JEWISH KING JESUS IS COMING AT THE RAPTURE FOR US IN THE CLOUDS-DON'T MISS IT FOR THE WORLD.THE BIBLE TAKEN LITERALLY- WHEN THE PLAIN SENSE MAKES GOOD SENSE-SEEK NO OTHER SENSE-LEST YOU END UP IN NONSENSE.GET SAVED NOW- CALL ON JESUS TODAY.THE ONLY SAVIOR OF THE WHOLE EARTH - NO OTHER.
1 COR 15:23-JESUS THE FIRST FRUITS-CHRISTIANS RAPTURED TO JESUS-FIRST FRUITS OF THE SPIRIT-23 But every man in his own order: Christ the firstfruits; afterward they that are Christ’s at his coming.ROMANS 8:23 And not only they, but ourselves also, which have the firstfruits of the Spirit, even we ourselves groan within ourselves, waiting for the adoption, to wit, the redemption of our body.(THE PRE-TRIB RAPTURE)
HOARDING OF GOLD AND SILVER
JAMES 5:1-3
1 Go to now, ye rich men, weep and howl for your miseries that shall come upon you.
2 Your riches are corrupted, and your garments are motheaten.
3 Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days.
REVELATION 18:10,17,19
10 Standing afar off for the fear of her torment, saying, Alas, alas that great city Babylon, that mighty city! for in one hour is thy judgment come.(IN 1 HR THE STOCK MARKETS WORLDWIDE WILL CRASH)
17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,
19 And they cast dust on their heads, and cried, weeping and wailing, saying, Alas, alas that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.
EZEKIEL 7:19
19 They shall cast their silver in the streets, and their gold shall be removed:(CONFISCATED) their silver and their gold shall not be able to deliver them in the day of the wrath of the LORD: they shall not satisfy their souls, neither fill their bowels: because it is the stumblingblock of their iniquity.
LUKE 2:1-3
1 And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.
2 (And this taxing was first made when Cyrenius was governor of Syria.)
3 And all went to be taxed, every one into his own city.
REVELATION 13:16-18
16 And he(THE FALSE POPE WHO DEFECTED FROM THE CHRISTIAN FAITH) causeth all,(IN THE WORLD ) both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:(MICROCHIP IMPLANT)
17 And that no man might buy or sell, save he that had the mark,(MICROCHIP IMPLANT) or the name of the beast,(WORLD DICTATORS NAME INGRAVED ON YOUR SKIN OR TATTOOED ON YOU OR IN THE MICROCHIP IMPLANT) or the number of his name.(THE NUMBERS OF HIS NAME INGRAVED IN THE MICROCHIP IMLPLANT)-(ALL THESE WILL TELL THE WORLD DICTATOR THAT YOUR WITH HIM AND AGAINST KING JESUS-GOD)
18 Here is wisdom. Let him that hath understanding count the number of the beast:(WORLD LEADER) for it is the number of a man; and his number is Six hundred threescore and six.(6-6-6) A NUMBER SYSTEM (6006006)OR(60020202006)(SOME KIND OF NUMBER IMPLANTED IN THE MICROCHIP THAT TELLS THE WORLD DICTATOR AND THE NEW WORLD ORDER THAT YOU GIVE YOUR TOTAL ALLIGIENCE TO HIM AND NOT JESUS)(ITS AN ETERNAL DECISION YOU MAKE)(YOU CHOOSE YOUR OWN DESTINY)(YOU TAKE THE DICTATORS NAME OR NUMBER UNDER YOUR SKIN,YOUR DOOMED TO THE LAKE OF FIRE AND TORMENTS FOREVER,NEVER ENDING MEANT ONLY FOR SATAN AND HIS ANGELS,NOT HUMAN BEINGS).OR YOU REFUSE THE MICROCHIP IMPLANT AND GO ON THE SIDE OF KING JESUS AND RULE FOREVER WITH HIM ON EARTH.YOU CHOOSE,ITS YOUR DECISION.
REVELATION 6:5-6
5 And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand.
6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.(A DAYS WAGES FOR A LOAF OF BREAD)
DOCTOR DOCTORIAN FROM ANGEL OF GOD
then the angel said, Financial crisis will come to Asia. I will shake the world.
The Shemitah is coming true.Do people not get it? There is a economic crash every 7 years.
1980: Recession
1987: Stock market crash
1994: Bond market crash
2001: 9/11, dot com, recession
2008: Housing crash
2015: See if something will happen-The central banks will be the death of us. Get ready and embrace yourself for the economic collapse.
UPDATE-SEPTEMBER 01,2015-12:00AM
DOW MARKET TUESDAY-SEPT 01,2015
09:30AM-230.43-
10:00AM-332.73-
10:30AM-308.30-
11:00AM-341.53-
11:30AM-317.65-
12:00PM-331.05-
12:30PM-387.03-
01:00PM-416.06-
01:30PM-416.90-
02:00PM-404.96-
02:30PM-392.82-
03:00PM-413.06-
03:30PM-437.04-
04:00PM-469.68- 16,058.35
LOW -546 HIGH -230
TSX-377.22 13,481.90 - GOLD +7.10 $1,139.60 - OIL -3.99 $45.21
$5.7 TRILLION DOLLARS WAS LOST IN THE WORLD STOCK MARKETS IN AUGUST.
THE DOW HAS ITS WORST AUGUST IN 17 YEARS.AND THE DOW FUTURES AT 9AM TODAY ARE DOWN -432.00 POINTS.ANOTHER ALL DOWN DAY IN THE WORLD MARKETS.
Dow industrials slump nearly 3% in third-worst trading day of year-Published: Sept 1, 2015 4:15 p.m. ET-market watch-By Sue Chang-Markets reporter
The Dow Jones Industrial Average plummeted on Tuesday to mark its third worst trading session of the year while the S&P 500 and Nasdaq also sank as Chinese manufacturing data pointed to a further slowdown in the world's second largest economy. The blue-chip benchmark DJIA, -2.84% slumped 469.68 points, or 2.8%, to 16,058.35. The S&P 500 SPX, -2.96% tumbled 58.33 points, or 3%, to 1,913.85 and the Nasdaq Composite COMP, -2.94% dropped 140.40 points, or 2.9% to 4,636.10. All 30 components in the Dow finished in the red while only three S&P 500 stocks finished the day higher. On the Nasdaq 100, only American Airlines Group Inc. AAL, -0.18% and Liberty Interactive Corporation Ventures LVNTA, +0.43% ended in the green.
Morgan Stanley: Central Banks Are Playing a Game of Chess That Results in an Endless Cycle of Easing-The struggle for inflation is real and strategic-Luke Kawa-September 1, 2015 — 3:52 PM EDT-bloomberg
After the European Central Bank decided to initiate an asset purchasing program, President Mario Draghi reportedly elected to unwind with a game of chess on his iPad during the plane ride back to Rome.According to Morgan Stanley's Marco Spaltro and Jim Caron, Draghi's choice for a game could not have been more fitting. In a new commentary, the two portfolio managers argue that diverging monetary policies and persistently low levels of inflation mean that central banks are now engaged in a global game of chess.Moreover, they say, this particular match won't end in a stalemate. Despite concerns that central banks have no moves left, the pair contends that all roads lead to competitive currency devaluations. Here's their extended analogy:At the beginning of the game, the global economy is at an arbitrary point of equilibrium, similar to a chess board, with the pieces representing policy tools that are used to achieve one’s goal—growth and inflation—the king. Once a central bank makes an initial move to achieve a new equilibrium, it sets in motion a sequence of moves from other central banks, which we refer to as the opening repertoire. Suddenly, the game becomes unbalanced and requires more policy changes until a new equilibrium is achieved. …In this game, central banks compete against each other by easing monetary policies in an attempt to meet their domestic, inflation-targeting mandates. Lack of coordination among central banks may mean that monetary policy remains lower for longer, leading to a semi-permanent low-yielding environment. At the end of the Global Chess Game, we are likely left with more central bank money, higher asset prices, low inflation and low yields.Morgan Stanley-The punishment for trying to leave the game or refusing to play, according to the portfolio managers, is deflation.While the portfolio managers make a comparison to chess, the scenario they depict also bears an even more striking resemblance to a game of hot potato, in which central bankers pass each other an unenviable deflationary parcel through their relative exchange rates.A central tenet of the portfolio managers' thesis is that ultralow interest rates have restrained inflationary pressures, since all that excess liquidity gave rise to overcapacity. Unconventional monetary policy measures, in turn, have only served to boost inflation to the extent that the domestic currency is weakened.Under such a regime, bond yields will stay lower for longer, with yield curves flattening. The most attractive investment destinations, in terms of expected returns, will be locales in which central banks have sufficient room to boost stimulus and are heading in that direction, like Canada, New Zealand, and Australia, according to Spaltro and Caron. But in the realm of foreign exchange, those are the currencies the two recommend shorting while going long the U.S. dollar or British pound, since those central banks have expressed an intention to leave the chess game.But even these opportunities will be fleeting, they warn, as both the Federal Reserve and the Bank of England will likely be forced to reverse course after importing deflation."In order to generate return in a world of low risk premia, timing reversals correctly will become a larger part of expected returns," they write. "As inflation converges quickly via adjustments in foreign exchange, central banks will likely change their stances to meet their domestic mandates."In Spaltro and Caron's framework, all central banks are pawns—ultimately able to move in just one direction, by pressing down on the monetary accelerator. It's potentially an incredibly pessimistic scenario.However, there is some hope.A paper presented at the Jackson Hole Economic Symposium suggests that the world's most powerful central bank might be able to act like a king and break this presumed chain of competitive devaluations.Gita Gopinath, professor at Harvard University, found that when it comes to the effect a rising currency has on inflation, the buck stops with the Fed.Because a high portion of global trade is invoiced in U.S. dollars and these prices tend to be sticky, "U.S. inflation is consequently more insulated from exchange rate shocks, while other countries are highly sensitive to it," she concluded.As such, Morgan Stanley's chess analogy could be put to the test in short order, as it just so happens that the one country with the most immunity to importing deflation is the one on the verge of embarking upon a tightening cycle.
Wall Street braces for stormy Sept.: Dow plunges more than 300 points on weak China data-Adam Shell, USA TODAY 11:04 a.m. EDT September 1, 2015-usa today
New month, same old negative, scary, correction-like price action on Wall Street as the Dow plunged more than 300 points at the opening bell Tuesday.The first day of September on Wall Street looks a lot like the abysmal trading action in August — the worst month for the Dow since May 2010 and the stock market's first 10% correction in four years — with investors bracing for more wild swings and losses. U.S. stocks followed a global market selloff sparked by a weak manufacturing report out of China that raised fresh fears of a slowdown in the world's second-biggest economy.The Dow Jones industrial average was down 330 points, or 2%, in the early minutes of trading and the broader Standard & Poor's 500-stock index fell 2%. The Nasdaq composite index dropped 1.7%.Avoid September's market pain in 9 ways-The selloff began in Asia on the weak economic news out of Beijing, and then spread to Europe. Shares of the Nikkei 225 in Japan fell nearly 4% earlier Tuesday, with stocks finishing 2.2% lower in Hong Kong and down 1.2% in Shanghai. In midday trading in Europe, shares were down more than 2% in London, Germany and France.Investors looking for a respite from the selling that pushed the Dow Jones industrial average down 6.6% in August and the S&P 500-stock index down 6.26% — its worst monthly plunge since May 2012 — are getting more of the same violent downward price action to kick off the first day of trading in September. Based on the volatile price action, it looks like Wall Street is not out of the woods yet when it comes to the recent corrective phase, the stock market's first since 2011.Wall Street had already been bracing for a volatile September, as the ninth month of the year has historically been one of the worst months for the stock market. September has been the worst-performing month for the Dow in the past 50 and 100 years, data from Bespoke Investment Group show.Stormy September looms after ugly August-Sparking the negative market sentiment today was a report released overnight that showed that manufacturing in August in China hit a three-year low, exacerbating worries about the health of the world's second-biggest economy and sparking fresh fears of a global growth slowdown.China’s NBS manufacturing PMI fell to a three-year low of 49.7 in August from 50.0 in July, Barclays said in a morning research note. A reading below 50 suggests a "contraction." The key negative drivers were declines in production and new orders.Continued weakness in China's economy, coupled with the August stock swoon and fears that the Federal Reserve will go ahead with its first interest rate hike in nearly 10 years when it concludes its two-day meeting on Sept. 17, has investors on edge and in a risk-off mood.September is usually an ugly month for stocks. But a few stocks have lived through the dreaded month and survived to tell the story. Sean Fujiwara
Forget Black Monday: the real stock market crash of 2015-The FTSE 100 had already suffered a ‘silent crash’ before this week...falling by more than 10pc-The benchmark Shanghai Composite Stock Index dropped more than seven percent on 24 August, trading down on fears of a slowdown in the world's second-largest economy. The plunge in Chinese equities followed last week's losses of some 11 percent. By Richard Evans-8:01AM BST 29 Aug 2015-the telegraph
Even the most relaxed investor can’t have avoided a tingle of panic over the stock market’s violent moves this week, beginning with “Black Monday”.But how many will have realised that the real falls in the FTSE 100 this summer actually occurred before this week, not during it? Between April 27, when the index hit a record high of 7104, and the close at 6207 on the Friday preceding Black Monday, the Footsie fell by 12.6pc. At the time of writing (August 27), the cumulative fall this week amounted to just 1.4pc.In other words, the sudden, noisy crash that made the front pages all over the world was less severe than the “silent crash” that preceded it.This is far from the only unnoticed aspect of the recent turmoil. When stock markets suffer large falls it is easy to assume that all investment funds will also have lost money. But this is not true – even an investor who chose the peak of the market to put money into shares will not have lost money in some popular funds.Others have fallen but by far less than the market as a whole.For example, the Unicorn UK Growth fund has achieved 8.2pc growth since the FTSE 100’s April peak, compared with a 14.6pc fall in the index itself (these figures, from FE Trustnet, the fund analyst, are on a “total return” basis, so they include dividend payments).Two funds from Miton – Undervalued Assets and UK Value Opportunities – have also produced impressive growth, of 7.4pc and 6.8pc respectively. The Slater Income fund gained 0.7pc.Among larger funds, Invesco Perpetual’s Income and High Income funds fell by less than the market, registering declines of 7.5pc and 7.4pc respectively, while Axa Framlington UK Select Opportunities lost 7.7pc on a total return basis.Neil Woodford’s new fund, Woodford Equity Income, declined by a relatively modest 3.2pc, while Trojan Income fell by 7.5pc and Artemis Income lost 8.1pc,In fact, even the worst performing equity income fund over the period did better then the market: the Aberdeen UK Equity Income fund lost 13.8pc, Trustnet’s figures show.The funds that are meant not to fall when the market does, “absolute return” funds, on the whole lived up to their billing. On average they have lost 0.7pc since the market’s April peak, Trustnet said. However, the Eclectica Absolute Macro fund fell by 14.6pc, while the often recommended Newton Real Return fund lost 4.9pc.• Is the FTSE 100's six year run at an end? The bull and bear points-• Which funds should you pick in a financial crisis? Will the markets keep falling? What the experts say-We should not perhaps be surprised when fund managers refuse to talk down the prospects for the assets they make a living from managing. But the investors we spoke to this week seemed convinced that the stock market was experiencing a temporary blip rather than entering into a sustained bear market. Richard Buxton, who manages the Old Mutual UK Alpha fund, described the recent falls as “indiscriminate”. He said the slump had created the best buying opportunity he had seen for years.Giles Hargreave, who manages a number of funds including Marlborough Special Situations, pointed out that the global stock market rout had made an early rise in interest rates less likely. “Given the much higher income shares offer over other assets, the stock market will still be the best place for savers to put their money, so I cannot see a wider correction taking place,” he said.Gary Potter, who buys funds for F&C Investments, said: “A bear market normally requires an economic recession and for the moment that seems unlikely in developed markets.”But Neil Woodford sounded a more cautious note. He said: “We remain cautious of the global growth outlook. Weak global growth and productivity, deflation and excessive debt remain our principal concerns.”Even in Britain, where growth has been comparatively strong, Mr Woodford said he worried about “the unbalanced nature of that growth”.A poor economic outlook does not automatically mean bad news for the stock market, of course, because such expectations are supposed to be taken into account when investors price shares.But as Mr Woodford put it: “The distraction of seeing share prices fall indiscriminately can be overwhelming and distort rational perspectives.”
Deal or war’: Is doomed dollar really behind Obama’s Iran warning?-Finian Cunningham Edited time: 17 Aug, 2015 09:29-RT
US President Barack Obama has given an extraordinary ultimatum to the Republican-controlled Congress, arguing that they must not block the nuclear accord with Iran. It’s either “deal or war,” he says.In a televised nationwide address on August 5, Obama said: “Congressional rejection of this deal leaves any US administration that is absolutely committed to preventing Iran from getting a nuclear weapon with one option: another war in the Middle East. I say this not to be provocative. I am stating a fact.”The American Congress is due to vote on whether to accept the Joint Comprehensive Plan of Action signed July 14 between Iran and the P5+1 group of world powers – the US, Britain, France, Germany, Russia and China. Republicans are openly vowing to reject the JCPOA, along with hawkish Democrats such as Senator Chuck Schumer. Opposition within the Congress may even be enough to override a presidential veto to push through the nuclear accord.In his drastic prediction of war, one might assume that Obama is referring to Israel launching a preemptive military strike on Iran with the backing of US Republicans. Or that he is insinuating that Iran will walk from self-imposed restraints on its nuclear program to build a bomb, thus triggering a war. But what could really be behind Obama’s dire warning of “deal or war” is another scenario – the collapse of the US dollar, and with that the implosion of the US economy.That scenario was hinted at this week by US Secretary of State John Kerry. Speaking in New York on August 11, Kerry made the candid admission that failure to seal the nuclear deal could result in the US dollar losing its status as the top international reserve currency.“If we turn around and nix the deal and then tell [US allies], ‘You're going to have to obey our rules and sanctions anyway,’ that is a recipe, very quickly for the American dollar to cease to be the reserve currency of the world.”In other words, what really concerns the Obama administration is that the sanctions regime it has crafted on Iran – and has compelled other nations to abide by over the past decade – will be finished. And Iran will be open for business with the European Union, as well as China and Russia.It is significant that within days of signing the Geneva accord, Germany, France, Italy and other EU governments hastened to Tehran to begin lining up lucrative investment opportunities in Iran’s prodigious oil and gas industries. China and Russia are equally well-placed and more than willing to resume trading partnerships with Iran. Russia has signed major deals to expand Iran’s nuclear energy industry.American writer Paul Craig Roberts said that the US-led sanctions on Iran and also against Russia have generated a lot of frustration and resentment among Washington’s European allies.“US sanctions against Iran and Russia have cost businesses in other countries a lot of money,” Roberts told this author.“Propaganda about the Iranian nuke threat and Russian threat is what caused other countries to cooperate with the sanctions. If a deal worked out over much time by the US, Russia, China, UK, France and Germany is blocked, other countries are likely to cease cooperating with US sanctions.”Roberts added that if Washington were to scuttle the nuclear accord with Iran, and then demand a return to the erstwhile sanctions regime, the other international players will repudiate the American diktat.“At that point, I think much of the world would have had enough of the US use of the international payments system to dictate to others, and they would cease transacting in dollars.”The US dollar would henceforth lose its status as the key global reserve currency for the conduct of international trade and financial transactions.Former World Bank analyst Peter Koenig says that if the nuclear accord unravels, Iran will be free to trade its oil and gas – worth trillions of dollars – in bilateral currency deals with the EU, Japan, India, South Korea, China and Russia, in much the same way that China and Russia and other members of the BRICS nations have already begun to do so.That outcome will further undermine the US dollar. It will gradually become redundant as a mechanism of international payment.Koenig argues that this implicit threat to the dollar is the real, unspoken cause for anxiety in Washington. The long-running dispute with Iran, he contends, was never about alleged weapons of mass destruction. Rather, the real motive was for Washington to preserve the dollar’s unique global standing.“The US-led standoff with Iran has nothing to do with nuclear weapons,” says Koenig. The issue is: will Iran eventually sell its huge reserves of hydrocarbons in other currencies than the dollar, as they intended to do in 2007 with an Iranian Oil Bourse? That is what instigated the American-contrived fake nuclear issue in the first place.”This is not just about Iran. It is about other major world economies moving away from holding the US dollar as a means of doing business. If the US unilaterally scuppers the international nuclear accord, Washington will no longer be able to enforce its financial hegemony, which the sanctions regime on Iran has underpinned.Many analysts have long wondered at how the US dollar has managed to defy economic laws, given that its preeminence as the world’s reserve currency is no longer merited by the fundamentals of the US economy. Massive indebtedness, chronic unemployment, loss of manufacturing base, trade and budget deficits are just some of the key markers, despite official claims of “recovery.”As Paul Craig Roberts commented, the dollar’s value has only been maintained because up to now the rest of the world needs the greenback to do business with. That dependency has allowed the US Federal Reserve to keep printing banknotes in quantities that are in no way commensurate with the American economy’s decrepit condition.“If the dollar lost the reserve currency status, US power would decline,” says Roberts. “Washington’s financial hegemony, such as the ability to impose sanctions, would vanish, and Washington would no longer be able to pay its bills by printing money. Moreover, the loss of reserve currency status would mean a drop in the demand for dollars and a drop in willingness to hold them. Therefore, the dollar’s exchange value would fall, and rising prices of imports would import inflation into the US economy.”Doug Casey, a top American investment analyst, last week warned that the woeful state of the US economy means that the dollar is teetering on the brink of a long-overdue crash. “You’re going to see very high levels of inflation. It’s going to be quite catastrophic,” says Casey.He added that the crash will also presage a collapse in the American banking system which is carrying trillions of dollars of toxic debt derivatives, at levels much greater than when the system crashed in 2007-08.The picture he painted isn’t pretty: “Now, when interest rates inevitably go up from these artificially suppressed levels where they are now, the bond market is going to collapse, the stock market is going to collapse, and with it, the real estate market is going to collapse. Pension funds are going to be wiped out… This is a very bad situation. The US is digging itself in deeper and deeper,” said Casey, who added the telling question: “Then what’s going to happen?”President Obama’s grim warning of “deal or war” seems to provide an answer. Faced with economic implosion on an epic scale, the US may be counting on war as its other option.Finian Cunningham, for RT-The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
Why It Really All Comes Down To The Death Of The Petrodollar-Submitted by Tyler Durden on 08/23/2015 09:59 -0400-zERO HEDGE
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge. The currency immediately plunged by some 25%.The rationale behind the move was clear enough. The plunge in crude prices along with the relative weakness of the Russian ruble had severely strained Kazakhstan, which is central Asia’s largest crude exporter. As a quick look at a chart of the tenge’s effective exchange rate makes clear, the pressure had been mounting for quite a while and when China devalued the yuan earlier this month, the outlook for trade competitiveness worsened. What might not be as clear (on the surface anyway) is how recent events in developing economy FX markets following the devaluation of the yuan stem from a seismic shift we began discussing late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order. In short, the world seems to have underestimated how structurally important collapsing crude prices are to global finance. For years, producers funnelled their dollar proceeds into USD assets providing a perpetual source of liquidity, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop. That all came to an abrupt, if quiet end last year when a confluence of economic (e.g. shale production) and geopolitical (e.g. squeeze the Russians) factors led the Saudis to, as we put it, Plaxico'd themselves and the US.The ensuing plunge in crude meant that suddenly, the flow of petrodollars was set to dry up and FX reserves across commodity producing countries were poised to come under increased pressure. For the first time in decades, exported petrodollar capital turned negative.That set the stage for a prolonged downturn in emerging market currencies, and as worries about China’s economy - the engine of global growth and trade - grew, so did the pressure.Thus when Beijing moved to devalue the yuan, it drove a stake through the heart of the EM world by simultaneously i) validating concerns about weak Chinese growth, thus guaranteeing further pressure on commodities, ii) delivering a staggering blow to the export competitiveness of multiple emerging economies, iii) depressing demand from the mainland by making imports more expensive. Thanks to the conditions that resulted from the death of the petrodollar (e.g. falling FX reserves and growing fiscal headwinds), the world’s emerging markets were in no position to defend themselves against the fallout from the yuan devaluation. Complicating matters is a looming Fed hike. Included below is a look at flows into (or, more appropriately, "out of") EM bonds. As Barclays notes, the $2.5 billion outflow in the week to August 21 is the highest level since February of last year. We are, to put it mildly, entering a not-so-brave new world and the shift was catalyzed by the dying petrodollar. Kazakhstan’s move to float the tenge is but the beginning and indeed Kazakh Prime Minister Karim Massimov told Bloomberg on Saturday that the world has entered "a new era" and that soon, any and all petro currency dollar pegs are set to fall like dominoes. Here’s more:Currency pegs in crude-producing nations are set to topple as the world enters a “new era” of low oil prices, according to the prime minister of Kazakhstan, which rattled markets this week with a surprise decision to abandon control of its exchange rate."At the end of the day, most of the oil-producing countries will go into the free floating regime,” including Saudi Arabia and the United Arab Emirates, Karim Massimov said in an interview on Saturday in the capital, Astana. "I do not think that for the next three to five, maybe seven years, the price for commodities will come back to the level that it used to be at in 2014."Central Asia’s biggest energy producer cut its currency loose on Thursday, triggering a 22 percent slide in the tenge to a record low versus the dollar. The move followed China’s shock devaluation of the yuan the week before, which drove down oil prices on concern global growth will stutter and nudged nations with managed exchange rates toward competitive devaluations of their own. More than $3.3 trillion has been erased from the value of global equities after China’s decision spurred a wave of selling across emerging markets. Brent crude touched a six year-low of $45.07 per barrel on Friday, while the Dow Jones Industrial Average entered a correction.“After I watched what is happening on the financial market and stock market in the U.S. on Friday night, I thought that we did it at the right time,” Massimov, 50, said in his office in the government’s headquarters. The decision avoided “big speculation and pressure this weekend in Kazakhstan,” he said.The central bank spent $28 billion this and last year to support the tenge, including $10 billion in 2015, Kazakh President Nursultan Nazarbayev said this week. After its slump on Thursday, the currency rallied 7.4 percent to close at 234.99 against the dollar a day later. The country’s dollar bonds due July 2025 climbed after the announcement, lowering the yield nine basis points to 5.74 percent in the last two days of the week.Before the currency shift, Kazakhstan was at a competitive disadvantage to Russia, its neighbor and top trading partner along with China. The tenge had fallen by only 7.6 percent against he dollar in the 12 months up to Aug. 20, compared with a 46 percent depreciation for the ruble, while crude had plummeted 55 percent in the period.We discussed this in great detail on Friday (with quite a bit of color on the fiscal impact for Saudi Arabia) and we've included a chart from Deutsche Bank which should have some explanatory and predictive value below, but the big picture takeaway is that the world is now beginning to feel the impact of the petrodollar's quiet demise, and because this is only the beginning, we've included below the entire text of the petrodollar's obituary which we penned last November .How The Petrodollar Quietly Died And Nobody Noticed-Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company - the end of the system that according to many has framed and facilitated the US Dollar's reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop.The main thrust for this shift away from the USD, if primarily in the non-mainstream media, was that with Russia and China, as well as the rest of the BRIC nations, increasingly seeking to distance themselves from the US-led, "developed world" status quo spearheaded by the IMF, global trade would increasingly take place through bilateral arrangements which bypass the (Petro)dollar entirely. And sure enough, this has certainly been taking place, as first Russia and China, together with Iran, and ever more developing nations, have transacted among each other, bypassing the USD entirely, instead engaging in bilateral trade arrangements, leading to, among other thing, such discussions as, in today's FT, why China's Renminbi offshore market has gone from nothing to billions in a short space of time.And yet, few would have believed that the Petrodollar did indeed quietly die, although ironically, without much input from either Russia or China, and paradoxically, mostly as a result of the actions of none other than the Fed itself, with its strong dollar policy, and to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico'ed both itself, and its closest Petrodollar trading partner, the US of A.As Reuters reports, for the first time in almost two decades, energy-exporting countries are set to pull their "petrodollars" out of world markets this year, citing a study by BNP Paribas (more details below). Basically, the Petrodollar, long serving as the US leverage to encourage and facilitate USD recycling, and a steady reinvestment in US-denominated assets by the Oil exporting nations, and thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance.A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."In short, the Petrodollar may not have died per se, at least not yet since the USD is still holding on to the reserve currency title if only for just a little longer, but it has managed to price itself into irrelevance, which from a USD-recycling standpoint, is essentially the same thing.According to BNP, Petrodollar recycling peaked at $511 billion in 2006, or just about the time crude prices were preparing to go to $200, per Goldman Sachs. It is also the time when capital markets hit all time highs, only without the artificial crutches of every single central bank propping up the S&P ponzi house of cards on a daily basis. What happened after is known to all..."At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out," said David Spegel, global head of emerging market sovereign and corporate Research at BNP.Spegel acknowledged that the net withdrawal was small. But he added: "What is interesting is they are draining rather than providing capital that is moving global liquidity. If oil prices fall further in coming years, energy producers will need more capital even if just to repay bonds."In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.Which is hardly great news: because in a world in which central banks are actively soaking up high-quality collateral, at a pace that is unprecedented in history, and led to the world's allegedly most liquid bond market to suffer a 10-sigma move on October 15, the last thing the market needs is even less liquidity, and even sharper moves on ever less volume, until finally the next big sell order crushes the entire market or at least force the [NYSE|Nasdaq|BATS|Sigma X] to shut down indefinitely until further notice. So what happens next, now that the primary USD-recycling mechanism of the past 2 decades is no longer applicable? Well, nothing good.Here are the highlights of David Spegel's note Energy price shock scenarios: Impact on EM ratings, funding gaps, debt, inflation and fiscal risks.Whatever the reason, whether a function of supply, demand or political risks, oil prices plummeted in Q3 2014 and remain volatile. Theories related to the price plunge vary widely: some argue it is an additional means for Western allies in the Middle East to punish Russia. Others state it is the result of a price war between Opec and new shale oil producers. In the end, it may just reflect the traditional inverted relationship between the international value of the dollar and the price of hard-currency-based commodities (Figure 6). In any event, the impact of the energy price drop will be wide-ranging (if sustained) and will have implications for debt service costs, inflation, fiscal accounts and GDP growth.Have you noticed a reduction of financial markets liquidity? Outside from the domestic economic impact within EMs due to the downward oil price shock, we believe that the implications for financial market liquidity via the reduced recycling of petrodollars should not be underestimated. Because energy exporters do not fully invest their export receipts and effectively ‘save’ a considerable portion of their income, these surplus funds find their way back into bank deposits (fuelling the loan market) as well as into financial markets and other assets. This capital has helped fund debt among importers, helping to boost overall growth as well as other financial markets liquidity conditions.Last year, capital flows from energy exporting countries (see list in Figure 12) amounted to USD812bn (Figure 3), with USD109bn taking the form of financial portfolio capital and USD177bn in the form of direct equity investment and USD527bn of other capital over half of which we estimate made its way into bank deposits (ie and therefore mostly into loan markets).The recycling of petro-dollars has benefited financial markets liquidity conditions. However, this year, we expect that incremental liquidity typically provided by such recycled flows will be markedly reduced, estimating that direct and other capital outflows from energy exporters will have declined by USD253bn YoY. Of course, these economies also receive inward capital, so on a net basis, the additional capital provided externally is much lower. This year, we expect that net capital flows will be negative for EM, representing the first net inflow of capital (USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global environment, but also the propensity of underlying exporters to begin investing the money domestically rather than save. The implications for financial markets liquidity - not to mention related downward pressure on US Treasury yields – is negative.Even scarcer liquidity in US Capital markets aside, this is how BNP sees the inflation and growth for energy exporters:Household consumption benefits: While we recognise that the relationship is not entirely linear, we use inflation basket weights for ‘transportation’ and ‘household & utilities’ (shown in the ‘Economic components’ section of Figure 27) as a means to address the differing demand elasticities prevalent across countries. These act as our proxy for consumption the consumption basket in order to determine the economic benefit that would result as lower energy prices improve household disposable income. This is weighted by the level of domestic consumption relative to the economy, which we also show in the ‘Economic components’ section of Figure 27.Reduced industrial production costs: Outside the energy industry, manufacturers will benefit from falling operating costs. Agriculture will not benefit as much and services will benefit even less.Trade gains and losses: Lost trade as a result of lower demand from oil-producing trade partners will impact both growth and the current account balance. On the other hand, better consumption from many energy-importing trade partners will provide some offset. The percentage of each country’s exports to energy producing partners represents relative to its total exports is used to determine potential lost growth and CAR due to lower demand from trade partners.Domestic FX moves are beyond the scope of our analysis. These will be tied to the level of openness of the economy and the impact of changed demand conditions among trade partners as well as dollar effects. Neither do we address non-oil related political risks (eg sanctions) or any fiscal or monetary policy responses to oil shocks.GDP growth-The least impacted oil producing country, from a GDP perspective, is Brazil followed by Mexico, Argentina, Tunisia and Trinidad & Tobago. The impact on fiscal accounts also appears lower for these than most other EMs.Remarkably, the impact of lower oil for Russia’s economic growth is not as severe as might be expected. Sustained oil at USD80/bbl would see growth slow by 1.8pp to 0.6%. This compares with the worst hit economies of Angola (where growth is nearly 8pp lower at -2%), Iraq (GDP slows to -1.6% from 4.5% growth), Kazakhstan and Azerbaijan (growth falls to -0.9% from 5.8%).For a drop to USD 80/bbl, it can be seen (in Figure 27) that, in some cases, such as the UAE, Qatar and Kuwait, the negative impact on GDP can be comfortably offset by fiscal stimulus. These economies will probably benefit from such a policy in which case our ‘model-based’ GDP growth estimate would represent the low end of the likely outcome (unless a fiscal policy response is not forthcoming).Global growth in 2015? More like how great will the hit to GDP be if oil prices don't rebound immediately? On the whole, we can say that the fall in oil prices will prove negative, shaving 0.4pp from 2015 EM GDP growth. The collective current account balance will fall 0.58pp to 0.6% of GDP, while the budget deficit will deteriorate by 0.61pp to -2.9%. This probably has the worst implications for EM as an asset class in the credit world.Energy exporters will fare worst, with growth falling by 1.9pp and their current account balances suffering negative pressure to the tune of 2.69pp of GDP. Budget balances will suffer a 1.67pp of GDP fall, despite benefits from lower subsidy costs. The impact of oil falling USD 25/bbl will be likely to put push the current account balance into deficit, with our analysis indicating a 0.3% of GDP deficit from a 2.4% surplus before. Fortunately, the benefit to inflation will be the best in EM and could help offset some of the political risks from reduced growth.As might be expected, energy importers will benefit by 0.4pp better growth in this scenario. Their collective current account will improve by 0.6pp to 1.1% of GDP.The regions worst hit are the Middle East, with GDP growth slowing to 0.3%, which is 3.8pp lower than when oil was averaging USD105/bbl. The regions’ fiscal accounts will also suffer most in EM, moving from a 1.7% of GDP surplus to a 1.8% deficit. Meanwhile, the CAB will drop 5.3pp, although remain in surplus at 3.9%. The CIS is the next-worst hit, from a GDP perspective, with regional growth flat-lined versus 1.91% previously. The region’s fiscal deficit will worsen from 0.7% of GDP to -1.8% and CAB shrink to 0.7% from 3% of GDP. Africa’s growth will come in 1.4pp slower at 2.8% while Latam growth will be 0.4pp slower at 2.2%. For Africa, the CAB/GDP ratio will fall by 2.4pp pushing it deep into deficit (-2.9% of GDP).Some regions benefit, however, with Asia ex-China growing 0.45bpp faster at 5.5% and EM Europe (ex-CIS) growing 0.55pp faster at 3.9%, with the region’s CAB/GDP improving 0.69pp, although remain in deficit to the tune of -2.4% of GDP.And so on, but to summarize, here are the key points once more:The stronger US dollar is having an inverse impact on dollar-denominated commodity prices, including oil. This will affect emerging market (EM) credit quality in various ways.The implications of reduced recycled petrodollars has significant ramifications for financial markets, loan markets and Treasury yields. In fact, EM energy exporters will post their first net drain on global capital (USD8bn) in eighteen years.Oil and gas exporting EMs account for 26% of total EM GDP and 21% of external bonds. For these economies, the impact will be on lost fiscal revenue, lost GDP growth and the contribution to reserves of oil and gas-related export receipts. Together, these will have a significant effect on sustainability and liquidity ratios and as a consequence are negative for dollar debt-servicing risks and credit ratings.http://www.zerohedge.com/news/2015-08-22/why-it-really-all-comes-down-death-petrodollar
OTHER STORIES
http://israndjer.blogspot.ca/2015/08/is-america-counting-on-tower-of-babel.html
http://israndjer.blogspot.ca/2015/08/will-there-be-microchip-implant-that.html
CHINA DEVALUES CURRENCY FOR AMERICAN INTEREST RATE RISE SPECULATION
http://israndjer.blogspot.ca/2015/08/last-day-of-aug-trading-what-will-sept.html
http://israndjer.blogspot.ca/2015/08/after-619-point-rise-yesterday-see-what.html
http://israndjer.blogspot.ca/2015/08/yesterday-dow-was-up-440-points-and.html
http://israndjer.blogspot.ca/2015/08/i-believe-this-china-devaluing-of-its.html
http://israndjer.blogspot.ca/2015/08/see-how-stock-markets-fare-today-at-ok.html
http://israndjer.blogspot.ca/2015/08/asian-stock-markets-crash-badly-to.html
http://israndjer.blogspot.ca/2015/08/stock-market-crash-was-inevitable-and.html
http://israndjer.blogspot.ca/2015/08/imf-its-premature-to-say-china-is.html
http://israndjer.blogspot.ca/2015/08/10-currencies-that-may-follow.html
http://israndjer.blogspot.ca/2015/08/11-chinese-banks-ask-for-bailouts.html
http://israndjer.blogspot.ca/2015/08/north-korea-threatens-us-what-china.html
http://israndjer.blogspot.ca/2015/08/what-kinda-story-is-this-america-used.html
http://israndjer.blogspot.ca/2015/08/112-now-dead-722-injured-in-china-port.html
http://israndjer.blogspot.ca/2015/08/china-devalues-currency-for-3rd-day.html
http://israndjer.blogspot.ca/2015/08/china-currency-wars-angers.html
http://israndjer.blogspot.ca/2015/08/china-devalues-currency-for-second-day.html
http://israndjer.blogspot.ca/2015/08/china-devalues-its-currency-stocks-fall.html
GREECE NEWS
http://israndjer.blogspot.ca/2015/08/typhoons-fires-koreas-talk-planned.html
http://israndjer.blogspot.ca/2015/08/tsipras-resigns-for-greece-elections.html
http://israndjer.blogspot.ca/2015/08/china-says-it-arrested-15000-people-for.html
http://israndjer.blogspot.ca/2015/08/russia-and-nato-rehearsing-for-war.html
http://israndjer.blogspot.ca/2015/08/at-least-56-dead-720-injured-in-chinese.html
http://israndjer.blogspot.ca/2015/08/greece-lenders-clinch-bailout-deal.html
HOARDING OF GOLD AND SILVER
JAMES 5:1-3
1 Go to now, ye rich men, weep and howl for your miseries that shall come upon you.
2 Your riches are corrupted, and your garments are motheaten.
3 Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days.
REVELATION 18:10,17,19
10 Standing afar off for the fear of her torment, saying, Alas, alas that great city Babylon, that mighty city! for in one hour is thy judgment come.(IN 1 HR THE STOCK MARKETS WORLDWIDE WILL CRASH)
17 For in one hour so great riches is come to nought. And every shipmaster, and all the company in ships, and sailors, and as many as trade by sea, stood afar off,
19 And they cast dust on their heads, and cried, weeping and wailing, saying, Alas, alas that great city, wherein were made rich all that had ships in the sea by reason of her costliness! for in one hour is she made desolate.
EZEKIEL 7:19
19 They shall cast their silver in the streets, and their gold shall be removed:(CONFISCATED) their silver and their gold shall not be able to deliver them in the day of the wrath of the LORD: they shall not satisfy their souls, neither fill their bowels: because it is the stumblingblock of their iniquity.
LUKE 2:1-3
1 And it came to pass in those days, that there went out a decree from Caesar Augustus, that all the world should be taxed.
2 (And this taxing was first made when Cyrenius was governor of Syria.)
3 And all went to be taxed, every one into his own city.
REVELATION 13:16-18
16 And he(THE FALSE POPE WHO DEFECTED FROM THE CHRISTIAN FAITH) causeth all,(IN THE WORLD ) both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:(MICROCHIP IMPLANT)
17 And that no man might buy or sell, save he that had the mark,(MICROCHIP IMPLANT) or the name of the beast,(WORLD DICTATORS NAME INGRAVED ON YOUR SKIN OR TATTOOED ON YOU OR IN THE MICROCHIP IMPLANT) or the number of his name.(THE NUMBERS OF HIS NAME INGRAVED IN THE MICROCHIP IMLPLANT)-(ALL THESE WILL TELL THE WORLD DICTATOR THAT YOUR WITH HIM AND AGAINST KING JESUS-GOD)
18 Here is wisdom. Let him that hath understanding count the number of the beast:(WORLD LEADER) for it is the number of a man; and his number is Six hundred threescore and six.(6-6-6) A NUMBER SYSTEM (6006006)OR(60020202006)(SOME KIND OF NUMBER IMPLANTED IN THE MICROCHIP THAT TELLS THE WORLD DICTATOR AND THE NEW WORLD ORDER THAT YOU GIVE YOUR TOTAL ALLIGIENCE TO HIM AND NOT JESUS)(ITS AN ETERNAL DECISION YOU MAKE)(YOU CHOOSE YOUR OWN DESTINY)(YOU TAKE THE DICTATORS NAME OR NUMBER UNDER YOUR SKIN,YOUR DOOMED TO THE LAKE OF FIRE AND TORMENTS FOREVER,NEVER ENDING MEANT ONLY FOR SATAN AND HIS ANGELS,NOT HUMAN BEINGS).OR YOU REFUSE THE MICROCHIP IMPLANT AND GO ON THE SIDE OF KING JESUS AND RULE FOREVER WITH HIM ON EARTH.YOU CHOOSE,ITS YOUR DECISION.
REVELATION 6:5-6
5 And when he had opened the third seal, I heard the third beast say, Come and see. And I beheld, and lo a black horse; and he that sat on him had a pair of balances in his hand.
6 And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.(A DAYS WAGES FOR A LOAF OF BREAD)
DOCTOR DOCTORIAN FROM ANGEL OF GOD
then the angel said, Financial crisis will come to Asia. I will shake the world.
The Shemitah is coming true.Do people not get it? There is a economic crash every 7 years.
1980: Recession
1987: Stock market crash
1994: Bond market crash
2001: 9/11, dot com, recession
2008: Housing crash
2015: See if something will happen-The central banks will be the death of us. Get ready and embrace yourself for the economic collapse.
UPDATE-SEPTEMBER 01,2015-12:00AM
DOW MARKET TUESDAY-SEPT 01,2015
09:30AM-230.43-
10:00AM-332.73-
10:30AM-308.30-
11:00AM-341.53-
11:30AM-317.65-
12:00PM-331.05-
12:30PM-387.03-
01:00PM-416.06-
01:30PM-416.90-
02:00PM-404.96-
02:30PM-392.82-
03:00PM-413.06-
03:30PM-437.04-
04:00PM-469.68- 16,058.35
LOW -546 HIGH -230
TSX-377.22 13,481.90 - GOLD +7.10 $1,139.60 - OIL -3.99 $45.21
$5.7 TRILLION DOLLARS WAS LOST IN THE WORLD STOCK MARKETS IN AUGUST.
THE DOW HAS ITS WORST AUGUST IN 17 YEARS.AND THE DOW FUTURES AT 9AM TODAY ARE DOWN -432.00 POINTS.ANOTHER ALL DOWN DAY IN THE WORLD MARKETS.
Dow industrials slump nearly 3% in third-worst trading day of year-Published: Sept 1, 2015 4:15 p.m. ET-market watch-By Sue Chang-Markets reporter
The Dow Jones Industrial Average plummeted on Tuesday to mark its third worst trading session of the year while the S&P 500 and Nasdaq also sank as Chinese manufacturing data pointed to a further slowdown in the world's second largest economy. The blue-chip benchmark DJIA, -2.84% slumped 469.68 points, or 2.8%, to 16,058.35. The S&P 500 SPX, -2.96% tumbled 58.33 points, or 3%, to 1,913.85 and the Nasdaq Composite COMP, -2.94% dropped 140.40 points, or 2.9% to 4,636.10. All 30 components in the Dow finished in the red while only three S&P 500 stocks finished the day higher. On the Nasdaq 100, only American Airlines Group Inc. AAL, -0.18% and Liberty Interactive Corporation Ventures LVNTA, +0.43% ended in the green.
Morgan Stanley: Central Banks Are Playing a Game of Chess That Results in an Endless Cycle of Easing-The struggle for inflation is real and strategic-Luke Kawa-September 1, 2015 — 3:52 PM EDT-bloomberg
After the European Central Bank decided to initiate an asset purchasing program, President Mario Draghi reportedly elected to unwind with a game of chess on his iPad during the plane ride back to Rome.According to Morgan Stanley's Marco Spaltro and Jim Caron, Draghi's choice for a game could not have been more fitting. In a new commentary, the two portfolio managers argue that diverging monetary policies and persistently low levels of inflation mean that central banks are now engaged in a global game of chess.Moreover, they say, this particular match won't end in a stalemate. Despite concerns that central banks have no moves left, the pair contends that all roads lead to competitive currency devaluations. Here's their extended analogy:At the beginning of the game, the global economy is at an arbitrary point of equilibrium, similar to a chess board, with the pieces representing policy tools that are used to achieve one’s goal—growth and inflation—the king. Once a central bank makes an initial move to achieve a new equilibrium, it sets in motion a sequence of moves from other central banks, which we refer to as the opening repertoire. Suddenly, the game becomes unbalanced and requires more policy changes until a new equilibrium is achieved. …In this game, central banks compete against each other by easing monetary policies in an attempt to meet their domestic, inflation-targeting mandates. Lack of coordination among central banks may mean that monetary policy remains lower for longer, leading to a semi-permanent low-yielding environment. At the end of the Global Chess Game, we are likely left with more central bank money, higher asset prices, low inflation and low yields.Morgan Stanley-The punishment for trying to leave the game or refusing to play, according to the portfolio managers, is deflation.While the portfolio managers make a comparison to chess, the scenario they depict also bears an even more striking resemblance to a game of hot potato, in which central bankers pass each other an unenviable deflationary parcel through their relative exchange rates.A central tenet of the portfolio managers' thesis is that ultralow interest rates have restrained inflationary pressures, since all that excess liquidity gave rise to overcapacity. Unconventional monetary policy measures, in turn, have only served to boost inflation to the extent that the domestic currency is weakened.Under such a regime, bond yields will stay lower for longer, with yield curves flattening. The most attractive investment destinations, in terms of expected returns, will be locales in which central banks have sufficient room to boost stimulus and are heading in that direction, like Canada, New Zealand, and Australia, according to Spaltro and Caron. But in the realm of foreign exchange, those are the currencies the two recommend shorting while going long the U.S. dollar or British pound, since those central banks have expressed an intention to leave the chess game.But even these opportunities will be fleeting, they warn, as both the Federal Reserve and the Bank of England will likely be forced to reverse course after importing deflation."In order to generate return in a world of low risk premia, timing reversals correctly will become a larger part of expected returns," they write. "As inflation converges quickly via adjustments in foreign exchange, central banks will likely change their stances to meet their domestic mandates."In Spaltro and Caron's framework, all central banks are pawns—ultimately able to move in just one direction, by pressing down on the monetary accelerator. It's potentially an incredibly pessimistic scenario.However, there is some hope.A paper presented at the Jackson Hole Economic Symposium suggests that the world's most powerful central bank might be able to act like a king and break this presumed chain of competitive devaluations.Gita Gopinath, professor at Harvard University, found that when it comes to the effect a rising currency has on inflation, the buck stops with the Fed.Because a high portion of global trade is invoiced in U.S. dollars and these prices tend to be sticky, "U.S. inflation is consequently more insulated from exchange rate shocks, while other countries are highly sensitive to it," she concluded.As such, Morgan Stanley's chess analogy could be put to the test in short order, as it just so happens that the one country with the most immunity to importing deflation is the one on the verge of embarking upon a tightening cycle.
Wall Street braces for stormy Sept.: Dow plunges more than 300 points on weak China data-Adam Shell, USA TODAY 11:04 a.m. EDT September 1, 2015-usa today
New month, same old negative, scary, correction-like price action on Wall Street as the Dow plunged more than 300 points at the opening bell Tuesday.The first day of September on Wall Street looks a lot like the abysmal trading action in August — the worst month for the Dow since May 2010 and the stock market's first 10% correction in four years — with investors bracing for more wild swings and losses. U.S. stocks followed a global market selloff sparked by a weak manufacturing report out of China that raised fresh fears of a slowdown in the world's second-biggest economy.The Dow Jones industrial average was down 330 points, or 2%, in the early minutes of trading and the broader Standard & Poor's 500-stock index fell 2%. The Nasdaq composite index dropped 1.7%.Avoid September's market pain in 9 ways-The selloff began in Asia on the weak economic news out of Beijing, and then spread to Europe. Shares of the Nikkei 225 in Japan fell nearly 4% earlier Tuesday, with stocks finishing 2.2% lower in Hong Kong and down 1.2% in Shanghai. In midday trading in Europe, shares were down more than 2% in London, Germany and France.Investors looking for a respite from the selling that pushed the Dow Jones industrial average down 6.6% in August and the S&P 500-stock index down 6.26% — its worst monthly plunge since May 2012 — are getting more of the same violent downward price action to kick off the first day of trading in September. Based on the volatile price action, it looks like Wall Street is not out of the woods yet when it comes to the recent corrective phase, the stock market's first since 2011.Wall Street had already been bracing for a volatile September, as the ninth month of the year has historically been one of the worst months for the stock market. September has been the worst-performing month for the Dow in the past 50 and 100 years, data from Bespoke Investment Group show.Stormy September looms after ugly August-Sparking the negative market sentiment today was a report released overnight that showed that manufacturing in August in China hit a three-year low, exacerbating worries about the health of the world's second-biggest economy and sparking fresh fears of a global growth slowdown.China’s NBS manufacturing PMI fell to a three-year low of 49.7 in August from 50.0 in July, Barclays said in a morning research note. A reading below 50 suggests a "contraction." The key negative drivers were declines in production and new orders.Continued weakness in China's economy, coupled with the August stock swoon and fears that the Federal Reserve will go ahead with its first interest rate hike in nearly 10 years when it concludes its two-day meeting on Sept. 17, has investors on edge and in a risk-off mood.September is usually an ugly month for stocks. But a few stocks have lived through the dreaded month and survived to tell the story. Sean Fujiwara
Forget Black Monday: the real stock market crash of 2015-The FTSE 100 had already suffered a ‘silent crash’ before this week...falling by more than 10pc-The benchmark Shanghai Composite Stock Index dropped more than seven percent on 24 August, trading down on fears of a slowdown in the world's second-largest economy. The plunge in Chinese equities followed last week's losses of some 11 percent. By Richard Evans-8:01AM BST 29 Aug 2015-the telegraph
Even the most relaxed investor can’t have avoided a tingle of panic over the stock market’s violent moves this week, beginning with “Black Monday”.But how many will have realised that the real falls in the FTSE 100 this summer actually occurred before this week, not during it? Between April 27, when the index hit a record high of 7104, and the close at 6207 on the Friday preceding Black Monday, the Footsie fell by 12.6pc. At the time of writing (August 27), the cumulative fall this week amounted to just 1.4pc.In other words, the sudden, noisy crash that made the front pages all over the world was less severe than the “silent crash” that preceded it.This is far from the only unnoticed aspect of the recent turmoil. When stock markets suffer large falls it is easy to assume that all investment funds will also have lost money. But this is not true – even an investor who chose the peak of the market to put money into shares will not have lost money in some popular funds.Others have fallen but by far less than the market as a whole.For example, the Unicorn UK Growth fund has achieved 8.2pc growth since the FTSE 100’s April peak, compared with a 14.6pc fall in the index itself (these figures, from FE Trustnet, the fund analyst, are on a “total return” basis, so they include dividend payments).Two funds from Miton – Undervalued Assets and UK Value Opportunities – have also produced impressive growth, of 7.4pc and 6.8pc respectively. The Slater Income fund gained 0.7pc.Among larger funds, Invesco Perpetual’s Income and High Income funds fell by less than the market, registering declines of 7.5pc and 7.4pc respectively, while Axa Framlington UK Select Opportunities lost 7.7pc on a total return basis.Neil Woodford’s new fund, Woodford Equity Income, declined by a relatively modest 3.2pc, while Trojan Income fell by 7.5pc and Artemis Income lost 8.1pc,In fact, even the worst performing equity income fund over the period did better then the market: the Aberdeen UK Equity Income fund lost 13.8pc, Trustnet’s figures show.The funds that are meant not to fall when the market does, “absolute return” funds, on the whole lived up to their billing. On average they have lost 0.7pc since the market’s April peak, Trustnet said. However, the Eclectica Absolute Macro fund fell by 14.6pc, while the often recommended Newton Real Return fund lost 4.9pc.• Is the FTSE 100's six year run at an end? The bull and bear points-• Which funds should you pick in a financial crisis? Will the markets keep falling? What the experts say-We should not perhaps be surprised when fund managers refuse to talk down the prospects for the assets they make a living from managing. But the investors we spoke to this week seemed convinced that the stock market was experiencing a temporary blip rather than entering into a sustained bear market. Richard Buxton, who manages the Old Mutual UK Alpha fund, described the recent falls as “indiscriminate”. He said the slump had created the best buying opportunity he had seen for years.Giles Hargreave, who manages a number of funds including Marlborough Special Situations, pointed out that the global stock market rout had made an early rise in interest rates less likely. “Given the much higher income shares offer over other assets, the stock market will still be the best place for savers to put their money, so I cannot see a wider correction taking place,” he said.Gary Potter, who buys funds for F&C Investments, said: “A bear market normally requires an economic recession and for the moment that seems unlikely in developed markets.”But Neil Woodford sounded a more cautious note. He said: “We remain cautious of the global growth outlook. Weak global growth and productivity, deflation and excessive debt remain our principal concerns.”Even in Britain, where growth has been comparatively strong, Mr Woodford said he worried about “the unbalanced nature of that growth”.A poor economic outlook does not automatically mean bad news for the stock market, of course, because such expectations are supposed to be taken into account when investors price shares.But as Mr Woodford put it: “The distraction of seeing share prices fall indiscriminately can be overwhelming and distort rational perspectives.”
Deal or war’: Is doomed dollar really behind Obama’s Iran warning?-Finian Cunningham Edited time: 17 Aug, 2015 09:29-RT
US President Barack Obama has given an extraordinary ultimatum to the Republican-controlled Congress, arguing that they must not block the nuclear accord with Iran. It’s either “deal or war,” he says.In a televised nationwide address on August 5, Obama said: “Congressional rejection of this deal leaves any US administration that is absolutely committed to preventing Iran from getting a nuclear weapon with one option: another war in the Middle East. I say this not to be provocative. I am stating a fact.”The American Congress is due to vote on whether to accept the Joint Comprehensive Plan of Action signed July 14 between Iran and the P5+1 group of world powers – the US, Britain, France, Germany, Russia and China. Republicans are openly vowing to reject the JCPOA, along with hawkish Democrats such as Senator Chuck Schumer. Opposition within the Congress may even be enough to override a presidential veto to push through the nuclear accord.In his drastic prediction of war, one might assume that Obama is referring to Israel launching a preemptive military strike on Iran with the backing of US Republicans. Or that he is insinuating that Iran will walk from self-imposed restraints on its nuclear program to build a bomb, thus triggering a war. But what could really be behind Obama’s dire warning of “deal or war” is another scenario – the collapse of the US dollar, and with that the implosion of the US economy.That scenario was hinted at this week by US Secretary of State John Kerry. Speaking in New York on August 11, Kerry made the candid admission that failure to seal the nuclear deal could result in the US dollar losing its status as the top international reserve currency.“If we turn around and nix the deal and then tell [US allies], ‘You're going to have to obey our rules and sanctions anyway,’ that is a recipe, very quickly for the American dollar to cease to be the reserve currency of the world.”In other words, what really concerns the Obama administration is that the sanctions regime it has crafted on Iran – and has compelled other nations to abide by over the past decade – will be finished. And Iran will be open for business with the European Union, as well as China and Russia.It is significant that within days of signing the Geneva accord, Germany, France, Italy and other EU governments hastened to Tehran to begin lining up lucrative investment opportunities in Iran’s prodigious oil and gas industries. China and Russia are equally well-placed and more than willing to resume trading partnerships with Iran. Russia has signed major deals to expand Iran’s nuclear energy industry.American writer Paul Craig Roberts said that the US-led sanctions on Iran and also against Russia have generated a lot of frustration and resentment among Washington’s European allies.“US sanctions against Iran and Russia have cost businesses in other countries a lot of money,” Roberts told this author.“Propaganda about the Iranian nuke threat and Russian threat is what caused other countries to cooperate with the sanctions. If a deal worked out over much time by the US, Russia, China, UK, France and Germany is blocked, other countries are likely to cease cooperating with US sanctions.”Roberts added that if Washington were to scuttle the nuclear accord with Iran, and then demand a return to the erstwhile sanctions regime, the other international players will repudiate the American diktat.“At that point, I think much of the world would have had enough of the US use of the international payments system to dictate to others, and they would cease transacting in dollars.”The US dollar would henceforth lose its status as the key global reserve currency for the conduct of international trade and financial transactions.Former World Bank analyst Peter Koenig says that if the nuclear accord unravels, Iran will be free to trade its oil and gas – worth trillions of dollars – in bilateral currency deals with the EU, Japan, India, South Korea, China and Russia, in much the same way that China and Russia and other members of the BRICS nations have already begun to do so.That outcome will further undermine the US dollar. It will gradually become redundant as a mechanism of international payment.Koenig argues that this implicit threat to the dollar is the real, unspoken cause for anxiety in Washington. The long-running dispute with Iran, he contends, was never about alleged weapons of mass destruction. Rather, the real motive was for Washington to preserve the dollar’s unique global standing.“The US-led standoff with Iran has nothing to do with nuclear weapons,” says Koenig. The issue is: will Iran eventually sell its huge reserves of hydrocarbons in other currencies than the dollar, as they intended to do in 2007 with an Iranian Oil Bourse? That is what instigated the American-contrived fake nuclear issue in the first place.”This is not just about Iran. It is about other major world economies moving away from holding the US dollar as a means of doing business. If the US unilaterally scuppers the international nuclear accord, Washington will no longer be able to enforce its financial hegemony, which the sanctions regime on Iran has underpinned.Many analysts have long wondered at how the US dollar has managed to defy economic laws, given that its preeminence as the world’s reserve currency is no longer merited by the fundamentals of the US economy. Massive indebtedness, chronic unemployment, loss of manufacturing base, trade and budget deficits are just some of the key markers, despite official claims of “recovery.”As Paul Craig Roberts commented, the dollar’s value has only been maintained because up to now the rest of the world needs the greenback to do business with. That dependency has allowed the US Federal Reserve to keep printing banknotes in quantities that are in no way commensurate with the American economy’s decrepit condition.“If the dollar lost the reserve currency status, US power would decline,” says Roberts. “Washington’s financial hegemony, such as the ability to impose sanctions, would vanish, and Washington would no longer be able to pay its bills by printing money. Moreover, the loss of reserve currency status would mean a drop in the demand for dollars and a drop in willingness to hold them. Therefore, the dollar’s exchange value would fall, and rising prices of imports would import inflation into the US economy.”Doug Casey, a top American investment analyst, last week warned that the woeful state of the US economy means that the dollar is teetering on the brink of a long-overdue crash. “You’re going to see very high levels of inflation. It’s going to be quite catastrophic,” says Casey.He added that the crash will also presage a collapse in the American banking system which is carrying trillions of dollars of toxic debt derivatives, at levels much greater than when the system crashed in 2007-08.The picture he painted isn’t pretty: “Now, when interest rates inevitably go up from these artificially suppressed levels where they are now, the bond market is going to collapse, the stock market is going to collapse, and with it, the real estate market is going to collapse. Pension funds are going to be wiped out… This is a very bad situation. The US is digging itself in deeper and deeper,” said Casey, who added the telling question: “Then what’s going to happen?”President Obama’s grim warning of “deal or war” seems to provide an answer. Faced with economic implosion on an epic scale, the US may be counting on war as its other option.Finian Cunningham, for RT-The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
Why It Really All Comes Down To The Death Of The Petrodollar-Submitted by Tyler Durden on 08/23/2015 09:59 -0400-zERO HEDGE
Last week, in the global currency war’s latest escalation, Kazakhstan instituted a free float for the tenge. The currency immediately plunged by some 25%.The rationale behind the move was clear enough. The plunge in crude prices along with the relative weakness of the Russian ruble had severely strained Kazakhstan, which is central Asia’s largest crude exporter. As a quick look at a chart of the tenge’s effective exchange rate makes clear, the pressure had been mounting for quite a while and when China devalued the yuan earlier this month, the outlook for trade competitiveness worsened. What might not be as clear (on the surface anyway) is how recent events in developing economy FX markets following the devaluation of the yuan stem from a seismic shift we began discussing late last year - namely, the death of the petrodollar system which has served to underwrite decades of dollar dominance and was, until recently, a fixture of the post-war global economic order. In short, the world seems to have underestimated how structurally important collapsing crude prices are to global finance. For years, producers funnelled their dollar proceeds into USD assets providing a perpetual source of liquidity, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop. That all came to an abrupt, if quiet end last year when a confluence of economic (e.g. shale production) and geopolitical (e.g. squeeze the Russians) factors led the Saudis to, as we put it, Plaxico'd themselves and the US.The ensuing plunge in crude meant that suddenly, the flow of petrodollars was set to dry up and FX reserves across commodity producing countries were poised to come under increased pressure. For the first time in decades, exported petrodollar capital turned negative.That set the stage for a prolonged downturn in emerging market currencies, and as worries about China’s economy - the engine of global growth and trade - grew, so did the pressure.Thus when Beijing moved to devalue the yuan, it drove a stake through the heart of the EM world by simultaneously i) validating concerns about weak Chinese growth, thus guaranteeing further pressure on commodities, ii) delivering a staggering blow to the export competitiveness of multiple emerging economies, iii) depressing demand from the mainland by making imports more expensive. Thanks to the conditions that resulted from the death of the petrodollar (e.g. falling FX reserves and growing fiscal headwinds), the world’s emerging markets were in no position to defend themselves against the fallout from the yuan devaluation. Complicating matters is a looming Fed hike. Included below is a look at flows into (or, more appropriately, "out of") EM bonds. As Barclays notes, the $2.5 billion outflow in the week to August 21 is the highest level since February of last year. We are, to put it mildly, entering a not-so-brave new world and the shift was catalyzed by the dying petrodollar. Kazakhstan’s move to float the tenge is but the beginning and indeed Kazakh Prime Minister Karim Massimov told Bloomberg on Saturday that the world has entered "a new era" and that soon, any and all petro currency dollar pegs are set to fall like dominoes. Here’s more:Currency pegs in crude-producing nations are set to topple as the world enters a “new era” of low oil prices, according to the prime minister of Kazakhstan, which rattled markets this week with a surprise decision to abandon control of its exchange rate."At the end of the day, most of the oil-producing countries will go into the free floating regime,” including Saudi Arabia and the United Arab Emirates, Karim Massimov said in an interview on Saturday in the capital, Astana. "I do not think that for the next three to five, maybe seven years, the price for commodities will come back to the level that it used to be at in 2014."Central Asia’s biggest energy producer cut its currency loose on Thursday, triggering a 22 percent slide in the tenge to a record low versus the dollar. The move followed China’s shock devaluation of the yuan the week before, which drove down oil prices on concern global growth will stutter and nudged nations with managed exchange rates toward competitive devaluations of their own. More than $3.3 trillion has been erased from the value of global equities after China’s decision spurred a wave of selling across emerging markets. Brent crude touched a six year-low of $45.07 per barrel on Friday, while the Dow Jones Industrial Average entered a correction.“After I watched what is happening on the financial market and stock market in the U.S. on Friday night, I thought that we did it at the right time,” Massimov, 50, said in his office in the government’s headquarters. The decision avoided “big speculation and pressure this weekend in Kazakhstan,” he said.The central bank spent $28 billion this and last year to support the tenge, including $10 billion in 2015, Kazakh President Nursultan Nazarbayev said this week. After its slump on Thursday, the currency rallied 7.4 percent to close at 234.99 against the dollar a day later. The country’s dollar bonds due July 2025 climbed after the announcement, lowering the yield nine basis points to 5.74 percent in the last two days of the week.Before the currency shift, Kazakhstan was at a competitive disadvantage to Russia, its neighbor and top trading partner along with China. The tenge had fallen by only 7.6 percent against he dollar in the 12 months up to Aug. 20, compared with a 46 percent depreciation for the ruble, while crude had plummeted 55 percent in the period.We discussed this in great detail on Friday (with quite a bit of color on the fiscal impact for Saudi Arabia) and we've included a chart from Deutsche Bank which should have some explanatory and predictive value below, but the big picture takeaway is that the world is now beginning to feel the impact of the petrodollar's quiet demise, and because this is only the beginning, we've included below the entire text of the petrodollar's obituary which we penned last November .How The Petrodollar Quietly Died And Nobody Noticed-Two years ago, in hushed tones at first, then ever louder, the financial world began discussing that which shall never be discussed in polite company - the end of the system that according to many has framed and facilitated the US Dollar's reserve currency status: the Petrodollar, or the world in which oil export countries would recycle the dollars they received in exchange for their oil exports, by purchasing more USD-denominated assets, boosting the financial strength of the reserve currency, leading to even higher asset prices and even more USD-denominated purchases, and so forth, in a virtuous (especially if one held US-denominated assets and printed US currency) loop.The main thrust for this shift away from the USD, if primarily in the non-mainstream media, was that with Russia and China, as well as the rest of the BRIC nations, increasingly seeking to distance themselves from the US-led, "developed world" status quo spearheaded by the IMF, global trade would increasingly take place through bilateral arrangements which bypass the (Petro)dollar entirely. And sure enough, this has certainly been taking place, as first Russia and China, together with Iran, and ever more developing nations, have transacted among each other, bypassing the USD entirely, instead engaging in bilateral trade arrangements, leading to, among other thing, such discussions as, in today's FT, why China's Renminbi offshore market has gone from nothing to billions in a short space of time.And yet, few would have believed that the Petrodollar did indeed quietly die, although ironically, without much input from either Russia or China, and paradoxically, mostly as a result of the actions of none other than the Fed itself, with its strong dollar policy, and to a lesser extent Saudi Arabia too, which by glutting the world with crude, first intended to crush Putin, and subsequently, to take out the US crude cost-curve, may have Plaxico'ed both itself, and its closest Petrodollar trading partner, the US of A.As Reuters reports, for the first time in almost two decades, energy-exporting countries are set to pull their "petrodollars" out of world markets this year, citing a study by BNP Paribas (more details below). Basically, the Petrodollar, long serving as the US leverage to encourage and facilitate USD recycling, and a steady reinvestment in US-denominated assets by the Oil exporting nations, and thus a means to steadily increase the nominal price of all USD-priced assets, just drove itself into irrelevance.A consequence of this year's dramatic drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.This decline follows years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling.But no more: "this year the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."In short, the Petrodollar may not have died per se, at least not yet since the USD is still holding on to the reserve currency title if only for just a little longer, but it has managed to price itself into irrelevance, which from a USD-recycling standpoint, is essentially the same thing.According to BNP, Petrodollar recycling peaked at $511 billion in 2006, or just about the time crude prices were preparing to go to $200, per Goldman Sachs. It is also the time when capital markets hit all time highs, only without the artificial crutches of every single central bank propping up the S&P ponzi house of cards on a daily basis. What happened after is known to all..."At its peak, about $500 billion a year was being recycled back into financial markets. This will be the first year in a long time that energy exporters will be sucking capital out," said David Spegel, global head of emerging market sovereign and corporate Research at BNP.Spegel acknowledged that the net withdrawal was small. But he added: "What is interesting is they are draining rather than providing capital that is moving global liquidity. If oil prices fall further in coming years, energy producers will need more capital even if just to repay bonds."In other words, oil exporters are now pulling liquidity out of financial markets rather than putting money in. That could result in higher borrowing costs for governments, companies, and ultimately, consumers as money becomes scarcer.Which is hardly great news: because in a world in which central banks are actively soaking up high-quality collateral, at a pace that is unprecedented in history, and led to the world's allegedly most liquid bond market to suffer a 10-sigma move on October 15, the last thing the market needs is even less liquidity, and even sharper moves on ever less volume, until finally the next big sell order crushes the entire market or at least force the [NYSE|Nasdaq|BATS|Sigma X] to shut down indefinitely until further notice. So what happens next, now that the primary USD-recycling mechanism of the past 2 decades is no longer applicable? Well, nothing good.Here are the highlights of David Spegel's note Energy price shock scenarios: Impact on EM ratings, funding gaps, debt, inflation and fiscal risks.Whatever the reason, whether a function of supply, demand or political risks, oil prices plummeted in Q3 2014 and remain volatile. Theories related to the price plunge vary widely: some argue it is an additional means for Western allies in the Middle East to punish Russia. Others state it is the result of a price war between Opec and new shale oil producers. In the end, it may just reflect the traditional inverted relationship between the international value of the dollar and the price of hard-currency-based commodities (Figure 6). In any event, the impact of the energy price drop will be wide-ranging (if sustained) and will have implications for debt service costs, inflation, fiscal accounts and GDP growth.Have you noticed a reduction of financial markets liquidity? Outside from the domestic economic impact within EMs due to the downward oil price shock, we believe that the implications for financial market liquidity via the reduced recycling of petrodollars should not be underestimated. Because energy exporters do not fully invest their export receipts and effectively ‘save’ a considerable portion of their income, these surplus funds find their way back into bank deposits (fuelling the loan market) as well as into financial markets and other assets. This capital has helped fund debt among importers, helping to boost overall growth as well as other financial markets liquidity conditions.Last year, capital flows from energy exporting countries (see list in Figure 12) amounted to USD812bn (Figure 3), with USD109bn taking the form of financial portfolio capital and USD177bn in the form of direct equity investment and USD527bn of other capital over half of which we estimate made its way into bank deposits (ie and therefore mostly into loan markets).The recycling of petro-dollars has benefited financial markets liquidity conditions. However, this year, we expect that incremental liquidity typically provided by such recycled flows will be markedly reduced, estimating that direct and other capital outflows from energy exporters will have declined by USD253bn YoY. Of course, these economies also receive inward capital, so on a net basis, the additional capital provided externally is much lower. This year, we expect that net capital flows will be negative for EM, representing the first net inflow of capital (USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global environment, but also the propensity of underlying exporters to begin investing the money domestically rather than save. The implications for financial markets liquidity - not to mention related downward pressure on US Treasury yields – is negative.Even scarcer liquidity in US Capital markets aside, this is how BNP sees the inflation and growth for energy exporters:Household consumption benefits: While we recognise that the relationship is not entirely linear, we use inflation basket weights for ‘transportation’ and ‘household & utilities’ (shown in the ‘Economic components’ section of Figure 27) as a means to address the differing demand elasticities prevalent across countries. These act as our proxy for consumption the consumption basket in order to determine the economic benefit that would result as lower energy prices improve household disposable income. This is weighted by the level of domestic consumption relative to the economy, which we also show in the ‘Economic components’ section of Figure 27.Reduced industrial production costs: Outside the energy industry, manufacturers will benefit from falling operating costs. Agriculture will not benefit as much and services will benefit even less.Trade gains and losses: Lost trade as a result of lower demand from oil-producing trade partners will impact both growth and the current account balance. On the other hand, better consumption from many energy-importing trade partners will provide some offset. The percentage of each country’s exports to energy producing partners represents relative to its total exports is used to determine potential lost growth and CAR due to lower demand from trade partners.Domestic FX moves are beyond the scope of our analysis. These will be tied to the level of openness of the economy and the impact of changed demand conditions among trade partners as well as dollar effects. Neither do we address non-oil related political risks (eg sanctions) or any fiscal or monetary policy responses to oil shocks.GDP growth-The least impacted oil producing country, from a GDP perspective, is Brazil followed by Mexico, Argentina, Tunisia and Trinidad & Tobago. The impact on fiscal accounts also appears lower for these than most other EMs.Remarkably, the impact of lower oil for Russia’s economic growth is not as severe as might be expected. Sustained oil at USD80/bbl would see growth slow by 1.8pp to 0.6%. This compares with the worst hit economies of Angola (where growth is nearly 8pp lower at -2%), Iraq (GDP slows to -1.6% from 4.5% growth), Kazakhstan and Azerbaijan (growth falls to -0.9% from 5.8%).For a drop to USD 80/bbl, it can be seen (in Figure 27) that, in some cases, such as the UAE, Qatar and Kuwait, the negative impact on GDP can be comfortably offset by fiscal stimulus. These economies will probably benefit from such a policy in which case our ‘model-based’ GDP growth estimate would represent the low end of the likely outcome (unless a fiscal policy response is not forthcoming).Global growth in 2015? More like how great will the hit to GDP be if oil prices don't rebound immediately? On the whole, we can say that the fall in oil prices will prove negative, shaving 0.4pp from 2015 EM GDP growth. The collective current account balance will fall 0.58pp to 0.6% of GDP, while the budget deficit will deteriorate by 0.61pp to -2.9%. This probably has the worst implications for EM as an asset class in the credit world.Energy exporters will fare worst, with growth falling by 1.9pp and their current account balances suffering negative pressure to the tune of 2.69pp of GDP. Budget balances will suffer a 1.67pp of GDP fall, despite benefits from lower subsidy costs. The impact of oil falling USD 25/bbl will be likely to put push the current account balance into deficit, with our analysis indicating a 0.3% of GDP deficit from a 2.4% surplus before. Fortunately, the benefit to inflation will be the best in EM and could help offset some of the political risks from reduced growth.As might be expected, energy importers will benefit by 0.4pp better growth in this scenario. Their collective current account will improve by 0.6pp to 1.1% of GDP.The regions worst hit are the Middle East, with GDP growth slowing to 0.3%, which is 3.8pp lower than when oil was averaging USD105/bbl. The regions’ fiscal accounts will also suffer most in EM, moving from a 1.7% of GDP surplus to a 1.8% deficit. Meanwhile, the CAB will drop 5.3pp, although remain in surplus at 3.9%. The CIS is the next-worst hit, from a GDP perspective, with regional growth flat-lined versus 1.91% previously. The region’s fiscal deficit will worsen from 0.7% of GDP to -1.8% and CAB shrink to 0.7% from 3% of GDP. Africa’s growth will come in 1.4pp slower at 2.8% while Latam growth will be 0.4pp slower at 2.2%. For Africa, the CAB/GDP ratio will fall by 2.4pp pushing it deep into deficit (-2.9% of GDP).Some regions benefit, however, with Asia ex-China growing 0.45bpp faster at 5.5% and EM Europe (ex-CIS) growing 0.55pp faster at 3.9%, with the region’s CAB/GDP improving 0.69pp, although remain in deficit to the tune of -2.4% of GDP.And so on, but to summarize, here are the key points once more:The stronger US dollar is having an inverse impact on dollar-denominated commodity prices, including oil. This will affect emerging market (EM) credit quality in various ways.The implications of reduced recycled petrodollars has significant ramifications for financial markets, loan markets and Treasury yields. In fact, EM energy exporters will post their first net drain on global capital (USD8bn) in eighteen years.Oil and gas exporting EMs account for 26% of total EM GDP and 21% of external bonds. For these economies, the impact will be on lost fiscal revenue, lost GDP growth and the contribution to reserves of oil and gas-related export receipts. Together, these will have a significant effect on sustainability and liquidity ratios and as a consequence are negative for dollar debt-servicing risks and credit ratings.http://www.zerohedge.com/news/2015-08-22/why-it-really-all-comes-down-death-petrodollar
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http://israndjer.blogspot.ca/2015/08/stock-market-crash-was-inevitable-and.html
http://israndjer.blogspot.ca/2015/08/imf-its-premature-to-say-china-is.html
http://israndjer.blogspot.ca/2015/08/10-currencies-that-may-follow.html
http://israndjer.blogspot.ca/2015/08/11-chinese-banks-ask-for-bailouts.html
http://israndjer.blogspot.ca/2015/08/north-korea-threatens-us-what-china.html
http://israndjer.blogspot.ca/2015/08/what-kinda-story-is-this-america-used.html
http://israndjer.blogspot.ca/2015/08/112-now-dead-722-injured-in-china-port.html
http://israndjer.blogspot.ca/2015/08/china-devalues-currency-for-3rd-day.html
http://israndjer.blogspot.ca/2015/08/china-currency-wars-angers.html
http://israndjer.blogspot.ca/2015/08/china-devalues-currency-for-second-day.html
http://israndjer.blogspot.ca/2015/08/china-devalues-its-currency-stocks-fall.html
GREECE NEWS
http://israndjer.blogspot.ca/2015/08/typhoons-fires-koreas-talk-planned.html
http://israndjer.blogspot.ca/2015/08/tsipras-resigns-for-greece-elections.html
http://israndjer.blogspot.ca/2015/08/china-says-it-arrested-15000-people-for.html
http://israndjer.blogspot.ca/2015/08/russia-and-nato-rehearsing-for-war.html
http://israndjer.blogspot.ca/2015/08/at-least-56-dead-720-injured-in-chinese.html
http://israndjer.blogspot.ca/2015/08/greece-lenders-clinch-bailout-deal.html
