• 747 days Will The ECB Continue To Hike Rates?
  • 747 days Forbes: Aramco Remains Largest Company In The Middle East
  • 749 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,149 days Could Crypto Overtake Traditional Investment?
  • 1,154 days Americans Still Quitting Jobs At Record Pace
  • 1,156 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,159 days Is The Dollar Too Strong?
  • 1,159 days Big Tech Disappoints Investors on Earnings Calls
  • 1,160 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,161 days China Is Quietly Trying To Distance Itself From Russia
  • 1,162 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,166 days Crypto Investors Won Big In 2021
  • 1,166 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,167 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,169 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,170 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,173 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,174 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,174 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,176 days Are NFTs About To Take Over Gaming?
Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Houston, We Have A 'Flows' Problem! The Taper Spigot Is Now Too Tight

According to global economist Richard Duncan , since 1952 every time Total US Real Credit Growth fell below 2%, the US has experienced a recession. This correlation has been marked on 9 separate occasions. We are now below 2% and as a consequence the Federal Reserve will soon have little choice but to make a course correction in the current "Taper" monetary policy.


$2.3 Trillion In Total Us Y-O-Y Credit Growth Required

Approximately $2.3 Trillion in total Y-o-Y credit growth is required. According to Richard Duncan's very detailed tracking at Macro Watch, the Fed will be between $500 and $1T short.


Sub 3% World GDP Growth

Sub 3% global growth levels have also been historically another major indicator of recessionary economic troubles in the US.


Problem Compounding Quickly

There are a number of developments that have placed the Federal Reserve and its new Chair Janet Yellen in this awkward policy quandary. One is falling foreign direct investment. FDI is now at Bear Stearns and Lehman lows and getting worse fast, with global GDP falling to sub 3% levels.


Dramatically Slowing Us Foreign Flows

"Houston, We Have a Problem!"


Conclusion

The chart below, taken from a survey of 222 fund managers responsible for a collective $591 billion in assets under management conducted by BofA Merrill Lynch between Feb. 7 and Feb. 13, 2014, shows where investors think we are in the global economic cycle right now. We have overlapped it with our work and sense we are highly likely in the midst of a major inflection point.

Welcome Ms Yellen! Like Greenspan and Bernanke when they assumed office, you will experience the most taunting challenges of your chairmanship very early in your tenure.

 


For more detail signup for your FREE copy of the GordonTLong 2014 THESIS PAPER

Signup for notification of the next MACRO INSIGHTS

Request your FREE TWO MONTH TRIAL subscription of the

Global Macro Tipping Points (GMTP) Report
No Obligations. No Credit Card.

 

Back to homepage

Leave a comment

Leave a comment