China's Housing Downturn: Is This a More Serious Correction?

China's housing downturn..."is this a more lasting correction?

Source: @IanTalley @WorldBank

...For now the markets don’t seem to be pricing in an impending improvement in China’s housing demand. Here is the May-2015 SHFE steel rebar futures contract (actively traded)."

Source: www.SoberLook.com

"The Economy is Busted and Stocks Are In a Bubble. End of Story"

"This is getting old.

We continue to be told that the US economy is in recovery and stronger than ever. The press trumpets heavily massaged data (GDP growth and the unemployment number) while ignoring data that clearly indicates the US economy is in the toilet (labor participation rate, median income, etc).

Do the following sound like a strong economy?

1)   The labor participation rate is at a 36 year low meaning there are less Americans of working age actually working than at any point in over three decades.

2)   Median income is down over $4K since 2008. You cannot use mean income to measure income because the wealth disparity in the US skews the results courtesy of the 0.01% who earn millions per year.

3)   An incredible 47% of US households receive some form of social spending from the US Government.

4)   One in five US households are on food stamps.

Keep these in mind whenever you hear that the economy is in recovery or stronger than ever. The reality is that the Federal Government and Federal Reserve handed trillions of dollars to the big banks (most of them FOREIGN banks). Everyone else got hosed.

The end result?

Stocks have become more and more disconnected from reality to the point that we are in a massive bubble even larger than that of the housing bubble.

You cannot have a market go absolutely vertical forever. At some point this whole mess will come crashing down."

-Graham Summers, Phoenix Capital Research

October is a Particularly Dangerous Month...

"October: This is one of the particularly dangerous months to invest in stocks. Other dangerous months are July, January, September, April, November, May, March, June, December, August and February.”

  - Mark Twain

Eurozone Has Turned the Corner...Really?

Ned Davis Chart: S&P 500 Price/Sales Ratio More Expensive Than Ever Before

Share of IPOs with Negative Earnings About to Reach Record…So is S&P 500? Where is Common Sense in this Chart?

Total Private and Public Debt Worldwide - Debt Deflation, not Inflation, is the Near Term Risk (Lacy Hunt, Van Hoisington)

"...debt deflation – not inflation – is the biggest near-term risk...the famous characterization of inflation ultimately depends on stable or rising monetary velocity… sans sufficient monetary velocity [see below], inflation does not materialize." Dr. Lacy Hunt (via Mauldin conference)

*Money Velocity*: "...the even more important velocity of money (V) rejects the argument that monetary policies are gaining traction. Velocity, or the speed at which money turns over, links M2 to the level of nominal economic activity. With the money supply expanding at 5.6% in the latest year, it would be reasonable to expect the same growth rate in nominal GDP if V were stable. Unfortunately, since 1997 velocity has been falling, and in the last twelve months it has dropped by 3% to 1.57, the lowest level in six decades (Chart 4). While velocity is influenced by a myriad of factors, the rate of change of financial innovation and lending for productive purposes affect its direction. If debt generates an income stream that repays principal and interest and creates other activities, it will tend to expand economic activity and cause V to rise. Student, auto and other loans for consumption (which represent the bulk of the increase in consumer credit in 2013) do not meet the necessary criteria, so debt is merely an acceleration of future consumption. This will tend to inhibit the borrower’s ability to increase consumption in the future. Further,  new regulations on our financial industries are discouraging financial innovation, and this will bring further downward pressure on velocity."

(http://www.hoisingtonmgt.com/)