• 92 days Could Crypto Overtake Traditional Investment?
  • 97 days Americans Still Quitting Jobs At Record Pace
  • 99 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 102 days Is The Dollar Too Strong?
  • 102 days Big Tech Disappoints Investors on Earnings Calls
  • 103 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 105 days China Is Quietly Trying To Distance Itself From Russia
  • 105 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 109 days Crypto Investors Won Big In 2021
  • 109 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 110 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 112 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 113 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 116 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 117 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 117 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 119 days Are NFTs About To Take Over Gaming?
  • 120 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 123 days What’s Causing Inflation In The United States?
  • 124 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

Peripherals: A Puzzling Predicament

Kicking the Can


Macro Outlook

It is undeniable that behind closed doors, world leaders are worried about the global slowdown and the inability of the developed countries, after 5 years of relentless stimulus, to mount more of a recovery. Unemployment has become a paramount problem globally.

Last month I covered the realities of the recent G20 meeting in St Petersburg, Russia in the "Taper Caper" and how it forced:

  1. The immediate de-escalation of the tensions in Syria,
  2. The too 'hawkish' Laurence Summers (it's all relative) no longer being a candidate for US Federal Reserve Chairmanship,
  3. The deferral of "TAPER" and any near term potential slowing of US liquidity injections.

These actions abruptly reversed the economic spiral the Emerging Markets were in and bought the global economy more time, as once again the can was kicked down the road.

This road appears more and more to be a false, economic illusion as Global Economic forecasts are continuously reduced.

The problem is that Emerging Markets are now 50% of the Global Economy and most importantly approaching 70% of the growth. For Emerging Markets to suffer a problem is to stall any recovery hopes in the developed economies.

Echo Boom


Macro Indicators

Slowing real economic growth can be seen from retail sales, to the Baltic Dry Index, to country imports and exports. Considering inflation is a major concern, the published Global Deflator of only 1.8% is puzzling, to say the least. Nevertheless, it still leaves growth perilously close to the 2% level considered to the threshold for a Global Recession.

World GDP


Macro Monetary

The global economies appear to be on the path towards the implementation of effectivelyan uncharted and unproven global "ABE-Nomics' policy being forced upon Japan.Whether it works, which I am highly skeptical of, may not be as important inthe short term as the fact it is based on the unparalleled strategy of the

debasement of the currency. The YEN is in startling freefall and fostering a global renewal of the Japanese Carry Trade to reignite credit creation.

Though in the Intermediate Term we see strength in the US dollar, expect this debasement across all developed economies' currencies in real terms (measured against precious metals, black gold and hard assets).


Geo-Economics

The problems in the Emerging Markets are serious and will take hold in 2014. Though the Fragile Five (Brazil, India, Indonesia, South Africa and Turkey) have received most of the attention we need to pay particular attention to the CEE (Central & Eastern Europe) in the not too distant future. Cyprus was an early warning. Poland confiscating Private Pensions last month is another!

 


Read the full research in this month's Global Macro Tipping Points at GordonTLong.com
Free Trials available for this issue. Sign Up
View last month's GMTP video "The Taper Caper" 20 minutes and 24 slides

 

Back to homepage

Leave a comment

Leave a comment