Analysts warned of a ‘cataclysmic year’ ahead for investors and the global economy

[superbeets]

'Sell everything' warns RBS as fears mount that mass sell-off is about to crash markets and oil could spiral towards $10 a barrel

• RBS tells investors 'In a crowded hall, exit doors are small. Risks are high'
• Mass sell-off could be as severe as the 2008 market meltdown, bank says
• Oil price drop could see petrol fall to 86p a litre, says RAC

PUBLISHED: 18:23, 12 January 2016 | UPDATED: 02:37, 13 January 2016





RBS urged investors to sell everything amid warnings that oil prices could fall to the lowest level in 17 years which may spark a meltdown as severe as the 2008 financial crisis.
RBS told investors told investors stock markets could fall 20 per cent this year, urging them to sell everything, saying: 'In a crowded hall, exit doors are small. Risks are high.
The stark warning came as oil prices fell to $30 a barrel for the first time since 2004 - but Standard Chartered said it might yet fall to as low as $10, not seen since 1998.

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Financial crisis: Banks issue blood-curdling warnings after a torrid start to the year on financial markets

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Huge losses: Japanese stocks tumble more than two percents on the Tokyo Stock Exchange market





Analysts warned of a ‘cataclysmic year’ ahead for investors and the global economy, BP said it would have to slash 4,000 posts around the world including 600 in the North Sea.
It would be a devastating blow for the North Sea oil industry already reeling from the slump in prices over the past 18 months, which have led pup prices to fall to under one pound a litre.
The horrifying warnings follow a torrid start to the year on financial markets, with billions of pounds wiped off stocks in the UK and elsewhere..

 

[superbeets]

The FTSE 100 managed to finish up 1 per cent or 57.41 points at 5929.24 at the close yesterday, but it only barely regained the ground lost yesterday.
London's top stock index saw £85billion wiped off its value after tumbling 5.2 per cent last week, during what is being dubbed the worst start to a New Year ever on world markets.
A string of banks including Barclays, Bank of America Merrill Lynch and Societe Generale have slashed their 2016 oil forecasts this week, while Standard Chartered cautioned that the price could plummet to $10 a barrel.


.But RBS sounded the strongest alert, issuing advice to clients saying 'danger is lurking out there for every investor' and 'the downside is crystallising. Watch out. Sell (mostly) everything.'It went on: 'In a crowded hall, exit doors are small. Risks are high.' Adding 'this looks very much like 2008', RBS suggested taking refuge in US and German government bonds.
UK motorists can look forward to lower petrol prices as the oil price tumbles, but the recent declines are causing chaos on financial markets which could end up tanking the global economy in the worst case scenario.
RAC fuel spokesman Simon Williams said: 'This latest prediction of oil hitting just $10 a barrel would have the potential to take petrol prices down to around 86p per litre – the last time we saw average prices this low was in early 2009.
'However, for prices to get this low the pound would have to get no weaker against the dollar than it is today.'
He added: 'At $10 a barrel, tax would account for around 84 per cent of the total price per litre – a clear indication of just how high a proportion of every litre we buy goes straight to the Treasury.


.

 

[superbeets]

Warning: Both RBS and Standard Chartered said oil might fall to as low as $10 a barrel

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Slipping: The FTSE saw £85bn wiped off its value after tumbling 5.2 per cent last week, during what is being dubbed the worst start to a New Year ever on world markets

Oil is down nearly 75 per cent since trading above $115 in mid-2014. Six months ago it dropped to $56.8 a barrel, before falling below $40 in December .
Deirdre Michie, of industry lobby group Oil & Gas UK, said: ‘The plummeting oil price has impacted heavily on activity. Companies are having to take very difficult decisions in what continues to be a challenging time.’
The slump in oil prices has coincided with turmoil on global financial markets as the slowdown in China and higher interest rates in the US knock fragile confidence.
RBS warned that it could be a punishing setback for savers with pensions and other investments tied up in shares. A 20 per cent fall in stock markets would wipe more than £300billion off the value of Britain’s biggest companies.
In a gloomy report, RBS analyst Andrew Roberts said. ‘Equities have become very dangerous. Watch out. Sell mostly everything… The game is up. The world is in trouble.’
In its note to clients, the bank warned that ‘this all looks similar to 2008’ when the collapse of US banking giant Lehman Brothers triggered the global financial crisis. Mr Roberts advised investors to switch their money out of risky assets such as shares and into the safety of bonds.
The price plummet is due to a supply glut, China’s weakening economy and stock market turmoil, as well as the strong dollar, which makes it more expensive for those using other currencies to buy oil.
Prices have also been driven lower by a threat that markets will be flooded by even more oil when sanctions against Iran are lifted shortly.
China has tried to impose draconian measures to halt wild bouts of selling on its markets, but to little avail so far.
Analysts have started to warn that what looked like a market correction in one of the world's biggest economies is becoming a full-blown crisis, which shows no signs of going away.
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[GasMan]

Clearly Bush's fault.

 

[SheriffJoe]

 

[Dave007inVegas]

Clearly Bush's fault.

No doubt.

 

[Dave007inVegas]

Here is another example of his work.

Altgeld Gardens, a neglected housing project in Chicago. Shuttered buildings at the complex.

 

[superbeets]

[h=1]IMF slashes global growth forecast after China posts its worst economic growth figures for 25 YEARS - fuelling fears we are on the verge of another financial meltdown[/h]

• The country's GDP sits at 6.9 per cent, after years spent in the double digits
• Its slowdown has caused shockwaves across European and Asian markets
• The IMF has now cut its growth forecasts for the third time in a year
• China's production has been major driver of the international economy
• But it is trying to shift its economy's emphasis from exports to services

PUBLISHED: 10:21, 19 January 2016 | UPDATED: 13:36, 19 January 2016



The International Monetary Fund has slashed its global growth forecasts for the third time in less than a year amid growing concerns of an impending financial meltdown.
Forecasting the world economy will grow at 3.4 percent this year and 3.6 percent in 2017, the IMF put both years down 0.2 percentage points from previous estimates.
It comes as it emerged today China's economic growth has dropped to its slowest rate in 25 years, scaring investors and prompting fears it could precede yet another financial crisis.

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Chinese investors look at share prices at a stock brokerage house as it is revealed the country's rate of economic growth has dropped to its slowest for 25 years

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Investors check stock prices at booths at a brokerage house in Beijing after a tumultuous day on the markets

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The country's GDP sits at 6.9 per cent, a far cry from the whirlwind of the early 2000s in which it maintained double figures and was a crucial driver of the global economy.
The sharp slowdown has sent shock waves through stock markets from Asia to the Americas over the past six months, in a rout that has wiped trillions off valuations.




The updated World Economic Outlook forecasts said a steeper slowing of demand in China remained a risk to global growth and that weaker-than-expected Chinese imports and exports were weighing heavily on other emerging markets and commodity exporters.
'We don't see a big change in the fundamentals in China compared to what we saw six months ago, but the markets are certainly very spooked by small events there that they find hard to interpret,' IMF economic counsellor Maurice Obstfeld said.
'It's not a stretch to suggest that [markets] may be reacting very strongly to rather small bits of evidence in an environment of volatility and risk aversion.
'The oil price puts stresses on oil exporters... but there is a silver lining for consumers worldwide, so it's not an unmitigated negative.'
These concerns have also shot to the top of global investors' risk lists for 2016 after the plunge stoked worries that the economy may be rapidly deteriorating.
Although today's news its economy grew in line with an expectation of 6.9 percent lifted Asian and European stocks, dealers remain cautious due to the poor rate of growth.
Shanghai's stock market, which has plunged almost 20 percent since the start of this year, ended up 3.2 percent in characteristically volatile trade.
Analysts said the gains were boosted by expectations of government stimulus measures to kick start growth this year.
Others said the government-backed 'national team' investment group was buying shares to prevent a market sell-off, with one eye on the upcoming Chinese New Year break.

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News that China's GDP remains slow sent shockwaves throughout Asian and European markets

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A man reads a newspaper with a front page headline which states 'China's GDP grows at 6.9 per cent'

'The sharp rise today is, without a doubt, supported by the "national team" as this is a good window for them to swoop in,' Phillip Securities analyst Chen Xingyu told AFP.
'Only they have the resources to lift the market this fast.'
After being a major driver of international growth for decades, China is locked in the midst of a protracted slowdown, leaving the U.S. as the only main driver of the global economy.
Weak exports, factory overcapacity, slowing investment, a soft property market and high debt levels are all compounding problems for the government as it tries to transition from a centrally planned economy to a more market-oriented model that will require leaders to cede a large degree of control.
Zhang Yiping, an economist at China Merchants Securities, said the struggling property market - a major driver of demand for materials from cement to steel - was mostly to blame for the difficulties.
'The policy to boost the property industry conducted in 2015 hasn't taken effect yet. I see more downward risks for China's economic growth in 2016, and they actually look fairly severe.'
Property investment rose just 1 percent, a near 7-year-low, while new construction plunged 14 percent.
The China statistics bureau told a news conference that the 2015 growth had been 'hard won', adding that the structural adjustment of the Chinese economy is at a crucial stage.




That highlights the difficulties Beijing will face in getting policy - be it monetary easing, reforms, increased fiscal spending or cutting red tape - to translate into actual growth in 2016.
Meanwhile, the Bank of England governor says there's no reason to raise interest rates given the collapse in oil prices and volatility in China.
In a speech at Queen Mary University London today, Mark Carney said 'now is not yet the time' to increase rates from their record low of 0.5 percent.
Mr Carney said the path for rates 'cannot be preordained,' and that it would depend on economic prospects, not the calendar.
The U.S. last month hiked raised rates for the first time in nearly a decade as America's economy expanded strongly last year.
But this does not mean the UK will follow suit with a rate rise soon, Mr Carney said.
Britain's export industry is more exposed to the weakening global economy than America, inflation is lower on these shores and the UK is also undergoing hefty spending cuts as the Government seeks to tackle the deficit, according to Mr Carney.
He said: 'Last summer I said the decision as to when to start raising Bank Rate would likely come into sharper relief around the turn of this year.
'Well, the year has turned and, in my view, the decision proved straightforward: now is not yet the time to raise interest rates.'
Mr Carney said policymakers needed to see faster economic growth, higher pay and more core inflation before deciding to increase rates.
'Progress in all three ... will increase confidence that the initiation of limited and gradual rate increases will be consistent with returning inflation sustainably to target.'
He said the UK's economic growth over 2015 had 'disappointed', averaging 0.5 per cent, per quarter, against its earlier expectations of 0.7 per cent, per quarter.
He added that the outlook for the global economy may weaken further, in particular due to China and other emerging market economies.
The remarks came only hours after the Office of National Statistics reported that Britain's consumer price inflation rate rose to 0.2 percent in the year ending in December, up from 0.1 percent in the year ending in November.
That level is well below the 2 percent target, minimizing pressure on policymakers to hike rates.

• SHARE PICTURE

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Mr Carney, speaking at Queen Mary University in London today, believed the outlook for the global economy may weaken further in spite of today's announcements revealing growth is stuttering internationally

• SHARE PICTURE

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Mark Carney, Governor of the Bank of England, today said it is not yet time for the UK to increase interest rates from their record low

 

[superbeets]

[h=1]World faces wave of epic debt defaults, fears central bank veteran[/h][h=2]Exclusive: Situation worse than it was in 2007, says chairman of the OECD's review committee[/h]

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











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).

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




"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 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.

Federal Reserve
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.
"It was always dangerous to rely on central banks to sort out a solvency problem ... It is a recipe for disorder, and now we are hitting the limit."
William White, OECD



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.

 

[loomis41973]

Bought multiple thousands of shares in MRO at 7.65 this week

 

[superbeets]

FTSE 100 hurtles towards bear market territory as oil-inspired sell-off triggers panic across financial markets- live

European markets open in the red following another turbulent trading session in Asia

European markets take their lead from Asia, opening sharply lower as oil prices fall again. Photo: Bloomberg Finance




• Middle East stock crash wipes £27bn off markets
• 'Drowning' oil market is here to stay, warns IEA
• Mark Carney rules out imminent interest rate rise
• FTSE heads towards bear market territory
• Shell's shares slide to a six-year low
• Asian markets tumble as oil heads further south







Equity markets: 'Ugly, very very ugly'

As the FTSE heads for bear market territory, Rebecca O'Keefe, of Interactive Investor, describes equity markets "ugly, very verly ugly, with momentum swinging negative yet again and the bears firmly in control."
"The fledgling hope from yesterday that markets were on the turn has been quashed by sharp overnight falls in Japan and Asia which has seen European markets fall aggressively.
"With every upturn being followed by deeper falls, investors are increasingly wary as it becomes more and more difficult to determine what might happen next."