Wednesday, April 16, 2014

INVESTOR ALERT: The Underlying Cause of The Banking Crisis Has Returned, Grave Adverse Effects Of The Ultra Loose Monetary Policy Everywhere In The World

Yet again, it seems, once senior political or economic figures leave their ‘public service’ the story changes from one of “you have to lie, when it’s serious” to a more truthful reflection on reality.As Finanz und Wirtschaft reports in this great interview, Bill White – former chief economist of the Bank for International Settlements (who admittedly has been quite vocal in the past) – warns of grave adverse effects of the ultra loose monetary policy everywhere in the world… “It all feels like 2007, with equity markets overvalued and spreads in the bond markets extremely thin… central banks are making it up as they go along.” Some very uncomfortable truths in this crucial fact-based interview.
The Underlying Cause of The Banking Crisis Has Returned
The world economy has not yet recovered from the last such implosion, and already we are on to another phase of unsustainable credit growth
As its name implies, the International Monetary Fund’s latest Global Financial Stability Report attempts to track developing risks within the financial system.
So the following statistic, contained in the report, should be of concern: high yield issuance among US corporates – junk debt in other words – over the past three years is more than double the amount recorded in the three years prior to the crisis.
What’s more, the trend is accelerating; gross issuance of high yield corporate bonds stood at a record $378bn (£225bn) last year. There were also $455bn of institutional leveraged loans issued in 2013, far exceeding the previous high in 2007, just ahead of the crisis.
Japan Risks Public Souring on Abenomics as Prices Surge
Prime Minister Shinzo Abe’s bid to vault Japan out of 15 years of deflation risks losing public support by spurring too much inflation too quickly as companies add extra price increases to this month’s sales-tax bump.
Chanos on China’s Credit Bubble
Why You Should Worry about China’s Economy: It Depends on $2.5 Trillion Worth of Debt Added Annually, Says Jim Chanos
IMF Holds High-Level Conference on Monetary Policy in the New Normal
IMF Managing Director Christine Lagarde set the tone as she opened the event: “The world is continuing to change. Monetary policy, and central banking, will not go back to what they used to be once the crisis is finally behind us.”
Flashing Red Warning: Q1 Earnings Growth Plunges To Lowest Since 2012
BofAML Warns VIX Complacency Suggest Stocks Fall Further
Fear and Greed Index
Investors are driven by two emotions: fear and greed. Too much fear can sink stocks well below where they should be. When investors get greedy, they can bid up stock prices way too far.
Another bearish wick in Bio Tech took place!
CLICK ON CHART TO ENLARGE
Bio Tech led on the way up and so far is been a leader on the way down!
Another bearish wick this past week took place in IBB.  Keep you eye on this leader and watch for its impact to the NDX 100 !!!
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Is Nasdaq on Its Way Back to 3,000?
“The observation that company earnings will be very weak for the first quarter seems to be talked about and written more and more about as the results start to be released. Weak consumer spending will catch up to public companies which sell to consumers. In turn, businesses which supply consumer-based businesses will be hampered. The sharp cost cuts which happened during the recession cannot be duplicated. Public companies have run out of cost-savings tricks as their revenue improvement falters.”
Citi Mortgage Originations Drop To Record Low

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