Posts Tagged ‘Dylan Grice’

SocGen’s Dylan Grice: China Is A Decade Away From Japan Style Doom

SocGen’s Dylan Grice: China Is A Decade Away From Japan Style Doom

Courtesy of Gregory White at Business Insider 

China FloodDylan Grice of Societe Generale has released another of his scathing reports, this time targeting the rise of China and why it might soon become the new Japan, only much, much worse.

China is currently experiencing a tremendous amount of cash inflows, as it has been labeled the best of the emerging markets kings, the BRICs. But all that money could be funding a massive bubble.

But the bubble story, which is well heard of, is only part of the comparison. Grice notes that China also has a similar population problem, brought on by the one-child policy, that will eventually lead to a demographic crisis similar to Japan’s.

First, on Japan’s lost decade, from Grice (emphasis his):

Something else happened in Japan in the early 1990s which receives less attention but provides a simpler explanation for its post-bubble experience: demand is deflating because the workforce is shrinking (see the first chart on page 3). The table below shows that while Japanese real GDP growth has indeed significantly lagged behind that of the US over the past 20 years, per worker GDP has broadly kept pace, even outpacing it over the last five.

Grice then notes the five things the two economies, Japan pre-bubble and China, have in common:

  • Absence of democracy
  • State-directed capitalism
  • Currency manipulation and reserve accumulation


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Market Still Deluding Itself That It Can Escape The Inevitable Dénouement

Market Still Deluding Itself That It Can Escape The Inevitable Dénouement

Courtesy of John Mauldin, Outside the Box 

One of my favorite analysts is Albert Edwards of Societe Generale in London. Acerbic, witty and brilliant. Emphasis on brilliant. The fact that he is a Doppelganger for James Montier (who long time readers are well acquainted with) is a coincidence (or he would say vice versa). I only kind of have permission to forward this note to you, but better to ask forgiveness… So, this week he is our Outside the Box. And a short but good one he is.

High angle view of glasses of red and white wine

I am in Amsterdam and it is late, but deadlines have no time line. Tomorrow more work on the book. It is getting close to the end. Most books are finished when the authors quit in disgust. How many edits can you do? I am close.

I wonder late at night, with maybe a few too many glasses of wine, why I feel like a book is so much more than an e-letter. Really? The last ten years of what I have written are on the archives. Good (ok, sometimes really good) is there. But some are an embarrassment. What was I thinking?

But somehow in my Old World brain, a book is more than a weekly letter. It is somehow more permanent than an “online” letter. Which may be archived forever. The book is “paper” and may be around for a few years. But the online version is here for a long time.

I know that is stupid. Really I do. But what is a 61 year old mind to do? A strange world we live in.

It is really time to hit the send button. More than you know! The conversation tonight has been too deep!

Your trying to figure out the purpose of life analyst,

John Mauldin


Market still deluding itself that it can escape the inevitable dénouement

By Albert Edwards

The current situation reminds me of mid 2007. Investors then were content to stick their heads into very deep sand and ignore the fact that The Great Unwind had clearly begun. But in August and September 2007, even though the wheels were clearly falling off the global economy, the S&P still managed to rally 15%! The recent reaction to data suggests the market is in a similar…
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Tim Backshall On Europe: “Default Now Or Default Later” As EuroStat Complains That Greece Is Still Withholding Critical Data

Tim Backshall On Europe: "Default Now Or Default Later" As EuroStat Complains That Greece Is Still Withholding Critical Data

Courtesy of Tyler Durden

There is one major problem with putting houses of card back together – they tend to fall…over and over. And while abundant liquidity in May and June served as an artificial prop to return European core and PIIGS spreads to previous levels merely as mean reversion algos took holds, the second time around won’t be as lucky. CDR’s Tim Backshall was on the Strategy Session today, discussing the key trends in sovereign products over the past few months, noting the declining liquidity in both sovereign cash and derivative exposure (we will refresh on the DTCC sovereign data later after its weekly Tuesday update). Yet the most interesting observation by Backshall is the declining halflife of risk-on episodes, which much like the SNB’s (now declining) interventions, are having less of an impact on the market, as ever worsening fundamentals can only be swept under the carpet for so long before they really start stinking up the place, and indeed, as Tim points out at 5:30 into the interview, even the IMF now realizes that soon the eventual second domino will fall, and it is better the be prepared (via the previously discussed infinitely expanded credit line), than to have to scramble in the last minute as was necessary in May. In other words, the storm clouds are gathering and only fools will invest in risk asset without getting some additional clarity on what is happening in Europe. The bottom line as Backshall asks is: "do they default now or default later." And that pretty much sums it up. Buy stocks at your own peril.

Incidentally all this is happening as we read in an exclusive Bloomberg piece that "four months after the 110 billion- euro ($140 billion) bailout for Greece, the nation still hasn’t disclosed the full details of secret financial transactions it used to conceal debt" and that EuroStat still has not received the required disclosure about just how fake (or real) the Greek debt situation truly is. When one steps back and ponders just how bad (and unknown) the situation in Europe is, and that stocks are unchanged for the year, one must conclude, as Dylan Grice does every week, that the lunatics have truly taken over the asylum.


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Disaster, By the Numbers

Disaster, By the Numbers

Courtesy of Michael Panzner at Financial Armageddon 

Bomb with a Lit Fuse

I’ve leveled many criticisms at the so-called experts in the financial community. Apart from being blatantly conflicted, many wouldn’t know how to analyze their way out of a paper bag even if their lives depended on it. Generally speaking, they are good communicators but lousy thinkers.

But as with most generalizations, there are exceptions to the rule. Some eloquent experts do know what they are talking about, including David Rosenberg of Gluskin Sheff, Albert Edwards and Dylan Grice of Societe General, Paul Kasriel of Northern Trust, and John Hussman of Hussman Funds.

Based on what he has to say, another person who should probably be added to that very short list is the individual interviewed in the following Yahoo! Finance Tech Ticker report, "America’s Ticking Debt Bomb: Like Greece, ‘Only Worse,’ Pento Says":

America’s debt bomb is ticking and is likely to detonate in five years or less, says Michael Pento, senior market strategist at Delta Global Advisors.

"It could be much sooner when we hit the debt wall," Pento says. "My opinion doesn’t matter: Math tells me we’re in a serious problem."

The math Pento refers to is the Treasury Department’s recent estimate that total U.S. debt will top $13.6 trillion this year and rise to 102% of GDP by 2015. Moreover, the publicly traded debt (debt excluding intra-governmental obligations) will rise to $14 trillion by 2015, up from "just" $7.5 trillion in 2009.

At $14 trillion, the interest payments on the public debt will total about $1 trillion in 2015, he continues; even assuming solid growth and low inflation, that would equal about 30% of total government revenue. "What do you think that does to our bond market?," Pento wonders. "It leads to a dollar crisis and a bond market crisis. That’s why gold refuses to go down. "

Demand for U.S. Treasuries and the dollar currently remain high, especially in the wake of the euro’s slow-motion implosion. Pento admits timing this debt crisis is difficult but predicts we’ll be "like Greece, but worse," in four years or less, unless we make a sudden turn toward austerity.


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CHINA WILL BE A BIGGER BUBBLE THAN JAPAN

CHINA WILL BE A BIGGER BUBBLE THAN JAPAN

Courtesy of The Pragmatic Capitalist

 scale model of the Central Business District in Beijing Superb analysis out of SocGen analysts this morning.  Dylan Grice says the Chinese economy has many similarities to the Japanese economy before it imploded in the 90’s.  He cites 8 reasons why the Chinese economy is likely to be an even larger implosion than the Japanese economy:

Studying the lessons from Japan’s lost decade(s) is key for anyone seeking to understand today’s post-bubble world. But a closer reading of Japan’s financial history illuminates today’s China far more. In the early 1980s, on the eve of its financial liberalisation, Japan was the rising power from the East set to overtake the West. Younger and growing rapidly, it was still a decade away from its climactic and catastrophic bubble peak. This is where China is now.

  • Japan’s deflationary experience since its bubble burst haunts policy makers and investors, who are confronted with a bewildering range of theories explaining what has gone wrong and how a similar scenario can or can’t be avoided.
  • But the real cause of Japan’s deflation is probably more demographic than debt-related.  If so, maybe we should be more worried about the side-effects of an ongoing stimulus overdose aimed at reviving the dead, rather than fighting a more ordinary bout of flu.
  • Japan has been the first industrial economy to begin demographic contraction. Indeed, thanks to Deng Xiaoping’s 1979 one child policy, China will soon face the same problem.
  • But it is unlikely China will suffer the same immediate fate. In fact, further reflection on the similarities between China and Japan leads one to realise that many of the challenges confronting China today have already been faced by Japan, demography being only one.
  • From the strained currency diplomacy to the accusation of favouring exports over domestic demand, from the Western marvelling at Confucian capitalism to the sense of inevitability about the rising of a great power in the East ? all were as true for Japan 30 years ago as they are of China today.
  • And Japan 30 or so years ago might be a more fruitful analogy altogether. There is a clear historic coincidence of manias and geopolitical shifts. In the 1980s, Japan’s developing financial bubble reflected a shifting of the balance of power in its direction.
  • But the geopolitical shift towards China now underway dwarfs that seen in


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Phil's Favorites

Carillion Q&A: The consequences of collapse and what the government should do next

 

Carillion Q&A: The consequences of collapse and what the government should do next

Courtesy of John Colley, Warwick Business School, University of Warwick

Construction giant Carillion has gone into liquidation. The UK’s second-largest construction firm was one of the government’s biggest contractors, involved in huge infrastructure projects like the HS2 rail link and the Royal Liverpool University Hospital. It also provides services across the public sector such as running libraries, schools and prisons. Here’s what you need to know about Carillion’s collapse.

Why did the government keep placing...



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ValueWalk

Nebraska Furniture Mart in the 1980s

By The Acquirer's Multiple. Originally published at ValueWalk.

little gem of a 1980s NBC News story about Rose Blumkin, better known to folks in Omaha as “Mrs. B.”. Rose Blumkin apparently was a fixture in Omaha, and ran a HUGE furniture store in Nebraska. Please don’t confuse Mrs. Blumkin with that dirty word “BLUMPKIN”. That’s not nice.

]]> Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

The post Nebraska Furniture Mart in the 1980s appeared first on ...



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Zero Hedge

North And South Korea Agree To Form Joint Team, Will March Together At Olympic Opening Ceremony

 

North And South Korea Agree To Form Joint Team, Will March Together At Olympic Opening Ceremony

Courtesy of Zero Hedge

In a decision that Yonhap called an "unprecedented breakthrough", North and South Korea have agreed to form their first joint Olympic team and will march together under a unified flag during the opening ceremony. The two Koreas agreed to form a joint women's ice hockey team to take part in the Winter Olympics to be held February 9-25 in Pyeongchang, the two ...



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Digital Currencies

What if the price of Bitcoin is the least interesting thing about it?

 

What if the price of Bitcoin is the least interesting thing about it?

Courtesy of 

Over the summer, I reviewed Steven Johnson’s book about innovation, called The Invention of Air. Johnson shows us how a simple insight by one of the least technically gifted scientists in history led to a massive chain reaction of human understanding about the world we live in and how it truly works.

If you missed my synopsis, it’s here.

...



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Insider Scoop

5 Biggest Price Target Changes For Wednesday

Courtesy of Benzinga.

  • Goldman Sachs raised Groupon Inc (NASDAQ: GRPN) price target from $4.70 to $5.40. Groupon shares closed at $5.03 on Tuesday.
  • Barclays boosted the price target for Pure Storage Inc (NYSE: PSTG) from $19 to $22. Pure Storage shares closed at $16.16 on Tuesday.
  • Stifel increased the price target for Deere & Company (NYSE: DE) from $161 to $184. Deere shares closed at $167.54 on Tuesday.
  • Mizuho raised the price target on QUALCOMM, Inc. (NASDAQ: ...


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Chart School

Weekly Market Recap Jan 14, 2017

Courtesy of Blain.

After 3 days of mild “rest” – and the first down day of the year (!!) for the S&P 500, bulls came back with bells on Thursday and Friday, driving indexes to record highs yet again.  This is starting to get “parabolic”… some shades of the type of things we saw in 1999.  (See the S&P 500 and NASDAQ charts below)  The S&P 500 gained 1.6% and the NASDAQ 1.7% for the week.

“This reminds me of January 2000,” said Kent Engelke, chief economic strategist, at Capitol Securities Management, which manages $4 billion in assets, referring to the nearly unceasing climb to records for stocks and the unease it can inspire.  “It’s scary, the unrelenting advance,” he added.

“The move isn’t about fundamentals...



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Biotech

How Alzheimer's disease spreads throughout the brain - new study

Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

 

How Alzheimer's disease spreads throughout the brain – new study

Courtesy of Thomas E CopeUniversity of Cambridge

Harmful tau protein spreads through networks. Author provided

Alzheimer’s disease is a devastating brain illness that affects an estimated 47m people worldwide. It is the most common cause of dementia in the Western world. Despite this, there are currently no treatments that are effective in curing Alzheimer’s disease or preventing its relentless progressio...



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Mapping The Market

Trump Admin Bans CDC From Using Words Like 'Science-Based,' 'Diversity'

By Jean-Luc

These are the policies of a theocracy, not a modern democracy:

Trump Admin Bans CDC From Using Words Like ‘Science-Based,’ ‘Diversity’

The Trump administration has prohibited the Centers for Disease Control and Prevention (CDC) from using words like “science-based,” “diversity,” and “transgender” in their official documents for next year’s budget, according to the Washington Post.

Senior CDC budget leader Alison Kelly met with the agency’s policy analysts on Thursday to announce ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

Ilene: David, you base many of your predictions of the future on a theory of historica...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

NewsWare: Watch Today's Webinar!

 

We have a great guest at today's webinar!

Bill Olsen from NewsWare will be giving us a fun and lively demonstration of the advantages that real-time news provides. NewsWare is a market intelligence tool for news. In today's data driven markets, it is truly beneficial to have a tool that delivers access to the professional sources where you can obtain the facts in real time.

Join our webinar, free, it's open to all. 

Just click here at 1 pm est and join in!

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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