Investment Markets Overview — W/E 20th November 2015

Ponzi finance” is a term labelled by the distinguished American economist Hyman Minsky to describe the use of borrowed funds to repay interest on existing debt, albeit that the initial loan is usually against an asset that is rising in value, for example margin debt on a stock portfolio or an interest deferred mortgage scheme, He identified this form of credit growth as unsustainable and would likely precipitate a financial crisis, a view shaped by his growing up during the great depression. A “Minsky moment” is when asset prices start to fall, the fall gathers pace and the lenders realise that they are unlikely to ever be re-paid as the whole house of cards falls down. According to a Bloomberg report this week, China has a $1,200,000,000,000 Ponzi finance problem as companies struggle to generate the cash flow needed to service their obligations as economic growth slows to the weakest pace in 25 years and corporate profits shrink. Defaults and bad loans are rising, yet policy-makers are telling banks not to withdraw lending to companies in “temporary” difficulties. Another “Minsky moment” may well be approaching.

20 Nov 2015

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Additional Commentaries:
•US economic data . . .
•Euro-Zone . . .
•The UK . . .
•Out East . . .
•The $US index . . .
•Within the commodities complex . . .
•Economic data due next week includes . . .

  Global trade, the life-blood of economic growth, is slowing and it’s slowing rapidly, as evidenced within last week’s ……

Charts:
1.  Indices Weekly
2. US Housing Starts V US House-builder Sentiment
3. EU 27 New Car Regisrations V Consumer Confidence
4. Japan GDP V  Private Consuption/Business Spending
5. Commodity YTD  Moves

Table:

13 Indices, 11 columns of detailed information, for accurate analysis

“Debt cuts economic growth which cuts trade.

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