Jueves 10/01/15, PPMI, ISM, gasto construccion

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Riesgo de suspensión de pagos de compañías emergentes y de pánico financiero

Carlos Montero
Jueves, 1 de Octubre del 2015 - 13:45:00

Hace unos días advertíamos de la existencia de un importante riesgo actualmente en los mercados globales, que reside en que la normalización de la política monetaria en EE.UU. podría llevar a un alza en el dólar, y éste a un incremento de la dificultad de pago de los deudores corporativos en la divisa estadounidense. El desorbitado crecimiento del endeudamiento en dólares pone en riesgo los balances de las compañías no financieras. Hace unos días el Fondo Monetario Internacional hacía una doble advertencia en este sentido.

El FMI afirmaba que unos tipos reales de EE.UU. más altos podrían desencadenar una ola de suspensiones de pagos masivas en las compañías de los países emergentes, y un pánico en los mercados financieros de todo el mundo.

El FMI estima que la deuda corporativa de los mercados emergentes subió en el último año a 18 trillones de dólares frente los 12 trillones del último año, y frente a los 4 trillones de 2004. Este fuerte incremento de deuda ha venido acompañado de una mayor debilidad en los balances empresariales, haciendo que las compañías sean más vulnerables a una subida de tipos de interés en EE.UU.

El FMI advirtió que esta situación podría crear una crisis de crédito, con el riesgo de que se extienda al sector financiero y se genere un círculo vicioso ya que los bancos reducirían a su vez los préstamos.

Un entorno de crecimiento constante y políticas monetarias extraordinariamente acomodaticias, añade el FMI, han ayudado a mantener un alto nivel de liquidez. Sin embargo, esto no significa que esta liquidez puede resistir para apoyar a los mercados en tiempo de estrés. Estos factores pueden enmascarar los riesgos de liquidez real en el mercado, que puede desencadenar violentos vaivenes financieros.


La ilusión de una abundante liquidez puede haber alentado la asunción de excesivos riesgos por parte de algunos inversores que podrían entrar en pánico si muchos inversores de repente se precipitan para deshacer posiciones, afirma el FMI.

“Incluso una aparentemente abundante liquidez puede de repente evaporarse y dar lugar a perturbaciones financieras sistémicas. Cuando la liquidez cae bruscamente, los precios se alinean menos con los fundamentales y tienden a reaccionar de forma exagerada, lo que lleva a un aumento de la volatilidad. En condiciones extremas, los mercados pueden congelarse por completo, con repercusiones sistémicas”.

El Fondo Monetario Internacional cree que la clave para que el escenario anterior no se desencadene es una “suave normalización de la política monetaria para evitar caídas repentinas en el apetito por el riesgo”, así como alentó a los bancos centrales a diseñar políticas de antelación que permitan mantener el funcionamiento de los mercados durante los períodos de estrés.

Son ya varias las instituciones y agentes financieros que advierten del gran riesgo que existe actualmente en los mercados ante el enorme endeudamiento público y privado. Veremos que sucede, pero si las tasas de crecimiento no se mantienen, como parece que no lo harán, me temo que el escenario que se nos plantea en el medio plazo no es nada positivo.

Lacartadelabolsa

14:16 Wal-Mart: El lado bajista prevalece
Trading Central

[ WAL-MART ]
Punto de rotación se sitúa en los 72,7.

Preferencia: Siempre que no se rompa al alza el nivel de los 72,7, favorecemos un movimiento bajista con 59,7 y posteriormente con 57,2 como próximos objetivos.

Escenario alternativo: Sólo la ruptura al alza del techo de los 72,7 invalidará nuestro escenario bajista. En este caso, al recuperarse la acción se debería subir primeramente a los 77,15 y posteriormente hacia los 80,4.

Comentario técnico: Los indicadores técnicos diarios son alcistas pero se encuentran cerca de las resistencias.


La fortaleza de la economía de EEUU revelada en esta divergencia

Jueves, 1 de Octubre del 2015 - 14:58:00

La economía de Estados Unidos depende de los consumidores. El martes, la confianza del consumidor superó las expectativas, mientras que los datos preliminares sobre el comercio de Estados Unidos en agosto mostraron un descenso del 3,2% en el valor nominal de las exportaciones, que suben ahora un 10,4% respecto al año anterior.

La caída de las exportaciones refleja los impactos del descenso en los precios del petróleo y un dólar fuerte. Para los consumidores de Estados Unidos, sin embargo, estas son buenas noticias.

Y así, a pesar de las noticias pesimistas sobre las exportaciones, la economía estadounidense aún está preparada para crecer un 2,6% este año, lo que sería su mejor año desde 2006 ya que la fuerza más poderosa de la economía - los consumidores - disfruta de una caída de los precios del petróleo y más poder adquisitivo debido a la fortaleza del dólar.


El gráfico adjunto, que viene de Doug Porter y el equipo de BMO, resume a la perfección las fortunas divergentes de la economía estadounidense: exportación a la baja y el gasto de los consumidores al alza. Y a fin de cuentas, esta es una gran noticia para Estados Unidos.

"Esa cruda dicotomía entre los consumidores y los exportadores está jugando en una variedad de estadísticas y resultados de las empresas", escribe Porter. "El consumidor estadounidense sigue siendo una fuerza poderosa."

Fuentes: Business Insider

[Fenix]

Indicadores de confianza del consumidor

Jueves, 1 de Octubre del 2015 - 15:52:00

GRAMI (Global Risk Aversion Macro Index), EMRA (Emerging Market Risk Aversion Index), NISI (News Implied Sentiment Indicator. Deterioro en el apetito por riesgo... esto es lo que podemos observar en nuestros indicadores GRAMI y EMRA.

Y en territorio bearish en el caso del NISI.

Aversos al riesgo y cortos del mercado….¿pueden seguir cayendo en precio los activos de riesgo? Ahora hablamos de las bolsas. El repunte de los últimos dos días es considerado como un ejemplo de inestabilidad. Recuerden que el VIX sigue en niveles del 25 %. Demasiada inestabilidad para que retorne la calma. Pero, tengo la sensación de que el mercado se puede ver más afectado ahora por factores de calma que otros negativos. Y la falta de estos últimos también puede ser positiva.

José Luis Martínez Campuzano
Estratega de Citi en España

[Fenix]

The Looming Medicaid Time-Bomb
Submitted by Tyler D.
10/01/2015 - 18:30

Between the demographic time bomb about to go off - that is, the growth of the elderly population far exceeding the growth of the working age population by several orders of magnitude - and then the weak economy, the huge expansion of entitlements under the health care law, and the dramatic increases of the costs of those entitlements, including for labor, what could possibly go wrong?


Tech Censors? Apple Bans App Noting Every US Drone Strike; Facebook Blocks Ad For "Negativity"
Submitted by Tyler D.
10/01/2015 - 13:15

"Under U.S. law - the law that, not coincidentally, governs most of the world’s largest online platforms - intermediaries such as Twitter and Facebook generally can’t be held responsible for what people do on them. But the United Nations proposes both that social networks proactively police every profile and post, and that government agencies only “license” those who agree to do so." Interestingly, it appears Apple and Facebook want to get ahead of the curve and begin censoring news the U.S. government might find embarrassing right away.

[Fenix]

Deflation Warning: The Next Wave
10/01/2015 17:30 -0400
Submitted by Chris Martenson

The signs of deflation are now flashing all over the globe. In our estimation, the possibility of an associated financial crisis is now dangerously high over the next few months.

As we’ve been saying for a while, our preferred model for how things are going to unfold follows the Ka-Poom! Theory as put out by Erik Janszen of iTulip.com.

That theory states that this epic debt bubble will ultimately burst first by deflation (the "Ka!") before then exploding (the "Poom!") in hyperinflation due to additional massive money printing efforts by frightened global central bankers acting in unison.

First an inwards collapse, then an outwards explosion. Ka-Poom!

We’ve been tracking the deflationary impulse for a while, and declared deflation the winner back in July of this year.
A Failed Strategy

What exactly do we mean by deflation? Back in 2008 the central banks of the developed world, as well as China, had a choice:

1. admit that prior policies geared towards encouraging borrowing at a faster rate than income growth were a horrible idea, or
2. double down and push those failed policies even harder

As we all know, they chose option #2. And so here we are, just 8 years later, with nearly $60 trillion in new debt piled on top of the prior mountain -- while GDP grew by only $12 trillion over the same time period:

(Source)

[Note: Global nominal GDP is projected to be $68.6 trillion in 2015, virtually unchanged from 2013]

In other words, instead of saying to ourselves: Hmmm.... it was probably a terrible idea to pile up debt at 2x the rate of income growth, what the world did instead was to double down on that terrible idea and pile on more debt at 5x the rate(!) of nominal GDP growth.

Talk about not learning from your past mistakes....

At any rate, what all of that money printing, lower interest rates and new debt creation did was force capital over the globe to look for some place to go. Absent any really good and creative ideas, that money primarily chased yield. It piled into risk assets like stocks and junk bonds, often in bubble-like fashion (meaning, in haste), and without proper due diligence.

The only way the central bank “strategy” (and we use that word very loosely) could have worked was if very rapid economic growth emerged to justify the accumulated levels of debt, comprised of both old and new borrowing. Central banks were indeed hoping such growth would materialize and lesson the burden of servicing the interest on all that debt.

But that growth, quite predictably (as forecasted by us among many others), did not emerge.

Perhaps Japan’s experience should have tipped the central bankers off as to why not. For several decades now, Japan has served as a warning: too much debt is the malady, not the cure.

So here we are. What are we to make of it all? It's our view that the financial markets are important to monitor because they will signal to us when sentiment has shifted, and let us know in advance that events will unfold at a faster pace.

Judging from the market action over the past month, we think that shift has happened. And we're increasingly concerned that this next ‘correction’ could be pretty rough for a lot of folks.
Bright Red Warning Lights

The global economy is downshifting fast, and there are lots of flashing red warning lights indicating as much.

Doug Noland has captured the emerging market pain caused by the hot money that is now flooding out of those territories, as well as provided a great explanation of the bubble dynamics in play:

The Federal Reserve is flailing and global currency markets are in disarray. Notably, the Brazilian real dropped more than 10% in five sessions, before Thursday’s sharp recovery reversed much of the week’s loss. This week the Colombian peso dropped 3.0%, and the Chilean peso fell 3.1%. The Mexican peso dropped 1.9%.



The Malaysian ringgit sank 4.5% for the week, with the South Korean won down 2.7% and the Indonesia rupiah losing 2.2%. The Singapore dollar fell 1.8%. The South African rand sank 4.4% and the Turkish lira fell 1.4%.



Notably, market dislocation was not limited to EM. The Norwegian krone was hit for 4.4%, and the Swedish krona lost 2.0%. The British pound declined 2.3%. The Australian dollar also lost 2.3%.



The global Bubble is bursting – hence financial conditions are tightening. Bubbles never provide a convenient time to tighten monetary policy. Best practices would require central bankers to tighten early before Bubble Dynamics take firm hold. Central bankers instead nurture and accommodate Bubble excess. It ensures a policy dead end.



As the unfolding EM crisis gathered further momentum this week, the transmission mechanism to the U.S. has begun to clearly show itself. While “full retreat” may be a little too strong at this point, the global leveraged speculating community is backpedaling. Biotech stocks suffered double-digit losses this week, as a significant Bubble deflates in earnest. It’s also worth noting that the broader market underperformed.

(Source)

What does it mean when we see currencies in retreat across the globe? It means that the hot, speculator money is rushing out of weaker economies and back towards the stronger center. This is consistent with a liquidity crisis, one where all the borrowed money used to spark all those heady asset gains and falling yields on the way out do the exact opposite on the way back.

And Doug is exactly right – there’s never a good time to pop a bubble. So the central bankers just sit, paralyzed, afraid to even raise rates by a token amount for fear that the daisy-chain of global bubbles will burst as a result. They needn’t fear: the bubbles will burst no matter what the Fed, et al., does.

A credit default swap (CDS) is a bit of insurance you can buy if you own a bond and are worried that the issuer may default on it. In a stable climate, the cost of that insurance (measured in percentage points above the stated yield on that debt) is pretty flat. It's usually close to the yield of the bond in question.

So you might have to pay 1% to 2% (i.e. 100 to 200 basis points) above the yield on, say a Brazilian ten year bond, to insure it against a default. As things begin to break down and become less certain, that cost will rise.

Now take a look at this chart of recent emerging market CDS 'spreads':

(Source)

See those CDS ‘spreads’ blowing out to the upside? That’s the sort of thing I was tracking in 2008 that gave me a clear, early warning that things were about to fall apart. While these levels are not (yet) flashing the same level of danger that we are seeing in the CDS paper for Glencore (which is almost certain to go bankrupt now), or for US shale drillers (tons of bankruptcies coming there, too), these are pretty serious warning signs to see in sovereign debt.

Why would the sovereign debt of Russia, Turkey, Brazil, and Malaysia be spiking right now? Because the hot money is flooding out of those countries. There's now an elevated risk that they may default on their bonds in the future.

These emerging market countries are being squeezed from every direction. But the worst pain is being experience by those that borrowed heavily in dollars (or other stable currencies). From the WSJ (Sept 29), we see the magnitude of the predicament for companies located in EM nations:

Developing-country firms quadrupled their borrowing from around $4 trillion in 2004 to well over $18 trillion last year, with China accounting for a major share.

Now, prospects in industrializing economies are weakening fast even as the U.S. Federal Reserve is getting set to raise interest rates for the first time in nearly a decade, a move that will raise borrowing costs around the world.



The burden of 26% larger average corporate debt ratios and higher interest rates come as commodity prices plummet, a staple export for many emerging-market economies.



Compounding problems, many firms borrowed heavily in dollars. As the greenback surges against the value of local currency revenues, it makes repaying those loans increasingly difficult.

(Source)

So the afflicted countries are going to see vastly weaker exports, plunging currencies, and their local corporations unable to pay off dollar-denominated loans -- on borrowing that ballooned from $4 trillion in 2004 to over $18 trillion just 11 years later. It’s an amazing statistic, one of many fostered by a cluster of central banks that know everything about blowing bubbles but nothing about ending them.

The punch line from the above article is this: “That massive debt build-up means it is “vital” for authorities to be increasingly vigilant, especially to threats to systemically important companies and the firms they have links to, including banks and other financial firms, the IMF said.”

Decoded, that means that $18 trillion is a big number. If even a small portion of that goes into default, it could easily drag down whole swaths of the developed world’s financial corporate structure. A systemic crisis that would begin on the edge but rapidly spread to the center.

Well, based on the DDBAX ETF which holds bonds priced in local currencies, we can get a sense of the pain those EM companies are feeling which have dollar denominated loans, but conduct business in their local currency:

Ouch! Based on the above chart, the past year has been painful indeed for those emerging market corporations and governments. No sign of a bottom yet either.
Not So Fast There….

One so-called ‘bright spot’ in the world economy is the US, which supposedly is doing better than everyone else. As you know, I consider US GDP statistics to be nearly useless because of all the statistical tricks and gimmicks that are now deployed (such as now counting ‘intangibles’ to go along with Owner Occupied Rent which records the price value of people not paying themselves rent, etc.,) to make things look better than they are.

So I’m having trouble believing that the US economy is doing well when our major trading partner to the south is struggling so much due to a huge drop drop in exports:

Mexico factory exports slump by most in over 6-1/2 years in Aug

Sept 25, 2015



(Reuters) - Mexico's factory-made exports slumped in August by the most in more than 6-1/2 years after uneven growth in the first half of 2015, data showed on Friday, while consumer imports rose.



Manufactured exports sank 7.2 percent in August compared with July, falling back after two months of gains, the national statistics agency said in a statement. It was the biggest month-on-month drop since December 2008, data showed.



Mexico exports mostly manufactured goods like cars and televisions and about three-quarters are sent to the United States.

(Source)

It’s hard to imagine that the US economy is doing fine when a major trading partner who exports 75% of its finished product to the US is experiencing a deep export slump.

But it’s not just Mexico that's seeing a big decline in export activity:

For the first seven months of 2015, U.S. exports dropped 5.6% to $895.7 billion. The value of South Korean exports shrank a revised 14.9% in August from a year earlier, the sharpest fall in six years, as shipments to China dropped. Chinese imports in August fell 13.8% in dollar terms from a year earlier, after an 8.1% decrease in July.

(Source – WSJ)

If this keeps up, 2015 will see the worst global trade performance since…wait for it…2008. For the US, 2015 will be the first year that exports have declined since the financial crisis. Ditto for a number of other countries.

Beyond exports, the surveys of US manufacturing and service sector activity are also flashing recession warning signs. In fact, the manufacturing survey has only been this low in the past during prior recessions. Maybe this time is different?

(Source)

On the plus side for the US: reasonably robust housing activity, low initial claims for unemployment, and growing income and expenditures. But the data for some of these is suspect (nearly 100 million working-age adults are not counted in the workforce), and in other areas, not robust enough to hang too many hopes on.

Add it all up, and there are a number of signs that not only is the US economy is far from robust, it may even be teetering on the verge of a recession. But the global economic landscape is decidedly tilted towards contraction, not expansion.

Why is all this important? Because seeing these signs early enough gives us a better chance to mentally, financially, and physically prepare for the next shock. The press does a very good job of constantly painting everything in a rosy light, and that’s fine, but it’s not very helpful if it also misleads.

Lots of people are woefully unprepared for what’s coming next. For many it will be a shock. Not because they couldn’t see it coming years in advance and made their own mental and financial adjustments on their own terms, but because they wouldn’t. Preferring to avoid an unpleasant truth they put it out of sight and out of mind, hoping that somehow things would work out in their favor.

In Part 2: From Deflation To Hyperinflation, we detail out the likeliest progression of the unfolding deflationary rout and the inevitable tsunami of money printing that the central banks will respond with, unleashing the final hyperinflationary chapter.

[Fenix]

Does Not Compute: DOL Continues To Paint Rosy Jobless Claims Picture As Challenger Sees "Surge" In Unemployment
Submitted by Tyler D.
10/01/2015 - 08:43

Does not compute. That may be the best way to summarize the discrepancy between the statistically-massaged, seasonally-adjusted initial claims data reported by the DOL, and what Challenger reported just an hour earlier when it said that U.S.-based employers announced plans to shed 58,877 in September, a 43 percent increase from the previous month. Worse, for 2015 YTD, employers have announced 493,431 planned layoffs, 36 percent more than the 363,408 cuts tracked from January through September a year ago. Someone is lying.



This Is The Endgame, According To Deutsche Bank
Submitted by Tyler D.
10/01/2015 - 15:53

"The system failed in 2008/09 and rather than allow a proper creative destruction cleansing, policy makers have been aggressively propping it up ever since. We think the end game is that when the next global recession hits, then QE/zero rate world will be re-appraised."

[Fenix]

Stocks Have Finally Begun to Catch Up with the Crisis in the Currency Markets
Submitted by Phoenix Capital Research on 10/01/2015 08:54 -0400

One of the biggest issues investors need to assess today is the US Dollar carry trade.

If you’re unfamiliar with the concept of a carry trade, it occurs when you borrow in one currency, usually at a very low interest rate, and then invest the money in another security, whether it be a bond, stock or what have you, that is denominated in another currency.
Now, investors in currencies are permitted to use greater leverage than their counterparts in stocks or bonds. Whereas a stock investor might be permitted to leverage up at 20 to 1, (meaning he or she can borrow $20 for every $1 in capital in his or her account), currency investors can leverage in excess of 100 to 1 or even 300 to 1…

Now a carry trade only works when the currency you are borrowing in remains weak. As soon as it begins to strengthen, you profits not only evaporate but you can end up deep in the red (remember you’ve borrowed $100 for every $1 you have in capital).

Globally the US Dollar carry trade is north of $9 trillion: larger than the economies of Japan and Germany combined. And it began to blow up in July of 2014.

Now, a critical theme that investors need to understand is that stocks are ALWAYS the LAST asset class to adjust to major changes in the financial system. The currency markets ALWAYS react first. It is only after the changes become enormous that stocks finally “get it.”

Consider the Asia Crisis of 1997. Thailand devalued the Baht on July 2, 1997. However it was not until August that the Thai stock market began to react. And it took the rest of the year for Thai stocks to really “get it.”

The reasons for this are that:

1) The currency market is much larger and more liquid that bonds or stocks and so reacts more quickly to changes in the global economy.

2) It takes time for currency moves to begin to affect profits and profit margins, which affect stock prices.

3) Of major asset classes, stocks have the largest percentage of individual or retail investors who are less likely to be aware of changes occurring in the financial system.

The bottom line is that when currencies begin to blow up it takes time for the rest of the financial world to catch on. This is particularly true for stocks.

With that in mind, consider that the global US Dollar carry trade began to blow up back in July 2014. While most commentators focused on the impact this had on Oil, the REAL damage was done in the emerging market currency space.

Below is a chart showing the US Dollar/ Chilean Peso (black), US Dollar/ Brazilian Real (blue), US Dollar/ Mexican Peso (red), US Dollar/ South African Rand (red), and US Dollar/ Singapore Dollar (pink) currency pairs.

As you can see, between the middle of 2014 and today, ALL of these pairs have seen price swings ranging in size from 16% to 26%.

These are ENORMOUS movements for currencies. Imagine losing 25% of your purchasing power in the span of a single year. This ONLY happens when the financial system is under incredible duress.

Indeed, across the board, Emerging Market currencies are collapsing against the US Dollar, falling to the lowest levels since 2001!

Many investors were not aware of this level of distress because they focus on stocks. However, the US stock market finally began to “get it” in August 2015.

This is not over by any means. As I mentioned before, the US Dollar carry trade is over $9 trillion in size. This is larger than the economies of Germany and Japan combined.

The worst is yet to come and smart investors are preparing now, BEFORE it hits.

If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.

We made 1,000 copies available for FREE the general public.

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Best Regards

Phoenix Capital Research

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