UK Middle? ....................................................................................................................................... 579
RESEARCH Clean Sweep by UK Conservatives Masks Huge Rifts ....................................................................................................... 580
RESEARCH Explaining UK's Dysfunctional Voting System; Where is British Politics Headed? Horse Trading .................................... 583
RESEARCH Consensus See UK Rate Increase in February 2015 Possibility of November ............................................................... 586
RESEARCH BOE Faces Labor Market Conundrum as Wage Growth Stalls .......................................................................................... 588
RESEARCH - UK workers' wage squeeze is longest since the 1870s ....................................................................................................... 591
SITUATIONAL ASSESSEMENT ..................................................................................................................................................................... 592
UK - What you need to Know....................................................................................................................................................................... 592
UK - Joins Currency War - Down 8% YTD ............................................................................................................................................... 593
UK - Specter of Stagflation Haunts UK ........................................................................................................................................................ 594
UK - Public Policy turns Against Austerity and PM Cameron ..................................................................................................................... 595
UK - Doomsday Debt Machine .................................................................................................................................................................... 596
UK - QE Extension Coming ......................................................................................................................................................................... 599
UK - Small Business Credit Squeeze Now Acute - Loan Rejections Rising ............................................................................................... 601
UK - Technically in a Depression ................................................................................................................................................................. 602
EU THE EU IS BEGINNING TO COME APART AT THE PERIPHERAL! ......................................................................................................... 605
CHARTS OF NOTE ......................................................................................................................................................................................... 605
NEW-CHARTS Who wants a referendum on the EU and would vote OUT? ........................................................................................ 605
NEW-CHARTS Europes Anti-Establishment Shake-Up .......................................................................................................................... 605
NEW-CHARTS UK A Major GDP Contributor to Europe ......................................................................................................................... 606
CHARTS Negative Interest Rates on 40% of Outstanding European Government Bonds ..................................................................... 606
CHARTS Once Unorthodox Negative Rates Now Increasingly Orthodox ............................................................................................... 606
CHARTS EU Savings Rates Surge in Countries With NIRP .................................................................................................................... 607
CHARTS 1 Million Syrian Refugee Arrivals By Land & Sea in 2015 ....................................................................................................... 607
CHARTS Main Migrant Route to Germany ............................................................................................................................................... 609
CHARTS Alternative Migrant Route to Europe......................................................................................................................................... 609
CHARTS Many Migrant Routes Being Taken .......................................................................................................................................... 610
CHARTS Many Migrant Routes Being Taken- Air, Land and Sea ........................................................................................................... 611
CHARTS Migrants Entering Hungary ....................................................................................................................................................... 612
CHARTS Schengen Non Shengen EU Countries ................................................................................................................................. 613
CHARTS Schengen Non Shengen EU Countries-2 .............................................................................................................................. 613
CHARTS Migrant Detentions .................................................................................................................................................................... 614
CHARTS German Asylum Applications ................................................................................................................................................. 615
CHARTS Euro Area and EU28 Unemployment Rates ............................................................................................................................. 616
CHARTS Unemployment Rates by Country Seasonally Adjusted ........................................................................................................ 616
CHARTS Inflation Tracks Commodity Prices ............................................................................................................................................ 617
CHARTS Tracing EU Dis-Inflation towards Deflation ................................................................................................................................ 617
CHARTS Bond Rout Reduces Negative Yielding Govt Debt by ~1T Euros ........................................................................................... 619
CHARTS Eurozone GDP Since 1999 ....................................................................................................................................................... 620
CHARTS "Real GDP in the Euro area is lagging behind other major economies since the...Crisis" ...................................................... 620
CHARTS "European firms are paying out more of their earnings as dividends than US firms are." ....................................................... 621
CHARTS "Over 1/2 of all government bonds yield less than 1%." ........................................................................................................... 622
CHARTS A weaker Euro has been good for the STOXX 600 .................................................................................................................. 623
CHARTS Eurozone equity inflows continue to rise .................................................................................................................................. 623
CHARTS YTD flows into European equity funds ..................................................................................................................................... 623
CHARTS 3 Mo EURIBOR Drops to -0.001% - Below Zero for First Time? ............................................................................................. 624
CHARTS Negative Yields Have Become the New Norm in the Euro area ............................................................................................ 624
CHARTS "Swiss Government Becomes First Ever To Issue 10Y Debt At A Negative Yield" ................................................................. 625
CHARTS Feb Retail Sales Y-o-Y +3.0% versus 2.8% est. ...................................................................................................................... 625
CHARTS Draghi Had To Deliver or it would have been a Collateral Massacre....................................................................................... 626
CHARTS EU Disconnect Between Equity Prices & Earnings and Dividends .......................................................................................... 626
CHARTS Eurozone is the Biggest Drag on Global Profits ....................................................................................................................... 627
CHARTS Eurozone Government & Private Debt 276% of GDP (Excluding Financials) ......................................................................... 627
CHARTS EU PMIS Rolling Over .............................................................................................................................................................. 628
CHARTS Eurozone Banks Too Big To Be Bailed Out! ............................................................................................................................ 629
CHARTS Eurozone Area Consumer Confidence May Be Misleading ..................................................................................................... 630
CHARTS Eurozone GDP & Recession Pattern ........................................................................................................................................ 630
CHARTS EU-Area PMI Shows Sustained Deterioration .......................................................................................................................... 631
CHARTS Euro Area CPI Seen Below 1% for 11th Month ......................................................................................................................... 631
CHARTS Euro Area Domestic Demand has lagged US & Japan by 9% since 2010 .............................................................................. 632
CHARTS Euro Area Inflation Levels ......................................................................................................................................................... 633
CHARTS Geo-Political Tensions May Weigh on Confidence .................................................................................................................. 634
CHARTS Stalling Euro-Area Recovery Heightens ECB QE Pressure ..................................................................................................... 634
CHARTS Industrial Production Slows In Line With PMIs ......................................................................................................................... 635
CHARTS ZEW Expectations Signals Slowdown Ahead .......................................................................................................................... 636
CHARTS Euro-Area July PMI ................................................................................................................................................................... 636
CHARTS Corporate Borrowing Spreads Remain Wide ........................................................................................................................... 637

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CHARTS ECB Less Accommodative Than the Fed ................................................................................................................................. 637

CHARTS EU Financial Conditions Deteriorating ...................................................................................................................................... 638
CHARTS EU Confidence .......................................................................................................................................................................... 639
CHARTS - Slow Money Growth May Stoke Deflation Concerns ................................................................................................................ 639
CHARTS - Euro-Area Inflation at Lowest Level Since 2009 Individual Countries ................................................................................... 640
CHARTS - Euro-Area Inflation Aggregate ................................................................................................................................................ 641
CHARTS - 10M Part-Time Workers Underemployed in EU ........................................................................................................................ 642
CHARTS - Euro-Area Housing Prices Decline ............................................................................................................................................ 643
CHARTS - Euro-Area Trade Surplus ........................................................................................................................................................... 644
CHARTS - Euro-Area Composite PMI ......................................................................................................................................................... 645
CHARTS - EU Area Weakness ................................................................................................................................................................... 646
CHARTS - EU Area GDP ............................................................................................................................................................................. 647
CHARTS - EU Area PMI .............................................................................................................................................................................. 648
CHARTS - EU Area PMI .............................................................................................................................................................................. 649
CHARTS - EU Real Rates ........................................................................................................................................................................... 650
CHARTS - EU -NON Euro Members GDP RELIANCE ............................................................................................................................... 651
CHARTS - EU GLOBAL GDP GROWTH CONTRIBUTION ....................................................................................................................... 652
CHARTS - EU PMI ....................................................................................................................................................................................... 652
CHARTS - EU CPI ....................................................................................................................................................................................... 654
CHARTS - Regional Risk-Reward ............................................................................................................................................................... 655
CHARTS - Europe's "Core" Problem is France ........................................................................................................................................... 656
CHARTS - Germany's Preoccupation with Inflation is More Than It Would Seem ..................................................................................... 659
CHARTS - Evidence OF Global Slowing Now Indisputable ........................................................................................................................ 660
CHARTS - EU Credit Downgrades, France and UK On Tap ...................................................................................................................... 662
CHARTS - Perceived Reduction in Risk, A Temporary Aberration ............................................................................................................. 664
CHARTS - Dangerous Delusional Divergences .......................................................................................................................................... 666
CHARTS - IMF Projections for Euro Area and GIIPS ................................................................................................................................. 667
CHARTS - Air Cargo Shipments Confirm Slowing Global Growth .............................................................................................................. 668
CHARTS - Eurozone Misery Indices Never Been Higher ........................................................................................................................... 669
CHARTS - Euro Currency ............................................................................................................................................................................ 671
RESEARCH OF NOTE .................................................................................................................................................................................... 676
NEW-RESEARCH Anti-establishment tsunami sweeps Europe .............................................................................................................. 676
NEW-RESEARCH Alan Greenspan says British break from EU 'is just the tip of the iceberg ............................................................... 679
RESEARCH Migrant Crisis Sparks Balkan Border Battles As EU Buckles Under Overwhelming Refugee Flow .................................. 680
RESEARCH Buiter: Migrant Crisis "May Signal The Beginning Of The End" For EU ............................................................................. 685
RESEARCH "The End of The EU": Merkel's "Heroic" Refugee Response May Destroy Union, Slovakia Warns .................................. 686
RESEARCH Europe's Refugee Crisis "Out of Control", Hungary PM Rages "This Is A German Problem, Not An EU Problem" ......... 693
RESEARCH The Broken Model of the Eurozone ..................................................................................................................................... 696
RESEARCH The Japanization of Europe in 9 This Time It Is Different Charts .................................................................................... 698
RESEARCH Eurozone on cusp of triple-dip recession as German exports crumble .............................................................................. 699
RESEARCH Euro Areas Stalling Industry No Support for GDP.............................................................................................................. 701
RESEARCH Early Warnings of Euro-Area Downturn Strengthen ECBs QE Case ................................................................................ 701
RESEARCH ECB Rate Decision .............................................................................................................................................................. 703
RESEARCH Euro-Area Data Deterioration Points Toward QE ............................................................................................................... 706
RESEARCH ECB v FEDERAL RESERVE ............................................................................................................................................... 707
RESEARCH The ECBs Negative Deposit Rate ...................................................................................................................................... 709
RESEARCH EU Version of QE Coming -> UST Purchases to Drive Euro Down ................................................................................... 711
RESEARCH Beware of EU Banks! ........................................................................................................................................................... 713
RESEARCH Emerging Markets Aggravates Festering Banking Problems ............................................................................................. 713
RESEARCH European Banks Have $3 Trillion of Exposure To Emerging Markets ................................................................................ 716
RESEARCH - EFSF Downgraded to AA+ ................................................................................................................................................... 718
RESEARCH - EU Stabilization Programs Are Presently Very Fragile ........................................................................................................ 719
RESEARCH - Spreads Widened in Peripherals and Significantly in Portugal and Greece ........................................................................ 722
SITUATIONAL ASSESSMENT ....................................................................................................................................................................... 724
PROGNOSIS: Why the European Situation Will Get Worse ....................................................................................................................... 724
PROGNOSIS: Increasing Structural Imbalances ........................................................................................................................................ 727
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees................................ 729
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ..................................................................................................... 734
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ................................................................................................................. 737
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ......................................................................................................... 739
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent ......................................................................................... 740
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ................................................................................................. 741
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................... 747
ITALY ANTI ESTABLISHMENT 5 STAR PARTY DCAPTURES MAJORAL ELECTIONS ............................................................................. 749
CHARTS OF NOTE ......................................................................................................................................................................................... 750
CHARTS - ITALY Lack of Capital Expenditure Has Inevitably Lead to Italian Budget Shortfalls ............................................................ 750
CHARTS - ITALY Debt & NGDP Diverge ................................................................................................................................................. 750
CHARTS - ITALY Italian Bank Assets versus NGDP ............................................................................................................................... 751
CHARTS - ITALY Italian Bank Loans Outstanding By Sector Households, Government & Non-Financial ......................................... 752
CHARTS - ITALY Italian Gross Investment versus France ...................................................................................................................... 752
CHARTS - ITALY Falling Real Labor Productivity Per Person Italy versus France .............................................................................. 753
CHARTS - ITALY Measuring Italian Bad Debt ......................................................................................................................................... 753
CHARTS - ITALY Italian Debt Maturity Profile w/ Implied Roll-Over and Estimated Deficits .................................................................. 754
CHARTS - ITALY Italian Interest Paid on the Public Debt ....................................................................................................................... 754
CHARTS - ITALY Target2 Liabilities Held By Banca dItalia .................................................................................................................... 755
CHARTS - ITALY Marketable Securities Held by Banca dItalia .............................................................................................................. 755

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CHARTS - ITALY Italian Real Annual Gross Wages ............................................................................................................................... 756

CHARTS - ITALY Italian Government Gross and Net Debt Comparisons as % of NGDP ...................................................................... 756
CHARTS - ITALY Non-Performing Loans by Region ............................................................................................................................... 757
CHARTS - ITALY Gross Italian Impaired Loans....................................................................................................................................... 758
CHARTS - ITALY Italian Government Debt .............................................................................................................................................. 758
CHARTS - ITALY Banks Non-Performing Loans .................................................................................................................................... 759
CHARTS - ITALY Quarterly GDP Growth ................................................................................................................................................ 760
CHARTS - ITALY 30 Year Bond Yield At 2.3% - Historic Low ................................................................................................................. 760
CHARTS - ITALY Italian Unemployment .................................................................................................................................................. 762
CHARTS - ITALY Italian Core Inflation ..................................................................................................................................................... 762
CHARTS - ITALY Italian Industrial Porduction ......................................................................................................................................... 763
CHARTS - ITALY Meal Affordability Deteriorates .................................................................................................................................... 764
CHARTS - ITALY Falling Oil & Gas Consumption ................................................................................................................................... 765
CHARTS - ITALY Italian Bond Yields ....................................................................................................................................................... 765
CHARTS - ITALY Slips Back Into Recession ........................................................................................................................................... 766
CHARTS - ITALY 10 Year Bond Yields Fall to Record Low .................................................................................................................... 767
CHARTS - ITALY - Forced Rate Cuts ......................................................................................................................................................... 768
RESEARCH OF NOTE .................................................................................................................................................................................... 769
NEW-RESEARCH Italy's Anti-Establishment 5-Star Movement Delivers Dramatic Victories In Key Mayoral Races ............................ 769
RESEARCH How Italy Will Fail And Drag Down The European Project ................................................................................................. 770
RESEARCH Italy Youth Unemployment Hits Record High 44.2%, Concerns Rising "Recession Exit May Be Unsustainable"............. 780
RESEARCH Italy Is "Willing To Temporarily Suspend Schengen" In Response To Refugee Crisis 09-02-15 Zero Hedge .................. 783
RESEARCH Italy Non-Performing Loans Hit A New Record High ....................................................................................................... 788
RESEARCH Demographic Devastation: Italy's Birth Rate Drops To 150 Year Low ............................................................................... 793
RESEARCH Italy Falls Back Into Recession, Raising Concerns for Eurozone ....................................................................................... 795
RESEARCH - Italys Downward Spiral ........................................................................................................................................................ 799
RESEARCH - Italys Budget Failures, Weak Growth Outlook Call Debt Sustainability Into Question ....................................................... 801
SITUATIONAL ASSESSEMENT ..................................................................................................................................................................... 805
ITALIAN ELECTION - What You Need to Know ......................................................................................................................................... 805
ITALIAN ELECTION - Europe Capitulates On Austerity- Never Had The Stomach For It ......................................................................... 806
ITALIAN ELECTION - Message Given By the People ................................................................................................................................ 808
ITALIAN ELECTION - Bad Debt Continue to Soar ...................................................................................................................................... 812
ITALIAN ELECTION - Italians React Badly to Austerity, Elections Hardly a Surprise! ............................................................................... 814
ITALIAN ELECTION - EUROPEAN FEEDBACK - #1 ................................................................................................................................. 815
ITALIAN ELECTION - EUROPEAN FEEDBACK - #2 ................................................................................................................................. 817
ITALIAN ELECTION - Regional Financial Cracks in Sicily.......................................................................................................................... 820
FRANCE MARINE LE PEN PLEDGES FRENCH REFERENDUM ................................................................................................................... 822
CHARTS OF NOTE ......................................................................................................................................................................................... 822
NEW-CHARTS FRANCE Marine Le Pen Pledges French Referendum Vote ...................................................................................... 822
CHARTS FRANCE Total Net Government Liabilities ............................................................................................................................ 822
CHARTS FRANCE Industrial production stagnated in February - 15% below pre-crisis levels. .......................................................... 823
CHARTS FRANCE Bankruptcies Soar as Profitability Slumps ............................................................................................................. 823
CHARTS FRANCE Post Hollande Election Results Jobseekers and 10 Year Yield ......................................................................... 823
CHARTS FRANCE French Job Seekers ............................................................................................................................................... 824
CHARTS FRANCE Inflation Expectations ............................................................................................................................................. 824
CHARTS - FRANCE Hollande Popularity Gap Heading for a Record Low ............................................................................................. 826
CHARTS - FRANCE Austerity Doesnt Get You Re-Elected ................................................................................................................... 826
CHARTS - FRANCE Worlds Worst PMI Ranking in June ....................................................................................................................... 827
CHARTS - FRANCE Near-record high bankruptcies and record-low profitability .................................................................................... 828
CHARTS - FRANCE Frances PMI Trend Weakness Beginning to Stand Out........................................................................................ 828
CHARTS - FRANCE Manufacturing Divergence With Germany Widens ................................................................................................ 829
CHARTS - FRANCE - GDP ......................................................................................................................................................................... 830
CHARTS - FRANCE - UNEMPLOYMENT .................................................................................................................................................. 831
CHARTS - FRANCE - BUDGET DEFICIT ................................................................................................................................................... 832
CHARTS - FRANCE - TAX v GDP .............................................................................................................................................................. 833
CHARTS - FRANCE - BUSINESS CONFIDENCE...................................................................................................................................... 834
RESEARCH OF NOTE .................................................................................................................................................................................... 835
RESEARCH Hollande says France in state of economic emergency ..................................................................................................... 835
RESEARCH France Just Enshrined Its "State Of Emergency" In the Constitution ................................................................................. 835
RESEARCH France Changes Constitution to Protect "Emergency" Police Powers from Court Challenges .......................................... 836
RESEARCH France's Far-Right Party Calls For Nation To "Re-Arm Itself", Revoke Muslims' Passports .............................................. 838
RESEARCH Moody's Downgrades France, Blames "Political Constraints", Sees No Material Reduction in Debt Burden ................... 839
RESEARCH When It Comes To Total Debt, Greece Is Not That Much Worse Than France (Or The USA) .......................................... 843
RESEARCH Economic Malaise Sparks Political Crisis in France ........................................................................................................... 844
RESEARCH - France In "Political Turmoil" After Hollande Unexpectedly Dissolves Government ............................................................ 846
RESEARCH Prime Minister Manuel Vall Resigns .................................................................................................................................... 848
RESEARCH - European Voters Are Revolting; France Warns "Situation Is Grave for France, Europe" ................................................... 848
RESEARCH - Steady Breakdown Underway .............................................................................................................................................. 851
RESEARCH - France Loses its Coveted and NEEDED AAA Rating.......................................................................................................... 855
SITUATIONAL ASSESSMENT ....................................................................................................................................................................... 857
FRANCE - An astoundingly high number of French people don't have faith in Hollande 05-02-15 BI ....................................................... 857
FRANCE - French utility EDF seeks to cut workers 10-week holiday quota 05-26-15 FT ......................................................................... 857
FRANCE - What You Need to Know ........................................................................................................................................................... 859
FRANCE - Key Indicators ............................................................................................................................................................................ 860
FRANCE: Sharpest Drop in Private Sector Output in Four Years .............................................................................................................. 863
FRANCE - Quits on Austerity - Never a Doubt This Would Happen ........................................................................................................... 866

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FRANCE - Socialism is Expensive .............................................................................................................................................................. 867

FRANCE - Has Turned back to Socialism ................................................................................................................................................... 869
FRANCE - Losing Its Way through Political Illusions and Lies ................................................................................................................... 870
FRANCE - Uncompetitive ............................................................................................................................................................................ 871
FRANCE - Titan Tire Calls Out French Labor ............................................................................................................................................. 873
FRANCE - France Responds to Titan Tire .................................................................................................................................................. 875
FRANCE - What Happens In France When Companies Fire People ......................................................................................................... 877
FRANCE - Hollande's Economically Insane campaign Promise ................................................................................................................. 878
GERMANY GERMANY MAY BE A BIGGER THREAT TO THE EUROPENA UNION THAN BREXIT! ........................................................... 879
CHARTS OF NOTE ......................................................................................................................................................................................... 879
CHARTS - GERMANY GDP Growth ........................................................................................................................................................ 879
CHARTS - GERMANY 10-year Bund yields have now moved above JGB yields ................................................................................... 880
CHARTS - GERMANY German Industrial Output -0.5% MM, +0.1% YY ................................................................................................ 881
CHARTS - GERMANY Germany now leading the way back up in Euro Zone ........................................................................................ 881
CHARTS - GERMANY On rolling bi-weekly basis, the 10-yr Bund yield rise of 43 bps is about as big as it gets in recent history ....... 882
CHARTS - GERMANY - 1.179% 30 Year Bond Yield ................................................................................................................................ 882
CHARTS - GERMANY 2 Year Sovereign Yield Goes Negative .............................................................................................................. 882
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................................ 883
CHARTS - GERMANY German & Japanese Yield Curves Are Remarkably Close ................................................................................ 884
CHARTS - GERMANY 10 Y European Yields.......................................................................................................................................... 885
CHARTS - GERMANY German Unemployment ...................................................................................................................................... 886
CHARTS - GERMANY German Core Inflation ......................................................................................................................................... 886
CHARTS - GERMANY 10 Year Sovereign Bund versus US10 Treasury ................................................................................................ 886
CHARTS - GERMANY Expectations Component Peaked In January ..................................................................................................... 887
CHARTS - GERMANY Ifo Rolls-Over....................................................................................................................................................... 887
CHARTS - GERMANY 10 Year Bund Below 1% ..................................................................................................................................... 888
CHARTS - GERMANY - Inflation ................................................................................................................................................................. 888
CHARTS - GERMANY - IFO Investor Confidence ...................................................................................................................................... 889
CHARTS - GERMANY - ZEW Expectations ................................................................................................................................................ 890
RESEARCH OF NOTE .................................................................................................................................................................................... 892
NEW-RESEARCH - END OF THE EU? Germany warns FIVE more countries could leave Europe after Brexit ...................................... 892
NEW-RESEARCH - Europe's Woes: The Escalating Cost To Germany .................................................................................................... 894
NEW-RESEARCH - Germany May Be A Bigger Threat To The European Union Than Brexit .................................................................. 897
RESEARCH - German Finance Minister: Expansive policies may have laid foundation of next crisis ...................................................... 899
RESEARCH - Furious Germans Stage Massive Anti-Islam Protest ........................................................................................................... 899
RESEARCH - Germany Has Repatriated Over 366 Tonnes Of Gold From New York And Paris .............................................................. 907
RESEARCH - U.S. Will Station New Nuclear Weapons in Germany against Russia ................................................................................. 913
RESEARCH - Refugee Crises At Dangerous Tipping Point As Hungary Deploys Army, Germany Loses Patience ................................. 914
RESEARCH - Why Volkswagen Is Systematically Important For Germany And Europe ........................................................................... 919
RESEARCH - Europe's Woes: The Escalating Cost to Germany ............................................................................................................... 921
RESEARCH - Bundesbank Blasts Draghi For Breaking Bailout Taboo ...................................................................................................... 924
RESEARCH - Five charts that show Germany is heading into recession 10-19-14 The Guardian............................................................ 925
RESEARCH - Draghi signaled additional monetary easing is likely to materialize - Possibly by September ............................................ 928
RESEARCH - Germany close to recession as ECB admits recovery is weak............................................................................................ 930
RESEARCH - Merkel's Third Chancellorship Challenges ........................................................................................................................... 932
RESEARCH - German Election - Merkel Begins Hunt for Coalition Partners............................................................................................. 935
RESEARCH - Europe's Shadow Economy: As Big As Germany................................................................................................................ 936
SITUATIONAL ASSESSEMENT ..................................................................................................................................................................... 940
GERMANY - Anti Euro AfD Party May Cost Merkel in Critical September Election ................................................................................... 941
GERMANY - The Euro Crisis Escalation over Cyprus May Politically Cripple Merkel ................................................................................ 942
GERMANY - Call for End of "Coercive Euro Association" .......................................................................................................................... 944
IBERIAN PENINSULA NIRP IS KILLING US SAYS SPAINS SECOND BIGEST BANK. ................................................................................ 946
CHARTS OF NOTE ............................................................................................................................................................................................... 946
CHARTS - SPAIN Spains Debt-to-GDP ................................................................................................................................................... 946
CHARTS - SPAIN Spains & Portugals Unemployment Rate June 2015 Seasonally Adjusted ........................................................... 946
CHARTS - SPAIN Spanish Industrial Production Output +1.0% MM, +2.9% YY ..................................................................................... 946
CHARTS - PORTUGAL Share of Lower Skilled Workers ......................................................................................................................... 947
CHARTS - PORTUGAL Non-Performing Loans........................................................................................................................................ 948
CHARTS - SPAIN 30 Year Bond Yield At 2.5% - Historic Low ................................................................................................................. 949
CHARTS - SPAIN 10 Year Bond Yield At 2.37% - Historic Low ............................................................................................................... 949
CHARTS - PORTUGAL Yields Hit Low After BES Bailout ....................................................................................................................... 950
CHARTS - PORTUGAL - Deficit Problem ................................................................................................................................................... 951
RESEARCH OF NOTE .................................................................................................................................................................................... 952
NEW-RESEARCH - NIRP is Killing us, Wheezes Spains Second Biggest Bank .................................................................................... 952
RESEARCH - Did Austerity Really Win Out in Portugal?............................................................................................................................ 953
RESEARCH - Spain's Economic Recovery Is "One Big Lie" ...................................................................................................................... 954
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ........................................................................................................ 957
RESEARCH - Jitters over Spanish elections, Greece hit banks, euro ........................................................................................................ 960
RESEARCH - Presidential Warning Spikes Yields To 8 Months Highs ...................................................................................................... 964
RESEARCH - Clear Signs of Desperation In Spain from a Growing Collateral Contagion ........................................................................ 966
RESEARCH - The Spanish Government's 'Bad Bank' Scam ..................................................................................................................... 967
SITUATIONAL ASSESSEMENT ..................................................................................................................................................................... 969
IBERIA - Credit Downgrades - At Precipice of "Non Investment Grade" .................................................................................................... 969
IBERIA - Regional Bailout Bailouts a Massive Problem .............................................................................................................................. 970
IBERIA - NPL Going Ballistic ....................................................................................................................................................................... 971
IBERIA - Spanish Funding Problem ............................................................................................................................................................ 972

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IBERIA - The Giant Spanish Housing Bubble, Now Beginning to Implode ................................................................................................. 977
IBERIA - Mal-Investment Coming Home to Roost....................................................................................................................................... 979
IBERIA - Bank Deposits Were Leaving, Now they Are Fleeing .................................................................................................................. 980
IBERIA - Now a Capital Investment Problem .............................................................................................................................................. 981
IBERIA - Banks on Artificial "Ponzi Bond" Life Support .............................................................................................................................. 982
CHINA: A LARGE FINANCIAL ACCOUNTS OUTFLOW PROBLEM! .................................................................................................................. 991
CHARTS OF NOTE ......................................................................................................................................................................................... 991
NEW-CHARTS Chinas Aggregate Financing 2002-2015 .................................................................................................................... 991
NEW-CHARTS Chinas Aggregate Financing & Nominal GDP ............................................................................................................... 991
NEW-CHARTS Chinas Ratio of Aggregate Financing to Nominal GDP ................................................................................................. 992
NEW-CHARTS Chinas Aggregate Financing Growth vs Nominal GDP Growth .................................................................................... 992
NEW-CHARTS Chinas Annual Increase in Aggregate Finance vs The Annual Increase in Nominal GDP ........................................... 993
NEW-CHARTS Chinas Ratio of Increase in Aggregate Finance to the Increase in Nominal GDP ........................................................ 993
NEW-CHARTS How Much Credit Will It Ztake? ....................................................................................................................................... 994
NEW-CHARTS Chinas Aggregate Financing Projected to 2025 ......................................................................................................... 994
NEW-CHARTS Chinas Aggregate Financing Annual Increase - Yuan ................................................................................................ 995
NEW-CHARTS Chinas Aggregate Financing Annual Increase US$ ................................................................................................ 995
NEW-CHARTS Chinas Credit Growth US versus China ...................................................................................................................... 996
NEW-CHARTS Aggregate Financing & Nominal GDP Projected to 2025 ............................................................................................ 996
NEW-CHARTS Aggregate Financing & Nominal GDP Projected to 2025 ............................................................................................ 997
NEW-CHARTS Non-Performing Loans .................................................................................................................................................... 997
NEW-CHARTS Aggregate Financing Will Not Grow at 12.6% a Year ..................................................................................................... 998
NEW-CHARTS A Different Scenario A Gradual Slowdown in Credit Growth ....................................................................................... 998
NEW-CHARTS Aggregate Financing Projected to 2025 Under a Gradual Slowdown Scenario............................................................. 999
NEW-CHARTS Aggregate Financing Annual Change Yuan 2003-2025 est. ....................................................................................... 999
NEW-CHARTS Aggregate Financing Annual Change US$ 2003-2025 est. ...................................................................................... 1000
NEW-CHARTS The Ratio of Aggregate Financing to GDP (Under a Different Scenario) ..................................................................... 1000
NEW-CHARTS Approaches to Chinese Funding? ................................................................................................................................. 1001
NEW-CHARTS The Balance of Payments Surplus Wont Be Enough! ................................................................................................. 1001
NEW-CHARTS Chinas Balance of Payments = Change in FX Reserves ............................................................................................ 1002
NEW-CHARTS Chinas Balance of Payments = Balance of Payments Must Balance! ........................................................................ 1002
NEW-CHARTS Breakdown of Chinas Balance of Payments ................................................................................................................ 1003
NEW-CHARTS Chinas Current Account ................................................................................................................................................ 1003
NEW-CHARTS Chinas Capital Account ................................................................................................................................................. 1004
NEW-CHARTS Chinas Financial Account .............................................................................................................................................. 1004
NEW-CHARTS Chinas Net Error & Omissions ...................................................................................................................................... 1005
NEW-CHARTS Chinas Foreign Reserves .............................................................................................................................................. 1005
NEW-CHARTS Is a Chinese Devaluation a Possibility? ........................................................................................................................ 1006
NEW-CHARTS Is a Change in the Chinese RRR (Required Reserve Ratio) a Possibility? .................................................................. 1006
NEW-CHARTS Changing the RRR (Required Reserve Ratio) - 1 .......................................................................................................... 1007
NEW-CHARTS Changing the RRR (Required Reserve Ratio) - 2 .......................................................................................................... 1007
NEW-CHARTS Is A Chinese QE a Possibility?-1 ................................................................................................................................... 1008
NEW-CHARTS Is A Chinese QE a Possibility?-2 ................................................................................................................................... 1008
NEW-CHARTS A Breakdown of the Peoples Bank of Chinas Assets .................................................................................................. 1009
NEW-CHARTS Chinese QE Would BE Potentially Different It Could Cause a Destabilizing Inflation Shock .................................... 1009
NEW-CHARTS Chinese CPI Annual Percentage Change Remember Tiananmen Square! .............................................................. 1010
NEW-CHARTS Chinese Yuan Devaluation, RRR Reductions and QE Coming..................................................................................... 1010
CHARTS Chinas Hot Money Flows ....................................................................................................................................................... 1011
CHARTS Capital Outflows and Falling Foreign Direct Investment ........................................................................................................ 1012
CHARTS Exchange Rates & Foreign Exchange Reserves ................................................................................................................... 1012
CHARTS China & Belgium Treasury Holdings v-China FX Reserves ................................................................................................. 1013
CHARTS Belgiums US Treasury Holdings ............................................................................................................................................ 1013
CHARTS China Containerized Freight Index ......................................................................................................................................... 1014
CHARTS China Fiscal Spending Y-o-Y Increase ................................................................................................................................... 1014
CHARTS GDP Growth Steady At 6.9% in Q3 2015 ............................................................................................................................... 1015
CHARTS Debt Fueled But Not Much Growth ......................................................................................................................................... 1015
CHARTS Chinese New Loan Breakdown .............................................................................................................................................. 1016
CHARTS CAI Suggests China Economic Activity Below Reported GDP .............................................................................................. 1016
CHARTS Chinese Bank NPLs Are Gradually Rising Every Quarter ...................................................................................................... 1017
CHARTS A Tale of Two Economies ....................................................................................................................................................... 1017
CHARTS Chinas Investment Share of GDP Higher than Ever in Japan or Korea ................................................................................ 1019
CHARTS China Treasury Holding Have Peaked But US Commercial Banks Taking Uo the Slack ..................................................... 1020
CHARTS China 2014 Labor Force Declines First Time in at Least Two Decades ................................................................................ 1020
CHARTS Ponzi Finance: Chinese Firms Are Issuing More Debt Just to Pay Interest .......................................................................... 1021
CHARTS Chinese Global Trade Index 2001 ....................................................................................................................................... 1021
CHARTS Chinese Imports Exports..................................................................................................................................................... 1022
CHARTS Chinas Economic Weakness Wider Deeper In September ................................................................................................ 1023
CHARTS Sinking Li Keqiamg Index Contrasts With Stable GDP .......................................................................................................... 1024
CHARTS China is the Undisputed Engine of Global Growth ................................................................................................................. 1025
CHARTS China Has Been Consuming Mind-Boggling Amounts of Raw Materials ............................................................................... 1025
CHARTS Fixed Asset Investment & Consumption in China Y-o-Y Growth ........................................................................................ 1026
CHARTS Fixed Asset Investment Rises Least Since 2000 ................................................................................................................... 1027
CHARTS Economic Indicators Point to Lower Growth than the Headline Figures ................................................................................ 1027
CHARTS Gains of Real Estate Development Investment 1/10th of 2010 Pace ..................................................................................... 1028
CHARTS Foreign Exports to China as a % of GDP ............................................................................................................................... 1028
CHARTS Foreign Exports to China for Chinas Domestic Use as a % of GDP ..................................................................................... 1029

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CHARTS China & Belgium Treasury Holdings vs China FX Reserves ................................................................................................. 1029
CHARTS Breakdown of Chinese Imports ............................................................................................................................................... 1030
CHARTS Chinese Imports Slow to 5 Year Low...................................................................................................................................... 1031
CHARTS Chinas Increasing Substitution of Imports for Made in China Products .............................................................................. 1031
CHARTS Developing Economies Exposure to Chinese Domestic Demand ......................................................................................... 1032
CHARTS Chinas GDP Monthly Tracker and Target .............................................................................................................................. 1033
CHARTS China Matters Less for US Consumers than for Stock Investors ........................................................................................... 1033
CHARTS Monthly Change in Foreign Reserves .................................................................................................................................... 1033
CHARTS Monthly FX Purchases ............................................................................................................................................................ 1034
CHARTS Chinas Estimated Productivity Growth Based on IP & Employment Shifts ........................................................................... 1034
CHARTS Shanghai Composite Index Profits% Y-o-Y ......................................................................................................................... 1035
CHARTS Corporate & Household Debt as % GDP ................................................................................................................................ 1035
CHARTS Weak Yuan Supported Much of 21-Year Export Rise to U.S. ................................................................................................ 1036
CHARTS Outstanding Balance of Margin Finance Shanghai Composite ........................................................................................... 1037
CHARTS Currency Rout Goes Global as Risk Seen of 50% Loss ........................................................................................................ 1037
CHARTS Yuan Trading Band ................................................................................................................................................................. 1038
CHARTS Historical Yuan FX Pattern...................................................................................................................................................... 1039
CHARTS China Plans to Spend Billions on Infrastructure in Pakistan .................................................................................................. 1039
CHARTS Chinas Proposed Silk Road Routes....................................................................................................................................... 1040
CHARTS China Activity Proxy & Official GDP........................................................................................................................................ 1041
CHARTS China Relaxes Commercial Bank Reserves ........................................................................................................................... 1042
CHARTS Chinese Balance of Payments ................................................................................................................................................ 1042
CHARTS Chinese Hot Money Flows ...................................................................................................................................................... 1043
CHARTS Falling Chinese Industrial Production ..................................................................................................................................... 1043
CHARTS Commodity Prices % Change Since July 2014 ...................................................................................................................... 1044
CHARTS Chinese Steel Demand, Iron Ore ............................................................................................................................................ 1044
CHARTS Chinese Rail Freight ............................................................................................................................................................... 1045
CHARTS Chinese Bank Assets versus US Bank Assets ....................................................................................................................... 1045
CHARTS Chinese Leverage and Underlying Nominal GDP .................................................................................................................. 1046
CHARTS Measures of Real & Nominal GDP Growth in China .............................................................................................................. 1046
CHARTS Chinese Total Debt & Breakdown........................................................................................................................................... 1047
CHARTS New Chinese Retail Stock Market Accounts .......................................................................................................................... 1047
CHARTS New Chinese Retail Stock Market Accounts-2 ....................................................................................................................... 1048
CHARTS Plummeting Chinese Consumer Confidence .......................................................................................................................... 1048
CHARTS Chinese PMI ............................................................................................................................................................................ 1049
CHARTS Chinese Exports versus Taiwan-Korea-Japan ....................................................................................................................... 1050
CHARTS - Falling Chinese Industrial Profits ............................................................................................................................................. 1050
CHARTS - Something Up (or rather down) with Chinese Currency? ....................................................................................................... 1050
CHARTS - Rising Margin Debt/Market Cap Ratio Suggests Liquidity m& Credit Risks ........................................................................... 1051
CHARTS - Corporate Bond Yields ............................................................................................................................................................. 1051
CHARTS - New Retail Stock Trading Accounts ........................................................................................................................................ 1052
CHARTS - Credit Growth 30% Above Trend for Private Sector Debt to GDP .......................................................................................... 1052
CHARTS - Falling Foreign Currency Reserves ......................................................................................................................................... 1053
CHARTS - 2 Year Yield Goes Negative .................................................................................................................................................... 1054
CHARTS - China Used More Cement in Last 3 Years than US in Entire 20th Century ............................................................................ 1054
CHARTS - China Real Activity Indicators Steel, Cement & Electricity ................................................................................................... 1055
CHARTS - Chinese Coal Consumption Falls ............................................................................................................................................ 1055
CHARTS - Chinese Y-o-Y Outstanding Credit & M2 ................................................................................................................................. 1056
CHARTS - Chinas Bank Reserve Requirement Ratio .............................................................................................................................. 1056
CHARTS - New Stock Market Trading Accounts ...................................................................................................................................... 1057
CHARTS Yuan Falls as Economy Weakens .......................................................................................................................................... 1058
CHARTS Yuans Currency Basket Composition .................................................................................................................................... 1058
CHARTS Yuan Diverges From Currency Basket ................................................................................................................................... 1059
CHARTS Industrial Output A Concern.................................................................................................................................................... 1059
CHARTS China On A Path Since 2008 That Historically Leads to A Currency Crisis........................................................................... 1060
CHARTS Borrowing Costs for Firms Remain High ................................................................................................................................ 1061
CHARTS Chinas Q1 GDP Deflator Falls to Zero .................................................................................................................................. 1061
CHARTS - Credit is Running Well Ahead of Economic Growth ................................................................................................................ 1063
CHARTS Productivity is Slumping As Debt Levels Soar........................................................................................................................ 1063
CHARTS Chinas Gross Fixed Capital Formation Problem ................................................................................................................... 1063
CHARTS Chinese Investment Peaking .................................................................................................................................................. 1064
CHARTS China Equity Flows ................................................................................................................................................................. 1065
CHARTS Credit Accumulation Rate Growth Comparisons ................................................................................................................. 1065
CHARTS Chinese Credit Growth ............................................................................................................................................................ 1066
CHARTS 5 Year Debt Growth versus GDP ............................................................................................................................................ 1066
CHARTS 5 Year Credit Growth .............................................................................................................................................................. 1067
CHARTS Growth Propensity of Credit Growth..................................................................................................................................... 1068
CHARTS Chinas Bad Loans - NPL........................................................................................................................................................ 1069
CHARTS Slowing Steel Consumption .................................................................................................................................................... 1070
CHARTS Shadow Banking System ........................................................................................................................................................ 1070
CHARTS Dramatic Chinese Housing Slowdown ................................................................................................................................... 1072
CHARTS - CHINA - A Global Slowdown on the Verge of Contraction...................................................................................................... 1073
CHARTS - CHINA - Chinese Credit Market .............................................................................................................................................. 1074
CHARTS - CHINA - PMI ............................................................................................................................................................................ 1074
CHARTS - CHINA - PMI-2 ......................................................................................................................................................................... 1076
CHARTS - CHINA - GDP ........................................................................................................................................................................... 1077
CHARTS - CHINA Industrial Output ....................................................................................................................................................... 1078

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CHARTS - CHINA - Urban Fixed Asset Investment .................................................................................................................................. 1079

CHARTS - CHINA Retail Sales .............................................................................................................................................................. 1080
RESEARCH OF NOTE .................................................................................................................................................................................. 1081
CHINA "China Is A Monumental Doomsday Machine" Stockman Warns .............................................................................................. 1081
CHINA China Faces Capital Flight Punishment ..................................................................................................................................... 1084
CHINA China's Credit Conundrum ......................................................................................................................................................... 1088
CHINA China's Economy Continues To Crumble As Key Data Is Worst In 15 Years ........................................................................... 1090
CHINA China Outflows Said To Surpass A Staggering $300 Billion in Under Three Months ............................................................... 1093
CHINA China FX Reserve Drop Is Collateral Damage from Yuan Fall .................................................................................................. 1096
CHINA This Isn't 1994: China and That First U.S. Rate Hike ................................................................................................................ 1098
CHINA Expect Regional Ripples, Not Global Waves, From China Selloff ............................................................................................. 1100
CHINA China Risks Downward Spiral of Falling Markets, Growth......................................................................................................... 1101
CHINA China to the Rescue ................................................................................................................................................................... 1103
CHINA Yuan Devaluation Helps Attain U.S. Monetary Tightening Without Fed Rate Hikes ................................................................. 1104
CHINA Devaluation Promises to Boost Exports, But Adds Stability Risk .............................................................................................. 1106
CHINA Risk of a Vicious Circle on Market, Profit Declines .................................................................................................................... 1108
JAPAN: KURODA UNSURE WHETHER NIRP & MONETARY POLICY IS WORKING .................................................................................... 1110
CHARTS OF NOTE ....................................................................................................................................................................................... 1111
NEW-CHARTS - JAPAN The Biggest Debt to GDP Ratio in the World! ................................................................................................ 1111
NEW-CHARTS - JAPAN Export & Import Growth in Yen Terms ........................................................................................................... 1111
NEW-CHARTS - JAPAN Annual Growth in Debt in Yen ........................................................................................................................ 1112
NEW-CHARTS - JAPAN Fiscal & Monetary Balance Sheets ................................................................................................................ 1112
NEW-CHARTS - JAPAN BOJ Assets versus Japanese GDP Divergence As US TAPER Ended. .................................................... 1113
NEW-CHARTS - JAPAN USDJPY & NIKKEI 225 since BOJs NIRP Announcement .......................................................................... 1113
NEW-CHARTS - JAPAN Nikkei Manufacturing PMI Contraction PLUS Increase Rate of Contraction .............................................. 1114
NEW-CHARTS - JAPAN BOJ Balance Sheet versus Japanese Manufacturing PMI ............................................................................ 1114
NEW-CHARTS - JAPAN Japans Real GDP Trajectory......................................................................................................................... 1115
NEW-CHARTS - JAPAN Japans Real GDP Trajectory with QE Drags ................................................................................................ 1115
NEW-CHARTS - JAPAN Japans Real Household Consumption less Imputed Rent ........................................................................... 1116
CHARTS - JAPAN Eire Similarities with Abenomics Period and 2007-2009 Crisis ............................................................................... 1116
CHARTS - JAPAN Nikkei 225 versus Kuroda's regime shift to NIRP .................................................................................................... 1117
CHARTS - JAPAN Largest unrealized losses on Margin Buying since Lehman ................................................................................... 1117
CHARTS - JAPAN Exports Y-o-Y versus USDJPY ................................................................................................................................ 1118
CHARTS - JAPAN Imports Y-o-Y ........................................................................................................................................................... 1118
CHARTS - JAPAN BOJ Holding of Outstanding Japanese Debt ........................................................................................................... 1119
CHARTS - JAPAN NIKKEI In Near Free-Fall ......................................................................................................................................... 1119
CHARTS - JAPAN Japanese Bank Stocks Collapsing as they Follow JGB 2-10 Yield Curve Spread ................................................. 1120
CHARTS - JAPAN Japanese Buying of Foreign Stock .......................................................................................................................... 1120
CHARTS - JAPAN BOJ Owns 52% of Entire Japanese ETF Market Assets ........................................................................................ 1121
CHARTS - JAPAN GDP Q-o-Q Quintuple Dip Recession .................................................................................................................. 1121
CHARTS - JAPAN Real Y-o-Y Cash Earnings with Abenomics ............................................................................................................ 1122
CHARTS - JAPAN BOJs Accelerating Purchases of Equity Funds Seen as Driving Force of Tokyo Share Markets ......................... 1122
CHARTS - JAPAN More than a Fourth of Japans Population is Over the Age of 65 ........................................................................... 1123
CHARTS - JAPAN IMFs Forecast of Japanese Population Growth...................................................................................................... 1123
CHARTS - JAPAN Prefectures with More Seniors Saw Steeper GDP Losses ..................................................................................... 1124
CHARTS - JAPAN Aging Population Will Continue Dragging Down Growth......................................................................................... 1124
CHARTS - JAPAN Fewer, Older Citizens Facing Larger Debt Burden ................................................................................................. 1125
CHARTS - JAPAN 20 Years Later China Follows Japans Pattern ....................................................................................................... 1125
CHARTS - JAPAN Financial Repression Gets Heavier in Japan .......................................................................................................... 1126
CHARTS - JAPAN Inventory Build Up Keeps Q1 GDP Afloat ............................................................................................................... 1127
CHARTS - JAPAN 48 Month Trade Balance Deficit .............................................................................................................................. 1128
CHARTS - JAPAN Y-o-Y Contracting Imports ....................................................................................................................................... 1128
CHARTS - JAPAN Monetary Base versus USDJPY .............................................................................................................................. 1129
CHARTS - JAPAN Japan National Debt Rises To 1,053,357,200,000,000......................................................................................... 1129
CHARTS - JAPAN 1.174% 30 Year Bond Yield ..................................................................................................................................... 1131
CHARTS - JAPAN 2 Year Yield Goes Negative..................................................................................................................................... 1131
CHARTS - JAPAN Savings Rate Goes Negative ................................................................................................................................... 1131
CHARTS - JAPAN Stagnate Housing Starts with Historic Low 35 Year Mortgages .............................................................................. 1132
CHARTS - JAPAN Non-Resident Net Investment in Japanese Stocks ................................................................................................. 1132
CHARTS - JAPAN Shifting Demographics - Birth versus Deaths .......................................................................................................... 1133
CHARTS JAPAN Nikkei Strength is all Relative ............................................................................................................................... 1133
CHARTS - JAPAN Trade Balance .......................................................................................................................................................... 1134
CHARTS - JAPAN 10 Year Treasury Approaching Zero (12-27-14) ..................................................................................................... 1135
CHARTS - JAPAN BOJ Reserve Balances ............................................................................................................................................ 1136
CHARTS - JAPAN Macro Crisis Zones .................................................................................................................................................. 1137
CHARTS - JAPAN Demographics .......................................................................................................................................................... 1137
CHARTS - JAPAN Fiscal Deficit versus BOJ Balance Sheet ................................................................................................................ 1138
CHARTS - JAPAN Japans Economy versus the Rest of the World ...................................................................................................... 1138
CHARTS - JAPAN Japans Decline in Real Interest Rates .................................................................................................................... 1139
CHARTS - JAPAN Japanese GDP Annualized Q-o-Q ........................................................................................................................... 1140
CHARTS - JAPAN Bankruptcies Due to Depreciating Yen .................................................................................................................... 1141
CHARTS - JAPAN Japanese & German Yield Curves Are Remarkably Close ...................................................................................... 1141
CHARTS Q2 GDP Downturn Even Worse Than Though or Looks........................................................................................................ 1143
CHARTS Real Incomes Falling at Fastest Rate in a Decade ................................................................................................................ 1143
CHARTS Japan Exports Remained Subdued ........................................................................................................................................ 1144
CHARTS Past Yen Strength Pushed Production Off-Shore .................................................................................................................. 1144

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CHARTS Japans Export Majors Lost Tech Battle ................................................................................................................................. 1145

CHARTS Japans Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................ 1146
CHARTS Japan Adjusted Trade Balance ............................................................................................................................................... 1146
CHARTS Japan BoP Current Account Balance .................................................................................................................................. 1147
CHARTS 5T Yen of JGB Selling ............................................................................................................................................................. 1147
CHARTS Sovereign Debt % of Tax Revenue ........................................................................................................................................ 1148
CHARTS Public Sector Debt Issuances 2013 as % GDP ...................................................................................................................... 1149
CHARTS - GDP Trend ............................................................................................................................................................................... 1149
CHARTS - CPI Trend ................................................................................................................................................................................. 1150
CHARTS - JAPAN - GDP Resurgence ...................................................................................................................................................... 1150
CHARTS - JAPAN - BOJ Balance Sheet .................................................................................................................................................. 1151
RESEARCH OF NOTE .................................................................................................................................................................................. 1152
NEW-JAPAN Did Bank Of Japan's Kuroda Just "Capitulate" Too? ....................................................................................................... 1152
NEW-JAPAN XXXXX .............................................................................................................................................................................. 1154
NEW-JAPAN Japan's Broken Economy - 25 Years of Failed "Stimulus" & "Temporary Illusions"........................................................ 1154
NEW-JAPAN Abenomics "Death Cross" Strikes As Japan PMI Plunges To 40-Month Lows ............................................................... 1158
JAPAN Safes Sell Out In Japan, 1,000 Franc Note Demand Soars As NIRP Triggers Cash Hoarding ............................................... 1160
JAPAN "There Will Be Hyperinflation" Japanese Lawmaker Warns "Kuroda Got It Wrong" With NIRP ............................................... 1162
JAPAN Abenomics Fails Miserably As Japan's Workers "Get Nothing" In 2015 ................................................................................... 1165
JAPAN Paul Krugman Is "Really, Really Worried" That He Might Have Screwed Up Japan ................................................................ 1167
JAPAN S&P Downgrades Japan from AA- To A+ On Doubts Abenomics Will Work - Full Text ........................................................... 1170
JAPAN Elderly Japanese Population Hits New Record - Demographic Death-Rattle Continues ......................................................... 1172
JAPAN Bank Of Japan Buying Power Runs Dry: "If They Don't Increase Now, It's Going To Be A Shock!" ........................................ 1176
JAPAN Abe Ratings Crash to Record Lows, Japan Lowers Minimum Voting Age ............................................................................... 1177
JAPAN Japan Now Spends 43% Of Tax Revenue To Fund Interest On Debt ...................................................................................... 1180
JAPAN Japan Still the Worlds Top Credit? ............................................................................................................................................ 1181
JAPAN Bank of Japan Relaxing All-Out Approach to Hitting Inflation Target ........................................................................................ 1182
JAPAN Japanese trading firms to cut investments, sell assets ............................................................................................................. 1183
JAPAN The BOJ Ups The Ante .............................................................................................................................................................. 1185
JAPAN Is Japan Kaput? ......................................................................................................................................................................... 1186
JAPAN - Pace of 60 to 70 trillion yen a year May Become "Open Ended" ............................................................................................... 1189
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1191
JAPAN - 3 Arrows of ABE-nomics Not Working ........................................................................................................................................ 1193
JAPAN - Stalled Inflation Adds Pressure for Second Round of Stimulus ................................................................................................. 1195
JAPAN - Japanese Financial Repression - Changes in Allocation of Japanese Retirement Accounts Coming ...................................... 1196
JAPAN - Japan bond market liquidity dries up as BoJ holding crosses 200tn........................................................................................ 1198
JAPAN - Abe Approval Rating Plunges ..................................................................................................................................................... 1200
JAPAN - What the Japanese been Buying ................................................................................................................................................ 1201
JAPAN - Japan May Matter More Than Tapering ..................................................................................................................................... 1203
JAPAN - Japan Finances Worse than at Wars End ................................................................................................................................. 1206
JAPAN - BOJ: "The days of constructive ambiguity is over! .................................................................................................................. 1207
JAPAN - Abenomics Third Arrow Growth Strategy Underwhelms .......................................................................................................... 1208
JAPAN - 2nd ABE-nomics $200B Stimulus Package Approved ............................................................................................................... 1210
JAPAN - Worlds Biggest Pension Fund Sees Japan Fail on ABE-nomics' 2% Inflation Goal ................................................................. 1211
JAPAN - The Abe-nomics Failure .............................................................................................................................................................. 1214
SITUATIONAL ASSESSEMENT & KEY NOTES .......................................................................................................................................... 1216
JAPAN - What You Need to Know............................................................................................................................................................. 1218
JAPAN - No Way Out But to Expand the Monetary Base ......................................................................................................................... 1221
JAPAN - BOJ to "Own" 100% of GDP in 5 Years...................................................................................................................................... 1221
JAPAN - Adjusted trade deficit the worst in Bloomberg's 20 year history ................................................................................................. 1225
JAPAN - How Japan's National Debt Grew ............................................................................................................................................... 1226
JAPAN - ABE-nomics About Lowering Real Interest Rates ...................................................................................................................... 1227
JAPAN - Japanese Bonds Have Lost Their Ability to Price Risk .............................................................................................................. 1228
JAPAN - Japanese Structural Problems a "Canary" for Western Developed Economies ........................................................................ 1231
JAPAN - Shinzo Abe Hasn't the Stomach for the Heavy Lifting Needed to Accompany ABE-nomics. .................................................... 1233
JAPAN - A Credit Squeeze Leads Deflationary Leg Down ....................................................................................................................... 1236
JAPAN - Some Japanese Policies Have Clearly Hit the Limit .................................................................................................................. 1237
JAPAN - The ABE (Asset Bubble Evaluator) Index ................................................................................................................................... 1239
JAPAN - Regional Risk-Reward ................................................................................................................................................................ 1240
JAPAN - Now the Frontrunner of Outright Monetization. .......................................................................................................................... 1241
JAPAN - Yen Devaluation .......................................................................................................................................................................... 1242
JAPAN - New Bank of Japan Policy - 2% Inflation in 2 Years .................................................................................................................. 1243
JAPAN - Appoints BOJ Governor Firmly Committed to Printing Money ................................................................................................... 1245

EMERGING MARKETS EM CURRENCIES FEEL BREXIT FALLOUT ........................................................................................ 1246

EMERGING MARKETS ....................................................................................................................................................................................... 1246
CHARTS OF NOTE ....................................................................................................................................................................................... 1246
NEW-CHARTS Brexit Effect Ripples through Emerging Markets ........................................................................................................ 1246
NEW-CHARTS Markets Collapse After Brexit ........................................................................................................................................ 1247
NEW-CHARTS Emerging Market Currencies Against the Dollar Since Pre- Brexit June 23rd .......................................................... 1248
CHARTS EM Wave is the Third Wave in the Global Financial Crisis (GFC) ......................................................................................... 1248
CHARTS Countries Scaled to the Un sustainablilty of Their Debt ......................................................................................................... 1248
CHARTS Emerging Market CAPEX A Dominate Part of their Economies ............................................................................................ 1249
CHARTS Estimated Assets in Sovereign Wealth Funds versus Oil & Gas Related -1 ......................................................................... 1251
CHARTS Emerging Market CAPEX A Dominate Part of their Economies-2 ......................................................................................... 1251
CHARTS Emerging Market Collapse Accelerated in May When Global Market Peaked ...................................................................... 1252

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CHARTS Emerging Market USD Corporate Bond Maturities ................................................................................................................ 1253

CHARTS MSCI EM FX Index - New 6 Year Lows ................................................................................................................................ 1253
CHARTS EM FX Loses Since FOMC Meeting Brazil Noticeably Worse ............................................................................................ 1254
CHARTS EM FX Debasement By Country Since FOMC ....................................................................................................................... 1255
CHARTS EM FX Debasement By Country Since 9/7/09 ....................................................................................................................... 1255
CHARTS Brazilians Scramble to Protect their Store of Value (Coming to Other Countries) ................................................................. 1255
CHARTS Brazil Real GDP Y-o-Y% ........................................................................................................................................................ 1256
CHARTS Brazil Real / US$ versus Brazil 5Y CDS ................................................................................................................................ 1257
CHARTS Brazil Change in Yields Compared to Turkey and Mexico .................................................................................................. 1258
CHARTS Brazil Sovereign Gross Debt/GDP Government versus BI Simulation ............................................................................ 1258
CHARTS Brazil Number of days to start a business Worst in the Major Countries! ........................................................................ 1259
CHARTS Brazil Real Reaches Record Low as Budget Pessimism Rises .......................................................................................... 1259
CHARTS 5Y CDS Spreads Brazil, Russia, Turkey, Indonesia, Colombia & Peru .............................................................................. 1260
CHARTS AFRICA-Chinese Investment Offers in Africa Since 2000 ..................................................................................................... 1260
CHARTS AFRICA-Foreign Direct Investment & Trade .......................................................................................................................... 1261
CHARTS AFRICA-Geographic Comparisons ......................................................................................................................................... 1262
CHARTS Emerging Markets Corporate Defaults ................................................................................................................................... 1262
CHARTS Emerging Markets Economic Surprise Index ......................................................................................................................... 1263
CHARTS Emerging Markets Currency Change versus USD ................................................................................................................. 1263
CHARTS Emerging Markets Change in Nominal Policy Rate ............................................................................................................... 1264
CHARTS EM Vulnerability to an external shock Resilience Indicator .............................................................................................. 1264
CHARTS EM Vulnerability to an external shock Resilience Indicator Change Since 2008 Crisis ................................................... 1266
CHARTS Falling EM Currencies ............................................................................................................................................................. 1267
CHARTS Post-China 16 ......................................................................................................................................................................... 1268
CHARTS Economies Now Need More Debt to Generate Growth ......................................................................................................... 1269
CHARTS Emerging Markets Benchmark Underperforms US Index ...................................................................................................... 1269
CHARTS - Reserves versus World ............................................................................................................................................................ 1269
CHARTS - Current Account Balances versus GDP .................................................................................................................................. 1271
CHARTS - Emerging Markets Index versus MSCI World Index ............................................................................................................... 1272
CHARTS - SINGAPORE - Inflation ............................................................................................................................................................ 1273
CHARTS - SINGAPORE - Exports ............................................................................................................................................................ 1274
CHARTS - SOUTH KOREA ....................................................................................................................................................................... 1275
CHARTS - TURKEY - Spreads .................................................................................................................................................................. 1276
RESEARCH OF NOTE .................................................................................................................................................................................. 1277
NEW-EMERGING MARKETS - Seven Countries Most Vulnerable To A Debt Crisis .............................................................................. 1277
NEW-EMERGING MARKETS - Brexit Effect Ripples Through Emerging Markets ................................................................................ 1283
NEW-EMERGING MARKETS - Risk-off sentiment hits emerging markets .............................................................................................. 1284
NEW-EMERGING MARKETS - Turmoil in emerging countries could hinder global insurance penetration ............................................ 1287
EMERGING MARKETS - Why Asian Markets Are Collapsing .................................................................................................................. 1288
EMERGING MARKETS - History Suggests Asia Can Handle Fed Tightening......................................................................................... 1290
EMERGING MARKETS - Here's Which Emerging Markets Are Most Vulnerable To "External Shock" .................................................. 1292
EMERGING MARKETS - North Korea: Chinese Outsourcing Giant ........................................................................................................ 1294
EMERGING MARKETS - Forced Changes & Advancements in the Normal "Plundering" Strategy ........................................................ 1296
EMERGING MARKETS - Crisis Temporarily Halted ................................................................................................................................. 1298
EMERGING MARKETS - The plight of four Asian countries - China, India, Indonesia and Japan. ......................................................... 1298
EMERGING MARKETS - Negative Current Accounts + Weak(ening) International Investment Positioning ........................................... 1303
EMERGING MARKETS - "TAPER" Shock Waves Across Asia................................................................................................................ 1304
EMERGING MARKETS - Global Bond Yields React Together ................................................................................................................. 1305
EMERGING MARKETS - A Bumpy Ride for Emerging Markets ............................................................................................................... 1307
EMERGING MARKETS - Stunning Withdrawals ....................................................................................................................................... 1313
EMERGING MARKETS - Bond Outflows Accelerating ............................................................................................................................. 1314
EMERGING MARKETS - This will make the 1997 Asian Crisis Seem Like an Early Warning ................................................................ 1316
EMERGING MARKETS - Developing Nations Feeling the Pain of Global Deleveraging Acceleration .................................................... 1318
EMERGING MARKETS - The Impact of "TAPER" .................................................................................................................................... 1320
SITUATIONAL ASSESSEMENT ................................................................................................................................................................... 1324
EMERGING MARKETS - What you Need to Know ...................................................................................................................................... 1324
EMERGING MARKETS - Comparative Ease of Doing Business ............................................................................................................. 1326
EMERGING MARKETS - Importance of Employment, Equality and Per Capital Income ........................................................................ 1327
ASEAN ........................................................................................................................................................................................................... 1330
ASEAN: A New Common Market .............................................................................................................................................................. 1330
ASIA ............................................................................................................................................................................................................... 1334
NEW-ASIA: CHARTS Top 7 Private Debt to GDP Growth Rates in 2015 ............................................................................................. 1334
NEW-ASIA: CHARTS Australia GDP Plus Credit Growth ...................................................................................................................... 1334
NEW-ASIA: CHARTS Hong Kong GDP Plus Credit Growth .................................................................................................................. 1336
NEW-ASIA: CHARTS Korea GDP Plus Credit Growth .......................................................................................................................... 1336
NEW-ASIA: CHARTS Financing Gaps Current Account Balance as a Percentage of GDP .............................................................. 1337
ASIA: CHARTS Entering More Adverse Part of the Credit Cycle .......................................................................................................... 1338
ASIA: CHARTS Real GDP Slowing, Real Funding Costs Are Rising .................................................................................................... 1339
ASIA: CHARTS Demographic Peaks of Working Age Populations ....................................................................................................... 1340
ASIA: CHARTS Impact of Demographic Change on Annual GDP Growth............................................................................................ 1341
ASIA: CHARTS Worlds 50 Busiest Container-Shipping Seaports ........................................................................................................ 1342
ASIA: CHARTS - REVENUE ..................................................................................................................................................................... 1343
ASIA: CHARTS EXPENDITURES .......................................................................................................................................................... 1343
ASIA: CHARTS SPENDING GAPS ........................................................................................................................................................ 1345
ASIA: CHARTS DEBT SERVICE ........................................................................................................................................................... 1345
ASIA: CHARTS - SINGAPORE ................................................................................................................................................................. 1347
ASIA: CHARTS INDONESIA CPI May 2014 .................................................................................................................................... 1348

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ASIA: CHARTS INDONESIA CPI Aug 2013 .................................................................................................................................... 1348

ASIA: CHARTS A Short Term Dead Cat Bounce? .............................................................................................................................. 1349
ASIA: CHARTS Inflation Problems Abound ........................................................................................................................................... 1350
ASIA: CHARTS Healthier Public Debt and Borrowing Positions than DM ............................................................................................. 1350
ASIA: CHARTS - AUSTRALIA ................................................................................................................................................................... 1351
ASIA - Regional Risk-Reward .................................................................................................................................................................... 1352
ASIA - Credit Contraction Problems .......................................................................................................................................................... 1353
ASIA - Corporate Debt Levels Reflect Unintended Consequences of Mispricing & Mal-Investment ....................................................... 1355
ASIA - Synchronized Markets .................................................................................................................................................................... 1357
ASIA - Caution Advised Regarding Positive South Korea Export Turnaround ......................................................................................... 1359
ASIA - Export Growth Looks Similar to Pre-2008 ...................................................................................................................................... 1360
ASIA - Global Slowing Quickly a Worsening Situation Across Asia .......................................................................................................... 1364
ASIA - Risks All on the Downside for Asia ................................................................................................................................................ 1365
ASIA - Demographic Headwinds ............................................................................................................................................................... 1368
ASIA - Pronounced Flight to Singapore Safety ......................................................................................................................................... 1369
LATIN AMERICA ........................................................................................................................................................................................... 1371
LATIN AMERICA Latin America Shouldn't Blame the Federal Reserve ................................................................................................ 1371
COLUMBIA Colombian Peso Leads Currency Declines as Crude Falls ............................................................................................... 1372
ARGENTINA Fewer Reserves Are a Plus for Argentine Bondholders .................................................................................................. 1373
VENEZUELA Signs of a Crack-up Boom and Dictatorship .................................................................................................................... 1374
VENEZUELA - Shortages & Hyperinflation ............................................................................................................................................... 1375
MIDDLE EAST ............................................................................................................................................................................................... 1377
TURKEY ..................................................................................................................................................................................................... 1377
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1378
BRICS................................................................................................................................................................................................................... 1384
BRICS BRIC GDP versus World GDP Contribution Contracting ........................................................................................................... 1384
BRICS Population, GDP,GDP per Capita .............................................................................................................................................. 1385
BRICS Responsible for 43% of Global Growth in 2013 ......................................................................................................................... 1386
BRICS A Short Term Dead Cat Bounce? ............................................................................................................................................ 1386
BRICS Inflation Problems Abound .......................................................................................................................................................... 1388
BRICS - EU Major Contributor to EM Current Account Deficit Growth ..................................................................................................... 1388
BRICS - Insufficient Levels Prompt Russian-Chinese Support ................................................................................................................. 1389
BRICS - A Development Bank-Forex Reserve Pool-African Integration ................................................................................................... 1391
BRICS - 40% of World Population and 25% of World GDP ...................................................................................................................... 1393
BRICS - $3 to $13B GDP in Ten Years ..................................................................................................................................................... 1396
BRICS- A World Wide Distrust of Financial Markets Building ................................................................................................................... 1398
BRAZIL........................................................................................................................................................................................................... 1400
NEW-BRAZIL - Brazil's Rio state declares financial disaster before Games ............................................................................................ 1400
NEW-BRAZIL - Brazilian Police Fired Tear Gas, Rubber Bullets As Protesters Try To Storm New President's Office .......................... 1400
NEW-BRAZIL - How Brazil, the darling of the developing world, came undone ....................................................................................... 1401
NEW-BRAZIL - Brazil's Rio state declares financial disaster before Games ............................................................................................ 1405
BRAZIL Brazils 2016 Recession Outlook Worsens ............................................................................................................................... 1405
BRAZIL Recession from 2015-2017 to be the Deepest Since 1901 Borders on Depression............................................................. 1405
BRAZIL - Brazil GDP Growth Y-o-Y .......................................................................................................................................................... 1407
BRAZIL Bankruptcy Escalates In Brazil 5525 In 2015 ........................................................................................................................ 1407
BRAZIL Falling Currency against the USD - USDBRL........................................................................................................................... 1408
BRAZIL Rising Yields for Brazilian Companies ...................................................................................................................................... 1408
BRAZIL Sharp Retail Decline ................................................................................................................................................................. 1409
BRAZIL GDP Contraction of -3.5% in 2016 and -0.5% in 2017 ............................................................................................................. 1409
BRAZIL Longest Sequence of Drops in Quarterly GDP Since 1996 ..................................................................................................... 1410
BRAZIL Sharp Decline in Quarterly GDP Growth in Recent Years ....................................................................................................... 1410
BRAZIL High Contribution of External Sector to Growth in 2016 ........................................................................................................... 1411
NEW-BRAZIL - Brazil's Rio state declares "State of Financial Disaster" before Summer Olympic Games ............................................. 1412
BRAZIL - Brazil Cut to Junk by All Three Ratings Agencies After Moody's Joins The Fray ..................................................................... 1412
BRAZIL 5,525 Companies Went Bankrupt In Brazil Last Year: "It's A Legitimate Credit Crisis" ........................................................... 1415
BRAZIL - Brazil Budget Cuts Not Enough to Avoid More Downgrades .................................................................................................... 1418
BRAZIL - Brazil's Economy Is Now A Job Destruction Machine ............................................................................................................... 1419
BRAZIL - Local Rates Hit Hardest by Swift S&P Sovereign Downgrade to Junk ..................................................................................... 1422
BRAZIL - Recession and High Rates Doomed Brazils Investment-Grade Rating ................................................................................... 1424
BRAZIL - Why Brazil Is Not Coming Back Anytime Soon ......................................................................................................................... 1426
BRAZIL - Brazil Returns to Junk as Developing Nations Feel the Squeeze ............................................................................................. 1426
BRAZIL - China Bails Out Brazil In $50 Billion Regional Power Grab ...................................................................................................... 1429
BRAZIL - Brazils Inflation-v Interest Rates Consumer Confidence Index ............................................................................................. 1436
BRAZIL - Brazils Depressed Consumer Confidence Index ...................................................................................................................... 1436
BRAZIL - Brazils Collapsing Confidence in the Construction Sector ....................................................................................................... 1437
BRAZIL - Brazil's Economy Is On The Verge Of Total Collapse ............................................................................................................... 1437
BRAZIL - Brazils Economy Just Imploded! ............................................................................................................................................... 1439
BRAZIL - Brazils economy slips into recession ........................................................................................................................................ 1442
BRAZIL - Inflation will remain high thanks to a "growth mismatch". .......................................................................................................... 1444
RUSSIA Russia Has Stopped Trying to Protect Ruble Has FX Reserves Depleted. ................................................................................ 1446
RUSSIA 2015 Russia Consensus GDP Forecast .................................................................................................................................. 1447
RUSSIA Foreign Exchange Reserves .................................................................................................................................................... 1447
RUSSIA Exchange and Interest Rate ..................................................................................................................................................... 1448
RUSSIA - Real GDP and Car Sales .......................................................................................................................................................... 1448
RUSSIA Inflation Rate ............................................................................................................................................................................ 1449
RUSSIA GDP Forecast versus USDRUB ............................................................................................................................................... 1449

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RUSSIA WTI Crude versus Ruble .......................................................................................................................................................... 1450

RUSSIA Russian Stocks versus Ruble, Russian 10 Y Yield versus 5Y CDS ........................................................................................ 1450
RUSSIA Russian CDS Spreads ............................................................................................................................................................. 1451
RUSSIA Winners and Losers of Oil Price Plunge .................................................................................................................................. 1452
RUSSIA CDS Spreads Has Widened 250bp Since Mid-June ............................................................................................................... 1453
RUSSIA Russian 5Y CDS versus USDRUB versus Russian Stocks .................................................................................................... 1454
RUSSIA Crude Oil in Rubles .................................................................................................................................................................. 1455
RUSSIA Russian Reserves versus USDRUB ........................................................................................................................................ 1455
RUSSIA Falling Oil Price Weighs on Economy and the Ruble .............................................................................................................. 1456
RUSSIA Russian Ruble versus Reserves .............................................................................................................................................. 1457
RUSSIA Russian Breakeven Oil Prices versus Liquids Production ....................................................................................................... 1458
RUSSIA Russian Refining & Upstream Economics-1 ............................................................................................................................ 1459
RUSSIA Russian Refining & Upstream Economics-2 ............................................................................................................................ 1459
RUSSIA Russian Holdings of US Treasuries ......................................................................................................................................... 1460
RUSSIA Russian 9 Year Gold Buying Spree ......................................................................................................................................... 1461
RUSSIA Net YTD Gold Purchases by the Central Bank of Russia ........................................................................................................ 1461
RUSSIAN RESEARCH WE FOLLOWED THIS TRI-SEMESTER ............................................................................................................ 1462
RUSSIA Russia signs up to $100 bn BRICS fund to rival IMF ............................................................................................................... 1462
INDIA.............................................................................................................................................................................................................. 1463
INDIA India Imports- Exports Y-o-Y ........................................................................................................................................................ 1463
INDIA CAPEX Bottom Out? .................................................................................................................................................................... 1464
INDIA Real GDP and Car Sales ............................................................................................................................................................. 1465
INDIA Inflation ......................................................................................................................................................................................... 1466
INDIA - Inflation .......................................................................................................................................................................................... 1467
INDIA - WPI ................................................................................................................................................................................................ 1468
INDIA - Will be fine as long as it continues to reduce its deficit. ............................................................................................................... 1469
INDIA - Panic in India ................................................................................................................................................................................. 1470
INDIA - India Rupee Collapse Showing Signs of Exhaustion ................................................................................................................... 1472
INDIA - Watch Out For RE-Emergence of Food Price Inflation ................................................................................................................ 1473
SOUTH AFRICA ............................................................................................................................................................................................ 1475

US ECONOMY ..................................................................................................................................... 1477

THE GLOBAL MACRO OVERLAY ........................................................................................................................................ 1477
MACRO - US Macro Data .................................................................................................................................................................................... 1478
CHARTS OF NOTE ....................................................................................................................................................................................... 1478
NEW- MACRO QE Correlation with Global Growth Barometer & S&P 500 .......................................................................................... 1478
NEW- MACRO Total Y-o-Y Global Export .............................................................................................................................................. 1479
NEW- MACRO MSCI World Index A Rounded Top or Consolidation? ............................................................................................... 1480
NEW- MACRO Central Bank Total Assets Fed,BoJ,BOE,ECB,PBoC ................................................................................................ 1480
NEW- MACRO Global Debt Growth ....................................................................................................................................................... 1481
NEW- MACRO 10 Fold Increase in Central Banks Assets in 20 Years. ................................................................................................ 1481
NEW- MACRO Global PMI ..................................................................................................................................................................... 1482
NEW- MACRO Global GDP % under Negative Rates ........................................................................................................................... 1482
NEW- MACRO Global Y-o-Y CPI Percentage Change .......................................................................................................................... 1483
NEW- MACRO Benchmark NIRP Rates ................................................................................................................................................ 1484
NEW- MACRO Baltic Dry Index At levels Not Seen Since the 1980s ................................................................................................ 1484
MACRO EM Wave is the Third Wave in the Global Financial Crisis...................................................................................................... 1485
MACRO Deteriorating EM FX, Equity and Debt .................................................................................................................................. 1485
MACRO Global Slowdown Only Getting Worse - China ........................................................................................................................ 1486
MACRO Global Slowdown Only Getting Worse - India .......................................................................................................................... 1487
MACRO Global Import-Export Trends .................................................................................................................................................... 1488
MACRO Developed World Import-Export Trends Has Nearly Halved Since 2000 ................................................................................ 1489
MACRO Emerging Market Import-Export Trends Has Also Fallen ........................................................................................................ 1490
RESEARCH OF NOTE .................................................................................................................................................................................. 1491
NEW-MACRO- The 8 Major Macro Economic Problems The Next President Will Face .......................................................................... 1491
Problem #1: Japan ............................................................................................................................................................................... 1491
Problem #2: China ................................................................................................................................................................................ 1491
Problem #3: Australia .......................................................................................................................................................................... 1492
Problem #4: The Middle East .............................................................................................................................................................. 1492
Problem #5: Russia .............................................................................................................................................................................. 1492
Problem #6: Europe ............................................................................................................................................................................. 1492
Problem #7: The Americas .................................................................................................................................................................. 1492
Problem #8: The United States ........................................................................................................................................................... 1493
A Recession is Inevitable .................................................................................................................................................................... 1493
NEW-MACRO- Deutsche Bank's Dire Warning On Global Trade: "The Currency War Is Futile" ............................................................ 1493

US INVESTMENT CYCLE ...................................................................................................................................................... 1497

CHARTS OF NOTE ....................................................................................................................................................................................... 1498
NEW-CHART Professionals Moving to the Sidelines in a Significant Fashion in US Equities .................................................... 1498
CHART Financial Cycles and Crisis Are Becoming Longer & Deeper ........................................................................................... 1499
CHART The Business, Credit and Rate Cycles ................................................................................................................................. 1499
CHART The Business, Credit and Rate Cycles ................................................................................................................................. 1499
CHART A Secular Problem on the Verge of Also Being a Business /Credit /Rate Cycle Problem .............................................. 1500
CHART Business Cycle Surprise Index ............................................................................................................................................. 1501
CHART Boom-Bust Cycle In Stocks ................................................................................................................................................... 1501

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RESEARCHOF NOTE ................................................................................................................................................................................... 1502

NEW-INVESTMENT Bonds & Stocks Unhinged from Reality- Financial reversal will fuel backlash against governments and
central banks ............................................................................................................................................................................................ 1502
GORD'S BIG PICTURE ECONOMIC CYCLE ..................................................................................................................................................... 1504
ECONOMIC INDICATORS .................................................................................................................................................................................. 1505
MONTHLY INDICATORS OF NOTE ............................................................................................................................................................. 1505
NEW-RESEARCH End of the Benign Cycle. ................................................................................................................................... 1505
RESEARCH - 8 Charts That Prove the US Is Already In A Recession ............................................................................................... 1506
RESEARCH - 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here ..................................... 1510
THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ..................................................................................................................... 1514
BUSINESS CYCLE - JOBS > CONFIDENCE > CONSUMPTION > GROWTH CYCLE.................................................................................... 1514
BUSINESS CYCLE - JOBS ................................................................................................................................................................................. 1515
SOME HIGHLIGHTS ..................................................................................................................................................................................... 1515
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1518
NEW-CHARTS Waiter / Bartender versus Manufacturing Jobs Post Dec 2007 ................................................................................. 1518
NEW-CHARTS NRA Restaurant Performance Index Post 2010 ........................................................................................................ 1518
CHARTS October NFP 60K below Estimates at 142K ........................................................................................................................... 1519
CHARTS Change in Civilian Employment: August 2015 ....................................................................................................................... 1519
CHARTS Peaks In LMCI Leads Declines in Employment...................................................................................................................... 1520
CHARTS September 2015 Monthly Job Change by State Bottoms up Says 22K Jobs Lost ............................................................. 1520
CHARTS Initial Jobless Claims .............................................................................................................................................................. 1521
CHARTS Increased Job Openings not a Sign of Better Employment ................................................................................................... 1522
NEW-CHARTS - U3 & U6 .......................................................................................................................................................................... 1524
NEW-CHARTS - Employment Situation Summary ................................................................................................................................... 1524
BUSINESS CYCLE - CONSUMER & BUSINESS SENTIMENT ......................................................................................................................... 1531
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 1531
NEW-SENTIMENT - Consumer, Investor & Trader ............................................................................................................................................. 1532
NEW-Consumer Confidence - Conference Board ........................................................................................................................................ 1532
NEW-Consumer Sentiment - Michigan ......................................................................................................................................................... 1535
NEW-Consumer Comfort - Bloomberg .......................................................................................................................................................... 1537
NEW-American Association of Independent Investors ................................................................................................................................. 1539
NEW-Investors Intelligence ........................................................................................................................................................................... 1539
NEW-National Association of Active Investment Managers (NAAIM) .......................................................................................................... 1540
NEW-Small Business Optimism .................................................................................................................................................................... 1541
NEW-Percentage Stocks above 50 & 200 DMA ........................................................................................................................................... 1543
NEW-Margin Levels ....................................................................................................................................................................................... 1544
Real Margin Debt as % of GDP ..................................................................................................................................................................... 1550
Margin Debt versus S&P 500 ........................................................................................................................................................................ 1550
Mutual Fund Cash Levels v S&P 500 ............................................................................................................................................................ 1551
NEW-OSCILLATORS & BREADTH: Indicators of Importance .......................................................................................................................... 1553
NEW-NYSE Overbought / Oversold .............................................................................................................................................................. 1553
NEW-OEX Open Interest (Puts/Calls) ........................................................................................................................................................... 1554
NEW-TRIN ..................................................................................................................................................................................................... 1555
NEW-McClellan Oscillator ............................................................................................................................................................................. 1556
CHARTS OF NOTE ............................................................................................................................................................................................. 1557
CHARTS Small Business Sentiment Trending Down Strongly .................................................................................................................. 1557
CHARTS Small Business Sentiment Margin Squeeze ........................................................................................................................... 1557
CHARTS Bloomberg Consumer Comfort versus Nasdaq ......................................................................................................................... 1558
SENTIMENT & CONFIDENCE Shifting Trend ................................................................................................................................................. 1559
CHARTS Economic Surprise Index lower highs, lower lows and a reluctant bounce ............................................................................ 1559
CHARTS Nominal & Real Household Spending Expectations .................................................................................................................. 1560
CHARTS Household Spending Expectations by Income Bucket .............................................................................................................. 1560
CHARTS A Very Neutral (Highly Unusual) Bull Market ............................................................................................................................. 1561
CHARTS Historical Swings in Sentiment ................................................................................................................................................... 1561
CHARTS Fed Doing the Lending Not the Banks What Are the Banks Worried About?...................................................................... 1563
CHARTS Investors Intelligence Bulls & Bears ........................................................................................................................................... 1563
CHARTS A/D Line Diverging from Price, Suggesting Weakening Momentum ......................................................................................... 1564
RESEARCH OF NOTE ........................................................................................................................................................................................ 1565
SENTIMENT Oblivious To Risk - Complacency Still Reigns .................................................................................................................. 1565
SENTIMENT UMich Consumer Confidence Tumbles to 12-Month Lows with Biggest Miss on Record................................................... 1569
SENTIMENT Elderly Americans' Confidence Collapses To 11-Month Lows (As Middle-Aged Hope Surges) ......................................... 1570
BUSINESS CYCLE CONSUMPTION ............................................................................................................................................................... 1572
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1572
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1573
NEW-CHARTS US Spending Consumption in 2015 Was in Healthcare Up Dramatically ................................................................. 1573
NEW-CHARTS US Spending Unaffordable Housing Shifting to Unaffordable Rentals...................................................................... 1573
NEW-CHARTS US Spending Gap Between Earnings and House Prices Now Larger than During Housing Bubble........................ 1574
CHARTS October Retail Sales Control Group Y-o-Y & Sequential Change ......................................................................................... 1575
CHARTS October Retail Y-o-Y Sales ..................................................................................................................................................... 1575
CHARTS Retail Sales Ex Autos M-o-M .................................................................................................................................................. 1576
CHARTS Monetary Velocity Declines as Excess Leverage Weighs on Consumption .......................................................................... 1576
CHARTS Consumer Credit Car Loans ................................................................................................................................................... 1577

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CHARTS Consumer Loans Owned by the Government ........................................................................................................................ 1577

CHARTS Student & Car Loans ............................................................................................................................................................... 1578
CHARTS Total Non-Revolving Credit ..................................................................................................................................................... 1578
CHARTS August Sequential Change in Revolving and Non-Revolving Credit ..................................................................................... 1579
CHARTS Gas Prices Below $2/Gallon by December? .......................................................................................................................... 1579
CHARTS Aggregate Income Proxy versus Retail Sales ex Auto and Gas ............................................................................................ 1580
CHARTS Consumption Items Sampling - Y-o-Y Growth........................................................................................................................ 1580
RESEARCH OF NOTE .................................................................................................................................................................................. 1581
NEW-CONSUMPTION This Is What Americans Spent Most Money On In 2015 Spoiler Alert: Obamacare ..................................... 1581
BUSINESS CYCLE - GROWTH .......................................................................................................................................................................... 1582
RESEARCH WE FOLLOWED ....................................................................................................................................................................... 1582
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1586
NEW-CHARTS Atlanta Fed Q1 GDP Forecast Tumbles to 1.4% .......................................................................................................... 1586
NEW-CHARTS Atlanta Fed Q1 GDP Forecast Trend is steadily down ................................................................................................. 1587
NEW-CHARTS Durable Goods Orders Ex-Transports Y-o-Y ................................................................................................................ 1587
NEW-CHARTS Markit PMI Both Services and Manufacturing falling Since June 2014 ..................................................................... 1588
NEW-CHARTS Markit Composite PMI and US GDP ............................................................................................................................. 1588
NEW-CHARTS US Economic Growth in 2015 Was in Healthcare Consumption .................................................................................. 1589
CHARTS Strong Dollar, High Inventories to Slow US Factory Output ................................................................................................... 1590
CHARTS US ISMs 3 Mo MA................................................................................................................................................................... 1590
CHARTS September Survey Data versus Non Farm Payrolls ............................................................................................................... 1591
CHARTS Regional Surveys for September versus ISM PMI (August) .................................................................................................. 1592
CHARTS Regional Manufacturing Surveys versus Forward EPS Estimates ........................................................................................ 1592
CHARTS Historical Regional Index Comparisons Last Seen in 2008 ................................................................................................ 1592
CHARTS Predicted US Quarterly GDP Grow Q-o-Q Annualized ....................................................................................................... 1593
CHARTS Predicted US Annual Growth % Through 2024 ...................................................................................................................... 1594
CHARTS Predicted US Growth Compared to UK and Eurozone .......................................................................................................... 1594
RESEARCH OF NOTE .................................................................................................................................................................................. 1595
NEW-GROWTH Core Durable Goods Tumble For 13th Month, Longest Non-Recessionary Stretch In 70 Years ............................... 1595
NEW-GROWTH PMI Services Signals "Softest Expansion of New Business Since 2009 .................................................................... 1597
NEW-GROWTH Healthcare Is About To Surpass Housing As The Biggest Source Of American "Growth" ............................... 1599
NEW-GROWTH X .................................................................................................................................................................................... 1601
NEW-GROWTH X .................................................................................................................................................................................... 1601
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION ................................................................................................................. 1602

US PUBLIC POLICY OBAMACARE IN REALITY A STEALTH TAX ................................................................................... 1610

CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1611
NEW-CHARTS The Changing Shape of US Income Distribution .......................................................................................................... 1611
NEW-CHARTS US infrastructure spending as a % of GDP is the lowest it has been since 1950 ........................................................ 1612
CHARTS The Cost of Healthcare By Country Spending Per Person ................................................................................................. 1613
CHARTS The Bankrupt US Healthcare System .................................................................................................................................. 1613
CHARTS Rise in Number of Homeless Children ................................................................................................................................... 1614
CHARTS One-Third of All Homeless Live in These 10 Cities ................................................................................................................ 1615
CHARTS Trends in American Public Schooling Since 1970 .................................................................................................................. 1616
CHARTS Size of US Army Since 1946................................................................................................................................................... 1616
CHARTS Lack of Trust in Government to Handle International & Domestic Problems ......................................................................... 1617
CHARTS Changing Presidential Stance ................................................................................................................................................ 1618
CHARTS Public Support to Withdraw from Union .................................................................................................................................. 1618
CHARTS - US Incarceration Rate Out of Control ...................................................................................................................................... 1619
RESEARCH OF NOTE .................................................................................................................................................................................. 1620
NEW-POLICY - These Are the 8 Biggest Barriers to Economic Growth .................................................................................................. 1620
NEW-POLICY Obamacare: Written by Insurance companies to benefit Insurance companies............................................................ 1621
NEW-POLICY Former UK Ambassador To Syria: US/UK Foreign Policy Is Doomed, Even Corrupt ........................................... 1623

MONETARY POLICY GLOBAL SLOW DOWN FORCES FED TO HOLD ON RATE INCREASE ......................................................... 1627
CHARTS & TABLES OF NOTE ........................................................................................................................................................................... 1627
NEW-CHARTS: US Monetary Base Growth versus S&P 500 ...................................................................................................................... 1628
NEW-CHARTS: Post QE-3- US Dollar Index ................................................................................................................................................ 1628
NEW-CHARTS: Post QE-3- S&P 500 ........................................................................................................................................................... 1629
NEW-CHARTS: Post QE-3- S&P 500 PE Ratio ............................................................................................................................................ 1629
NEW-CHARTS: Post QE-3- MSCI World Index ............................................................................................................................................ 1630
NEW-CHARTS: Post QE-3- HYG .................................................................................................................................................................. 1630
NEW-CHARTS: Post QE-3- LQD .................................................................................................................................................................. 1631
NEW-CHARTS: Post QE-3- LQD .................................................................................................................................................................. 1631
NEW-CHARTS: Feds US PCE Y-o-Y ........................................................................................................................................................... 1632
NEW-CHARTS: US Industrial Production ..................................................................................................................................................... 1632
NEW-CHARTS: US Industrial Production ..................................................................................................................................................... 1633
NEW-CHARTS: US Durable Goods New Orders ......................................................................................................................................... 1633
CHARTS: US Monetary Velocity Declines as Excess Leverage Weighs on Consumption .......................................................................... 1634
CHARTS: Velocity of Money Shows Transmission System Broken ............................................................................................................. 1634
CHARTS: Interest Rates Reflect Economic Growth & Inflation .................................................................................................................... 1635
CHARTS: Fed Balance Sheet Change versus S&P 500 .............................................................................................................................. 1635
CHARTS: Fed Policy Initiatives versus S&P 500 Actions ............................................................................................................................. 1636
CHARTS: Total US Credit Old versus New Series .................................................................................................................................... 1636
CHARTS: Banks Treasuries Stash Boosts Case for Fed Delay .................................................................................................................. 1637

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CHARTS: US Treasuries Purchased by Domestic Mutual Funds ................................................................................................................ 1637

CHARTS: Total Debt and Loans versus US GDP ......................................................................................................................................... 1638
CHARTS: Credit Markets Instruments All Sectors- Liability Levels ........................................................................................................... 1638
CORE CHARTS ................................................................................................................................................................................................... 1639
QUANTITATIVE EASING .............................................................................................................................................................................. 1639
NEW-CORE: QE Stages versus US Treasury Market .............................................................................................................................. 1639
NEW-CORE: QE Stages versus US Equity Market................................................................................................................................... 1639
NEW-CORE: QE Correlation with US Equity Market ................................................................................................................................ 1640
NEW-CORE: US Monetary Base Growth Correlation with US Equity Market .......................................................................................... 1640
NEW-CORE: QE Correlation with Global Growth Barometer & S&P 500 ................................................................................................ 1641
NEW-CORE: Expect Exponential Growth in the Fed Balance Sheet ....................................................................................................... 1641
NEW-CORE: Total Assets Held by the Federal Reserve .......................................................................................................................... 1642
NEW-CORE: Exponential Growth in US Credit a Requirement ................................................................................................................ 1642
RESEARCH OF NOTE ........................................................................................................................................................................................ 1643
NEW-RESEARCH BEN BERNANKE: What tools does the Fed have left? Part 1: Negative interest rates ............................................. 1643
NEW-RESEARCH BEN BERNANKE: What tools does the Fed have left? Part 2: Targeting longer-term interest rates ........................ 1648
NEW-RESERCH Why Lower Gasoline Prices Are Not Stimulating The Economy ................................................................................... 1651

FISCAL POLICY RECIPE FOR COLLAPSE: RISING MILITARY & SOCIAL WELFARE SPENDING ................................................... 1653
FEDERAL DEBT HOLDINGS & FINANCING...................................................................................................................................................... 1655
CHARTS OF NOTE ....................................................................................................................................................................................... 1655
FINANCING The Debt Ceiling Debt Limit is Likely to Fall in November ..................................................................................................... 1655
FINANCING CHINA SELLING The Mysterious Belgium Treasury Holder Has Started Selling .............................................................. 1655
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-1 ........................................................................... 1656
FINANCING CHINA SELLING China & Belgium Holdings v China Forex Reserves-2 ........................................................................... 1656
FINANCING CHINA SELLING China & Belgium Holdings Change ........................................................................................................ 1657
FINANCING Breakdown of US Debt Holdings as of 2014 .......................................................................................................................... 1657
CHARTS US Federal Government Debt to GDP ....................................................................................................................................... 1658
CHARTS Drivers of US Debt ...................................................................................................................................................................... 1659
CHARTS Total Government Expenditures versus Real GDP .................................................................................................................... 1660
CHARTS US Debt About to Pass $18T and 102% of GDP ....................................................................................................................... 1660
CHARTS US Non-Financial Debt-to-GDP Since 1952 .............................................................................................................................. 1661
FEDERAL BUDGET SPENDING ......................................................................................................................................................................... 1662
NEW-CHARTS Where Did Every Dollar in Spending Go? ........................................................................................................................ 1662
CHARTS Mandatory versus Discretionary Spending ................................................................................................................................. 1662
CHARTS Interest Costs to Dwarf Virtually Every Federal Expense .......................................................................................................... 1663
CHARTS Looming Increases in Baby-Boomer Driven Deficits .................................................................................................................. 1664
CHARTS Federal GAAP Based Deficit Growth & Federal Obligations Growth ......................................................................................... 1664
CHARTS - US Government Budget Surplus / Deficit .................................................................................................................................... 1665
CHARTS - Government Receipts & Outlay Growth Improves Significantly .................................................................................................. 1665
CHARTS - Federal Budget Surplus / Deficit .................................................................................................................................................. 1666
CHARTS - Real Federal Government Purchases ......................................................................................................................................... 1666
FEDERAL BUDGET - What You Need to Know ................................................................................................................................................. 1668
BUDGET - President Obama's Entire Budget In One Chart .................................................................................................................... 1669
BUDGET - A Budget That Institutionalizes Big Government .................................................................................................................. 1670
BUDGET - Budget Deficit Shrinking and Shrinking Infrastructure Spending ................................................................................................ 1675
RESEARCH - CROMNIBUS - The Real Reason Why It Needed to be Passed .......................................................................................... 1676
RESEARCH - $89.5 trillion in liabilities ......................................................................................................................................................... 1678
RESEARCH - The Federal Government is "cooking the books"! ................................................................................................................. 1682
RESEARCH NIA 2015 U.S. Debt Crisis Report ......................................................................................................................................... 1687
STATE & LOCAL BUDGETS ............................................................................................................................................................................... 1697
NEW-CHARTS Connecticut Bond Yield Spreads Over AAA Munis .......................................................................................................... 1697
CHARTS State & Local Tax Revenues ...................................................................................................................................................... 1697
NEW-RESEARCH - Countdown To Insolvency Begins For Chicago Pensions As State Supreme Court Rejects Reform Bid ...... 1698
NEW-RESEARCH - Connecticut Credit Risk Spikes to Record High ..................................................................................................... 1700
RESEARCH - Almost Half of US States Are Officially Broke .................................................................................................................. 1702
RESEARCH - State & Local Government Crisis ....................................................................................................................................... 1706
RESEARCH - State & Local Government Drag ............................................................................................................................................ 1712
UNFUNDED LIABILITIES .................................................................................................................................................................................... 1717
NEW-Charts Revenues Completely Consumed By Major Entitlements & Interest by 2025 ..................................................................... 1717
NEW-Charts In FY 2014 Medicaid Accounted for 8% of Federal Outlays ................................................................................................. 1717
NEW-Charts Medicare Spending is a Growing Share of the Federal Budget ........................................................................................... 1718
RESEARCH Private Pension Fund Levels Fall Behind ............................................................................................................................. 1719
RESEARCH Professor Laurence Kotlikoff on the $210T Fiscal Gap ...................................................................................................... 1722
US REGULATORY COSTS ................................................................................................................................................................................. 1725
CHARTS Annual Cost of Federal Regulation 2012, $1.863T ................................................................................................................. 1725
RESEARCH Investor Uncertainty............................................................................................................................................................... 1725
US TAX POLICY & ISSUES ................................................................................................................................................................................ 1727
NEW-CHARTS Marginal Tax Rates Must Nearly Double to Fund Entitlement Spending ......................................................................... 1727
CHARTS 7 Corporate CEOs Paid More Than Corporation Paid Tax ........................................................................................................ 1728
CHARTS - Americas 100 highest-paid CEOs, 29 received more in pay than company federal income taxes ........................................... 1729
CHARTS Employed Population of America Tax Exposure ..................................................................................................................... 1732
CHARTS US Has the Highest Nominal Corporate Tax Rate in the Industrialized World ....................................................................... 1732

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CHARTS How Banks Use Dividend Arbitrage to Reduce Client Tax ...................................................................................................... 1733
RESEARCH - Tax Rate Comparisons ........................................................................................................................................................ 1734
RESEARCH - Payroll Tax Holiday ................................................................................................................................................................ 1734
RESEARCH - Taxes & Spending .................................................................................................................................................................. 1735
RESEARCH - Avoiding Taxes ..................................................................................................................................................................... 1739
MISC CHARTS & TABLES OF NOTE ................................................................................................................................................................. 1742
NEW-CHARTS Size of US military Spending Dwarfs all others- Spends more than the Next 15 Combined ........................................... 1742
CHARTS Competing Visions of Government ............................................................................................................................................. 1742
CHARTS - Sovereign Debt ............................................................................................................................................................................ 1744
CHARTS - Growing Government Dependence ............................................................................................................................................. 1745
CHARTS - Coming Demographic Shock ....................................................................................................................................................... 1745
CHARTS - Fiscal Cliff Outcome .................................................................................................................................................................... 1749

KEY DRIVERS MUST HAVE CATALYSTS OF CHANGE ................................................................................................... 1751

EMPLOYMENT .................................................................................................................................................................................................... 1751
CHARTS & TABLES ...................................................................................................................................................................................... 1752
NEW-CHARTS Waiter / Bartender versus Manufacturing Jobs Post Dec 2007 ................................................................................. 1752
NEW-CHARTS NRA Restaurant Performance Index Post 2010 ........................................................................................................ 1752
NEW-CHARTS NRA Restaurant Performance Index Pre 2010.......................................................................................................... 1753
CHARTS Labor Force Participation Rate versus Food Stamp Participants .......................................................................................... 1753
CHARTS World Youth Unemployment A Crisis .................................................................................................................................. 1753
CHARTS Change in Civilian Employment since December 2007 ......................................................................................................... 1754
CHARTS Total Foreign-Born versus Native-Born Workers since Dec 2007 ......................................................................................... 1755
CHARTS Manufacturers versus Waiter/Bartenders Since 2007 ............................................................................................................ 1756
RESEARCH OF NOTE .................................................................................................................................................................................. 1757
NEW-EMPLOYMENT The "Restaurant Recovery" Is Over: Casual Dining Sales Tumble For Fourth Straight Month ......................... 1757
REAL DISPOSABLE INCOME ............................................................................................................................................................................ 1760
CHARTS & TABLES ..................................................................................................................................................................................... 1760
NEW-CHARTS Wages as a percentage of GDP have been falling for decades ................................................................................... 1760
NEW-CHARTS Middle class wealth is based not in stocks but in the family home ............................................................................... 1760
NEW-CHARTS Inflation-adjusted household income has dropped back to levels first reached in the 1980s ...................................... 1762
NEW-CHARTS Wages have declined regardless of educational attainment ........................................................................................ 1762
NEW-CHARTS US Productivity versus Wage Growth 1947-Now ...................................................................................................... 1763
NEW-CHARTS US Productivity versus Non-Supervisory Compensation 1947-Now ......................................................................... 1763
NEW-CHARTS Productivity has been slipping since around 2003: Alan Greenspan:"Productivity is dead ........................................ 1764
NEW-CHARTS Middle class household wealth has absolutely cratered since the top of the housing bubble in 2007 ........................ 1764
NEW-CHARTS Income gains have all flowed to the top 10% ............................................................................................................... 1765
NEW-CHARTS Higher education and healthcare have exploded higher .............................................................................................. 1766
CHARTS Average Hourly Earnings of all Employees Total Private .................................................................................................... 1767
CHARTS Individuals Annually Receiving Foods Stamps ....................................................................................................................... 1767
CHARTS Homeless among Students is Growing .................................................................................................................................. 1768
CHARTS Stagnant Middle Class Wages ................................................................................................................................................ 1768
CHARTS Median Earnings by Sex ......................................................................................................................................................... 1769
CHARTS Disconnect Between Productivity and Typical Workers Compensation 1948-2014 ........................................................... 1770
CHARTS Unemployment Rate is close to 24% according to Shadow Stats ......................................................................................... 1771
CHARTS Non-Farm Payrolls less HES Complex ................................................................................................................................... 1771
CHARTS Childcare Costs Surge Past Rent, Tuition in Most of US ....................................................................................................... 1772
CHARTS Illinois the Biggest User of Food Stamps in Mid-West ........................................................................................................... 1772
CHARTS Illinois has Regained Few Manufacturing Jobs Since the Great Recession .......................................................................... 1773
CHARTS Food Stamps Outpace Manufacturing Jobs 25-1 in Illinois .................................................................................................... 1773
CHARTS Debt by Generation ................................................................................................................................................................. 1774
RESEARCH OF NOTE .................................................................................................................................................................................. 1775
DI What Killed The US Middle Class? .................................................................................................................................................... 1775
US RESIDENTIAL REAL ESTATE ...................................................................................................................................................................... 1784
CHARTS & TABLES ...................................................................................................................................................................................... 1784
NEW-POLICY Renter versus Owner Occupied Housing Units Since 1996..................................................................................... 1784
NEW-POLICY Home prices are floating out of reach for average wage earners ........................................................................... 1784
NEW-POLICY US Home Price Growth versus Wage Growth ........................................................................................................... 1785
NEW-POLICY Pending Home Sales Falling ........................................................................................................................................ 1785
NEW-POLICY Existing Home Sales M-o-M ......................................................................................................................................... 1786
NEW-POLICY Pending Home Sales Falling ........................................................................................................................................ 1786
NEW-POLICY New Home Sales Y-o-Y ................................................................................................................................................. 1787
NEW-POLICY Total New Home Sales vs Median New Home Sales Prices ..................................................................................... 1787
POLICY US Cities with Highest Median Prices of Single-Family Homes........................................................................................ 1788
POLICY NAHB Sentiment Much Higher than Permits and Starts? .................................................................................................. 1788
POLICY Flattenening NAHB Sentiment .............................................................................................................................................. 1789
POLICY New Homes Sales versus Ave Wage Grow Y-0-Y versus MBA 30Y rate versus Real Median Inc ................................ 1790
POLICY Mortgage Purchase Application Index versus Fed Balance Sheet ................................................................................... 1791
POLICY Total News Home Sales v Median New Home Sale Price .................................................................................................. 1792
POLICY San Francisco Y/Y Price Increase Indicator ........................................................................................................................ 1792
POLICY Meaningful Housing Recovery On Hold Until Spring ......................................................................................................... 1794
POLICY Housing Starts ........................................................................................................................................................................ 1794
POLICY Existing & New Home Sales .................................................................................................................................................. 1795
POLICY Home Ownership Rate versus Rental Rate ......................................................................................................................... 1795
POLICY Mortgages Past Due and Foreclosure Starts ................................................................................................................... 1796

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POLICY Mortgage Spreads .................................................................................................................................................................. 1796

POLICY Lumber Sales .......................................................................................................................................................................... 1797
RESEARCH OF NOTE .................................................................................................................................................................................. 1799
NEW-RESIDENTIAL Housing Will Support, Not Lead, U.S. Growth This Time .............................................................................. 1799
NEW-RESIDENTIAL For the Average American, Owning A Home Is Increasingly Unaffordable ................................................ 1801
NEW-RESIDENTIAL New Home Sales Plunge Most Since June 2014 ............................................................................................. 1804
NEW-RESIDENTIAL Existing Home Sales Crash Most In 6 Years: NAR Blames Slowing Economy, Bubbly Home Prices ..... 1806
US COMMERCIAL RETAIL REAL ESTATE ....................................................................................................................................................... 1810
CHARTS & TABLES OF NOTE ..................................................................................................................................................................... 1810
CHARTS Vacancy Rate - Indoor Malls versus Strip Malls ..................................................................................................................... 1810
CHARTS McDonalds Global Sales Fall 2.5% - 35,000 Franchise Operators In Trouble...................................................................... 1810
CHARTS McDonalds US Same Store Sales Down ~4% Y-o-Y ............................................................................................................ 1811
CHARTS Top US Franchise Defaulters ................................................................................................................................................. 1811
CHARTS Online Retailers Beginning to Dominate Worlds Largest Retailers by Market Cap .............................................................. 1812
CHARTS Shippers Being Squeezed By Online Retailers ...................................................................................................................... 1812
CHARTS Consumer Discretionary Underperforming Consumer Staples Signs of Increasing Squeeze ............................................ 1813
CHARTS Discretionary Retail Sales Trend ............................................................................................................................................ 1813
CHARTS US Retail Sales Ex-Auto & Parts ............................................................................................................................................ 1814
CHARTS Retail Sales Ex-Auto Adjusted for Inflation & Population Growth .......................................................................................... 1815
CHARTS Retail Space Opened Pre-2008 versus Current Rate ............................................................................................................ 1816
CHARTS CMBS Recovered Somewhat but Malls In Trouble ................................................................................................................ 1816
CHARTS Department Store Sales Continue to Erode ........................................................................................................................... 1817

SPECIAL FOCUS US RECESSION RUMBLINGS .............................................................................................................. 1818

US RECESSION RUMBLINGS ........................................................................................................................................................................... 1818
CHARTS OF NOTE ....................................................................................................................................................................................... 1819
NEW-RECESSION Recession Risks Rising as Profits Fall By Most Since 2008 .................................................................................. 1819
NEW-RECESSION Durable Goods Orders Ex-Transports Y-o-Y ......................................................................................................... 1820
NEW-RECESSION Markit Composite PMI and US GDP ...................................................................................................................... 1820
NEW-RECESSION A US Recession is now a VERY Likely Outcome! ................................................................................................. 1821
NEW-RECESSION Manufacturing Indicators & Industrial Production In Recession Territory ............................................................. 1822
NEW-RECESSION The Real Employment Economic Picture & Recessionary Driver ......................................................................... 1822
NEW-RECESSION Inflation Creeping Into Recessionary Statistics ..................................................................................................... 1823
NEW-RECESSION 15-month Continuous Y-o-Y drop in Factory orders Historically Has Signaled A Recession for 60 Years ........... 1824
NEW-RECESSION Productivity Slows As Recoveries Age (Y-o-Y%) ................................................................................................... 1824
NEW-RECESSION St.Louis Recession Probability ............................................................................................................................... 1825
NEW-RECESSION Recession Probability Based on Probit Model ....................................................................................................... 1825
NEW-RECESSION Recession Probability The Economic Output Composite Index .......................................................................... 1826
NEW-RECESSION Recession Probability HY Spreads Have not Traded at Current Levels Outside a US Recession .................... 1826
NEW-RECESSION Recession Probability Market Sentiment Can Become A Driver of Recessions ................................................ 1827
NEW-RECESSION Recession Probability Inflation tends to Rise Into and During a Recession ....................................................... 1827
NEW-RECESSION Wholesale Inventories -to - Sales ........................................................................................................................... 1828
NEW-RECESSION Industrial Production Is Rolling Over ...................................................................................................................... 1828
NEW-RECESSION US Recession Probabilities .................................................................................................................................... 1829
RECESSION We are already in a US GDP Recession ......................................................................................................................... 1829
RECESSION HY Close to 2001 Recession Levels ................................................................................................................................ 1830
RECESSION US Recession Cycle Suggests Economic & Earnings Cycle May Be Close To Ending......................................... 1831
RECESSION US Recession Cycle Suggests Cycle May Be Close To Ending ............................................................................... 1831
RECESSION Current Economic Cycle Is Getting Old In The Tooth ............................................................................................ 1832
RECESSION Average Monthly Job Growth Deteriorating ..................................................................................................................... 1832
RECESSION Annual Percent Change In Real GDP .............................................................................................................................. 1833
RECESSION US Manufacturing Sector Recession ............................................................................................................................... 1833
RECESSION Large Profit Margin Declines Coincides With Recessions ............................................................................................... 1834
RECESSION Buybacks Drop on Reduced Free Cash Flow Drop Compared to Previous Recession ............................................... 1834
RECESSION Annual % Change in 12Mo Forward EPS Expectations Turn Negative .......................................................................... 1835
RECESSION US Recession Estimates Pop .......................................................................................................................................... 1835
RECESSION US Recession Indicator & Relative Performance of Stocks & Bonds.............................................................................. 1836
RECESSION Real S&P 500 Index with Historical Recessions .............................................................................................................. 1836
RECESSION September Survey Data versus Non Farm Payrolls ........................................................................................................ 1837
RECESSION Regional Surveys for September versus ISM PMI (August) ............................................................................................ 1837
RECESSION Regional Manufacturing Surveys versus Forward EPS Estimates .................................................................................. 1838
RECESSION Historical Regional Index Comparisons Last Seen in 2008 .......................................................................................... 1838
RECESSION Global Oil Consumption Leads Economic Growth Trend is Down Global Headwinds .............................................. 1839
RECESSION Gross Domestic Income versus Wilshire 5000 Tells the Story ..................................................................................... 1840
RECESSION CT 2015 Revenue Recession .......................................................................................................................................... 1840
RECESSION Q2 2015 Revenue Recession .......................................................................................................................................... 1841
RECESSION 4 Consecutive months of y/y Spending Declines ............................................................................................................. 1841
RECESSION BOA: Retail sales ex-autos, plunged 0.8% mom seasonally adjusted.......................................................................... 1842
RECESSION Top 10 US Market Areas Signal Retail Problem Underway ............................................................................................ 1842
RECESSION Wholesale Inventories to Sales Spiking To Areas Seen During Recession Trends ....................................................... 1843
RECESSION Wholesale Inventories Less Wholesale Sales ................................................................................................................. 1844
RECESSION Wholesale Inventories vs GDP Trends ............................................................................................................................ 1844
RECESSION Auto Inventories to Sales ................................................................................................................................................. 1845
RECESSION Falling Collateral and Residuals Undermine Real Growth ............................................................................................ 1845
RECESSION Coincident / Lagging Indicator Ratio versus Recessions ................................................................................................. 1846
RECESSION Annual Change in Durable Goods Orders v Recessions ................................................................................................. 1846

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RECESSION Durable Goods v Core-Durable Goods (Ex Defense) versus Recessions ...................................................................... 1847
RECESSION Real Gross Domestic Investment versus Recessions ..................................................................................................... 1847
RECESSION Total Real Private Fixed Investment as % of Real GDP versus Recessions .................................................................. 1848
RECESSION Businesses Operate Against Actual Demand versus Recessions .................................................................................. 1848
RECESSION ISM Composite Index versus Recessions........................................................................................................................ 1849
RECESSION Capacity Utilization versus Industrial Production versus Recessions ............................................................................. 1849
RECESSION Retail Sales (NSA) Annual % Chg of 12 Month Average versus Recessions ................................................................. 1850
RECESSION Monthly Retail Control Purchases Y-o-Y % Chg versus Recessions......................................................................... 1850
RECESSION Major Economic Trends.................................................................................................................................................... 1851
NEW-RESEARCH OF NOTE ........................................................................................................................................................................ 1852
NEW- RECESSION Economists are starting to warn about the risk of a new U.S. recession .............................................................. 1852
NEW- RECESSION Economists Finally Admit, Odds Of A US Recession Are On The Rise ............................................................... 1855
RECESSION Retail Sales Slump on Deck ............................................................................................................................................. 1857
RECESSION This Is another "Subprime" Waiting To Blow ................................................................................................................... 1860
RECESSION Record Gap between US Inventories and Sales Screams Recession ............................................................................ 1863
RECESSION August spending was the weakest in nominal dollar terms since 2012 ........................................................................... 1865
RECESSION The Next Recession Will Definitely Not Happen In 2018 ................................................................................................. 1870

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MONTHLY PROCESS OF ABSTRACTION

The Global Macro Tipping Points (GMTP) Service is an integral part of our monthly Process of Abstraction research
methodology. The process starts monthly with the Tipping Points and completes with a final Synthesis. The
sequence is optimized to align with the established Macro Economic Data releases.

Plan

Release
Date

III.

Monday following
4th Saturday
of the Month

IV.

II.

Monday following
2tnd Saturday of the
Month

Tuesday following
3rd Saturday
of the Month

Service

Coverage

Tipping Points

Tipping Points

Abstraction

Global Macro

Abstraction

US Economy

Technical Analysis

Technical Analysis

Market Analytics

Fundamental Analysis

Market Analytics

Risk Analysis

Synthesis

Commentary

Synthesis

Commentary

Thesis

Conclusions

Global Macro Tipping Points

(GMTP)

Market Analytics & Technical

Analysis (MTA)

Monthly Market Commentary

(MMC)

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