HSBC: YIKES - Arab States Going Broke!

How many businesses can withstand a drop in revenues of 50% or more and expect to survive? Few,  if any! With oil prices being down by that percentage, expect many of the resource based countries to start defaulting on their debt and thereby crashing the global banking system along with the stock markets. It will cascade!

It was all a house of cards built on an exuberant credit bonanza fueled by unprecedented low loan rates that was doomed from the start. Now here comes the payback - and it won't be pretty.

All things revert to the mean - that's the first  law of common sense, just ask Soros!

 

Arab States Face $94 Billion Debt Crunch on Oil Slump, HSBC Says

Gulf Cooperation Council countries may struggle to refinance $94 billion of debt in the next two years as the region faces slowing growth, rising rates and rating downgrades, according to HSBC Holdings Plc.

Oil-rich GCC states have to refinance $52 billion of bonds and $42 billion of syndicated loans, mostly in the United Arab Emirates and Qatar, HSBC said in an e-mailed report. The countries also face a fiscal and current account deficit of $395 billion over the period, it said.

Expectations that these funding gaps "will be part financed through the sale of sovereign U.S. dollar debt will complicate efforts to refinance existing paper that matures over 2016 and 2017," Simon Williams, HSBC’s chief economist for the Middle East, said in the report. "With the Gulf acting as a single credit market, the refinancing challenge will likely be much more broadly felt" and "compounded by tightening regional liquidity, rising rates and recent downgrades," he said.

READ MORE

http://www.bloomberg.com/news/articles/2016-02-28/hsbc-sees-94-billion-gulf-arab-debt-crunch-amid-oil-slump

The Game Changed in Venezuela  

http://caracaschronicles.com/2014/02/20/the-game-changed/

People continue to be arrested merely for protesting, and a long established local Human Rights NGO makes an urgent plea for an investigation into widespread reports of torture of detainees. There are now dozens of serious human right abuses: National Guardsmen shooting tear gas canisters directly into residential buildings. We have videos of soldiers shooting civilians on the street.

Washington warns top banks to stay away from Russian bonds   

https://www.rt.com/business/333579-russia-us-eurobonds-sanctions/

Russia’s dollar-denominated 2023 bond now has a yield of 4.53 percent, sliding from 4.9 percent in September 2013 when Moscow raised $7 billion, data from the Financial Times showed.

According to the WSJ, some bank officials, including those at Citigroup, said they won’t participate. Goldman Sachs and J.P. Morgan Chase say they are still weighing their options.

Moody's Downgrades Brazil Sovereign Rating 

http://www.bloomberg.com/news/articles/2016-02-26/brazilian-banks-downgraded-by-moody-s-after-sovereign-debt-cut

 Itau Unibanco Holding SA, Banco do Brasil SA and Banco Bradesco SA were among more than two dozen financial firms in Brazil that had credit ratings cut by Moody’s Investors Service after it stripped the nation of an investment grade this week.

Ratings affected in the latest shakeup included baseline credit assessments and bank deposit and debt ratings, New York-based Moody’s said Thursday in a statement.

While the moves were prompted by the change in the sovereign rating, Brazilian banks’ creditworthiness “may also face downward pressure if Brazil’s very challenging operating environment results in a deterioration of their financial fundamentals, particularly profitability, asset quality and capitalization,” Moody’s said.

Brazil was cut two steps below investment grade, to Ba2, with a negative outlook, a sign the rating might go lower. The downgrade came one week after Standard & Poor’s reduced Brazil’s rating to BB, also two steps below investment grade with a negative outlook. The moves reflect Brazil’s worst recession in more than a century, a nationwide corruption scandal and declining demand from China for Brazilian commodities.

Why Singapore's Economy Is Heading For An Iceland-Style Meltdown

It has been just five years since the Global Financial Crisis, and the world – in brazen defiance of the lessons of 2008 – is already back to blowing massive bubbles and naively praising the countries that are benefiting from these “fool’s gold” economic booms. The Southeast Asian island nation of Singapore is currently inflating one of the most egregious examples of these post-2009 bubbles, and is displaying parallels to Iceland’s bubble that are causing me to believe that its boom will end in a similar (but not necessarily identical) manner.

READ MORE

http://www.forbes.com/sites/jessecolombo/2014/01/13/why-singapores-economy-is-heading-for-an-iceland-style-meltdown/#346ffdb113cc

www.firstfinancialinsights.blogspot.com

Russia's Economy Hitting the Skids

Things are bad in Russia, right now - and they are bound to get worse before they get better. Oil prices are not expected to increase substantively until 2017,  while production levels are  being punished. Too much economic pressure  on Russia, however, is not good for global peace.
Keep a steady  eye on this situation.

Can things get any worse for Russia? You're about to find out

For a decade, Dmitri Barinov has been following the volatile economy of his homeland from the safe distance of Union Investment’s offices in Frankfurt. Last year, as other money managers were steering clear of Russia’s broken economy, the Moscow-born Barinov pulled off something of a coup: He persuaded his bosses to take the plunge and buy Russian government bonds. It was a narrow bet, but he ended up winning because the central bank—after implementing the biggest interest rate hike since the Russian financial crisis in 1998 to prop up the collapsing ruble—changed course and aggressively backtracked. In the first 10 months of 2015, ruble-denominated government bonds handed investors such as Barinov a 25 percent return in dollar terms, the biggest gain for local bonds anywhere.

Read More

http://www.msn.com/en-us/money/markets/can-things-get-any-worse-for-russia-youre-about-to-find-out/ar-BBpU3Q4?li=BBnbfcL

Putin "Prepared to Use Tactical Nuclear Weapons" If Turkey/Saudi Invade Syria  

In Syria, rather than cooperate with Russia and Iran in helping Assad’s military defeat the jihadists, the Obama administration has continued playing it cute, insisting – as Secretary of State John Kerry has said recently – that armed “legitimate opposition groups” exist separately from Al Qaeda’s Nusra Front.

Recession 2016: In Some States, A Very Deep Economic Downturn Has Already Arrived 

If the price of oil does not go back up, this could be just the beginning. It is being reported that a whopping 35 percent of all oil and gas companies around the planet are at risk of falling into bankruptcy, and the financial institutions that have been backing these energy companies are getting very nervous.

1 in 4 Americans on Verge of Financial Ruin  

That’s particularly problematic considering that emergencies happen more often than you might think. A 2014 survey by American Express found that half of all Americans had experienced an unforeseen expense in the past year — some of which could be considered an emergency. Indeed, 44% of those who had an unforeseen expense(s) had one for health care and 46% for car trouble — two items that for many Americans are must-pay items, as you need a car to get to work and your health expenses are usually not optional. 

Thousands Told Their Pension Savings at Risk

Thousands of workers who have been encouraged by the government to take out pension plans could be at risk of losing their savings, the industry regulator has told the BBC.

It follows fears that dozens of companies providing auto enrolment pensions are too small to survive.

The BBC has also uncovered evidence that employers and workers are being deliberately misled by some providers.

The government said it was aware of the issue, and was planning to take action.

Independent experts claim the problem could affect up to a quarter of a million people a year who are putting their savings into so-called master trust pensions.

http://www.bbc.com/news/business-35560788 

www.firstfinancialinsights.blogspot.com

#Economy Lurched at Brink - South Africa

 This is another case where an overpopulated country with diminishing resources  per capita has fallen  onto perpetual hard times like Nauru.  It reflects the peak in global civilization and there are more coming as the resources per capita crisis grows unabated.

Tipping Point Looms for Despairing South Africa  

Not since Nelson Mandela walked out of Victor Verster prison 26 years ago have investors been gloomier about South Africa’s economy.

Money is pouring out at a record pace as inflows dwindle. The rand has plunged and unemployment is the highest among almost 40 developing nations tracked by Bloomberg. Drought is driving up food costs. Hanging in the balance is the investment-grade credit rating South Africa sweated to achieve in 2000, shortly after Mandela left office.

South Africans are paying the price not just for a collapse in commodities prices -- metals and mining contribute more than 50 percent of exports -- but for growing questions over whether President Jacob Zuma is up to the task. Stoking doubts were the antics at the finance ministry in December, when Zuma removed Nhlanhla Nene and replaced him with little-known lawmaker David van Rooyen. As bond yields soared and the rand crashed, he changed his mind four days later and installed Pravin Gordhan, Nene’s predecessor.

Read More

http://www.bloomberg.com/news/articles/2016-02-21/tipping-point-looms-for-south-africa-as-economy-s-despair-grows

Even Bank Bailout Architect Says Time To Break Up Banks  

The $700 bank bailout plan Kashkari helped author, known as the Troubled Asset Relief Program (TARP), stopped the Wall Street firms that caused the crisis from going bankrupt. A parallel process, undertaken by New York President Timothy Geithner along with the Treasury Department, pressured the Wall Street banks to merge and get even bigger in hopes that size would increase confidence in the financial system

What's in your food? Nobody really knows  

Why doesn’t government know what’s in your food? Because industry can declare on their own that added ingredients are safe. It’s all thanks to a loophole in a 57-year old law that allows food manufacturers to circumvent the approval process by regulators. This means companies can add substances to food without ever consulting the Food and Drug Administration about potential health risks.

Copper: The Next Metal Set To Rise After Gold?  

The grey moving average on the larger chart is the 60 day moving average, which is more important than the widely followed 50 DMA, and it shows signs of flattening, a very bullish signal, certainly if it will transition into a rising pattern.

 New Global Financial Cold War  

The United States has responded by changing the IMF rules. It said, ‘Wait a minute. It’s okay for the IMF to make loans to countries that don’t pay China and Russia or the BRICs, because we’re in a new Cold War. The IMF really is working for us.’ As long as the U.S. has veto power in the IMF, its delegate can veto any loan to a country that owes money to the United States that the United States doesn’t wish to support. But it has no objection for the IMF making loans to U.S. satellites such as Ukraine, that official debts to Russia.

http://www.nakedcapitalism.com/2016/02/michael-hudson-discusses-the-new-global-financial-cold-war.html

Buckle Your Seat Belts - Markets Heading For Freefall, & More

The Dow Correction And Everything Else That Went Wrong in Stocks

The global equity selloff that sent benchmark indexes to their worst week in four years played havoc with individual stocks and industries in the U.S. market.

To energy shares already snared in a bear market, add semiconductor stocks, which crossed the threshold by capping a decline of more than 20 percent. Apple Inc. also entered a bear market, while the Dow Jones Industrial Average entered a so-called correction with a decline of 10 percent from its last record. Biotechnology, small caps, media, transportation and commodity companies have also entered corrections.

The Standard & Poor’s 500 Index sank 3.2 percent on Friday to cap a weekly loss of 5.8 percent, the worst daily and weekly declines in almost four years. The benchmark gauge is down 7.5 percent from its last record in May, after dropping out of a trading range that has supported it for most of the year.

Greek bailout: Alexis Tsipras steps down to trigger new elections 

The prime minister insisted in an address on public television that he was proud of his time in office and had got “a good deal for the country”, despite bringing it “close to the edge”. He added that he was “shortly going to submit my resignation, and the resignation of my government, to the president”. The prime minister will be replaced for the duration of the short campaign by the president of Greece’s supreme court, Vassiliki Thanou-Christophilou – a vocal bailout opponent – as head of a caretaker government.

From Russia to Iran, the consequences of the global oil bust

Nick Butler, former head of strategy for BP, told me, “We are in for a longer and more sustained period of low oil prices than in the late 1980s.” Why? He points to a perfect storm. Supply is up substantially because a decade of high oil prices encouraged producers throughout the world to invest vast amounts of money in finding new sources. Those investments are made and will keep supply flowing for years. Leonardo Maugeri, former head of strategy for the Italian energy giant Eni, says, “There is no way to stop this phenomenon.” He predicts that prices could actually drop to $35 per barrel next year, down from more than $105 last summer.

Greece bailout deal 'will not work': Varoufakis

"Ask anyone who knows anything about Greece's finances and they will tell you this deal is not going to work.""The Greek finance minister... says more or less the same thin,

Germany made €100bn profit on Greek crisis

Greece’s biggest creditor Germany has made a huge profit on the country’s debt crisis over the last 5 years as it saved through lower interest payments on funds borrowed amid investor “flights to safety.”

Pentagon Fears It’s Not Ready for a War With Russia

The U.S. military has run the numbers on a sustained fight with Moscow, and they do not look good for the American side.

Is It Time to Get into Crash Positions?

Maybe this flight won't go into a tailspin; perhaps it simply runs out of fuel.

With stock markets diving around the globe, a pressing question arises: is it time to get into Crash Positions?

In case you forgot how to get into Crash Positions, here's a reminder:

After a dizzying 500+ point drop in the Dow on Friday, should we brace for impact? There are plenty of fundamental and technical reasons to view the swoon this week as the initial downturn that presages a crash landing.

But if we look at the last equivalent spike down in October 2014, we're not so sure. Both spikes (October 2014 and August 2015) smashed through the lower Bollinger band, but the volume in last week's plummet was nothing special compared to the 2014 swoon.

Big moves have a bit more credence if they're accompanied by massive volume.

Learning Success: 

APPLY Tips From The Best

Sir Richard Branson, Virgin Group – Anyone who owns more than 400 companies and is worth billions of dollars is clearly doing many things right. I admire Richard Branson’s tenacity, and I admire his personal brand—so much so, that when my paired leadership partner, Mary Michelle Scott, and I recently traveled to Australia with several of our team in our launch of Fishbowl Australia, we made the effort and kept the commitment to fly with Virgin Airlines every step of the way.

Jim Rogers Thinks Deal To Bypass US Dollar Possible? & More

Jim Rogers Russia, China, Brazil Sign Deal To Bypass US Dollar?

Russia has little debt, ample resources and its currency freely floats and he speculates at some point a challenge to the US dollar will take place, he says

Jim Rogers thinks the US is a “flawed currency” that should be replaced and he thinks the BRICs nations can do it, minus India. Jim Rogers: Brazil wants to compete with the US dollar

Discussing the recent BRICs conference, Jim Rogers noted the steady drumbeat to displace the US as the world’s reserve currency of choice. “Brazil wants to compete with the IMF, the World Bank and the US dollar,” as do all participants in the BRICs conference, Rogers said when speaking on an RT interview.

“Brazil, China and Russia could easily put something together to compete with the US dollar,” Rogers said, leaving out one component of the BRICs alliance. “The US dollar is a terribly flawed currency. I’m an American. I hate to say that. But the US has serious problems, the world has serious problems. We need something else” and potentially a competing world currency could be developed. If this were to occur, the US and its economy might be put in a straight jacket as the ability to engage in large deficit spending could be curtailed. Jim Rogers: BRICs developing an alternative banking system

To put together a competing world reserve currency and develop an alternative banking system, the BRICs might consider throwing India out of the equation, Jim Rogers said. India has been said to be the stumbling block in establishing the new world bank. “India and Brazil have big (national) debts. Russia is not a big debtor and has big international reserves,” Rogers noted, pivoting to Russian advantages in the interview. “Russia has a freely convertible currency and none of the others have a freely convertible currency.” 

Jim Rogers thinks Russia should spend its time courting suitors in its own neighborhood, however. “If I were Russia I would be more interested in selling to Asia than South America.”

As reported two days ago in ValueWalk, the leaders of Russia, India, Brazil, China and South Africa are in meetings ending July 17 to bring together plans to create a $100 billion bank to compete with the World Bank and International Monetary Fund. The planed bank is a piece in a larger puzzle to provide a global alternative to Western dominance of the financial system. This has been a stated goal of Russia and China, both of whom have engaged in trade deals that eschew the use of the US dollar.markets 

Jim Rogers started trading the stock market with $600 in 1968.In 1973 he formed the Quantum Fund with the legendary investor George Soros before retiring, a multi millionaire at the age of 37. Rogers and Soros helped steer the fund to a miraculous 4,200% return over the 10 year span of the fund while the S&P 500 returned just 47%. 

Doomsday clock for global market crash strikes one

 minute to midnight as central banks lose control 

8 - Overvalued US market In the US, Professor Robert Shiller’s cyclically adjusted price earnings ratio – or Shiller CAPE – for the S&P 500 stands at 27.2, some 64pc above its historic average of 16.6. On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007.

A September To Remember?

In terms of overnight action, China’s equity market eked out a positive gain amid a stabilizing yuan, further aided by the Chinese market regulator essentially inferring it would prop up the equity market for years to come. I wonder what we’ll think in 30 years’ time when we look back at the market intervention we have seen across the globe in the last half a decade or so. Hum dee dum.

This Week In Energy: The Growing Threat From China 

In the U.S., low oil prices could be exacerbated by an outage at a major U.S. refinery. The Whiting refinery, based in Indiana right outside of Chicago, was taken offline by its owner BP (NYSE: BP) for unplanned repairs. The refinery’s total output is 410,000 barrels per day, and one of the units (with a 240,000 barrel-per-day throughput capacity) could be offline for a month or two.

The Secrets Of Extraordinary Survivors 

Their successes challenge many of our common notions about the resilience of the human mind. While some people understandably crumble after extraordinarily harrowing events, others, like Eugenie have an extraordinary capacity to rebound and survive. Understanding why could lead us to help many more recover and grow after their experiences.

Europe In Crisis:

Everyone from Putin to ordinary savers is stockpiling gold

European investors snapped up gold bars and coins at a rapid pace in the second quarter as turmoil in Greece threatened to push the country out of the eurozone.

The World Gold Council (WGC) said demand in Europe for the precious metal rose sharply in the three months to June compared with the same quarter last year amid rapid buying of bullion, even as global demand fell by 12pc to a six-year low of 915 tonnes.

The increase in Europe was led by Germany, where sales of bars and coins rose 24pc to 24.1 tonnes in the second quarter. Demand in Austria and Switzerland also rose sharply, according to the WGC's quarterly trends report.

Learning Success: 

APPLY Tips From The Best

Larry Page,  Google – 


Larry Page is another example of a businessperson who can persevere any challenge. Larry and his company have faced much criticism and received ample praise over the years for his company’s actions. But in the midst of the storm, he has never let what others think sway him from pursuing the course for his company that he considers the best.

Top Weekly Ideas and Insights

An Inconvenient Truth

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EXISTENTIAL REALITY 

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 - Looking Beyond The Brink -