This Ticking Time-Bomb Is Now Threatening The World Financial System

This ticking time-bomb is now threatening the world financial system.

Here is a portion of today’s note from Art Cashin: I Owe You One – In this week’s edition of “Outside the Box”, my friend, John Mauldin, featured the latest report from Dr. Lacy Hunt of Hoisington Investment Management. It is an eye-opening piece on the topic of debt.

To whet your appetite, here is a quote from John’s introduction:

The Federal Reserve, the European Central Bank, the Bank of Japan and the People’s Bank of China have been unable to gain traction with their monetary policies…. Excluding off balance sheet liabilities, at year-end the ratio of total public and private debt relative to GDP stood at 350%, 370%, 457% and 615%, for China, the United States, the Eurocurrency zone, and Japan, respectively…. The debt ratios of all four countries exceed the level of debt that harms economic growth. As an indication of this over- indebtedness, composite nominal GDP growth for these four countries remains subdued. The slowdown occurred in spite of numerous unprecedented monetary policy actions – quantitative easing, negative or near zero overnight rates, forward guidance and other untested techniques.

Pull up the whole report. It is “must” reading.

Overnight And Overseas – Tokyo roared ahead for the second straight day as Kuroda hints at further easing moves. Shanghai hit a new multi-month high and Australia rallied too. India is closed for a holiday.

In Europe, stocks are backing off a smidge from Wednesday’s closing highs. The BOE stood pat. Talk of Brexit is beginning to heat up but not heavily influencing markets yet.

Currencies are in minor turmoil after Singapore had a surprise easing and China marked the yuan down notably against the dollar.

The currency shuffle has dinged commodities a bit. Gold is down and oil struggles a bit.
Consensus – Bulls may want to consolidate their two day gains here. Thursday before Expiration can be volatile. Currency moves may become a factor so they bear watching.

Stick with the drill – stay wary, alert and very, very nimble.

Art Cashin
King World News
April 14, 2016