Q3 2015 Quarterly Wrap-Up: News Trends & Stories

October 20, 2015

What an intense year! And the 3rd quarter of 2015 was no exception.

Clearly, policy makers were expecting a stronger economy. We spent Q3 listening to back-pedaling on growth projections while the Fed continued to back-pedal on raising interest rates. We ended Q3 with the Wall Street ducks quacking for more QE.

China: A Bigger Footprint

Try watching the Solari Report video below: Stephen Roach – Seeking US-China Balance. There is no greater challenge facing the global economy than the rebalancing of the US-China relationship. For many years, China’s growth was based on providing low-cost manufactured goods to Europe and the United States. After 2007 and the recession in the developed countries, China’s growth continued with significant increases in debt that fueled a housing and real estate bubble and investment in infrastructure. The effort to build domestic consumer markets has produced mixed results. Efforts to 1) market infrastructure and development efforts to the emerging markets and 2) to organize the Asian Infrastructure Investment Bank have been greeted by U.S. fears regarding changes in the global order. Does the West want China to grow or not? There were times during the 3rd quarter where it looked like the answer was “NOT.”

Solari Report Resources

The Limits of US Power

As we discussed in our 2014 Annual Wrap Up, the Bretton Woods system is clearly unraveling. The US is overextended. Throughout 2015, U.S. military commitments were clearly more expensive than the U.S. federal budget could afford. During Q3, US diplomatic and military efforts reduced commitments in the Middle East and tried to plug diplomatic holes around the world. As the limits of US power become clear, the rejection of US initiatives such as GMOs were apparent. The US was able to push through a preliminary agreement on the Trans-Pacific Partnership. However, it was clear that this was a defensive response to the increased presence of China and a rising Asia on the global stage.

Solari Report Resources

Deflation

The drop in commodities prices has continued beyond what was expected, surprising many insiders. Combined with a correction in the equities markets and concerns about credit quality and interest rates in the bond market, fears of deflation continued to grow.

The G-20 Pushes for Growth

For the BRICS nations, the way to keep economic growth going was to work together and to secure financing outside G-7 controlled institutions. There was a lot of noise and several moves to enhance economic independence – and the tensions between the G-7 and G-20 grew.

The End of the Bond Bull

After Greece and Puerto Rico “rang the bell” in the first half of 2015, we spent Q3 with market makers and investors trying to figure out exactly how the turn in the bond market was going to work. When the Fed declined to raise interest rates in September, the message was clear. The world is struggling to carry an untenable amount of debt and “kicking the can” appears to look like the best option.

Solari Report Resources

Refugee Mass Migration

One way to manage an aging population and a furious middle class is to overwhelm them with immigrants. Now Europe has their hands full.

Leadership: Tag, You’re It

There is nothing more painful than a struggle with corrupt leadership. From overwhelming immigration in the US and Europe, to intense campaigning of the US Presidential candidates more than a year before the 2016 election, to the hypocrisy of a Pope flying around in private planes lecturing us about our carbon footprint while settling more pedophilia litigation and fielding a PR team the size of Dallas—struggling with corrupt leadership was arguably our foremost concern. Not to mention our foremost disgust.

Solari Report Resources

The Push for Vaccines & The Mysterious Deaths of The Natural Doctors

The new policy wars are fought with junk science. The way to make junk science effective is to kill all the scientists and experts who are willing to prove that it is junk. The number of sudden, violent deaths among holistic doctors was proof positive of the extraordinary, desperate push against health freedom in the United States. It will not succeed. Please take a moment to honor the people who have lost or risked their lives in the service of mankind. Their courage in Q3 was a continuous source of inspiration.

Equity Markets Correct

The only sector that performed well was U.S. consumers. Is that because consumers are being forced to spend on higher food prices and higher medical costs?

Solari Report Resources

Blue Chip Volatility

The stocks of blue chip companies such as Volkswagen are taking big dives. This is creating uncertainty regarding risk management…and helping index fund marketing.

Solari Report Resources

Fear Porn Hits New Highs

Numerous attention-grabbing predictions of catastrophic market meltdowns did not come true – again. See our efforts to bring folks back to the ground:

Solari Report Resources

The great truth is that life marches on. If you did not ignore the fear porn in Q3, you have a new time-saving opportunity – to ignore it in Q4!