Macro Outlook
It is undeniable that behind closed doors, world leaders are worried about
the global slowdown and the inability of the developed countries, after 5 years
of relentless stimulus, to mount more of a recovery. Unemployment has become
a paramount problem globally.
Last month I covered the realities of the recent G20 meeting in St Petersburg,
Russia in the "Taper Caper" and how
it forced:
- The immediate de-escalation of the tensions in Syria,
- The too 'hawkish' Laurence Summers (it's all relative) no longer
being a candidate for US Federal Reserve Chairmanship,
- The deferral of "TAPER" and any near term potential slowing of US liquidity
injections.
These actions abruptly reversed the economic spiral the Emerging Markets were
in and bought the global economy more time, as once again the can was kicked
down the road.
This road appears more and more to be a false, economic illusion as Global
Economic forecasts are continuously reduced.
The problem is that Emerging Markets are now 50% of the Global Economy and
most importantly approaching 70% of the growth. For Emerging Markets to suffer
a problem is to stall any recovery hopes in the developed economies.
Macro Indicators
Slowing real economic growth can be seen from retail sales, to the Baltic
Dry Index, to country imports and exports. Considering inflation is a major
concern, the published Global Deflator of only 1.8% is puzzling, to say the
least. Nevertheless, it still leaves growth perilously close to the 2% level
considered to the threshold for a Global Recession.
Macro Monetary
The global economies appear to be on the path towards the implementation of effectively
an uncharted and unproven global "ABE-Nomics' policy being forced upon Japan.
Whether it works, which I am highly skeptical of, may not be as important in
the short term as the fact it is based on the unparalleled strategy of the
debasement of the currency. The YEN is in startling freefall and fostering
a global renewal of the Japanese Carry Trade to reignite credit creation.
Though in the Intermediate Term we see strength in the US dollar, expect this
debasement across all developed economies' currencies in real terms (measured
against precious metals, black gold and hard assets).
Geo-Economics
The problems in the Emerging Markets are serious and will take hold in 2014.
Though the Fragile Five (Brazil, India, Indonesia, South Africa and Turkey)
have received most of the attention we need to pay particular attention to
the CEE (Central & Eastern Europe) in the not too distant future. Cyprus
was an early warning. Poland confiscating Private Pensions last month is another!
Read the full research in this month's Global
Macro Tipping Points at GordonTLong.com
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View last month's GMTP video "The
Taper Caper" 20 minutes and 24 slides
