We come to the end of a year that felt like a tumble down a rocky hill, with the odd dead cat bounce off a boulder of defiant optimism, but the weight of gravity propelled all economic sentiment and geo-political expectation down towards even greater unknown unknowns. Feeling dizzy with concussion, we are left facing 2016 with a repeated bad record festive carol screeching off the turntable over and over asking – what’s next?
But the one constant graph that kept moving up against economic gravity and logic was the monetary easing generosity juggernaut extended to the financial markets for yet another year. Like UFC cage fighters slamming on a cliff edge, the European and the Chinese central bankers landed bigger and bigger blows to salvage an economic system caught in an endless Greek tragedy, while the Fed essentially kept the punch bowl filled and the Chinese-demand slumber party going. The only answer that the swarms of PhDs packing the globe’s leading financial institutions can offer the world is we must keep printing free money – give everyone more credit cards on zero interest rates to pay for the last credit card bills! All these brains, so little wisdom...Governments and central banks risk tipping the world into a fresh financial crisis, the International Monetary Fund warned in its Global Financial Stability Report released in October. Emerging market companies have “over-borrowed” by $3 trillion in the last decade, reflecting a quadrupling of private sector debt between 2004 and 2014, the IMF Report said. Now they face a Fed rate-rising cycle – ouch!Despite the endless government interventions, China’s economic slowdown continues to surprise on the downside heading to 5%, and perhaps beyond. While most keep waiting for the hidden TV cameras to pop out from behind the couch to say that it was all a joke and China is still enjoying double-digit growth. We need to all wake up – It’s not! It’s over!The Bloomberg Commodity Index, the gauge tracking the performance of 22 natural resources, has plunged two-thirds from its peak in 2011, to the lowest level since 1999. That shows it’s back to square one for the so-called commodity super cycle, an appetite for coal, oil and metals from Chinese manufacturers that powered a bull market for about a decade.Anglo American, one of the world’s biggest mining companies, said in early December it would cut around 85,000 employees, or 63% of its workforce. And I haven’t even mentioned the 60% collapse in oil prices facing-off against a global stockpile of 3 billion barrels...Suffice to ask – What’s Next?