AUG 12 SIT EC y POL
ZERO HEDGE
12
SIGNS THAT AN IMMINENT GLOBAL FINANCIAL CRASH HAS BECOME EVEN MORE LIKELY. by
Michael Snyder via The Economic Collapse blog, Submitted by Tyler
Durden on 08/12/2015
As we hurtle toward the absolutely critical months of
September and October, the unraveling of the global financial system is
beginning to accelerate.
….
The following are 12 signs that
indicate that a global financial crash has become even more likely after the
events of the past few days…
1- The
devaluation of the yuan on Tuesday took virtually the entire planet by surprise
(and not in a good way). The following comes from Reuters…
China’s 2 percent
devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall
Street and other global equity markets as it raised fears of a new round of
currency wars and fed worries about slowing Chinese economic growth.
2- One of the
big reasons why China devalued the yuan was to try to boost exports.
China’s exports declined 8.3 percent in July, and global
trade overall is falling at a pace that we haven’t seen since the last
recession.
3- Now that
the Chinese have devalued their currency, other nations that rely on exports
are indicating that they might do
the same thing. If you scan the big financial news sites, it seems
like the term “currency war” is now being bandied about quite a bit.
4-This is the very first time that
the 50 day moving average for the Dow has moved below the 200 day moving
average in the last four years. This is known as a “death cross”, and it is a
very troubling sign. We are just about at the point where all of the most
common technical signals that investors typically use to make investment
decisions will be screaming “sell”.
5- The price
of oil just closed at a brand new six year low. When the price
of oil started to decline back in late 2014, a whole lot of people were
proclaiming that this would be a good thing for the U.S. economy. Now we
can see just how wrong they were. At this point, the price of oil has already
fallen to a level that is going to be absolutely nightmarish for the global
economy if it stays here. Just consider what Jeff Gundlach had said in December… “something is very, very wrong with the
world, not just the economy. The geopolitical consequences could be — to
put it bluntly — terrifying”
6- This week we
learned that OPEC has been pumping more oil than we thought, and it is being
projected that this could cause the price of oil to plunge into the 30s…
West Texas Intermediate crude futures skidded through the year’s lows and
looked set to break into the $30s-per-barrel range after the Organization of
the Petroleum Exporting Countries admitted to more pumping and China devalued
its currency, sending ripples through global markets.
7- In a recent article, I explained that the collapse in
commodity prices that we are witnessing right now is eerily similar to what we
witnessed just before the stock market crash of 2008. On Tuesday, things
got even worse for commodities as the price of copper closed at a brand new six year low.
8- The South American debt crisis of 2015
continues to intensify. Brazil’s government bonds have been downgraded to just one level
above junk status, and the approval rating of Brazil’s president has fallen
into the single digits.
9- Just before the
financial crisis of 2008, a surging U.S. dollar put an extraordinary amount of
stress on emerging markets. Now that is happening again. Emerging
market stocks just hit a brand new four year low on Tuesday thanks to
the stunt that China just pulled.
10- Things are not
so great in the United States either. The ratio of wholesale inventories
to sales in the United States just hit the highest level since the last recession.
What that means is that there is a whole lot of stuff sitting in warehouses out
there that is waiting to be sold in an economy that is rapidly slowing down.
11- Speaking of
slowing down, the growth of consumer spending in the United States has just
plummeted to multi-year lows.
12- Deep inside,
most of us can feel what is coming. According to Gallup, the number of
Americans that believe that the economy is getting worse is almost 50 percent higher
than the number of Americans that believe that the economy is getting better.
Things are lining up
perfectly for a global financial crisis and a major recession beginning in the
fall and winter of 2015.
But just because
things look like they will happen a certain way does not necessarily mean that
they will. All it takes is a single “event” of some sort to change
everything.
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Chinese
Devaluation Extends To 3rd Day - Yuan Hits 4 Year Low, Japan Escalates Currency
Race-To-The-Bottom Rhetoric. Submitted
by Tyler Durden on 08/12/2015
The
"one-off" adjustment has now reached its 3rd day as The PBOC has
now devalued the Yuan fix by 4.65% back to July 2011 lows.
PBOC tries to reassure: *CHINA
PBOC SAYS YUAN REMAINS STRONG CURRENCY IN LONG-TERM
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Albert
Edwards: "Prepare For Sub-1% Treasury Yields And Another Financial
Crisis". Submitted by Tyler
Durden on 08/12/2015
In some ways the question is not whether the renminbi is
competitive or uncompetitive. The problem is that the renminbi is unambiguously
less competitive than it was. This comes at a time when the Chinese economy is
struggling and the stock market bubble is bursting. To all but the most
PollyAnna’ish of observers that means this is the start of a major renminbi
devaluation forcing the US to import even more of the world’s unwanted
deflation.... Prepare for sub-1% 10y Treasury yields and another
financial crisis as policy impotence is soon revealed to all.
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There's
More To Come - Offshore Yuan Signals Further Devaluation Tonight. Submitted
by Tyler Durden on 08/12/2015
Despite 2 significant interventions to stall what is likely
an avalanche of wrong-way carry trade unwinds (or perhaps to stop the boat
swinging to the other side too much), offshore Yuan has continued to depreciate
since China closed and now implies another 1% devaluation is looming (having
been up to a 2.6% discount earlier in the day).
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Why
More Conflict Is Inevitable In The Middle East. Submitted by Tyler
Durden on 08/12/2015
We all know how sectarian, religious and political
differences have thrown many Middle Eastern countries into chaos and armed
conflict. But there is a deeper factor at play which deserves greater
recognition: severe water scarcity.
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Charting
A Decade Of Yuan Moves. Submitted by Tyler
Durden on 08/12/2015
The yuan has already fallen to 6.3858 at the close of
trading on Wednesday afternoon, from 6.2097 at Monday's close — a level last
seen in the summer of 2012. In this chart, we map out the history of moves
in the yuan in the decade since the PBOC broke the dollar peg in 2005...
and all the rhetoric that will now be undone...
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Emerging
Market Currencies To Crash 30-50%, Jen Says. Submitted by Tyler
Durden on 08/12/2015
"[The] devaluation of the yuan risks a new round
of competitive easing that may send currencies from Brazil's real to
Indonesia's rupiah tumbling by an average 30 percent to 50 percent
in the next nine months, according to investor and former International
Monetary Fund economist Stephen Jen."
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Asset-Price
Inflation Enters Its Dangerous Late Phase. Submitted by Tyler
Durden on 08/12/2015
Asset price inflation, a disease whose source always lies
in monetary disorder, is not a new affliction. It was virtually
inevitable that the present wild experimentation by the Federal Reserve -
joined by the Bank of Japan and ECB - would produce a severe outbreak. And indications
from the markets are that the disease is in a late phase, though still
short of the final deadly stage characterized by pervasive falls in asset
markets, sometimes financial panic, and the onset of recession.
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Everyone
Is Probably Wrong About The US Dollar. Submitted by Tyler
Durden on 08/12/2015
"When all the experts and forecasts agree – something
else is going to happen."
… Here extracts of this article
The meteoric rise of the dollar has become singularly the
biggest story in the global markets. While a strong dollar is good for
importers, it is equally bad for exporters. This is particularly the case with
US-based multi-national companies to do a bulk of their business overseas. Given
that exports make up roughly 40% of corporate profits, it is no surprise that
the surge in the dollar has become one of the biggest excuses for earnings
weakness as of late.
However, as with bull markets in stocks, when a trend
develops the bulk of analysts jump on the proverbial "band wagon"
and begin to assume the current trend will last indefinitely. Just as the bull
market will end, the rally in the dollar will end also and sooner than most
expect.
Economically Speaking
From an economic standpoint, there is a difference between a
rise in the dollar and a spike. As shown in the chart below, slow, steady rises
in the US dollar have been coincident with economic expansions. This should not
be a surprise as a stronger domestic economy attract inflows of foreign
capital. However, at the point where the dollar strength sufficiently impacts
exports, a recession is eventually triggered.
When looking at a historical perspective, sharp declines in
exports have been a precursor to the onset of economic recessions in the past.
Given the economy is currently growing at roughly 2%, there is little ability
to absorb a shock of any magnitude.
Therefore, while the majority of analysts suggests strength
in the dollar will continue, a flight out of the US dollar could be easily
triggered by a further unfolding of domestic economic instabilities. This is
particularly the case should such economic weakness be coupled with a sharp
decline in US asset prices.
Could the current dollar rally last
a bit longer? Absolutely. However, it is unlikely to move substantially
higher without a correction first.
Prices, like anything, are subject to the laws of gravity.
Long-term moving averages are essentially the "gravity" to
prices. A moving average can not exist without prices have traded above and
below the average over time. The longer the term of the moving average, the
greater the gravitational force it applies. In order for prices to move higher,
prices must eventually "revert to the mean," or beyond.
From a contrarian standpoint, with everybody on the long
side of the trade, it may be time to take the opposing view. There is
substantial evidence of economic weakness beginning to take a firmer hold of
the global economy and the damage inflicted by recent dollar strength is more
pervasive that currently recognized. The problem, as always, is that most won't
realize the validity of that statement until long after multiple revisions of
historical data finally reveal the truth.
As such, it is likely time to remove long-dollar hedges from
portfolios. The good news is that a weaker dollar will play favorably for
commodity driven sectors of the market that have been beaten down over the last
several months.
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Sorry
Troika, Spain's Economic Recovery Is "One Big Lie". Submitted
by Tyler Durden on 08/12/2015
During six months of protracted and terribly fraught
negotiations between Athens, Berlin, Brussels, and the IMF, the idea that
Spain, Italy, and Ireland somehow represented austerity "success
stories" was frequently trotted out as the rationale behind demanding that
Greece embark on a deeper fiscal retrenchment despite the fact that the country
is mired in recession. For many in the periphery, the notion of an economic
recovery is fiction, plain and simple.
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8
Capital Markets 'Threats' To The Central Bank Narrative. Submitted by Tyler
Durden on 08/12/2015
The week's weakness started with the surprise yuan
devaluation, but the moves in everythingfrom crude oil to U.S. government debt
signal that investors and traders are telling the Fed to hold off for now. Will
U.S. policymakers listen? Make no mistake: the Fed marches to its own
data-dependent drum. These indicators will only tell you if the central bank
has the right tempo to support markets.
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How
China Trades US Treasurys When It Wages Currency War. S-by Tyler
Durden on 08/12/2015
Ever wondered how a nation wages a currency war? As
Reuters reports, Chinese state-owned banks were selling dollars on behalf of
the central bank to stabilize the yuan around 6.43 against the dollar on
Wednesday, foreign exchange traders in Shanghai said, as the devaluation
collapse got a little out of hand. This follows wholesale dollar-asset buying
to weaken the Yuan. But that leaves the question, how did they get the
dollars? As the chart below shows, by trading Treasuries...
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"This
Will End Badly" High Yield Bonds Tumble To Worst Since 2011. S-by Tyler
Durden on 08/12/2015
As far as credit markets are concerned, U.S. stock
investors have lost touch with reality.
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Are
The Saudis Winning? US Crude Production Slows To Lowest In 3 Months. by
Tyler
Durden on 08/12/15
US crude production declined 0.74% last week to its
lowest level since May 15th. US crude inventories dropped for the 4th week
of the last 5, but considerably less than expected.
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Gold
& Silver Surge As Dollar Dumps.
Submitted by Tyler Durden on 08/12/2015
Just
3 weeks after the world could not purge itself fast enough of 'pet rocks', Gold
is pushing to one-month highs this morning (at $1120) and Silver just broke a key technical level at
its 50-day moving average as USD weakness and global turmoil have seen
Precious metals gain for the last few days...
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Dollar
Tumbles As Fed Rate Hike Suddenly Looking Very Uncertain To Goldman, Bank Of
America. Submitted by Tyler
Durden on 08/12/2015
After China's shocking currency devaluation, which some more
conspiratorially-minded observers have concluded was China's retaliation to the
west for the IMF's recent snub that pushed back China's evaluation for
inclusion into the SDR to some indefinite point in 2016, the only question on
everyone's mind is whether the Fed will delay or outright cancel any imminent
"data-dependent" rate hikes as a result of the implicit tightening of
monetary conditions thanks to China, and the dramatic appreciation of the USD
which would not have taken place without China.
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Yuantervention:
PBOC Devalues The Yuan, Then Scramble To Support It In The Open Market.
Submitted by Tyler Durden on 08/12/2015
As we noted
earlier, the most surprising development out of this mornings repeat rout
in the Chinese currency was not that it happened: after all as we laid
yesterday out there is at least
10-15% in immediate downside left for the Yuan but that shortly before the
market close, China's central bank intervened via "at least one major
Chinese state-owned bank sold large amount of dollar shortly before market
closed, prompting rapid gain in yuan, according to two traders at onshore banks"
Bloomberg reported adding that at least one state bank continuously sold dollar
until USD/CNY reached around 6.38.
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Hillary
Clinton Turns Over E-mail Server To Feds As Bernie Sanders Surges Ahead In New
Poll. Submitted by Tyler Durden on 08/12/2015 READ ALSO: Understanding
Why The Clinton Emails Matter
Hillary Clinton, bowing to pressure from GOP lawmakers, has turned
over her private e-mail server to the FBI. Meanwhile, Democratic voters
look to be turning on the former First Lady as a new poll has Bernie Sanders surging ahead in
New Hampshire.
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- China central bank under pressure to weaken yuan further (Reuters)
- Currency Rout Goes Global as Jen Sees Risk of 50% Loss on China (BBG)
- Europe Stocks Fall Most in Two Weeks as China Sparks Growth Fear (BBG)
- German Yields Drop to Record as China Boosts Bonds Around World (BBG)
- FT to Japan, Economist to Italy: Agnelli Family Raises Stake in Economist as Pearson Exits (BBG)
- Goldman Sachs to Give Out ‘Secret Sauce’ on Trading (WSJ)
- Greece's Preliminary Bailout Deal Faces German Turbulence (BBG)
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INFORMATION CLEARING HOUSE
Israel’s
Proxies Hell-bent on Destroying America for Israel? . By James Petras
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The two-state solution is no more. No Palestinian state
will exist here beside the State of Israel.
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Mikhail
Gorbachev: America Wanted To Rule The World But Lost Its Way. Who is the US afraid of?
Video By RT URL: https://youtu.be/XQmx8cPdIrk
Video By RT URL: https://youtu.be/XQmx8cPdIrk
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Who Is
Blocking Ukrainian Peace Negotiations?
Putin or the US-backed Kiev government?
By Stephen F. Cohen
By Stephen F. Cohen
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Ron Paul:
Russia is a Scapegoat Western propaganda has been
turned on Russia, from the so-called military industrial complex
Video URL: https://youtu.be/2Hdard_zg8k
Video URL: https://youtu.be/2Hdard_zg8k
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“Lone Wolf”
Terror and the PsyWar on American Public Opinion . CNN
and other news outlets are again working with intelligence and/or military
psywar personnel to essentially “brainwash the American public”
By James Tracy
By James Tracy
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The Social
Cost of Capitalism. Despite massive evidence to the
contrary, libertarians hold tight to their romantic concept of capitalism
By Paul Craig Roberts
By Paul Craig Roberts
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NEWS IN SPANISH
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EconomÃa. Presentación del informe preliminar de la
Comisión de la Verdad. VIDEO. Eric Toussaint
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El
análisis de James Petras en CX36. "Si el gobierno de Venezuela sufre una
derrota, se van a fortalecer las tendencias conservadoras en América Latina”. EfraÃn Chury Iribarne
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La Exxon Mobil contra Venezuela y la Unidad de
Nuestra América. Adrián Figueroa León
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