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Sunday, 30 August 2015

Financial Advice Fails - As Everybody Becomes Poorer

Platinum Wealth Partners’ Insights

There are tipping point indicators in  any directions you care to explore. Stock markets are being crushed, economies are heading towards long slumps, Europe faces a migration crisis, technology doesn't help, and moreover - everyone is becoming poorer. 

A deeper look into these indicators and many more; suggests we are operating beyond the planet's physical capacities and the constraints imposed by limits to growth.

August 27, 2015

Real Household Net Worth:

 Look Out Below?

In my last post I pointed out that over the last half century, every time the year-over-year change in Real Household Net Worth went negative (real household wealth decreased), a recession had either started, or was about to.  (One bare exception: a tiny decline in Q4 2011, which looks rather like turbulence following The Big Whatever.) Throughout, click for source. - 

The problem: we don’t see this quarterly number until three+ months after the end of a quarter, when the Fed releases its Z.1 report for the the preceding quarter. The Q2 2015 report is due September 18.

But right now we might be able to roughly predict what we’re going to see four+ months from now, in the report on our current quarter, Q3, which ends September 30. We’re a bit over a month from the end the quarter, and we have some numbers to hand.

The U.S. equity markets are down roughly 7% year-over-year

South Africa's economy contracts, risk of recession grows

PRETORIA (Reuters) - South Africa's economy shrank for the first time in more than a year during the second quarter of 2015, raising the risk that labour disputes and slowing Chinese demand for commodities could push it towards recession.
The economic strain will inhibit the central bank from raising rates further to protect a weak currency and target inflation, while also torpedoing government efforts to keep deficits in check and protect its credit ratings.

Afghan migrants arrive on the Greek island of Kos after crossing from Turkey to Greece

A record 107,500 migrants crossed the EU borders last month to outstrip the previous monthly record in June of 70,000. During the first seven months there were nearly 340,000 migrants, up from 123,500 last year,

Warring Migrant Tribes, Grenade Attacks…What Is Going On In Sweden?

A Police officer secures on December 16,
if you bring intolerant people into your country this is what can happen

Not only how we deal with the world and make sense of it, or interact with each other, but also how we look at ourselves and understand our own nature, existence, and responsibilities. 
This is the IT version of my book The Great Field (available in Kindle books).

$2.1 Trillion Erased From U.S. Stocks In Six Days

The enormous losses reflect the deep fears gripping markets about how the world economy will fare amid a deepening economic slowdown in China.

The DowS&P 500 and Nasdaq have all tumbled into correction territory, their first such 10% decline from a recent high since 2011.
The S&P 500 -- the best barometer for the biggest U.S. companies -- has lost trillions of market value in the six-day selloff through Tuesday, according to S&P Dow Jones Indices.
To put those losses into perspective, that's roughly equal to the combined market value of these corporate titans put together:
 Apple (AAPLTech30)Google(GOOGLTech30)Berkshire Hathaway (BRKA)ExxonMobil (XOM)Facebook (FBTech30)Walmart(WMT) and 21st Century Fox (FOXA).

Originally Published 

Thursday, 27 August 2015

Greenspan Warns Exuberant " Bond Bubble To Bust" & More Top Insights

Greenspan warns about bond-market bubble

: Former Federal Reserve Chairman Alan Greenspan is sounding the alarm about a bubble that he believes is forming in the bond market.
In two television interviews in recent days, Greenspan said interest rates could shoot higher and derail the economy when the bubble bursts.
The former Fed chairman says the current situation in the bond market is comparable to what happens in the stock market during an equity bubble.
Noting that stock-market bubbles are typically characterized by extreme price-to-earnings ratios, Greenspan said extremely low yields are telling a similar tale for bonds.
“If you turn the bond market around and you look at the price of bonds relative to the interest received by those bonds, that looks very much like the usual spread which would concern us if it were equities, and we should be concerned,” Greenspan said in an interview with Fox Business Network.

There are China analysts, and then there is Charlene Chu.
She has been called a rock star of Chinese-debt analysis. Money managers the world over pay tens of thousands of dollars for access to her research at her new firm Autonomous Research. Her reports are rarely leaked, and she rarely gives interviews.

Business Insider got a glimpse at a massive report she wrote at the end of July.

This was when everyone was freaking out about the precipitous fall of China's stock markets, and it predates the Chinese authorities' decision to devalue the yuan.

Her base case in the report was for Chinese authorities to maintain stability of the equity market and forestall contagion.There is also a doomsday scenario, however, in which there is contagion to other domestic and international markets, large capital outflows, and an acceleration of problems associated with financial-sector weakness and corporate indebtedness.

The report said: "This in turn would likely lead to a significant pullback in credit, putting the brakes on GDP growth and bringing an end to China's decades of stellar economic growth. At that point, social and political stability — the critical wild cards in this equation — could come under question."

This is what doom looks like

Growth in OPEC’s biggest exporter will slow to 2.8 percent this year and 2.4 percent in 2016 after oil prices slumped, the Washington-based IMF said in a statement on Monday. If spending isn’t curbed, its fiscal deficit would be “very large” this year and over the medium term, it added.

“Moody’s isn’t the only one predicting that growth will be slow to rebound,” said Ari Santos, a trader at Sao Paulo-based brokerage H.Commcor. “Looking forward, we’ll have a stagnant economy, with no growth and no outlook to grow.”

Protesters calling for the impeachment of President Dilma Rousseff march along Copacabana beach on Aug. 16, 2015.
In the midst of its deepest economic and political crisis in a generation, Brazil is contending with a business climate so punishing that major projects across numerous sectors are being frozen or shrunk, while small businesses slash prices and shift focus.

Singapore-based wealth managers, already under pressure from a global move towards tax information sharing, face a more immediate threat as Asian countries including Indonesia and India look to chase undeclared money in the low-tax city state. A global crackdown on tax evasion launched during the 2008 financial crisis has already forced Switzerland and other European offshore hubs to surrender their prized bank secrecy.

The combined deficit of private sector DB schemes in the UK

 now stands at around £900 billion, up from £250 billion

 since the start of the millennium, despite companies pouring

 in £500 billion towards pension saving over that time.

 According to Hymans Robertson, the stark figures highlight

 that for too long pension schemes have been taking too 

much risks

Originally Published

 Investors' Insights 


Sunday, 16 August 2015

Since 2000 Real GDP Grew 31.6%, But Wages Are Flat?

Platinum Wealth Advisors

Markets were momentary inspired by Buffet’s latest blockbuster deal  and shenanigans that turned over the downward sentiment of the past seven trading-sessions. But the old guy in Omaha is not the world, and the real world could actually care less about what Berkshire did, does, or doesn’t do. Markets, however, being collectively neurotic by nature, care for short time spurts -   that is until the next trendy thought or event captures its child-like focus and limited imagination – thus the game goes on..   

A brief review of the real world concludes that there is little to be exuberant about. In addition to Greece,SpainItaly and perhaps the rest of the Eurozone, along with other nations, all account for many top Western economies who are  in critical distress. Some are near terminal. Meanwhile, bad debt at Chinese banks continues to accelerate, as expected, Resource economies are seeing exports drop for commodities. Australia’s  coal industry is now on the watch list ; so is Norway’s oil industry.  Bonds for the Eurozone are now paying negative returns, indicating that there are no “Real Economy “investments for notional capital. Japan’s consumer confidence is dropping faster than a hockey’s player’s gloves in a big-game  fight , each month. Russia’s GDP fell sharply, by 4.5%; it is getting hammered by both sanctions and resource issues. Taiwan too is lowering market yields. BrazilVenezuelaMexico, and no doubt many more South and Central American countries, are basket-cases. Then there is the Ukraineand its Slovak and Eastern European neighbours, who are all experiencing hardships.

 Still, an even  bigger concern are countries in the Middle East, South Asia and Africa, where the economic optics are limited, distorted or non- existent, but one may conclude with confidence that given  the extent of wars, starvation, medical deprivation and extra-ordinary waves of migration to less-marginal neighbouring countries, that most of these economies are also terminal cases with little hope of recovery to  sustainable levels for their indigenous populations. Overpopulation is thus rampant everywhere.

In the meantime, most folks in North America are getting poorer, since 2000,  as “The Tale Of Two Charts” ndicates below - and more importantly, they do not participate at all in the real GDP growth. It looks  much worse too, as per capita incomes are going backwards while  drowning in the temporary relief from more debt at all levels, to keep a broken  consumer  consumption system hobbling along. Pensions and medical services are also in peril in both  developing and developed countries.

So indeed, markets may be neurotically happy for a brief moment enjoying  the usual relief reactions, despite what is plain and clear to object analysis and evaluation. Meaning, the iceberg’s damage has but one inescapable conclusion – so what the heck, why not rearrange the deck chairs with Uncle Warren, while having the ship’s band play merrily along - once more?

Knowing that in the end, reality is a cruel mistress - who promises wide-spread currency wars (devaluations –  already ChinaJapanAustralia are suspects…), and trade protectionism with its consequential and expanding global conflicts!

Good Luck; Be Careful Out There!

Where Did the GDP "Growth" Go? Not into Wages

How can the economy grow by roughly one-third in real dollars while real median household income drops like a rock?
Based on gross domestic product (GDP), the U.S. economy has grown smartly since 2000: GDP rose from 10,031 in 2000 to 17,840 in mid-2015. That's an increase of 77.8%.

A Tale of Two Charts

Ironically - the same old French story - Storm the Bastille?

The Permian Basin in West Texas remains one of the few bright spots compared to other shale basins in North America. Drilling there is still profitable, with low costs and existing infrastructure. A series of pipelines have come online in West Texas over the past year, eliminating the discount that Permian oil traded at compared to the WTI benchmark. The Wall Street Journal notes that RSP Permian (NYSE: RSPP), a Permian driller, successfully sold new equity, a sign that investors are still keen on drillers in the basin. RSP sought to raise funds to complete acquisitions and the company raised $157.5 million by selling new stock this week. There is a lot of speculation about when and to what extent lenders and equity investors will pull out of the shale sector, but RSP’s successful offering demonstrates that there is still an appetite for shale companies among investors.

  With just one model on sale to support all its R&D, it's understandable why a share sale might be on the horizon. When you look at Tesla's finances the same way that GM and Ford report theirs (generally accepted accounting principles, or GAAP), the company lost nearly $15,000 per car this last quarter. Although Tesla says this number is more than covered by income from EVs it leases direct to customers, designing and developing cars is neither cheap nor simple, and the company will need cash to grow into a multiple-model lineup.

Farmer Ryan Rogers checks on a generator at Homestead Dairy in Plymouth, Indiana, which invested in a biogas recovery system whiThe Environmental Protection Agency estimates that more than three million tons of greenhouse gas emissions were eliminated last year by Homestead and the 246 other US livestock farms which have installed biogas recovery systems.
That's equivalent to taking more than 630,000 cars off the road.

The Mongstad oil and gas refinery, part-owned by Statoil ASA, is near Bergen, Norway.
Oil is losing value just as investments in the petroleum industry are heading for the biggest drop since 2000. To cope with the shift, companies such as Statoil ASA started restraining spending more than six months before Brent crude started to tumble.

As Economic Malaise Grows, Brazil 

Budget Deficit Hits All Time Record

June’s result means that the government's budget deficit reached a record breaking 8.1% of GDP -- one of the highest across emerging and developed economies and the highest in Brazil since the beginning of current data in 1995.

Learning Success: 

APPLY Tips From The Best

Indra Nooyi,  PepsiCo , another of  100 Most Powerful Women - Forbes, has not only led her company to record financial results but is making strides to move PepsiCo in a healthier direction, leading the courageous charge to shed traditional fast food properties and to replace them with initiatives to supply healthier foods. She is deeply caring and committed as a senior executive. She is a fun-loving executive as well—she played lead guitar for an all-woman rock band in college, loved to play cricket, and is known to sing karaoke and perform at corporate gatherings to this day. Yes, I have been known to relate to her fun-loving spirit as a senior executive as well.

Originally Published

Platinum Wealth Partners



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