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

Being on the wrong side of this decade's investing mega-trend

 

Being on the wrong side of this decade’s investing mega-trend

Courtesy of 

Josh Brown and Michael Batnick discuss the recent post “I did everything I was supposed to do”, which is the story of a man whose spent his whole career working for asset management firms and now finds himself on the wrong side of the active vs passive debate. There are real world consequences of the massive outflows of cash coming from actively managed mutual funds. This was Josh’s attempt to look at the issue from the other side.

The post spread around the financial web like wildfir...



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Zero Hedge

BMO: Everything Will Change After Tomorrow's "Quad Witching"

Courtesy of ZeroHedge

Don't look to the Fed to explain today's torrid, global rally: according to a controversial take by BMO's bearish technical analyst, Russ Visch, yesterday’s FOMC announcement was a non-event "as markets shrugged off the interest rate decision and follow-up presser with Chairman Powell", and today's action has an entirely different catalyst, resulting in "no change" to Visch's short-term outlook.

And in another contrarian take, Visch claims that "the quality of the rally since late May (narrow participation, extremely light volume) suggest it’s nothing more than a relief rally within an ongoing medium-term downtrend" as shown in the chart below.

...



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Kimble Charting Solutions

Silver; Multi-Year Bull Market Getting Started?

Courtesy of Chris Kimble.

Is a multi-year bull market about to start in Silver? We should find out soon!

This chart looks at Silver since the early 1970s. It has spent the majority of the past 35-years inside of rising channel (1).

It created a series of flat bottoms and lower highs in the late 1990s. When it broke out at (2), it rallied for years to come, where it gained several hundred percent.

Silver hit the top of this channel back in 2011 at $50, where a long-term bear market started. The 65% decline over the past 8-years has it testing the bottom of this mul...



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Insider Scoop

10 Biggest Price Target Changes For Thursday

Courtesy of Benzinga.

  • Citigroup raised Accenture Plc (NYSE: ACN) price target from $194 to $211. Accenture shares closed at $183.95 on Wednesday.
  • Stephens & Co. boosted the price target for Adobe Inc (NASDAQ: ADBE) from $288 to $327. Adobe shares closed at $291.21 on Wednesday.
  • Credit Suisse boosted the price target on Ferrari NV (NYSE: RACE) from $158 to $185. Ferrari shares closed at $157.83 on Wednesday.
  • Goldman Sachs cut the price target for Tesla ...


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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Chart School

Silver Review

Courtesy of Read the Ticker.

The folks in the federal reserve will debase the US dollar currency to an extreme degree silver will finally lift off the floor.. 

Note: Readers should re watch the silver back screen news video, here.

The following video looks at price action and Wyckoff logic.

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If gold moves, silver wi...

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Digital Currencies

Cryptos Are Crashing As Asia Opens, Bitcoin Back Below $8k

Courtesy of ZeroHedge. View original post here.

Having survived the day's bloodbath in US tech stocks, cryptos are crashing in the early Asian session, apparently playing catch-down to the day's de-risking.

While no catalyst is immediately evident, there are some reports noting 13 large global banks are preparing to launch digital versions of major global currencies next year, though we suspect this drop was more algorithmic that fundamental-driven.

...



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ValueWalk

More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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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

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

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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