GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Citi Strategists Warn "WORLD ECONOMY SEEMS TRAPPED IN DEATH SPIRAL"; Nasdaq Shed 3% Amid Massive Tech Sell-Off; EU Stocks End Lower After Weak U.S. Jobs Number; Asia Ends Mixed, Nikkei Ends Off 5.9%; And Oil Falls In Volatile Trade!

February 5, 2016 - GLOBAL ECONOMY -  The global economy seems trapped in a "death spiral" that could lead to further weakness in oil prices, recession and a serious equity bear market, Citi strategists have warned.

Some analysts — including those at Citi — have turned bearish on the world economy this year, following an equity rout in January and weaker economic data out of China and the U.S.

"The world appears to be trapped in a circular reference death spiral," Citi strategists led by Jonathan Stubbs said in a report on Thursday.

"Stronger U.S. dollar, weaker oil/commodity prices, weaker world trade/petrodollar liquidity, weaker EM (and global growth)... and repeat. Ad infinitum, this would lead to Oilmageddon, a 'significant and synchronized' global recession and a proper modern-day equity bear market."

Stubbs said that macro strategists at Citi forecast that the dollar would weaken in 2016 and that oil prices were likely bottoming, potentially providing some light at the end of the tunnel.

"The death spiral is in nobody's interest. Rational behavior, most likely, will prevail," he said in the report.

Crude oil prices have tumbled by around 70 percent since the middle of 2014, during which time the U.S. dollar has risen by around 20 percent against a basket of currencies.

The world economy grew by 3.1 percent in 2015 and is projected to accelerate to expand by 3.4 percent in 2016 and 3.6 percent in 2017, according to the International Monetary Fund. The forecast reflects expectations of gradual improvement in countries currently in economic distress, notably Brazil, Russia and some in the Middle East.

By contrast, Citi forecasts the world economy will grow by only 2.7 percent in 2016 having cut its outlook last month.

Overall, advanced economies are mostly making a modest recovery, while many emerging market and developing economies are under strain from the rebalancing of the Chinese economy, lower commodity prices and capital outflows.

Stubbs added that policymakers would likely attempt to "regain credibility" in the coming weeks and months.

"This is fundamental to avoiding a proper/full global recession and dangerous disorder across financial markets. The stakes are high, perhaps higher than they have ever been in the post-World War II era," he said.

Just 151,000 new jobs were created in January in the U.S., in the latest sign that the world's biggest economy is slowing. Economists are concerned about an industrial or manufacturing recession in the country, following some warnings from companies in earnings seasons and recent weak manufacturing activity and durable goods orders data.

However, some analysts say markets are overegging the prospect of a global slump.

"Many markets are now pricing in a significant probability of recession and when we talk about recession, we're talking particularly about a U.S. recession. Do you think that is likely or not? To me, the odds are too high; the market is pricing too high a probability," Myles Bradshaw, the head of global aggregate fixed income at Amundi, told CNBC this week.

Nasdaq sheds 3% amid massive tech sell-off

U.S. equities closed sharply lower on Friday amid a massive drop in technology stocks and as mixed U.S. employment data raised concerns the Federal Reserve may raise rates this year.

"It started with the uncertainty of the Fed and with the weak tech earnings ... it seems to have spread to the broader market," said JJ Kinahan, chief strategist at TD Ameritrade. "I think people are taking any unnecessary risk off before the weekend."

The three major indexes opened slightly lower, with the Dow Jones industrial average briefly trying for gains, but closed 211 points lower. McDonald's and Home Depot weighed the most on the index.

The S&P 500 index closed 1.85 lower percent, as information technology fell more than 3.35 percent. The Nasdaq composite fell 3.25 percent, as Apple and the iShares

Nasdaq Biotechnology ETF (IBB) dropped 2.67 percent and 3.19 percent, respectively.

Also weighing on the index were Amazon and Facebook, which closed down 6.36 percent and 5.81 percent, respectively.

Source: FactSet

LinkedIn shares also tanked 43.63 percent after posting weak guidance on their quarterly results. "I think 60 percent [of the market sell-off] is that the Fed was going to raise rates," said Kim Forrest, senior equity analyst at Fort Pitt Capital. "The other 40 percent is LinkedIn. The quarter was good, but the guidance was not."

"Some of the big tech stocks have had weak earnings," said Randy Frederick, managing director of trading and derivatives at Charles Schwab. "One stock is not a bellwether for one sector, but when you get multiple stocks with negative earnings reports, then you start seeing [a sector] go lower."

Investors also digested data showing the U.S. economy added 151,000 jobs in January, according to the Bureau of Labor Statistics. Economists were expecting a gain of 190,000. The unemployment rate, however, fell to 4.9 percent from 5.0 percent, while wages rose 0.5 percent.

"There was something for the bulls and something for the bears. It depends on which part of the statistics you want to focus on," said Bruce McCain, chief investment strategist at Key Private Bank.

"This is a classic example of why the headline looks worse than the actual report," said Art Hogan, chief market strategist at Wunderlich Securities. "The key components of this report were positive."

He noted that average hourly earnings, average hours worked and labor force participation all rose last month.

"It's all about that wage number, and that the 151,000 number is still indicative of growth," said Peter Cardillo, chief market economist at First Standard Financial. "[Wages] could be a sticking point for the Fed."

The jobs report raised the odds of another Federal Reserve rate hike, said Arne Espe, senior portfolio manager at USAA Investments.

"We're back to pricing in a 50 percent chance for a rate hike in December," he said. " We were at less than 50 percent before the report."

The central bank hiked interest rates for the first time in nine years in December. Recent U.S. economic data has been mixed and, coupled with falling oil prices, have contributed to rising fears of a recession.

European stocks end lower after weak US jobs number

European markets finished lower on Friday after the latest U.S. jobs data showed a slowdown in employment in January.

The pan-European STOXX 600 ended around 0.9 percent lower, with all major bourses in negative territory as investors digested weaker-than-expected U.S. employment data.

Germany's DAX closed down around 1.1 percent, while the French CAC and London's FTSE finished down 0.9 percent and 0.7 percent respectively.

Nonfarm payrolls increased by a seasonally adjusted 151,000 in January, the U.S. Labor Department said, falling short of analysts' expectations. The figures are likely to influence the hiking path the Federal Reserve takes on interest rates.

"Signs of a slowdown in hiring, still-weak annual pay growth and disappointing survey data, all pitched alongside an adverse financial market environment so far this year, reduce the odds of the Fed hiking rates again in March," chief economist at Markit, Chris Williamson, said.
U.S. equities fell on Friday after the jobs data was out.

Anglo American ended sharply higher, closing up over 10 percent as metal prices saw a slight rebound. Fellow miner Lonmin also saw strong gains.

On the earnings front, ArcelorMittal announced it would launch a $3 billion capital increase after its fourth-quarter net loss widened from a year ago amid falling steel prices, sending shares down more than 5 percent.

Nikkei extends losses for fifth day, down 5.9% for the week

Kazuhiro Nogi | AFP | Getty Images

Asian markets came under pressure on Friday, closing mixed despite a positive finish on Wall Street overnight, as a newly weaker dollar brought fresh concerns.

"The U.S. dollar basket has lost 3.2 percent since the close on Friday and 2.3 percent in two days, with Wednesday being the worst single day in [the dollar index] DXY in seven years," Evan Lucas, market strategist at spreadbetter IG, said in a morning note.

The dollar index, where the dollar is weighted against a basket of currencies, was at 96.58.

Lucas added, "The 36 percent increase in the U.S. dollar in 12 months is clearly putting a strain on U.S. economic growth; U.S. competitiveness has been squeezed and the Fed is isolated as the only central bank to be 'normalizing' monetary policy."

In Japan, the Nikkei extended losses for the fifth day in a row, with the index closing down 225.40 points, or 1.32 percent, at 16,819.59 on the back of a stronger yen. The index has shed 5.85 percent since Monday. The dollar-yen pair fell to the 116-handle, at 116.82 in afternoon trade; earlier this week, the pair was trading above 120.

Lucas said, "[The Bank of Japan's] negative rates have done nothing to slow the appreciation of the Japanese yen since last week. [BOJ Governor Haruhiko] Kuroda and Co.'s attempts to drive export competitiveness and more investment diversification from Japan in the current environment is a tough ask."

Mark Matthews from Bank Julius Baer was more succinct: "Japanese stocks like it when the dollar rises, and don't like it when the dollar falls," he said in a morning note.

Japanese exporters closed mostly down, with Toyota, Nissan and Honda seeing losses between 1.88 and 3.29 percent. Toyota reported an operating profit of 722 billion yen ($6.18 billion) in the October-December period, down 5.3 percent on-year, after market close. The Japanese carmaker also reported a net profit of 1.89 trillion yen, up 9.2 percent, on year, for the first nine months of the fiscal year ending on December 31, 2015.

Down Under, Australia's ASX 200 closed down 4.15 points, or 0.08 percent, at 4,976.20, with the financial sector losing 0.70 percent. Energy and materials sectors finished in positive territory, buoyed by gains in commodities.

Across the Korean Strait, the Kospi retraced early losses to close flat at 1,917.79.

In China, indexes gave up their marginal gains on the final trading day ahead of the Lunar New Year, when markets will remain closed for a week starting February 8. The Shanghai composite closed down 17.07 points, or 0.61 percent, at 2,763.94, while the Shenzhen composite fell 20.36 points, or 1.15 percent, to 1,750.70. Hong Kong's Hang Seng index was up 0.62 percent.

- CNBC News.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - EU On The Brink Of "TERRIFYING CRISIS" As Five Of Europe's Biggest Banks Are In Danger, Warns Expert!

Are Europe's banks heading into meltdown?

February 4, 2016 - EUROPE - Some of Europe’s biggest banks are on the brink for a crisis that echoes the 2008 meltdown, a finance expert warned today, as fears over the global economy escalate.

Deutsche Bank, Credit Suisse, Santander, Barclays and RBS are among the stocks that are falling sharply sending shockwaves through the financial world, according to former hedge fund manager and ex Goldman Sachs employee Raoul Pal.

At the height of the financial disaster in 2008, the Government was forced to step in and rescue Lloyds Banks and RBS from liquidation, while the European Central Bank gave huge bailouts to Spain, Greece, Portugal and Italy.

Last month, the head of the European Central Bank Mario Draghi raised expectations that it could undergo yet more Quantitative Easing in March – in effect printing billions of pounds worth of money – in the face of ongoing economic fears.

France last month declared a state of economic crisis adding to worries about the stability of the euro-zone.

Regulations now require banks in Europe to hold more cash as a buffer against market shocks, but Mr Pal said balance sheets haven’t been cleaned up and warned negative interest rates are hitting the firms hard.

The pundit’s comments come as a number of bank shares plunged to their lowest levels for years.

The Chancellor George Osborne has even been forced to push back Lloyds Bank’s retail share sale after stock value plunged too far.

Mr Ral told CNBC news: “I look at the big long-term share charts of them, and I think this looks very terrifying indeed. I have not seen anything like this for a long time.

“Negative rates are something the banks can banks cannot deal with and that’s being priced into share prices quickly.”

Fears over low oil prices and China’s slowing economy, tumbling stock values at the start of the year were largely driven by investors selling off oil and mining companies.

But now panic has spread into other sectors.

And Mr Pal said banking issues could be an even bigger worry than China’s growth slowdown and cheap oil. - Express.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Over 100 Walmart Stores Shut Down For Good In The United States In Small Towns And Rural Areas; A "Double Blow" For Many Frustrated Residents; Will Impact THOUSANDS Of Employees; Company Shares Down 25 PERCENT Over The Past 12 Months!

February 2, 2016 - UNITED STATES - More than 100 Walmarts around the country shut their doors Thursday for good -- many in small towns and rural areas with few other shopping options.

The retailer cites a long-term strategy shift and financial performance. Company shares are down 25 percent over the past 12 months, and the nationwide closures will also impact thousands of employees, reports CBS News correspondent David Begnaud.

"It's maddening because Walmart chose to do this," said resident Retha Thompson, who feels betrayed by Walmart's decision to leave Whitewright, Texas just 12 months after its grand opening. "They chose to come here and then when they put the other grocery store out of business, they want to close down and leave. I'm mad."

She's talking about "Pettit's," the mom and pop grocery that was a mainstay in this small town for nearly 60 years.

"Business - it just quit coming," Larry Deeds, the store's co-owner said.

Pettit's closed about nine months after Walmart opened.

"It's almost enough to bring a tear to your eye to see all these shelves empty," said Will Pettit, who worked here since he was 16.

When Walmart moved in last year, Whitewright's Mayor Allen West said a little competition from Walmart was a good thing. But now that it's leaving, "it's going to hurt the city financially, it's going to hurt the citizens economically and not good for their mental status," the mayor said.

Walmart is closing 154 stores in 27 states, many of them in small towns. In a statement to CBS News, Walmart said:

"The decision to close some of our stores was not easy and we share in the communities' disappointment. We're always searching for opportunities to serve more customers throughout the country -- especially those in underserved communities. We're now focused on where we can help impacted communities through our plans for charitable giving and expediting the process to work with potential buyers for these locations."

"Communities are finally getting a look at not only the effects of when Walmart comes into town, but also when they leave," said Bloomberg news reporter Shannon Pettypiece. "And I think that is a double blow for a lot people."

But Deeds said Walmart doesn't deserve all the blame.

"I lost some customers that had been coming to me for 20 or more years," Deeds said.

And now that Walmart is closed, Retha Thompson will drive half an hour to the closest grocery store.

"It won't be Walmart. I'm done with Walmart," Thompson said.

Two of Thompson's daughters-in-law were Walmart employees. They were offered either a severance package or the opportunity to relocate to work at another store, as goes for thousands of other employees across the country. - CBS News.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Global Stocks Sink On Fresh Growth Fears!

January 21, 2016 - GLOBAL ECONOMY - Global stocks plunged, driven by heightened concerns about growth and fading confidence in the willingness or ability of central banks to boost their economies.

The concern is the outlook for inflation, which in small doses is crucial to a healthy economy and which monetary-policy makers around the world have failed to accelerate. Another sharp fall in oil prices and weak consumer-price data in the U.S. on Wednesday gave traders fresh reasons to doubt what already were dismal expectations for the year.

The Dow Jones Industrial Average fell by more than 500 points before rebounding to close down 249 points, or 1.6%, extending a rout that has left the blue-chip index off 9.5% this year. Japan’s Nikkei Stock Average and the U.K.’s FTSE 100 index sank into bear markets—down 20% from a recent high.

In a sign of the stress, a crush of buying into haven assets pushed yields on 10-year U.S. Treasurys below 2%, leaving them at their lowest level since October. Bond yields fall as prices rise. Gold, another asset perceived as a harbor in times of turmoil, rose 1.6%.

Asian markets were higher early Thursday. Japan’s Nikkei and Hong Kong’s Hang Seng Index were each up more than 1%, while the Shanghai Composite was up less sharply.

The unusually severe losses in stocks and most commodities to start 2016 have led people in business, the investment community and government to question their outlooks and ask whether economic conditions might be worse than they had expected.

International Monetary Fund Managing Director Christine Lagarde said at the World Economic Forum in Davos, Switzerland, that the world economy should continue to expand at a modest pace this year, but said the downside risks are “bigger on the horizon than what we would have thought.”

Growth in China has faltered, slowing to 6.9% last year, the slowest pace in a quarter century. The slowdown has rattled economies on every continent. An indication is oceangoing cargo, with the rates for shipping a single container between Europe and Asia plummeting to $740 recently from $1,765 at the start of 2014.

Meanwhile, U.S. inflation remains weak, with the consumer-price index falling a seasonally adjusted 0.1% in December, according to a report from the Labor Department on Wednesday.

And then there is oil, which fell below $27 a barrel in New York—dropping 6.7%, to $26.55—just two trading days after settling below $30 for the first time in 12 years. Cheaper oil can be good news, signaling lower costs across the economy. But it may indicate slower demand from the factories, truckers and car buyers that use petroleum products around the world.

“If the oil price was just a supply story,” said Peter Schaffrik, chief European macro strategist at RBC Capital Markets, “it wouldn’t bother everyone.”

The turbulence prompted online subprime lender Elevate Credit Inc. to postpone its initial public offering, according to people familiar with the matter, the second company this year to do so.

The mood was already pessimistic coming into the year. Just 27% of the chief executive officers sounded out in a survey by PricewaterhouseCoopers—timed to coincide with the start of the​ gathering in Davos—said they thought global economic growth would improve in the coming year. That is down from 37% last year and 44% in 2014. The poll surveyed 1,409 CEOs in 83 countries.

Randall Stephenson, chief executive of AT&T Inc., the largest U.S. telecommunications company by revenue, said in an interview at the conference that he isn’t optimistic U.S. growth will accelerate much.

“Our expectation is that we do no better than 2% in 2016,” Mr. Stephenson said. “And absent some fiscal policy move, we think there’s probably more downside than upside in that forecast.”

The views of corporate bosses are colored by the collapse in a number of commodities and questions surrounding the ability of policy makers to boost growth. With interest rates still ultralow in the U.S. and Europe, there isn’t much room for central-bank officials to maneuver.

An electronic stock board in Tokyo displays the closing figure for the Nikkei Stock Average on Wednesday. Japanese shares entered a bear market,
a drop of 20% or more from a recent high. Photo: Kiyoshi Ota/Bloomberg News

With financial markets often serving as a leading indicator of economic performance, the executives’ views could prove prescient and indeed become self-fulfilling if their companies adjust expansion plans accordingly.

To be sure, not everyone is bearish. The U.S. has posted steady jobs growth, and traders generally don’t expect the country to slip into a recession.

“Everyone knows that the U.S. is in a low-growth environment, and everyone knows that Europe is in a low-growth environment,” Adena Friedman, chief operating officer of stock-exchange operator Nasdaq Inc., said in an interview in Davos. “If you look at China, it’s a slowing environment off of a much bigger economy than it was 10 years ago, but it’s slowing and shifting into more of a consumer market, so to me, those are not bad things.”

Markets are having to find their way with less support from the Fed. While that may boost volatility for now, it ultimately may prove beneficial.

Hedge-fund manager Paul Singer, who runs the roughly $26 billion Elliott Management Corp., said his fear is more monetary stimulus, in lieu of longer-term fixes such as easing tax and regulatory burdens.

He said in an interview in Davos that it can be risky to buy in an environment like this. “It’s very difficult to be a bottom-fisher at any time,” Mr. Singer said. “With the commodities crash, it could be fatal if you bottom-fish too aggressively and too early.”

Ms. Lagarde, the IMF chief, said it also was possible the economy could post stronger growth than expected. But the IMF already has lowered its outlook for 2016, and with markets off to a turbulent start, the immediate prospects have become less certain.

In addition to falling oil prices and slowing growth, she identified a lack of coordination among central banks in major economies as another threat.

The Federal Reserve, which meets on interest-rate policy next week, has been inclined to tighten monetary conditions at a time when many other countries still are easing.

The European Central Bank remains on a path of easy money, but disappointed markets in December by not being as aggressive as expected in its latest decision on interest rates and bond purchases.

Officials at both the ECB and the Fed had expected stabilization in oil prices to help them boost inflation back to desired ranges of about 2%.

Officials in China, meanwhile, have sent confusing signals about plans for further easing.

“The biggest risk for China is not to slow down in a measured way, but to stimulate the economy to such an unrealistic speed that it implodes suddenly and goes down in flames,” Fang Xinghai, a director-general in the Office of the Central Leading Group on Economic and Financial Affairs, said in an interview on the sidelines of the World Economic Forum.

Guo Ping, who holds the rotating post of CEO at Chinese telecom-equipment maker Huawei Technologies Co., said at a Wall Street Journal luncheon in Davos that China’s economy isn’t in crisis but will experience a deep adjustment for roughly two years.

Policy makers have “made some mistakes,” he said. “I don’t think up till now, they have found the right way.” - WSJ.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Global Stock Markets Dive Amid Oil Rout; IMF CUTS Global Growth Outlook; World Faces "WAVE OF EPIC DEBT DEFAULTS"; Russia Ruble Hits ALL-TIME LOW!

January 20, 2016 - GLOBAL ECONOMY - Stock markets worldwide have tumbled with investors unsettled by the continued slide in oil prices and fears about the impact on global growth.

Global stock markets fall amid oil rout

On Wall Street the Dow Jones and S&P 500 were 2% lower in early trading, while the Nasdaq fell 2.3%.

The FTSE 100, Germany's Dax and the Cac 40 in Paris are all trading about 2.5% lower - resuming the year's sell-off.

Many markets are now in so-called bear market territory - a fall of 20% or more from their most recent peak.

The falls in Europe and the US came after Asian stocks closed sharply lower.

Markets in Dubai closed at a 28-month low, while in Japan shares fell to their lowest level since October 2014.

Top emerging market shares and currencies were also caught up in the turmoil, with the Russian rouble hitting a new record low of 80.295 against the dollar.

Some observers think that many markets were riding for a fall. Asset prices were pumped up by ultra-low interest rates in the developed world and also by the central banks that have engaged in quantitative easing, buying financial assets with newly created money.

That happened with shares, with bonds and with commodities. For commodities the boom is well and truly over, partly due to the slowdown in China and in the case of oil mainly due to plentiful supplies.

European Photopress Agency.

Clearly there are some troublesome developments and the IMF has a warning: "If these key challenges are not successfully managed, global growth could be derailed."

That at bottom is what the markets are worried about.

"Investors have decided the world is a riskier place," said Laura Lambie, senior investment director at Investec Wealth Investment.

She says that concerns over growth in China, the prospect of rising US interest rates and the possibility that low oil prices might force some oil companies out of business are the main concerns for investors.

"There's been a short-term change in sentiment," she said.

Oil slide continues

The downwards move came after oil prices continued to slide, with the price of international benchmark Brent Crude down 2.4% at $28.08 a barrel, around a 12-year low.

The oil price has plummeted 75% since mid-2014 as oversupply, mainly due to US shale oil flooding the market, has driven down the cost of the commodity.

At the same time, demand has fallen because of a slowdown in economic growth in China and Europe.

The world's energy watchdog warned on Tuesday that the market could "drown in oversupply".

The International Energy Agency, which advises countries on energy policy, said it expected the global glut to last until at least late 2016.

The International Monetary Fund's decision on Tuesday to downgrade its global growth forecast for this year and issue a warning about the outlook added to the dark mood among investors.

World stocks are now at their lowest levels since 2013, with the MSCI world equity index down 9.9% in January, its biggest drop since 2009.

Analysts said they expected the volatility to continue.

"I am quite pessimistic about the equity markets for the next two to three months. I do not see a 2008-style scenario, but I do see a bear market coming," said Andreas Clenow, hedge fund trader and principal at ACIES Asset Management. - BBC.

World faces wave of epic debt defaults, fears central bank veteran

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned.

"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS).

"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief," he said.

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he told The Telegraph on the eve of the World Economic Forum in Davos.

"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."

The next task awaiting the global authorities is how to manage debt write-offs - and therefore a massive reordering of winners and losers in society - without setting off a political storm.

Mr White said Europe's creditors are likely to face some of the biggest haircuts. European banks have already admitted to $1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed.

The next task awaiting the global authorities is how to manage debt write-offs without setting off a political storm. Photo: Rex

The European banking system may have to be recapitalized on a scale yet unimagined, and new "bail-in" rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.

The warnings have special resonance since Mr White was one of the very few voices in the central banking fraternity who stated loudly and clearly between 2005 and 2008 that Western finance was riding for a fall, and that the global economy was susceptible to a violent crisis.

Mr White said stimulus from quantitative easing and zero rates by the big central banks after the Lehman crisis leaked out across east Asia and emerging markets, stoking credit bubbles and a surge in dollar borrowing that was hard to control in a world of free capital flows.

The result is that these countries have now been drawn into the morass as well. Combined public and private debt has surged to all-time highs to 185pc of GDP in emerging markets and to 265pc of GDP in the OECD club, both up by 35 percentage points since the top of the last credit cycle in 2007.

"Emerging markets were part of the solution after the Lehman crisis. Now they are part of the problem too," Mr White said.

Mr White, who also chief author of G30's recent report on the post-crisis future of central banking, said it is impossible know what the trigger will be for the next crisis since the global system has lost its anchor and is inherently prone to breakdown.

A Chinese devaluation clearly has the potential to metastasize. "Every major country is engaged in currency wars even though they insist that QE has nothing to do with competitive depreciation. They have all been playing the game except for China - so far - and it is a zero-sum game. China could really up the ante."

Mr White said QE and easy money policies by the US Federal Reserve and its peers have had the effect of bringing spending forward from the future in what is known as "inter-temporal smoothing". It becomes a toxic addiction over time and ultimately loses traction. In the end, the future catches up with you. "By definition, this means you cannot spend the money tomorrow," he said.

A reflex of "asymmetry" began when the Fed injected too much stimulus to prevent a purge after the 1987 crash. The authorities have since allowed each boom to run its course - thinking they could safely clean up later - while responding to each shock with alacrity. The BIS critique is that this has led to a perpetual easing bias, with interest rates falling ever further below their "Wicksellian natural rate" with each credit cycle.

The error was compounded in the 1990s when China and eastern Europe suddenly joined the global economy, flooding the world with cheap exports in a "positive supply shock". Falling prices of manufactured goods masked the rampant asset inflation that was building up. "Policy makers were seduced into inaction by a set of comforting beliefs, all of which we now see were false. They believed that if inflation was under control, all was well," he said.

In retrospect, central banks should have let the benign deflation of this (temporary) phase of globalisation run its course. By stoking debt bubbles, they have instead incubated what may prove to be a more malign variant, a classic 1930s-style "Fisherite" debt-deflation.

Mr White said the Fed is now in a horrible quandary as it tries to extract itself from QE and right the ship again. "It is a debt trap. Things are so bad that there is no right answer. If they raise rates it'll be nasty. If they don't raise rates, it just makes matters worse," he said.

There is no easy way out of this tangle. But Mr White said it would be a good start for governments to stop depending on central banks to do their dirty work. They should return to fiscal primacy - call it Keynesian, if you wish - and launch an investment blitz on infrastructure that pays for itself through higher growth.

"It was always dangerous to rely on central banks to sort out a solvency problem when all they can do is tackle liquidity problems. It is a recipe for disorder, and now we are hitting the limit," he said. - Telegraph.

IMF cuts global growth outlook for 2016

The International Monetary Fund (IMF) has downgraded its forecast for this year’s global economic growth to 3.4 percent which is 0.2 percent lower than its October outlook.

For 2017, the IMF projects 3.6 percent growth.

"Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy," the IMF's World Economic Outlook report said, adding “if key challenges are not successfully managed, global growth could be derailed.”

The slowdown and rebalancing of the Chinese economy, lower commodity prices, and strains in some large emerging market economies will continue to weigh on growth prospects in 2016–2017, said the IMF.

According to the report, a modest and uneven recovery is expected to continue in advanced economies. The picture for “emerging market and developing economies is diverse but in many cases challenging.”

The US, the UK and Spain are expected to beat two percent growth this year.

Growth in China is expected to slow to 6.3 percent in 2016 and 6.0 percent in 2017, primarily reflecting weaker investment growth as the economy continues to rebalance.

“Russia, which continues to adjust to low oil prices and Western sanctions, is expected to remain in recession in 2016,” according to the report. It added that in 2017 growth in Russia will resume.

The IMF projected higher growth for the Middle East, adding that lower oil prices, and in some cases geopolitical tension and domestic strife would continue to weigh on the outlook.

The fund downgraded the prospects for global trade growth for 2016 and 2017, saying it would reflect developments in China as well as distressed economies. - RT.

Russia's ruble hits all-time low against the dollar

The ruble hit a historic low on Wednesday as the dollar climbed past the 80.1 rubles level for the first time, exceeding the levels seen during the shock plunge of the Russian currency in December 2014.

After a day of relative calm, the ruble resumed its downward spiral, breaking through the previous record low it hit on December 16, 2014, as oil prices, key to Russia's economy, test 12-year lows.

The ruble was also trading at 87.6 against the euro as Asian and European markets suffered another rout.

Gas and oil account for more than a half of the Russian budget revenues.

"The market will be generally driven by global economic sentiment, which does not exactly look hopeful at the moment," Alfa Bank said in a note to clients on Wednesday.

In December 2014, the Russian currency crashed to unprecedented lows, trading at over 80 rubles to the dollar and 100 to the euro.

The ruble hit a historic low against the dollar (AFP Photo/Alexander Nemenov)

Western sanctions over the Kremlin's support for the separatist insurgency in Ukraine have all but closed access to foreign borrowing for Russia and exacerbated the crisis.

The worsening economic outlook amid falling oil prices presents a serious challenge for President Vladimir Putin, whose pact with voters has been based on years of economic stability and relative prosperity.

The International Monetary Fund on Tuesday downgraded its forecast for Russia, predicting that the country's economy would contract by 1 percent this year.

The IMF warned that slower Chinese growth, a stronger US dollar, the collapse in oil prices and political turmoil could all wreak further havoc in struggling economies like Russia's.

Prime Minister Dmitry Medvedev has said that while the government will seek to honour its social obligations, it will have to "considerably cut" spending.

Igor Nikolayev, director of the FBK Grant Thornton Institute of Strategic Analysis, said the plunge in the ruble did not bode well for the economy as it exacerbated financial risk, leading to lower investment.

"Even an ordinary person already understands -- if the ruble falls, prices will grow and life will become harder." - Yahoo.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - President Francois Hollande Declares France Is In A "STATE OF ECONOMIC EMERGENCY" And Throws £1.5 BILLION At Reducing Unemployment!

January 20, 2016 - FRANCE - French President Francois Hollande has declared France is in a 'state of economic emergency' and has promised to spend £1.5billion to try and reduce the country's high unemployment rates.

Mr Hollande today pledged huge spending on a package of measures to fight the stubbornly high unemployment that has dogged his four years in power.

Labelling the country in 'a state of economic emergency' and requiring urgent new measures, the socialist also promised the spending would not come from tax rises.

In a speech to business leaders, he said: 'These two billion euros will not be financed through extra taxes of any kind. They will be financed by savings.'

One billion euros will be spent on training schemes for unemployed people.

Joblessness, which stands at around 10 percent or 3.57 million people in the eurozone's second-largest economy, was the 'only issue which ranks above security for the French people', he claimed.

Mr Hollande said France needed to 'increase the pace of reforms' and innovation was 'key' to getting people back to work.

Mr Hollande today pledged huge spending on a package of measures to fight stubbornly high unemployment

'France must also increase training, education and the level of qualifications of its workers,' he said.

After several years of sluggish growth, the French economy took another blow with the jihadist attacks in November that killed 130 people, which slowed activity in the fourth quarter.

Under the new measures to stimulate recruitment, companies employing fewer than 250 people will receive a 2,000-euro bonus for each new employee with a contract of more than six months, under certain conditions.

Hollande dismissed suggestions that he was trying to 'artificially' reduce unemployment as he prepares for a bid to secure re-election in the 2017 presidential election.

Despite this, the new measures were greeted with scorn by the opposition.

'What planet are Francois Hollande and his government living on if they think it is enough to pay a company that takes someone on a cheque of 1,000 or 2,000 euros?' said Guillaume Larrive, of the right-wing Republicans led by former president Nicolas Sarkozy. - Daily Mail.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Former Barbados PM Owen Arthur Calls On Caribbean Governments To Move Swiftly To Avert What Observers Say Is An Emerging Banking Crisis Over Correspondent Banks!

January 20, 2016 - CARIBBEAN - Former Barbados prime minister Owen Arthur Tuesday said Caribbean countries need to have in place mechanisms that can allow them to respond to issues on Correspondent Banking.

He said these measures must be “in a coherent and sustained manner, rather than in a spasmodic way, to the challenges which will continuously come our way from having to function as the world’s smallest and most vulnerable economy in a turbulent and unforgiving global economic arena”.

Arthur, addressing a round table discussion on “Correspondence Banking” said that the Caribbean countries now find themselves in a more vulnerable condition than they have ever been in their post-independent existence.

Arthur said regional countries are constantly having to make adjustments to accommodate far reaching changes in the environment within which their development takes place.

“This has placed on them the responsibility of having to manage more complex transitions and transformations than any other group of nations. They have had, and will continue to have to institute new arrangements by which to order their domestic affairs, central to which is the sustained and coherent implementation of fiscal consolidation programmes to restore order to their public finances.”

But Arthur, an economist, said the challenges for Caribbean countries surrounding the management of their fiscal consolidation programmes are modest relative to the difficult new circumstances that have, over the past two decades, affected their ability to successfully carry out cross border transactions.

“To begin with, all Caribbean societies have been significantly and adversely affected by changes in International Trade Law, which have stripped them of the means by which they have traditionally protected domestic enterprises, and have required them to enter new reciprocal trade arrangements even with developed economies. The toll taken on traditional industries in agriculture and manufacturing has been severe.”

He said in addition, the “sunrise industries” which have been designated to be the engines to generate a substantial part of the growth for the future have themselves had to operate in an atmosphere of uncertainty by having to respond to extra regional initiatives such as the OECD Harmful Tax Competition Initiative, and more recently, the provisions contained in the USA Foreign Account Tax Compliance Act, and the OECD Base Erosion and Profit Shifting Project.

Arthur said that a 2014 World Bank report revealed that in respect of every critical determinant of trade performance, the Caribbean reflects the worst indices of any region in the world.

Owen Arthur

“In addition, the region’s circumstances have not been assisted by the fact that in an era when so much of global economic activity is being driven by the provisions in bilateral trade pacts, the Caribbean had entered the fewest of any group of nations.”

He said that the region also stands, for the future, to be overwhelmed by new trade arrangements, such as the Trans Pacific Trade Pact, and new global supply and value chain arrangements by global enterprises that are bypassing the Caribbean.

“For the Caribbean to attain and stay on a viable path to growth and development, a concerted effort has to be made to transform its economies from being trade-preference dependent economies which they have been traditionally, and debt-propelled economies which they have recently become, to being investment-driven economies, marked by a very high component of private foreign capital, and eventually, genuine export-propelled economies.

“Indeed, over the immediate future, to create the conditions to generate strong growth, the Caribbean has to increase the ratio of private capital inflows to GDP (gross domestic product), and to use such resource flows to help build new productive capacity which is capable of being competitive in a liberalized global economy.”

Arthur said as such, any new measure that stands in the way of enabling the Caribbean to significantly improve its cross border economic and financial transactions must be deemed to be a serious threat to the development of the region.

“It is in such a context that the Corresponding Banking Challenge looms as the most recent, but perhaps the potentially most devastating threat to the stable and successful development of the region. It is therefore important that the Caribbean does not allow itself to become the real but unintended victim of a global effort to reduce financial crimes, to fight against terrorism by reducing its sources of finance, and quite frankly, the efforts of major banking enterprises to enhance their profitability.”

“o begin with, unaddressed, the derisking that is at the centre of the Correspondent Banking issue, could serve to delink Caribbean economies from access to global finance at a juncture where they need to increase the ratio of capital inflows to GDP,” Arthur warned, noting that it can also increase the cost of access to such finance or force economic agents in the region to resort to illicit means, further damaging the image of the region.

“It can also do untold damage to the financial sector in the Caribbean. For it has been well observed that the Caribbean financial sector is characterized by features such as shallow banking systems, undeveloped and highly concentrated financial markets and domestic currencies that are not internationally traded,” the former Barbados prime minister added.

He said that there is much therefore that the Caribbean can and must do to fend off this existential threat. “First the Correspondent Banking crisis is one that does not apply only nor uniquely to the Caribbean but is one that has far flung implications for many countries across the globe. There is therefore no requirement for the Caribbean to feel that it must fight this on its own.”

He said the Caribbean must form strategic alliances and commit the resources to join the other many countries and institutions which have embraced this as being a legitimate cause to be fought for in every conceivable forum.

He said it was also important for the region to strain every sinew to ensure that its own rules, standards and enforcement mechanisms consistently meet global requirements in the fight against financial crimes and the fight against terrorism.

Arthur said ideally, this ought to be a well co-ordinated regional effort and that it can be made to be such if the Caribbean revisits and reenergizes its own efforts to integrate the regional economy.

“In this regard, the creation of a single regional market, involving the removal of barriers to the movement within the region of the flow of goods, services, capital and labour, and the creation of new rights for the establishment of enterprise, was intended to be but the first phase of the CSME (CARICOM Single Market and Economy).”

He said the second, involving the creation of a virtual single economy, as set out in the Girvan Plan of 2007, envisioned harmonized and coordinated regional actions and programmes, including regulatory and supervisory systems, that could significantly enhance the region’s ability to strengthen the economic and financial infrastructure on which its economy rests.

“Indeed, the Plan to move to a Single Economy called for the putting in place, for example, of a Regional Financial Services Agreement and a Regional Investment Code, which, if brought into existence, would have been designed to govern and bring order to the operation of the regional financial sector, and set out clear guidelines concerning that sector’s relationship with the global economy.

“The issue now being grappled with concerning Correspondent Banking surely must accentuate the need for the Caribbean to have in place mechanisms that can allow it to respond on this matter, as on all others in a coherent and sustained manner, rather than in a spasmodic way, to the challenges which will continuously come our way from having to function as the world’s smallest and most vulnerable economy in a turbulent and unforgiving global economic arena.” - The Montserrat Reporter.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - China's Full-Year Economic Growth Hits 25-YEAR LOW!

January 19, 2016 - CHINA - China's economic growth edged down to 6.8 percent in the final quarter of 2015 as trade and consumer spending weakened, dragging full-year growth to its lowest in 25 years.

Growth has fallen steadily over the past five years as the ruling Communist Party tries to steer away from a worn-out model based on investment and trade toward self-sustaining growth driven by domestic consumption and services. But the unexpectedly sharp decline over the past two years prompted fears of a politically dangerous spike in job losses.

Full-year growth declined to 6.9 percent, government data showed Tuesday. That was the lowest since sanctions imposed on Beijing following its crackdown on the Tiananmen Square pro-democracy movement caused growth to plummet to 3.8 percent in 1990.

The October-December growth figure was the lowest quarterly expansion since the aftermath of the global financial crisis, when growth slumped to 6.1 percent in the first quarter of 2009. Growth in the July-September quarter of 2009 was 6.9 percent.

Growth in investment in factories, housing and other fixed assets, a key economic driver, weakened to 12 percent in 2015, down 2.9 percentage points from the previous year. Retail sales growth cooled to 10.6 percent from 2014's 12 percent.

"The international situation remains complex," said Wang Bao'an, commissioner of the National Bureau of Statistics, as a news conference. "Restructuring and upgrading is in an uphill stage. Comprehensively deepening reform is a daunting task."

Growth was in line with private sector forecasts and the ruling Communist Party's official target of about 7 percent for the year.

Beijing responded to ebbing growth by cutting interest rates six times since November, 2014, and launched measures to help exporters and other industries. But economists note China still relies on state-led construction spending and other investment.

December exports shrank 1.4 percent from a year earlier, well below the ruling party's target of 6 percent growth in total trade. For the full year, exports were down 7.6 percent, a blow to industries that employ millions of Chinese workers.

Forecasters see indications retail sales and other activity accelerated toward the end of 2015, suggesting Beijing's efforts to put a floor under the downturn are gaining traction.

"The growth picture remains two-sided. The real estate construction slump and weak exports continued to weigh on activity," said Louis Kuijs of Oxford Economics in a report.

"Meanwhile, though, consumption continued to expand robustly, supported by solid wage growth," said Kuijs. "The robust growth in the consumption and services nexus is key for policymakers. They need it to avoid labor market stress."

Spending on online commerce grew by 33.3 percent over 2014. Wang said the share of total economic activity accounted for by consumption rose to 56.4 percent, up 15 percentage points from 2014.

Forecasters expect economic growth to decline further this year, with the International Monetary Fund targeting a 6.3 percent expansion. - Huffington Post.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - General Electric Plans To Cut 6,500 Jobs In Europe In The Next Two Years!

The logo of U.S. conglomerate General Electric is pictured at the company's site in Belfort, April 27, 2014.

Reuters/Vincent Kessler

January 18, 2016 - EUROPE - General Electric plans to cut 6,500 jobs in Europe over the next two years, including 765 in France and 1,300 in Switzerland, the company said on Wednesday.

A GE spokesman in France said GE was sticking to its pledge to create 1,000 net jobs in France in the next three years as part of its acquisition of Alstom's energy business.

He added that the company was looking at job cuts at its headquarters in Levallois and La Defense, but not at Belfort, the heart of Alstom's former energy unit.

He said that unions had been informed on Tuesday and that talks would start on Wednesday. The jobs concerned were mainly in support functions such as human resources, legal and communication.

"This is a plan, which could change following discussion with employee representatives," he said.

He gave no details on which other countries would be hit, but GE said in a separate statement that it had begun talks with workers in Switzerland, where 1,300 jobs could be impacted by the measures.

Those cuts were expected to be in the gas and steam power businesses, which have experienced a slump in recent years.

GE's takeover of Alstom's energy business - which includes gas and steam turbines, wind turbines, turbines for hydro dams and power grids - added about 65,000 employees to GE's workforce of about 305,000 and significantly expanded GE's reach in the global market for power generation equipment.

The head of GE's power division said in September the company would seek to wring out $3 billion in cost savings over five years from the Alstom acquisition. - Reuters.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Stock Markets Suffer Worst Start Of Year SINCE GREAT DEPRESSION; World's Richest Down $305 BILLION As Markets Extend Global Rout; Retail Sales In U.S. Decrease To End Weakest Year Since 2009; Wal-Mart To Shutter 269 Stores, 154 Of Them In The U.S.; World Bank Issues "PERFECT STORM" Warning For 2016!

The Shanghai market was the worst performer. 

Imaginechina / Splash News

January 15, 2016 - GLOBAL ECONOMY - The start of this year has been the worst for financial markets since the onset of the Great Depression, with stock prices slumping around the world amid mounting concern over the situation in China.

Markets suffer their worst start to the year since Great Depression

A wave of selling has swept the world’s leading financial centres over the past two weeks, with the value of Britain’s leading companies falling by more than £110 billion since the start of the year the year.

The FTSE 100 index of Britain’s biggest quoted companies fell 114 points, or 2 per cent, to 5,804 yesterday — the lowest close since November 2012. Indices in Europe and America have fared even worse: the Shanghai market was the worst performer, closing down 3.6 per cent, taking its total losses to 18 per cent for 2016. This was prompted by the price of a barrel of Brent crude dipping below the $30 mark, for the third time this week. In America the Dow Jones industrial average closed down 391 points, or 2.4 per cent, at 15,988.

The FTSE 100 index of Britain’s biggest quoted companies fell 114 points, or 2 per cent, to 5,804 yesterday — the lowest close since November 2012. In America the Dow Jones industrial average closed down 391 points, or 2.4 per cent, at 15,988.

The Shanghai market was the worst performer, closing down 3.6 per cent, taking its losses for the year so far to 18 per cent. This was prompted by the price of a barrel of Brent crude dipping below $30 for the third time this week.

David Buik, of Panmure Gordon, the investment bank, suggested that the “financial carnage” in stock markets in the first two weeks of the year was the worst since 1928.

Investors seeking safe havens have turned to gold, sparking a 2 per cent recovery in its price to $1,094 an ounce.

George Osborne underlined the pessimistic mood by warning last week of grave threats to the British economy, the chancellor saying that it could be “the year we look back at the beginning of the decline” if the country abandoned his agenda. Fears of another crash were heightened by a research note by an economist at RBS advising clients to “sell everything except high-quality bonds”.

Some economists have said, however, that the risk of contagion from China has been exaggerated. It is only Britain’s sixth-largest export market, representing no more than 3.6 per cent of overseas sales, behind the Republic of Ireland.

In China, interventions by the Communist party to prop up markets have done little to reassure investors, and the plight of the world’s second-largest economy is gripping markets. There is strong evidence of a slowdown, after an unprecedented boom between 2000 and 2014, when the size of the Chinese economy ballooned by a factor of eight. The Beijing authorities have set a growth target of 6.5 per cent for this year, but scepticism over the accuracy of its economic data is growing.

Fathom Consulting, an economic forecaster, thinks that growth in China could be as low as 2.4 per cent, rather than the official 6.8 per cent. The difference between those figures, in dollar terms, equated to more than the entire economy of the United Arab Emirates, suggesting that a severe jolt is in store for the rest of the world.

The Chinese government’s botched interventions in local stock exchanges have heightened the nervousness, and added to the steep fall in the price of oil. It tumbled to below $29 a barrel yesterday, its lowest since 2004. - The Times.

World's Richest Down $305 Billion as Markets Extend Global Rout

Plunging stock markets are exacting a toll on the world’s biggest fortunes.

The 400 richest people have lost $305 billion from their combined net worth this month as global equities tumbled for the worst start to a year on record on mounting concern that worldwide growth is faltering.

The billionaires lost more than $115 billion this week, with 76 taking hits of at least $1 billion in January, according to the Bloomberg Billionaires Index. Seven shed more than $1 billion on Friday alone as the Dow Jones Industrial Average sank 391 points, European stocks fell into a bear market and the Shanghai Composite Index wiped out gains from an unprecedented state-rescue campaign.

Amazon.com Inc. founder Jeff Bezos led decliners on the Bloomberg index, losing $8.9 billion since Jan. 1 and $1.9 billion Friday when the Internet retailer declined 3.85 percent. Bill Gates, the world’s richest person, has lost $6.8 billion of his net worth this year and Wang Jianlin, China’s richest person, is down $6.4 billion.

Only nine of the 400 billionaires have increased their net worth in 2016, led by Indian oil billionaire Mukesh Ambani, chairman of Mumbai-based Reliance Industries Ltd., who’s added $620 million.

The combined net worth of the 400 billionaires is $3.6 trillion, a 16 percent decline from their peak of $4.3 billion on May 18, 2015. - Bloomberg.

Retail Sales in U.S. Decrease to End Weakest Year Since 2009

Sales at U.S. retailers declined in December to wrap the weakest year since 2009, raising concern about the momentum in consumer spending heading into 2016.

The 0.1 percent drop matched the median forecast of 84 economists surveyed by Bloomberg and followed a 0.4 percent gain in November, Commerce Department figures showed Friday in Washington. For all of 2015, purchases climbed 2.1 percent, the smallest advance of the current economic expansion.

The slowdown, including electronics stores, clothing merchants and grocers, indicates Americans probably preferred to sock away the savings from cheaper fuel instead of splurging during the holiday season. While hiring has been robust in recent months, faster wage gains remain elusive, one reason household spending may have a tougher time accelerating as the new year gets under way.

“There isn’t anything encouraging in this report,” said Thomas Simons, a money-market economist at Jefferies Group LLC in New York. “It’s very disappointing. The labor market is in good shape, which suggests the outlook is probably better than this.”

Estimates in the Bloomberg survey for retail sales ranged from a decline of 1 percent to a 0.3 percent advance. The November tally was revised up from a previously reported 0.2 percent increase.

Weak 2015

The increase for all of 2015 followed a 3.9 percent gain the prior year. It was the smallest advance since demand slumped 7.4 percent in 2009, when the recession ended in June of that year.

A separate report from the Labor Department showed inflation remained contained at the wholesale level. The producer price index decreased 0.2 percent in December from the prior month and was down 1 percent year-over-year.

The retail sales report showed six of 13 major categories showed declines in demand in December from the prior month, with a 1 percent slump at general merchandise stores that was the biggest since February, the report showed.

Receipts at gasoline stations dropped 1.1 percent. The Commerce Department’s retail sales data aren’t adjusted for prices, so lower fuel costs depress filling-station receipts.

Regular gasoline at the pump has dropped to a seven-year low, falling below $2 a gallon this week to reach $1.93 on Thursday, according to AAA, the biggest U.S. motoring group.

Clothing, Electronics

The retail report also showed sales decreased 0.9 percent at clothing chains and 0.2 percent at electronics stores.

Automobile dealers’ sales were little changed.

Industry figures earlier this month showed purchases of cars and light trucks came in at a 17.2 million annualized rate in December, the slowest since July, after an 18 million pace the prior month, according to Ward’s Automotive Group. Even so, industry sales data shows 2015 was a record year for automakers.

The figures used to calculate gross domestic product, which exclude categories such as food services, auto dealers, home-improvement stores and service stations, unexpectedly dropped 0.3 percent, the biggest decrease since February, after the prior month’s 0.5 percent increase in the so-called retail control group that was smaller than previously estimated.

Warm December

Warmer than usual weather last month probably curtailed purchases of winter gear including clothing. This was the warmest December on record for the contiguous U.S., according to the National Oceanic and Atmospheric Administration.

Some economists may lower estimates for fourth-quarter gross domestic product and consumer spending following the retail sales results. The median forecast in a Bloomberg survey shows household purchases rose at a 2.2 percent annualized rate from October through December, after a 3 percent pace in the prior three months.

Recent reports had signaled the November-December holiday season was a mixed one for retailers. Same-store sales fell in the two months for chains ranging from Macy’s Inc. to Best Buy Co. while those who snagged an increase included J.C. Penney Co. Same-store sales for the industry as a whole account for about 17 percent of total retail sales, which make up almost half of consumer spending.

Beige Book

“Growth of consumer spending ranged from slight to moderate in most Districts,” according to the Federal Reserve’s Beige Book economic survey based on reports from late November to early January by regional Fed banks. “Auto sales were somewhat mixed, as activity has begun to drop off from previously high levels in some Districts.”

Employers added 292,000 workers in December and payrolls for the previous two months were revised higher, the Labor Department reported last week. The jobless rate held at a more than seven-year low of 5 percent. Wages stagnated, with average hourly earnings unchanged from November and up 2.5 percent from a year earlier. They’ve been in the 2 percent range since the expansion began in 2009. - Bloomberg.

Wal-Mart to shutter 269 stores, 154 of them in the US

In this Thursday, June 4, 2015, photo, shoppers walk from the checkout at a Wal-Mart Supercenter store in Springdale, Ark. Wal-Mart announced Friday, Jan. 15, 2016,
that it is closing 269 stores, more than half of them in the U.S. and another big chunk in its challenging Brazilian market. The store closures will start at the end of January.
(AP Photo/Danny Johnston)

Wal-Mart is doing some rare pruning.

The world's largest retailer is closing 269 stores, including 154 in the U.S. that includes all of its locations under its smallest-format concept store called Wal-Mart Express. The other big chunk is in its challenging Brazilian market.

The stores being shuttered account for a fraction of the company's 11,000 stores worldwide and less than 1 percent of its global revenue. Wal-Mart Stores Inc. said the store closures will affect 16,000 workers, 10,000 of them in the U.S. Its global workforce is 2.2 million, 1.4 million in the U.S. alone.

The store closures will start at the end of the month.

The announcement comes three months after Wal-Mart Stores Inc. CEO Doug McMillon told investors that the world's largest retailer would review its fleet of stores with the goal of becoming more nimble in the face of increased competition from all fronts, including from online rival Amazon.com.

"Actively managing our portfolio of assets is essential to maintaining a healthy business," McMillon said in a statement. "Closing stores is never an easy decision. But it is necessary to keep the company strong and positioned for the future."

Michael Exstein, an analyst at Credit Suisse, described the moves as "baby steps" in his report published Friday, but he believes they are positive ones. He noted that this is the first mass closing that Wal-Mart has announced in at least two decades.

"It is a sign that Wal-Mart has begun the process of dealing with unproductive locations in a much more tangible and coherent way," he wrote. "But we continue to believe that Wal-Mart needs a much larger restructuring of its store base in order to narrow its focus as it seeks to improve its sales and returns, especially internationally."

Wal-Mart has seen sales perk up for a key revenue measure for the last few quarters in its U.S. business. But it warned last October that its earnings for the fiscal year starting next month will be down as much as 12 percent as it invests further in online operations and pours money into improving customers' experience in the stores. The company has been building bigger fulfillment centers devoted to e-commerce orders and expanding online services.

Of the 154 store closures in the U.S., 102 of them are under the Wal-Mart Express name, which were opened as a test in 2011. The company operates more than 5,000 stores overall in the U.S.

Wal-Mart Express marked the retailer's first entry into the convenience store arena. The stores, which sold essentials like toothpaste, were meant to be a solution to the threat of the fast-growing dollar stores. Wal-Mart Express intended to be a two-pronged strategy: stores in small towns that aren't big enough to support a full-size Wal-Mart and stores in big cities where building a supercenter was impractical. But the concept never caught on as the stores served the same purpose as Wal-Mart's larger Neighborhood Markets: fill-in trips and prescription pickups.

Also covered in the closures are 23 Neighborhood Markets, 12 supercenters, seven stores in Puerto Rico, six discount stores and four Sam's Clubs.

More than 95 percent of the stores set to be closed in the U.S. are within 10 miles of another Wal-Mart. The Bentonville, Arkansas, company said it is working to ensure that workers are placed in nearby locations.

Wal-Mart will now focus in the U.S. on supercenters, Neighborhood Markets, the e-commerce business and pickup services for shoppers.

The retailer said it also closed 60 loss-making locations in Brazil, which accounts for 5 percent of sales in that market. Wal-Mart, which operated 558 stores in Brazil before the closures, has struggled as the economy there has soured. Its Every Day Low price strategy has also not been able to break against heavy promotions from key rivals.

The remaining 55 stores are spread elsewhere in Latin America.

Wal-Mart said that it's still sticking to its plan announced last year to open 50 to 60 supercenters, 85 to 95 Neighborhood Markets and 7 to 10 Sam's Clubs in the U.S. during the fiscal year that begins Feb. 1. Outside the U.S., Wal-Mart plans to open 200 to 240 stores.

The financial impact of the closures is expected to be 20 cents to 22 cents per share from continuing operations, with about 19 cents to 20 cents expected to affect the current fourth quarter. The company is scheduled to release fourth-quarter and full-year results on Feb. 18.

In a separate move, Wal-Mart said that it's merging its Arkansas-based team that creates technology for its stores with its Silicon Valley team that does the same for e-commerce. The move is expected to help Wal-Mart create a more seamless shopping experience for customers who are jumping back and forth between stores and their mobile phones.

Shares of Wal-Mart Stores Inc. fell $1.13, or 1.8 percent, to close at $61.93 amid a broad market sell-off. - AP.

World Bank issues 'perfect storm' warning for 2016

 Russia’s Vladimir Putin (L), India’s Narendra Modi (3rd L), Brazil’s Dilma Rousseff (4th L), China’s Xi Jinping (4th R) and South Africa’s Jacob Zuma (R).
Photograph: Alexander Nemenov/AFP/Getty Images

The risk of the global economy being battered by a “perfect storm” in 2016 has been highlighted by the World Bank in a flagship report that warns that a synchronised slowdown in the biggest emerging markets could be intensified by a fresh bout of financial turmoil.

The Bank said the possibility that Brazil, Russia, India, China and South Africa – the so-called Brics economies – could all face problems simultaneously would put in jeopardy the chances of a pick-up in growth in the coming year.

It added that the impact would be heightened by severe financial market stress of the sort triggered in 2013 by the announcement by the Federal Reserve that it was considering reducing the stimulus it was then providing to the US economy.

Launching its annual Global Economic Prospects, the Bank said activity in 2015 had failed to live up to its expectations – the fifth year in a row that growth has undershot the forecasts made by the Washington-based institution, which lends to the world’s poorest countries.

The Bank said growth had slowed to 2.4% in 2015, from 2.6% in 2014, but added that a stronger performance in developed countries should lead to 2.9% growth this year.

“Downside risks dominate and have become increasingly centred on emerging and developing countries,” it said.

The Bank is predicting that recessions in Brazil and Russia will bottom out in 2016, that China will experience only a modest growth slowdown from 6.9% to 6.7% and that India will continue to expand at a robust pace.

The report said that, in a development unmatched since the 1980s, most of the largest emerging market economies were slowing at the same time. Sharp declines in commodity prices, subdued global trade, weaker capital flows and currency pressures had combined last year to create a “particularly challenging external environment for commodity exporters”, where most of the growth slowdown had occurred.

The Bank has estimated that growth in developing countries reached a post-crisis low of 4.2% in 2015, down from 4.9% in 2014, and warned that 2016 could be another difficult year.

In the event that growth in the Brics economies fell one percentage point short of expectations, the Bank said this would knock 0.8 points off growth in other emerging markets and reduce growth in the global economy by 0.4%.

But the Bank also highlighted the risks of what it called a perfect storm. “Spillovers could be considerably larger if the Brics growth slowdown were combined with financial market stress.

“If, in 2016, Brics growth slows further, by as much as the average growth disappointment over 2010-14, growth in other emerging markets could fall short of expectations by about one percentage point and global growth by 0.7 percentage points.

“If such a Brics growth decline scenario were to be combined with financial sector turbulence, emerging market growth could slow by an additional 0.5 percentage points and global growth by an additional 0.4 percentage points.”

Jim Yong Kim, the Bank’s president, said: “More than 40% of the world’s poor live in the developing countries where growth slowed in 2015. Developing countries should focus on building resilience to a weaker economic environment and shielding the most vulnerable. The benefits from reforms to governance and business conditions are potentially large and could help offset the effects of slow growth in larger economies.”

The Bank said it expected the growth rate in the Middle East and North Africa region to more than double as a result of the ending of sanctions against Iran and an end to declining oil prices. “Growth is forecast to accelerate to 5.1% in 2016 from 2.5% in the year just ended, as the expected suspension or removal of economic sanctions against the Islamic Republic of Iran will allow that country to play a larger role in global energy markets. Growth is expected to pick up in other oil exporters as well, predominantly on the assumption that oil prices will stabilize.” More stable commodity prices should also help Africa, the Bank added, predicting growth to pick up from 3.4% in 2015 to 4.2% in 2016. - The Guardian.

GLOBAL ECONOMIC MELTDOWN: Precursors To A Global Financial Collapse - Royal Bank Of Scotland Economists Says "SELL EVERYTHING AHEAD OF STOCK MARKET CRASH"; Warns Of "CATACLYSMIC" Year With Slumps In Shares And Oil!

January 12, 2016 - GLOBAL ECONOMY - Investors face a “cataclysmic year” where stock markets could fall by up to 20% and oil could slump to $16 a barrel, economists at the Royal Bank of Scotland have warned.

In a note to its clients the bank said: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It said the current situation was reminiscent of 2008, when the collapse of the Lehman Brothers investment bank led to the global financial crisis. This time China could be the crisis point.

Stock markets have already come under severe pressure in 2016, with the FTSE 100 down more than 5% in its worst start since 2000. In the US, the Dow Jones industrial average has made its poorest ever start to a year.

Oil prices have also fallen sharply on fears of lower demand and a supply glut, especially with Iran due to start exporting once more when sanctions are lifted. Tensions between Iran and Saudia Arabia make it less likely that Opec can agree to cut production to halt the slide in prices. Brent crude is down another 1% at $31.18, its lowest level since April 2004.

Investors have been spooked by fears of a severe slowdown in the Chinese economy and a fall in the value of the yuan, not helped by a crash in the country’s stock market despite attempts by the country’s authorities to curtail selling.

Andrew Roberts, RBS’s credit chief, said: “China has set off a major correction and it is going to snowball. Equities and credit have become very dangerous, and we have hardly even begun to retrace the ‘Goldilocks love-in’ of the last two years.”

Markets have been supported for some time by low interest rates, stimulus measures from central banks including quantitative easing, and hopes of economic recovery. But with the Federal Reserve raising rates and the Bank of England expected to follow suit, that prop is being removed.

Roberts said European and US markets could fall by 10% to 20%, with the FTSE 100 particularly at risk due to the predominance of commodity companies in the UK index. “London is vulnerable to a negative shock. All these people who are long [buyers of] oil and mining companies thinking that the dividends are safe are going to discover that they’re not at all safe.

“We suspect 2016 will be characterised by more focus on how the exiting occurs of positions in the three main asset classes that benefited from quantitative easing: 1) emerging markets, 2) credit, 3) equities … Risks are high.”

RBS is not the only negative voice at the moment. Analysts at JP Morgan have advised clients to sell stocks on any bounce.

Morgan Stanley has said oil could fall to $20 a barrel, while Standard Chartered has predicted an even bigger slide, to as low as $10. Standard said: “Given that no fundamental relationship is currently driving the oil market towards any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the US dollar and equity markets.

“We think prices could fall as low as $10 a barrel before most of the money managers in the market conceded that matters had gone too far.” - The Guardian.