Is China manipulating growth to 7.5%?!

Economic numbers are sometimes hard to collect, especially in China there are doubts about the growth and other numbers. The regional numbers in the regions are pushed up to get a favourable treatment from bejing. Numbers below zero are often made zero, because they don’t want to show a decline.

 The last years they are saying more and more that China is manipulating the numbers. It looks like China published too low numbers and has now a buffer for disappointing growth numbers.

Maybe that is why the government can say with so much confidence that growth in 2012 will be 7.5% (or higher).

Till it is clear that growth is decelerating in Q2, while Q1 was already bad (7.1% QoQ annualised, not yoy as China always publishes).

For more see also  http://www.nytimes.com/2012/06/23/business/global/chinese-data-said-to-be-manipulated-understating-its-slowdown.html?_r=1&hp

Death cross bullish since QE

Chart technical signals sometimes work differently since the FED is printing money with QE. One example is the death cross (the 50-days moving average is breaking down a declining 200-days moving average downwards.

In the chart of Schaeffer Research you see the number of death crosses that were formed in the S&P500.

When the S&P500 formed a death cross in the past it was a pretty good signal more havoc was coming in the next year.

WSJ's blog Market Beat (and others) think that a death cross is bullish since the invention of QE. The FED cannot stand that many death crosses are formed and does something (QE,Twist). And indeed after 6 month after the last death cross (August 12 2011) the S&P500 is 15% higher, not lower.

source: http://blogs.wsj.com/marketbeat/2012/06/27/heres-how-the-death-cross-is-bullish-for-stocks/

Google, not Facebook rules the worldwide web

Google is worldwide the website with the most visitors, traffic. It has 23 of the 100 busiest websites. Facebook is doing less good in America and Europe and is only dominant in MENA, moslim countries. Yahoo is 1 in Japan and Cameroon (a cheap internet providers puts Yahoo as starting page).

source: http://webempires.org/dominating-websites-map/ (numbers from alexa that are not uncontested)

FED twists again, no QE, credit growth OK

The most popular heading for reading the tea leaves of the FED decision yesterday was: the FED twists again or let us twist again.


That was the most important decision: the Twist Operation will be extended to the end of the year. The pace will be slower because of not enough material present of which the duration can be extended. After finishing it becomes almost impossible to sterilise QE.

No QE yet, so the market was a bit dissatisfied. What they should do with the interest rate was no question: they have promised long ago to keep the rates at 0%, even while half of the FED members see higher interest rates. Several hawks have lowered their estimates for 2014, see chart of Capital Economics.

There is still an Albanese majority that in the long run the FED rate ought to be c. 4% (so there is some reason in Solvency II to hope for rates in the long run of 4%+).

The FED reduced their forecasts for growth (see chart Ecompic) and inflation for 2012 and especially 2013.

That caused to expect that the unemployment rate will decline "only slowly" dalen in instead of the "gradually" they hoped in the previous FED statements. The FED is sinning against its dual mandate in every prospect: the unemployment rate stays too high and inflation will be too low. Still they didn’t took the bazooka of QE3.  

Decoupling of growth US and Europe not at all clear

The correlation between the growth of France with that of the US is high (about 0.8). The decoupling of the growth of France from the US is not at all clear. The growth differences have been higher. The past shows that those growth differences didn’t last long. By the way, economic growth in the US is structurally higher than in France because of the (1%). That growth difference was lower than 1% since 2000 but seems to be rising a bit (say 0.5%) again.

Most other countries in Europe have a clearly lower correlation with the US, but still quite high. Together the growth of total Europes correlates only a bit stronger than the growth of France with the US. The correlation between growth between European countries is often clearly lower than the correlation with US growth: it should have been better to take the dollar as common currency (when correlation is important as often has been stated).

The chart of Rosenberg shows that the growth in Europe correlated strongly with the US and the deviation is not that big now. His question is: Is there a decoupling of growth between the US and Europe?

N.B. Rosenberg thinks the growth of the US will fall to European levels, while I think the old growth differences with the US will come back pretty soon with recovering growth in Europe (from recession levels now).

Chindia and farm productivity and exports to Europe

Farm productivity in China and India has improved tremendously in the past decades. In the past few years the improvement is slower in India (I hope the old trend will come back, that really is possible given the low productivity in India). The above average productivity in China was a surprise to me

There is a lot of fear in the market that Asia has to suffer a lot from lower exports to Europe. China and India are the big exporters to Europe, but that is still only a few % of the GDP. That cannot take down their growth completely. The exports to the rest of Asia is more important and that ought to compensate easily for lower exports to Europe.

Greece/ Spain and the Iraq wars in 2003, 1991

Last weekend we had an example of a day where a lot of people thought: this will determine if we get a bear market for years. All people saw a big tail risk happening with a probability of 50%. That is too much for a tail risk: then it is priced in totally in the market. Everybody is aware of the pending disaster.


Well, Greece delayed drachmageddon but now Spain is seen as lost forever.





This is not the first time everybody sees the same tail risk occurring with a high probability. That was also the case for the Iraq wars in 1991 and 2003. We knew timely in advance when the war should start. In 1991 Peter Lynch, then the miracle investor of Magellan, warned that really everybody had priced in the Iraq risks and that he knew one thing for sure: the risk premium at that moment was gigantic. So you had to be brave to profit from these high risk premiums, especially what had become too cheap because of those too high risk premiums. Markets started to rise in the week before the attack and the bear market was over. History repeated itself in 2003. Before the market was sent down for the n th time in the slow motion bear market of 2000-2003. Fixed investments saw a double dip, quite unusual and the valuation were at the long last low again (after the bubble valuations of 2000). Everybody was cautious, kept cash because you never knew, maybe Saddam Hussein had a bacteriological bomb etc. You could not sell to your client you were bullishly positioned, because when it should have gone wrong, you would be reproached seriously: how could you take those risks when you knew the war would start? So you get a low in markets that will last for years.

In 2012 the situation is a bit different, but still comparable. The crisis in Greece is near the end phase, a happy end is not possible as everybody knows. The pain of Spain has become too high. Again we are in a situation where evberybody is positioned for these tail risk disasters. Lots of investors keep cash, they will see what happened after the Greek elections, what disappointment will be invented at the euro summit end of June.

Everybody knows something positive has to be done (as everybody in 1991 and 2003 knew that the US army is stronger than the one of Iraq and that Iraq has no mountains) . That has caused that investors are less negatively positioned now than in 1991, 2003. There are even high valuations for some high dividend equities that seem to be safe. There are extremes at the bond market. They have speculated ridiculously in German and US government bonds. That position is being unwind a bit last week.

Spain could be a bigger disaster than Greece. The macro of Europe deteriorates by the day (maybe the most after Greece in the Netherlands). The saving rates in some countries (including the Netherlands) are starting to become so high they will go down and the economic recovery will start in these countries.

What has changed is that the pain threshold of the central banks has been hit: the macro forecasts have to be brought down, inflation expectations are falling a lot. This is not only the case in the Eurozone but also in the US, UK and Japan. Draghi, Bernanke c.s. have signalled their pain threshold is surpassed. So we know for sure a new tsunami of liquidity will arrive soon. Angela knows something has to happen at the euro summit. Germany has flagged well enough no bazooka is possible to shoot away the problems immediately, buts some advance has to be made.

So we are seeing a hope rally. You could see it already in the buy write index (there is an ETF where they write every month a call option at the money on the S&P500. (the red line in the chart) versus the S&P500 itself. That points at some rise. No guarantee, only hope of course.

NAHB points to more housing starts and will help US growth in 2013

The NAHB index for the confidence of homebuilders rose again in the US. This is a leading indicator for housing starts .The abysmal fall of housing starts was a very important reason why the economic recovery since 2009 was so poor. Now it signals help for the economy in 2013. This is necessary to limit the damage of the fiscal cliff (the end of the Bush tax cuts that will cause 4% austerity unless enough repair works will be in place;


my opinion: the fiscal cliff will be diluted to 2% and the multiplier effect will be c. 0.5, so it will diminish growth with 1% next year; this is not enough to cause a recession, especially not with the help of more housing starts).

The news about the US housing market remains quite good after several disaster years. More and more statistics show rising house prices, inventories versus sales are declining and foreclosures will decline.

This is not yet a good or normal housing market. There are still huge numbers of foreclosures, too many millions of Americans that are under water with their mortgages. It is still not easy to get a mortgage, but the situation is improving. With government subsidies (also favourable for banks) this can improve further.

Oil production to go up

The yearly energy report of BP shows that oil reserves are growing strongly. 72% of the conventional reserves is still in the Middle East. Lat year Iraq’s proven reserves grew the most, with 28B barrels (on total reserves of 1652B).

Especially reserves in Latin America and Africa grew.

These are the conventional reserves only. With the help of fracking (and horizontal drilling) the reserves will grow a lot further. The US could become the biggest oil producer in the world. Also Russia is investing in (US) fracking technology to remain the biggest oil producer in the world. China will probably soon follow. In the conventional production Iraq will show tremendous growth and become as big a producer as Saudi Arabia over some years.

The sudden rise of production in the US because of fracking is the most striking.

The reversal of the trend causes doubt about the peak oil theory of Hubbert (it remains true for individual fields, for example there are sound fears that the production from the biggest field in the world, the Saudi Ghawar field (http://bittooth.blogspot.co.uk/2012/06/ogpss-current-oil-production-and-future.html)). The fall of conventional production in many countries will be replaced for the biggest part by fracking. (and total production will not fall because of rising production in Brazil, Iraq and some countries in Africa).

(source: http://www.economist.com/blogs/graphicdetail/2012/06/daily-chart-7)


What did Dudley (CEO of BP) say by the presentation of their annual report?

2011 was an exceptional year because of all the disruptions of the oil production in Libya and the sudden extra demand from Japan because of their horrible tsunami earthquake. Oil prices didn’t go up extremely because of the higher natural gas production in the US at much lower prices.

The growth of the energy demand comes from Emerging Markets, +5.3% in 2011 (China took 71% of that demand) while demand in the OECD countries went down with 0.8%. The growth in China was met mostly by higher coal production. Coal production in the world rose 5.4%, oil 1% and natural gas 2.3%.

The growth of the oil production in the US was mainly caused by the growth of shale oil production. This year the recovery of the production in Libya is important.

How good is austerity: good and bad deficits (Woody Brock (2))

Tuesday Woody Brock was at our office and also this time he suggested the US and UK should have more good deficits (deficits because of more government investment in infrastructure (or education, research).


China and India demonstrated after 2008 how well you can boost economic growth with infrastructure spending to get only small decelerations of growth. They have big good deficits.

In the West all deficits are bad.

This distinction between good and bad deficits (in the past the golden rule for government deficits) doesn’t get enough attention in the drive to push austerity. It is seen, but it is not leading to action.

In Europe Hollande wants a growth pact, but he is not pushing infrastructure funds for France/ PIGS etc.

Somewhat new (but not to the readers of his new book American Gridlock: Why the Right and Left Are Both Wrong -- and What Can Be Done About It , discussed by http://www.huffingtonpost.com/dr-h-woody-brock/american-gridlock-book_b_1269227.html) is his scheme when a goverment needs big or small deficits, bad and good deficits.

Animal spirits are low now and the relative yield of infrastructure investments is in the UK and US high because of the extremely low bond yields.

That means you should get very high government deficits in the US/UK, as well good as bad deficits.

In the Clinton years the animal spirits were abundant and the bond yields were high for infrastructure investments (private investments yielded more). And indeed in the Clinton years you had surplus on the government budgets.

Woody had no opinion about changing multipliers of government spending when the output gap is high (more and more studies are pointing to a bigger multiplier when the output gap is big, so that means you should not do austerity, especially not when bond yields are low).

growth of incomes per head after 1871 in western countries

The chart’s source: http://mpra.ub.uni-muenchen.de/39021/1/MPRA_paper_39021.pdf (changed by Hallerbach of Robeco to make the numbers logarithmic)


Australia and UK were the richest in 1870-1900, Australia was especially rich in WWII, but lost then its lead.

Finland and Spain were the poor houses until 1930 (Spain until 1955) and marched then to prosperity. Maybe Spain will follow Italy to the bottom of the pack in the coming years below New Zealand.

There has been a lot of convergence in the incomes per head in the western countries after WWII.

Norway and the US are the winners of last decade.

Why remained volatility so low (theory of Woody Brock)

Equities in the world react since the credit crisis (the period of the Great Moderation has ended) more violent on economic surprises than before (the red line in the chart fluctuated before the crisis more compared to the S&P, afterwards it is in line according to the chart of economic surprises in the G10 versus the three month change of the world equity index from MS.


The last few years the volatility moves with the economic news, but not extra. One should expect that because of the euro crisis especially the last year the S&P should have moved much more than on macro news alone.

Why is it that the S&P only seems to react on macro economic news and not at all seems to suffer from contagion from the euro crisis? What is Woody’s theory?

We are used now to the fact that equities fluctuate much more than alone can be attributed to news about fundamentals. Shiller has found already quite some time ago that 80% of the fluctuations of equity prices cannot be explained by underlying news about the fundamentals.

There has been a lot of research why equities move so much more than fundamentals indicate. In the efficiente market theory this was a conundrum: everybody knows everything and has the same rational expectations. Why then all that volatility?

First one tried to find an answer with Behavioral Finance, but that didn’t offer a satisfactory explanation.
Arrow/Kurz had a better theory: it is all about changes in the belief structures. When everybody has different beliefs (expectations) then people will trade a lot. Especially with lots of leverage and strong beliefs you will see plenty of trading. So doing Kurz could explain more than 90% of the volatility.

Price changes are caused by corrections on mistakes, wrong correlated beliefs. In some periods one sees strongly correlated beliefs. Then everybody will be right or wrong. When you were wrong there were massive price reactions (for example the housing market after 2006, nobody believed prices could decline, almost nobody saw the credit crisis coming).

Last year we saw a lack of conviction in the beliefs, there was almost no leverage on the bets. Everybody was wrong in all directions (not in one direction). The beliefs were uncorrelated (there were the most diverging stories ever over deflation or hyperinflation arriving). This caused quite orderly declines and rises of the equity markets. It was only the economic news that did all the job to move the prices.

In sentiment surveys you see now there are not many bulls and bears, but an exceptional amount of advisors that don’t know (they see not big moves, only a correction). So there is a lack of conviction in the forecasts for the markets, there are no strong beliefs and the beliefs are also uncorrelated. There is also less leverage. So it is understandable that equities only react on news about fundamentals and don’t show high volatility.

This is a plausible theory, but difficult to support with empirics. An old theory is saying that when central bank liquidity is high volatility is going down to low levels. That also explains why volatility is not high, even when people are now forecasting euromageddon and taxmageddon.

PIGS not competitive is the problem, not Merkel

The Economist was blaming Merkel/ germany for the crisis. Those uncle Scrooges in germany with their side kicks in The Netherlands and Finland, still don’t see the obvious. Those poor people in Southern Europe needs to be helped (not like the cat) with unlimited support. The Banking Union / fiscal union/ Eurobonds has to arrive soon otherwise Eurogeddon will strike. Guaranteeiing everything is cheaper than bankrupting one after one of the PIIGS.


The cover caused some comments from Germany. http://www.handelsblatt.com/politik/international/economist-titelblaetter-original-oder-faelschung/6735328.html

Nowadays reality sets in that the loss of competitive power the main reason is for the problems, because the PIIGS can no longer devalue their currencies and making it so more difficult for German exports.

Italy could follow the productivity battle with Germany until  2007 (charts of Charles Gave)

Since the introduction of the euro Germany profited most and expanded its production, where Italy lagged more and more since they can no longer bill in cheap liras.

The same applies for money growth: Germany goes on

The rest of Europe sees no growth

Middleclass America getting poorer

Every three years the FED takes its Survey of Consumer Finances. After 18 months they publish the results.


So it is old news. Still the results of 2010 are shocking enough to cause havoc for the re-election probability of Obama.

The real incomes have fallen 10% in 2007-10 for the mean income and is back to the level of about 1995.
This looks like the end of the asmerican dream: you will not see your income rising far above that of your parents. If this trends were to continue, the middle class will go back to the incomes of before the Industrial Revolution (but fortunately this is very, very unlikely to happen).

Net wealth was even doing worse because of the decline of the house prices with growing mortgage debt (only now diminishing) and the lower equity prices. The median wealth decline from $126,000 to $ 77,000.

In 2007-2010 the richest 10% did even worse than the median, but after 210 that probably reversed again.

In the last quarter the net wealth rose because of higher equity and house prices with lower mortgage debt. Dat will be more favourable for the richest 10%.


sources: http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html?_r=1&src=me&ref=business and Catalpa and Bianco

Barry Ritholtz added the following:
A list of middle-class miseries by economist David Rosenberg (as told by Anthony Mirhaydari)


• Forty-five million Americans (one in seven) are on food stamps.
• One in seven is unemployed or underemployed.
• The percentage of those out of work defined as long-term unemployed is the highest (42%) since the Great Depression.
• 54% of college graduates younger than 25 are unemployed or underemployed.
• 47% of Americans receive some form of government assistance.
• Employment-to-population ratio for 25- to 54-year-olds is now 75.7%, lower than when the recession “ended” in June 2009.
• There are 7.7 million fewer full-time workers now than before the recession, and 3.3 million more part-time workers.
• Eight million people have left the labor force since the recession “ended” — adding those back in would put the unemployment rate at 12% instead of 8.2%.
• The number of unemployed looking for work for at least 27 weeks jumped 310,000 in May, the sharpest increase in a year.
• Just 14% of high-school graduates believe they will have a more successful financial future than their parents.
• The male unemployment rate for ages 16 to 19 is 27%; for ages 20 to 24, it is 13%.
• Because of structural problems such as negative home equity (which keeps people from moving for work) and skills erosion (from long-term unemployment), UBS economists estimate that the economy’s natural unemployment rate has increased from 5.7% before the recession to 8.6% now. This acts as a speed limit on potential economic growth.

source: http://money.msn.com/investing/washington-vs-the-middle-class-mirhaydari.aspx?page=0

Chinese numbers better than expected, but worries over soft growth remain

China’s macro numbers disappointed severely in the past weeks, but this week we saw a revival: almost all numbers were better than expected. I don’t think this will continue and that the Citigroup Economic Surprise Index will disappoint for some time.

The exports of China improved to 15.3% growth yoy, imports to 12.7%, almost double what consensus thought. China has again a strong surplus on its current account, the deficit of February was an outlier. This makes it more difficult for China to defend a weaker yuan versus the US$.

The commodity investors suddenly have new hopes because of the better import numbers for commodities.

Credit growth is better again, but the monetary stimulus did not caused to clearly higher credit growth.

The mini cycle and PE's, bond yields

Above a chart of the Citigroup Surprise Indices (CESI) for the US, Eurozone and China. They are based on a weighted three month base according to Citigroup recipe.

The most surprising is that China disappoints the most (but today it will recover somewhat).

Important is that from time to time the news is a bit too disappointing or too good. At the moment the US is going out of the normal range to overpessimism and then you can predict with a good chance of success that the tide will turn.

The US CESI follows a mini cycle that I hope is now close to its trough (and that is possible when politicians in Europe stop the melt down and/or central banks throw a zillion to the markets (then confidence will improve, new orders can rise again), when the oil price remains low (this supports consumption now very well, this is underappreciated good news).

The PE’s correlate very well according to the mini cycle with economic surprises (in the chart you see the PE divided by its two year moving average). This means that when the Citigroup Surprise index starts to rise again, you can have high hopes that PE’s will rise and equity markets go up.

Also the interest rates follow the mini cycle of macro surprises. The relation is not that well in the last months because suddenly a strong belief was growing we live in a kind of Japan scenario for the next decade or worse thanks to euro politics.

This kind of doom scenarios will get less followers when the US mini cycle turns up again, but for a big move of long dated interest rates more is necessary: a convincing solution for the euro crisis or a convincing outlook for higher inflation on the long run. Both things will arrive, but you need still more patience.

Bianco's conference call (2): the hope rally

According to Bianco (and others) it is strange that while Europe is perishing, the macro of the US disappoints, China is not to the rescue, there are almost no bears.

Since the 70s there were not as many people who saw a correction, not a bear or bull market. They don’t want to be surprised by the hope rally because internationally coordinated a mountain of money (the now so normal one trillion or more) will be thrown to the PIGS and MBS. Everybody knows, only not when and how many zillion.

Hilsenrath has solemnly promised in the Wall Street Journal: there will be action from the FED and he knows: he is the official allowed messenger of the FED to bring the gospel of QE etc.

And so everybody knows that Bernanke like Obi One Kenobi will save the universe from disaster with unconventional means. This will succeed, also for the fifth time.

Bianco’s conference call: the bank run in Spain and Greece (1)

Europe is pulling down equity markets and interest rates extremely. This was caused according to Bianco (and many others) by deposit bank runs in Greece and Spain.

After the Greek elections of May 6 the panic aggravated. The Greek suddenly had even better reasons to suppose they could suddenly see drachmas on their bank account instead of euro, comparable to what happened in Argentina (where US $ deposits suddenly were transformed 70% lower value Argentine peso deposits).

The melting away of deposits in the PIGS is already going on since the end of last year. Deposits flow to Germany/ UK/ Switzerland etc. A further acceleration arrived when people in Spain saw that the banks needed so much new capital that they could have only enough capital when they paid back in pesetas.

So everybody wanted to get rid of their deposits in PIGS (or even in the UK for banks with a Spanish name). The wanted to exchange their deposits in safe bonds, so at any price German sovereigns were bought (PV: and a bubble in long dated bonds was created when hedge funds also bought excessively to hedge their risks)

The last few weeks thinks became worse and worse and according to Sober Look/ Kostas Kalevras the last few days € 68 miljard extra MRO (main refinancings operation facility) Money was drawn from the ECB and this is emergency Money, that very well could be necessary money to repair the holes of lost deposits in Spanish banks.  

Oil prices can go down further

The oil production is rising pretty strongly while the demand is stabilising and even falling in the last months. Because of the disappointing growth in China and Europe the supply is now bigger than the demand. Because demand and supply curves for oil are very steep a small surplus of supply versus demand leads to big falls in prices (it Works also the other way around). So it is not very amazing that oil prices have fallen a lot in the past weeks.


Suddenly the fears for a supply disruption in Iran are postponed until after the elections in the US. Even the extra demand from post nuclear Japan are not helping anymore.

Obama's chances on re-election are tumbling

The chart above gives the probability according to Intrade of the re-election of Obama (with its blip after the killing of Osama bin Laden).
If it were the chart of an equity you should sell it after the breakdown after the bad employment numbers last week.

The chart above gives the probability of a win of Romney according to betters on Intrade. If it were an equity you should buy it. Especially after the last bad employment growth numbers.

The unemployment rate is strongly correlated with the chances of Obama. According to Strategas the unemployment rate has to decline to below 7.6% for a win of Obama. This is not a great probability.

The approval rate of Obama is too low for an easy re-election.

Overpessimism is back: reconnection of Nasdaq/Topix analogy

For a long time the collapse of the Nasdaq after March 2000 followed the collapse of the Japanese Topix since December 1989.


Since November 2011 there was a disconnect between Nasdaq and Topix lagged with a bit more than ten year. The Nasdaq went up, while it should have gone down according to the believers in the Japan scenario. They had to wait a bit, but now they are screaming victory: the Nasdaq will reconnect to the Topix movements ten year ago and so it will fall about 60% from now on before you can dream again of a big bull market.



The number of doom and gloom stories is exploding. They are emphasing now that the Japan scenario is now insanely overoptimistic for what we will see in the coming years. Sovereign bond yields are saying loud and clearly that there will be no growth in the world for the next 30 years, for decades you will not get positive real interest rates (as is priced in now). Never will the equity market go up structurally unless deleveraging has been finished enough and that will not happen in the next thousand years because governments have to pay for care and healthcare and trillions a quarter to keep the banking system a life. They don’t see a way out. The ICT-revolution is not leading to progress but decay. Governments were out of their mind when they privatised so much because governments are so much more efficient, not making profits.

Seriously, people proposed to buy put on bonds priced at zero % interest rates for short dated maturities, because interest rates have to fall deeply below zero and option models don’t take this into account and calculate too low prices for puts. It est prices for put at interest rates of zero are too low.

Soros with his speech how badly Europe is doing went viral. Everybody is saying this is the wisest thing they have ever heart about Europe (maybe with the exception of Reinhart/Rogoff). Patiently he explains the euro is a bubble that is going to implode. Italy and other PIGS voluntarily agreed to be downgraded to an Emerging Market that cannot lend in its own currency they can’t manipulate.

http://www.businessinsider.com/george-soros-speech-goes-viral-2012-6#ixzz1woFygyv5

Hedge funds finally know it fors ure: the good old times are gone forever. http://www.businessinsider.com/raoul-pal-the-end-game-2012-6#

The retiring boss of the worldbank agrees totally now he is allowed to say what he really thinks.

http://www.businessinsider.com/world-bank-boss-impending-catastrophe-a-rerun-of-great-panic-of-2008-2012-6

Lombard Street Research was talking about:

The looming cliff for asset prices

It is abundantly clear, let us migrate to Mars.

More and more people work into (very) high ages in the US

In the US 55+ suddenly are not retiring. They have to work because they have not enough money to retire. 55+ is the only age cohort where now work more people than before the credit crisis (partly because there are more 55+ people now) 16-24 can forget to get work. They study but that creates mountains of debt. kan het vergeten aan goed betaald werk te komen. Ze studeren dan maar door en bouwen studieschuld op.

In France they should have already invented a workweek of 20 hours for the elderly.

In the US especially surprisingly many 70-74 year old men still work. Even above 75 still 10 % of the men (have to) work. The cohort 60-64 that Works will have to grow strongly in the US given the too low interest rates to buy a nice pension.

PMI’s and the economic growth in France, the Netherlands, China and US

The PMI's in Europe show a considerable deterioration of the economic growth in Q2. Above a chart for France. According to Applied Macro Global Economics the PMI’s oeverstimate the decline of the GDP’s in Europe, but the direction is clear. Including the growing credit crunch economic growth in France will be negative in Q2.

For the Nederland the story is a bit less dire, but also in the Netherlands growth will be negative in Q2.

Even for China it is not  a happy story, but economic growth can be more than 7.5% according to the PMI’s

For the US fortunately it is a positive chart, so still a happy end (chart of Strategas).

Even the BRICS want a stronger dollar

The dollar is not only rising agisnt the Euro, but also against the currencies of the BRICS (this year South Africa is added to BRIC, so BRICS, even while their growth is not that high; so the BRICS have become very commodities oriented).


The Chinese Yuan is still the strongest, but even the Yuan is now declining versus the dollar.

(http://graphics8.nytimes.com/images/2012/06/01/business/global/01yuan-graphic/01yuan-graphic-popup.jpg)

(chart of Strategas)