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RESEARCH – Tipping Points

  • GLOBAL CORPORATIONS WILL BRING NEXT WAVE OF PAIN, MONEY MANAGERS WARNING
    April 25, 2018
    GLOBAL CORPORATIONS WILL BRING NEXT WAVE OF PAIN, MONEY MANAGERS WARNING KEY MESSAGES: The proportion of global highly-leveraged companies -- those with a debt-to-earnings ratio at five times or greater -- hitting 37 percent in 2017 compared with 32 percent in 2007, according to S&P Global Ratings. U.S. investment grade bonds posted their worst first quarter since
  • THE EURO AREA’S DEEPENING POLITICAL DIVIDE
    April 24, 2018
    THE EURO AREA'S DEEPENING POLITICAL DIVIDE -- SOURCE: 03-21-18 Ashoka Mody - "The euro area’s deepening political divide" -- Two European elections – in Germany on 24 September 2017 and Italy on 4 March 2018 – warn that the peoples of Europe are drifting apart. Much of the recent deepening of these divisions can be
  • JAPAN IS SO BROKE ITS PRISONS ARE FULL OF NEW 80+ YEAR OLD FELONS!
    April 24, 2018
    JAPAN IS SO BROKE ITS PRISONS ARE FULL OF NEW 80+ YEAR OLD FELONS!   -- EXCERPTED FROM 04-22-18  SovereignMan.com - Simon Black - "Japan Is So Broke That Its Prisons Are Full Of 80+ Year Old 'Felons'" -- ‘Mrs. F.’ was 84 years old the first time she ever went to prison. Her crime?
  • JAPAN’S SELLING OF US TREASURY’s REDUCES ITS HOLDINGS TO LOWEST LEVELS SINCE 2012
    April 24, 2018
    JAPAN'S SELLING OF US TREASURY's REDUCES ITS HOLDINGS TO LOWEST LEVELS SINCE 2012 The second largest foreign US creditor, Japan has been liquidating in recent months. In the latest TICS report Japan sold $22.6 billion in TSYs in December, bringing its total to $1,061.5BN, the lowest total since the start of 2012. This trend has
  • BOJ DROPS MONETARY BOMB – “PLAN TO CONTINUE VERY STRONG ACCOMMODATIVE MONETARY POLICY FOR SOME TIME”
    April 24, 2018
    BOJ DROPS MONETARY BOMB - "PLAN TO CONTINUE VERY STRONG ACCOMMODATIVE MONETARY POLICY FOR SOME TIME"  -- EXTRACTED: 04-23-18 MishTalk - "Japan Expects To Hit 2% Inflation In 5 Years, Aggressive Easing Will Continue" -- The BOJ thinks Japan may hit its 2% inflation target in 5 years. Kuroda says risks are to the downside. It
  • EARNINGS SPIKE UPWARDS (TAX CUTS) BUT PE MULTIPLES CONTRACTING?
    April 20, 2018
    EARNINGS SPIKE UPWARDS (TAX CUTS) BUT PE MULTIPLES  CONTRACTING? Do we have Peak PE? KEY MESSAGES The Federal corporate tax rate was slashed from 35% to 21%. Investors applauded Trump’s policies with gusto.  One-year forward earnings-per-share estimates for the S&P 500 jumped from 145 to 160 almost overnight. Over the past couple of months, stocks
  • RICKARDS: THREE SIGNS GLOBAL LIQUIDITY IS DRYING UP
    April 20, 2018
    RICKARDS: THREE SIGNS GLOBAL LIQUIDITY IS DRYING UP --SOURCE: 04-16-18 James Rickards, Daily Reckoning - "Don’t Wait Too Long to Leave the Party" -- Liquidity is the ultimate paradox in finance. It’s always there when you don’t need it and never there when you need it most. The reason is crowd behavior, or what mathematicians
  • JUNK BOND MARKET STILL IN TOTAL DENIAL, FIGHTING THE FED
    April 18, 2018
    JUNK BOND MARKET STILL IN TOTAL DENIAL, FIGHTING THE FED Happily dreaming in La-la-land till the rude awakening. -- SOURCE: 04-18-18 Wolf Richter - "Junk Bond Market Still in Total Denial, Fighting the Fed" -- The Fed’s efforts to raise interest rates across the spectrum have borne fruit only in limited fashion. In the Treasury
  • TOTAL GLOBAL FACTOR PRODUCTIVITY (TFP) IN STEADY LONG TERM DECLINE
    April 18, 2018
    TOTAL GLOBAL FACTOR PRODUCTIVITY (TFP) IN STEADY LONG TERM DECLINE -- SOURCE: 04-18-18 Tuomas Malinen of GnS Economics - "Zombies And The End Of The "Global Synchronized Recovery"-- Several economic indicators have turned to the south at the beginning of this year. They clearly indicate a slowing economic momentum (see this, this and this). This is something that was not supposed
  • SII RETAIL – THE POST HURRICANE RETAIL SALES SHORTAGE ILLUSTRATES FURTHER 16.6M MISSING FROM LABOR FORCE
    April 17, 2018
    SII RETAIL - THE POST HURRICANE RETAIL SALES SHORTAGE ILLUSTRATES FURTHER 16.6M MISSING FROM LABOR FORCE -- SOURCE: 04-16-18 Alhambra Investments,  Jeffrey P. Snider - "The Retail Sales Shortage" -- Retail sales rose (seasonally adjusted) in March 2018 for the first time in four months. Related to last year’s big hurricanes and the distortions they produced, retail
  • EXAMINING HOW THE CREDIT CYCLE WILL REVERSE
    April 15, 2018
    EXAMINING HOW THE CREDIT CYCLE WILL REVERSE CONCLUSION The Fed is behind the curve on Inflation and presumably knows this. They are likely highly aware of the potential for a Recession in early in 2019. As a consequence they appear to feel they should error on being aggressive regarding rate hikes so they have more
  • GOLDMAN: “THIS IS THE LARGEST & FASTEST CORRELATION CHANGE ON RECORD (OUTSIDE OF 1987)!”
    April 15, 2018
    GOLDMAN: "THIS IS THE LARGEST & FASTEST CORRELATION CHANGE ON RECORD (OUTSIDE OF 1987)!" -- SOURCE: 04-13-18 ZeroHedge - "Goldman: "This Is the Largest And Fastest Correlation Change On Record Outside Of 1987" -- Back on January 20, 2017 the day of Trump's inauguration, Morgan Stanley pointed out a striking change to the cross-asset regime,
  • SOCGEN: LOW ‘vol’ IS GONE & THIS CHANGES EVERYTHING!
    April 15, 2018
    SOCGEN: LOW 'vol' IS GONE & THIS CHANGES EVERYTHING! -- SOURCE: 04-13-18 ZeroHedge - "SocGen: "Low Vol Is Gone And This Changes Everything" -- Goldman Sachs, Bank of America, Morgan Stanley: while Wall Street banks and their research teams tend to disagree on most aspects of market analysis and forecasting, one common theme they currently all
  • GLOBAL FUND FLOWS GO NEGATIVE
    April 14, 2018
    GLOBAL FUND FLOWS GO
  • ETF FLOWS AT WORLD’S LARGEST ASSET MANAGER PLUNGE 46%
    April 14, 2018
    ETF FLOWS AT WORLD'S LARGEST ASSET MANAGER PLUNGE 46% -- SOURCE: 04-12-18  ZeroHedge - "ETF Flows At World's Largest Asset Manager Plunge 46%" -- If ETF inflows are supposed to be some type of strong foundation for the market to rest on, Blackrock's latest quarterly earnings report should be a sign that the bottom could
  • CRACKS IN CREDIT MORE PRONOUNCED SINCE FEBRUARY VIX IMPLOSION
    April 14, 2018
    CRACKS IN CREDIT MORE PRONOUNCED SINCE FEBRUARY VIX IMPLOSION -- ABSTRACTED FROM: 03-23-18  ZeroHedge - "Retail Whiplashed By 2nd Largest ETF Outflow On Record; Longest HY Outflows Since 2007" -- According to the fund flow data, it's time to worry about credit and especially high yield, because as BofA's Michael Hartnett writes, "credit is cracking” after
  • LIST OF CASSANDRAS CONTINUES TO GROW – PIMCO, CREDIT SUISSE & JPM ADDED
    April 12, 2018
    LIST OF CASSANDRAS CONTINUES TO GROW - PIMCO, CREDIT SUISSE & JPM ADDED -- SOURCE: 04-12-18 ZeroHedge - "CIO Of World's Largest Bond Fund: "We Are Not Alarmist But It's Time To Sell" -- It's been a while since the world's richest and/or most famous fund managers spooked retail investors with warnings to get out
  • FUNDAMENTALS – MANY SEE BULLISH EARNINGS BUT RIPE FOR A DISAPPOINTMENT!
    April 12, 2018
     FUNDAMENTALS - MANY SEE BULLISH EARNINGS BUT RIPE FOR A DISAPPOINTMENT! -- SOURCE: 03-28-18 Dr. Ed Yardeni  - "Bullish Earnings Ahead" Spring started on March 20. Spring is Goldilocks’ favorite season because it is neither too cold nor too hot. Chauncey Gardiner, antihero of Jerzy Kosinski’s satirical novel Being There, also likes spring because that’s when
  • FUNDAMENTALS: MARKETS CONTINUE TO BE HIGHLY OVERVALUED
    April 12, 2018
    FUNDAMENTALS: MARKETS CONTINUE TO BE HIGHLY OVERVALUED by Jill Mislinski, 4/4/18 Here is a summary of the four market valuation indicators we update on a monthly basis. The Crestmont Research P/E Ratio (more) The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more) The Q Ratio, which is the total price of the market
  • THE PETROYUAN & RUSSIA
    April 5, 2018
    THE PETROYUAN & RUSSIA Is Putin Winning The War Of Attrition With The U.S.? Wednesday, April 4, 2018, 10:00 PM Authored by Tom Luongo, The news that President Donald Trump offered to hold a meeting with his counterpart in the Kremlin, Vladimir Putin, has the political world in an uproar. Furiously keyboards are chattering away
  • GORDON T LONG INTERVIEW- THE UNSUSTAINABILITY OF IT ALL
    April 5, 2018
  • CHINESE NEWS EXTOLS: PETROYUAN A STRATEGIC COMPETITIVE ADVANTAGE
    April 3, 2018
    CHINESE NEWS EXTOLS: PETROYUAN A STRATEGIC COMPETITIVE ADVANTAGE -- SOURCE: 03-29-18 Global Times - "‘Petroyuan’ to propel currency internationalization" -- The Shanghai debut of China's first yuan-denominated crude futures trading market on Monday proved a great success, with major domestic and foreign traders displaying active interest. Total turnover amounted to 18.3 billion yuan ($2.9 billion)
  • EVEN INVESTMENT GRADE “BBB” BONDS BECOMING A MAJOR MARKET CONCERN
    April 2, 2018
    EVEN INVESTMENT GRADE "BBB" BONDS BECOMING A MAJOR MARKET CONCERN By bulking up on debt, U.S. companies have added a new uncertainly into financial markets  -- SOURCE: 04-01-18 WSJ - "The Danger Lurking in a Safe Corner of the Bond Market" -- U.S. companies have been bulking up on debt, introducing another wild card into
  • MAJOR CRACKS IN HY, EM & EVEN IG BODE POORLY FOR FUTURE DEBT FUNDED BUYBACKS
    April 2, 2018
    MAJOR CRACKS IN HY, EM & EVEN IG BODE POORLY FOR FUTURE DEBT FUNDED BUYBACKS DEBT FUNDED BUYBACKS The pillar that has been carrying equities for years (courtesy of cheap debt-funded buybacks) appears to be cracking as bond funds took a $1.9bn hit in the latest week. In fact, as BofA points out highlighting the
  • CREDIT PROBLEMS IN THE UNSECURED US$ FUNDING MARKET
    March 31, 2018
    CREDIT PROBLEMS IN THE UNSECURED US$ FUNDING MARKET -- SOURCE: 03-29-18 ZeroHedge - "Libor Just Did Something It Hasn't Done In 13 Years" -- With traders looking in awe at the ongoing flattening in the yield curve, as the 2s10s drops below 50bps... ... with the 10Y sliding to a 7 week low under 2.74%
  • ECRI: GLOBAL LEADING ECONOMIC INDEX TURNING DOWN
    March 31, 2018
    ECRI: GLOBAL LEADING ECONOMIC INDEX TURNING DOWN Global Economy's Wile E. Coyote Moment - ECRI Our prediction last year of a global growth downturn was based on our 20-Country Long Leading Index, which, in 2016, foresaw the synchronized global growth upturn that the consensus only started to recognize around the spring of 2017. With the synchronized global
  • GLOBAL SYNCHRONOUS RECOVERY NARRATIVE COMING APART RAPIDLY
    March 31, 2018
    GLOBAL SYNCHRONOUS RECOVERY NARRATIVE COMING APART RAPIDLY -- SOURCE: 03-30-18 ZeroHedge - "Global Synchronous Recovery' Narrative Crushed As EU, US Data Diverge" -- The chart below shows the Citi Economic Surprise Index for the US, compared against the broader G10 index, and the Europe index. The out-performance of US positive data surprises is stark... highlighting
  • A MARKET REGIME CHANGE IS OCCURRING – VIX TERM STRUCTURES IN “BACKWARDATION”
    March 29, 2018
    A MARKET REGIME CHANGE IS OCCURRING - VIX TERM STRUCTURES IN "BACKWARDATION" Volatility is back and most notably the VIX term structure has been inverted for a significant period of time - which itself is unusual... As Bloomberg notes, backwardation is a tell-tale sign that stress is still built into the market -- typically, contracts for further months
  • US CONSUMERS ARE BUYING INTO THE “HAPPY BUBBLE” BUT INCOMES DON’T SUPPORT THE MEDIA EUPHORIA
    March 29, 2018
    US CONSUMERS ARE BUYING INTO THE "HAPPY BUBBLE" BUT INCOMES DON'T SUPPORT THE MEDIA EUPHORIA US CONSUMER SAVINGS RATE CONTINUES TO FALL  MORE & MORE ARE FORCED TO USE CREDIT TO MAKE ENDS
  • LIBOR-OIS NEW CULPRIT FOR HEDGED TREASURY YIELDS NEAR 0%
    March 28, 2018
    LIBOR-OIS NEW CULPRIT FOR HEDGED TREASURY YIELDS NEAR 0% -- SOURCE: 03-27-18  Bloomberg - "LIBOR Ascent Is New Culprit for Hedged Treasury Yields Near 0%" --  For euro-, yen-based buyers, cost to shield FX swings rises But one big change: the cross-currency basis is not to blame A phenomenon rippling through global funding markets is
TIPPING POINTS

RISK CATEGORIES

Subscribers have access to the Tipping Point Risk Categories. Relevant research is organized within these and they provide an excellent place to start your due diligence.  These categories (and their contained research) are the start of Gordon’s Abstraction & Synthesis process that he employs to formulate his original thinking. It is also the primary “data base” for all research material used in various videos, articles etc.  Subscriber access only, the current Tipping Point Risk Categories are shown below.  

HIGHEST RISK

ELEVATED RISK

MODERATE RISK

LOW RISK