AUG 2 16 SIT EC
y POL
ZERO HEDGE
ECONOMICS : THE EC COLLAPSE in AMERICA
Based on June 2014 EPS estimates, “fair value” of the
S&P 500 at 15 times CY 2015 earnings would have been 2,169 for the index.
But those forward earnings were a mirage, the real reported value more than
a third less than that. “Fair value” on an actual
basis would have been instead 1,297!
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Savings are slumping (which means credit is surging) as
the American consumer keeps on spending (+3.7% YoY near highest since May 2015)
despite income growth at its slowest since Dec 2013
(+2.7% YoY). The diverging trend of the last 6 months (higher spending,
lower income) is unlikely to last but with the savings
rate at 5.3% (down from 6.2%)at March 2014 lows, we suspect the run way is
running out.
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As of this moment, absent a substantial pick up in wages
and disposable income in general, US spending - that key driver of US GDP - is
about to slow down sharply as the savings rate enters the red zone. As shown in
the chart above, every time the savings rate hits about 5%, consumers slow
down. The problem is that it comes just as spending in Q1 supposedly soared.
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Can we be honest and say that many of the reductions
in value, quantity and quality are actually instances
of fraud?
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Following last week's surprise build in overall crude
inventories (after 9 weeks of draws), API reported a smaller than expected
drawdown (-1.34mm vs -2mm exp). However, oil prices are extending late-day
gains as Cushing reported a major 1.3mm draw (against expectations of a 1mm
barrel build). Gasoline drew down but Distillates built.
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Well that escalated quickly. Having toyed with the
$39-handle yesterday, this morning's plunge has erased those stops.
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What
Could Possibly Go Wrong Here? It's
probably nothing...
For 20 years the average EV/EBITDA multiple of the
Russell 2000 oscillated around 11x...
Since Bernanke unleashed QE2 and showed the world that
nothing else matters, the ultimate valuation metric has
exploded to 21x - almost double the norm.
See image location at: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/07/31/20160801_EOD1_1_0.jpg
What could possibly go wrong
here?
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"The government should have never extended [us]
so much
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"Falling rates of global trade growth have
attracted much comment by analysts and officials, giving rise to a literature
on the ‘global trade slowdown’ giving the impression of world trade losing
momentum, but growing nonetheless. The sense of the global pie getting larger
has the soothing implications... but our first finding that the rosy impression
painted by some should be set aside...trade volumes
have plateaued... Except during global
recessions, a plateau lasting 15 months is practically unheard of since the
Berlin Wall fell."
….
-World export volumes reached a
plateau at the start of January 2015. The same finding holds if import volume
or total volume data are used instead.
-Both industrialised countries’ and emerging markets’
trade volumes have plateaued (Figure 1).
Figure 1 World trade plateaued around the start of
2015
See image location at: https://assets.weforum.org/editor/G5OvAHQLOwRrMfMkTTFvAkRNAvHWWdS05QJ1vH1EEjc.png
-Except during global
recessions, a plateau lasting 15 months is practically unheard of since the
Berlin Wall fell.
-Except during global
recessions, a plateau lasting 15 months is practically unheard of since the
Berlin Wall fell.
-In 2015 the best available data on world export volumes
diverges markedly from that reported by the WTO, IMF, and World Bank, and
probably explains why analysts at these organisations have missed this profound
change in global trade dynamics (Table 1).
See image location at: https://assets.weforum.org/editor/TVi9j2jO_9fF0yr-kqG1DDslZSinhmX8qc9RWY6opWI.png
Our argument is not that world
trade has stopped. Rather, that according to a benchmark measure of trade
volume, world trade isn’t slowing down – it is not growing at all.
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After every other major US health insurance provider
admitted to generating substantial losses on Obamcare, earlier today Aetna
became the latest to report that its annual loss on Obamacare plans would be
more than $300 million. More ominously, Aetna joined the biggest US health
insurer UnitedHealth in reviewing how, if at all, it would continue providing
ACA services in the 15 states it's currently in.
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July auto sales missed
estimates pretty much across the board. Digging a little deeper to
strip out fleet sales the numbers were
even worse.
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"...the
motivations and actions (or inaction) of individuals in the financial system,
governments, central banks, academia and the media that collectively contribute to the persistence of a
dangerous and distorted financial system and inadequate, poorly designed
regulations. The
underlying problem is a powerful mix of distorted incentives, ignorance, confusion, and lack of
accountability. Willful blindness seems to play a role in flawed
claims by the system’s enablers that obscure reality and muddle the policy
debate."
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POLITICS
One day after about a
100 protesters gathered in Lower Manhattan Monday, calling for an end to police
brutality and the firing of NYPD Commissioner William Bratton, they got just
what they wanted and moments ago NYPD Commissioner, news broke that Bill
Bratton is set to resign later today according
to ABC. Mayor Bill de Blasio is expected to announce Bratton’s departure
today, along with his succession by NYPD chief James P. O’Neill.
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Clinton does not understand that
a policy of endless interventionism has brought us to our knees and made us far
weaker. Does she really expect us to be the policemen of the
world with $20 trillion in debt? Likewise, Republican candidate Donald Trump
misses the point. He promises
to bring back jobs to America without any understanding of the policies that
led to their departure in the first place.
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"The government should have never extended [us] so much
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ME & WORLD ISSUES: GLOBAL RECESSION
If the goal of the
EBA Stress Tests was to reassure investors and regain confidence that 'all is
well' in Europe's increasingly fragile and systemically interconnected banking
system, then it has utterly
failed. The broadest European bank stock
index is now down 7% from the post-stress-test spike highs, Italian banks are
at record lows and being halted (despite Renzi's promises), Commerzbank is
struggling with capital raise chatter, and Deutsche Bank and Credit Suisse are
tumbling after being booted from the Stoxx 50.
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The BoJ launched its mini-ETF-bazooka but disappointed
overall, and last night Abe unveiled a disappointing 26th fiscal stimulus plan
since 1990 - practically admitting that Abenomics had failed. The worrying thing is that this double whammy of
under-delivering appears to have shaken the world's faith in everything
Japanese as bonds, stocks, and the JPY carry trade are unwinding in a hurry. While 10Y JGB yields rise back near 0bps, USDJPY just
broke back to a 100 handle, near one-month lows...
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Disappointing fiscal
stimulus, loss of faith in The BoJ, and increasingly headless-chicken
policymakers has sparked a
sudden and severe rush for the exits from Japan's government bond markets. 10Y JGB yields exploded from -30bps
to almost 0bps in the last 4 days - the biggest crash in prices in over 3
years. This bloodbath is roiling the rest of the global developed bond market
with Bund yield spiking (+12bps in last 2 days, almost back to 0), Swiss, UK,
and Danish bonds are all blowing out, and Treasury yields up 14bps since Friday alone.
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DEMOCRACY NOW or DOWN with TYRANNY
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GLOBAL RESEARCH
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Janae Bonsu & Montague Simmons say their demands for
black power, freedom and justice go beyond reform and require transformative
change
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Arn Menconi tells the Real News he's aiming to defeat his
corporate-backed Democratic opponent by prioritizing the fight against climate
change and income inequality
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Wenonah Hauter, author of Frackopoly: The Battle for the
Future of Energy and the Environment explains the history of the oil industry's
collusion with the state and how the fate of the planet depends on challenging
fracking
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INFORMATION CLEARING HOUSE
Russia Defeats Terrorism… While America Hails
a Freak Show. By Finian
Cunningham
What Syrian and Russian forces are about to achieve
in the recapture of Aleppo is nothing short of a historic
victory.
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The institutional memory of the world’s media is that
of a street dog.
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US
Airstrikes Hit Libya to Bolster UN-Created Government. By Daniel McAdams
The US is bombing Libya to consolidate the power of a
non-elected government
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What
"Drill, Baby, Drill" Means in the South China Sea. By Pepe Escobar
At least 10% – and rising – of China’s total energy
consumption travels the South China Sea.
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COUNTER PUNCH
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Terry Connolly Challenges
to Duopoly Control
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RT SHOWS
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Keiser
Report Episode
948 Max and Stacy discuss the myth of the Millennial
entrepreneur. Business startups have collapsed, but the Obama administration
says student debt is great for the US economy.
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WASHINGTON BLOG
Yesterday, I showed how Consumer
Prices Have Soared 160% Since 2001 for everything from burritos to
healthcare. This enormous loss
of purchasing power is not reflected in the official measure of inflation,
which claims inflation is subdued (1% or so annually).
But price inflation doesn’t necessarily reflect all the
inflation that’s hidden in plain sight in smaller quantities and
declining quality. We’ve all
observed prices of consumer items remaining the same while the amount of the
product we receive for our money is less than it was a few years ago. .. While
a reduction in product quantities can be easily calculated, reductions in
quality are harder to discern and calculate.
Consider the quantity and quality of the paint being
applied to kitchen appliances. Although I can’t quantify this, I’ve noticed
appliances such as ranges and refrigerators are now prone to rust along the
bottom edges in a few years because the manufacturers no longer apply much
paint to surfaces and edges that are not visible, for example the underside of
the steel exteriors. .. This sort of rust was unknown in older appliances, or
would only be visible after decades of service, not a few years. .. I also notice that
the paint is now so thin that scrubbing will in some cases remove the top layer
of paint.
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Donald
Trump Warns Americans To Get Out Of The Stock Market As The Dow Falls For A 7th
Day In A Row Posted on August 2, 2016 by WashingtonsBlog. By Michael Snyder, the Economic Collapse Blog.
What Trump told Fox Business earlier today was actually
right on the money. Our financial markets have been artificially inflated
by the Federal Reserve, and all artificial bubbles of this nature eventually
burst. The following comes from a Bloomberg article that was posted on
Tuesday entitled “Trump
Urges Exit From Market Boosted by ‘Artificially Low’ Rates“…
Donald
Trump on Tuesday said interest rates set by the Federal Reserve are inflating
the stock market and recommended 401(k)-holders to get out of equities, just
like he did.
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NOTICIAS IN SPANISH
Ent a Theotonio dos Santos "Lo que no está bajo control de EE.UU.
pasa a ser una amenaza"
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Infor Econ CELAG Consecuencias de liberalización
cambiaria en Arg en la era Macri
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PRESS TV
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Venezuela signatures 'enough for recall' come
autogolpe like Turkey?
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