DIC 2 16 SIT EC
y POL .. P1
ZERO HEDGE
ECONOMICS
THE WORLD CONTEXT
While paper gold traders can't seem to dump the precious metal fast
enough, physical
gold demand is soaring around the world. India
retail premiums are spiking (amid demonetization), local China premiums soar to a 3-year-high (as
capital controls loom), and coin sales from the US Mint have risen for the 4th straight month,
accelerating post-election to the
highest since July 2015 since Trump's victory at the election.
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In
September, headlines of Deutsche Bank trading clients pulling collateral
sparked grave concern over the world's most systemically dangerous bank. Today,
the stock is sliding once again as WSJ
reports the bank said it would
cease providing some coverage for about 3,400 actively trading clients in its
global markets division, according to a memo sent to equities staff.
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OTHER world issues
below , here only titles:
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We don’t know anything about its effects, not on IMF policies
(Ms Lagarde was today very nervous about the fate of globalism as the news from
China, RU and India: ready to quit & debank USD.)
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BACK TO ECON in AMERICA
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Can the
current iteration of global capitalism be reformed, or is it poised to be
replaced by some other mode of production?
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From the 316 rig trough in May,
American oil drillers have added 161 to 477 - the
highest since January 2016. The rising rig count continues to track lagged oil prices higher and US crude production is following
that trend to its highest level since June.
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Earlier today the Stanford Institute for Economic Policy Research revealed some fairly startling
realities about California's public pension underfunding levels.
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“The
problem for Trump is that we no longer reside in the 80’s where a large group
of ‘baby boomers’ were entering the workforce and driving a massive wave
of innovation and productivity changes. Today, we are on the wrong
side of the demographic trends combined with falling productivity and
labor force growth.”
…
What a change a couple of weeks can make. As my
colleague, Michael Lebowitz, wrote this past week:
“Following Donald Trump’s surprise victory
and the violent market reactions, many investors are left scratching their
heads. As shown above, the consensus narrative warned that a Trump victory
would spell doom for the markets. Days later, the narrative flipped and Trump’s
economic policies, all of which were known prior to the election, are deemed
beneficial for share prices.”
The question
which remains, however, is whether tax reform and infrastructure spending
will have the impact the markets are currently betting on? As I penned in yesterday’s missive:
“The
problem for Trump is that we no longer reside in the 80’s where a large group
of ‘baby boomers’ were entering the workforce and driving a massive wave
of innovation and productivity changes. Today, we are on the wrong side of the
demographic trends combined with falling productivity and labor force
growth.”
“In any event, the horses may
already be out of the barn. Only 8.5% of payroll
employment is now attributable to manufacturing, down from 10.3% 10 years ago,
14.3% 20 years ago, and 17.5% 30 years ago. Bringing factory jobs back
to the US may bring them back to automated factories loaded with robots. Even
Chinese factories are using more robots”
And from Harvard Business Review:
“Slow productivity growth is the main cause of
slow economic growth, and slow economic growth makes it all but impossible for
everyone’s boat to rise. No wonder angry citizens want dramatic
change. But while voters may see the problem in a political establishment that
is out of touch, the populist politicians who are
challenging that establishment are unlikely to fare better.
In the short term, they may be able to medicate the economy with a big
tax cut or a dose of deficit spending. When the effects of that treatment wear
off, though, the effects of slow productivity growth will linger.”
But beyond the
productivity problem is simply debt.
While Trumponomics has fostered a
furious rally in asset prices, the impacts of rising interest rates, inflation,
and a surging dollar may provide headwinds of the wrong type. In fact,
the current combination of events is similar to what we saw previously – in
1999. (yellow highlights).
SEE GRAPHT AT: http://realinvestmentadvice.com/wp-content/uploads/2016/12/SP500-MarketUpdate-120116.png
If you look closely there is a high degree of similarity
in the markets actions between today and the “exuberance” in 1999.
In
other words, changes to fiscal policy will
likely only offset retractions of monetary policy.
Just a thought.
In the meantime, here is what I am reading this weekend.
Trumponomics
- The Revolution That Failed by David Stockman via Daily Reckoning
- Sustaining The Trump Rally by Mohamed El-Erian via Project Syndicate
- Trumponomics Vs. Reality by Martin Feldstein via WSJ
- Can Trump Really Rebuild America by David Millward via The Telegraph
- Better Come To Terms With Growth Expectations by Eric Bush via GaveKal
- Trumpflation Is Coming! Really! by Kenneth Rapoza via Forbes
- Trumponics Gets Wall St Thumbs Up by Heather Long via CNN Money
- Lessons For Trump From JFK by Ray Keating via Real Clear Markets
- The Trouble With Trump’s Infrastructure Plan by Tyler Cowen via Bloomberg
- Trump May Have Trouble With Jobs Promise by Ana Swanson via WashPo
- Trump Can’t Fix The Economic Problem by Marc Levinson via Harvard Business Review
- Donald Trump & The New Economic Order by Michael Spence via Project Syndicate
- We’re All Populists Now by Dr. Ed Yardeni via Yardeni Research
- Q3 GDP Got Lots Of Temporary Help by Richard Moody via Regions
- The Big Infrastructure Myth by Marc Scribner via Foundation For Economic Freedom
…
Markets
- The “Ideal Buy High/Sell Low” Situation by Shawn Langlois via MarketWatch
- Market Could Soar 400-Points & Be A Bad Thing by Business Insider
- Buffett Indicator Says Stocks Overvalued by John Reese via CNBC
- Why The Bulls Will Stay In Charge by Howard Gold via MarketWatch
- Trump Will Benefit Almost All Stocks by Julie Verhage via Bloomberg
- Are The Markets All Wrong About Trump? by James Mackintosh via WSJ
- 3 Tailwinds To Buoy Global Stocks by Sid Verma & Blaise Robinson via Bloomberg
- Don’t Believe The Great Great Bond Fake-Out by Jeff Reeves via MarketWatch
- Global Bond Yields At A Glance by Peter Tchir via Forbes
- No Long-Term Issues For Bonds…YET by Michael Kahn via Barron’s
- Bond Market Trumpdado by Ivan Martchev via MarketWatch
- Inside Markets Love Affair With Trump by Charles Gasparino via New York Post
- 5% Yearly Returns Wishful Thinking by John Coumarianos via MarketWatch
- Just How Bullish IS The Market Right Now via Avi Gilburt via MarketWatch
- In Defense Of Fed’s Rate Hike Campaign by Edward Harrison via Credit Writedowns
…
Interesting Reads
- The Italian Connection by Danielle DiMartino-Booth via Money Strong
- 3-Signs Black Friday Was A Bust by Craig Wilson via Daily Reckoning
- The Best Credit Cards For 2016 by Brendan Harkness via Credit Card Insider
- Boomers & Gen-X’rs Are Worried by Rodney Brooks via WashPo
- Krugman On The Working Class by Tim Duy via Fed Watch
- Rates Will Remain Low by David Trainer via Forbes
- From Peak Oil To Peak Demand by Justin Fox via Bloomberg
- If You Build It (Infrastructure), They Won’t Come by Stephen Entin via IBD
- House Price Increases Less Than You Think by Keith Jurow via Advisor Perspectives
- Home Prices Reach New Highs, Houston Falls by Aaron Layman via AaronLayman.com
- Missing The Big Economic Picture by J Bradford Delong via Project Syndicate
- More Blowoff Than Breakout by John Hussman via Hussman Funds
- Are Industrial Metals Pointing To Economic Growth? by Dana Lyons via Tumblr
- Bonds Haven’t Priced In Trumpflation Yet by Jesse Felder via The Felder Report
…
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An interesting week:
- Nasdaq's worst week since Feb 2016
- Small Caps worst week since Feb 2016
- Bank stocks up 4 weeks in a row to highest since Jan 2008
- FANG Stocks down 4 of the last 6 weeks
- Treasuries down 4 weeks in a row, TLT lowest close in a year
- USD Index down first time in 4 weeks
- Oil's best week since Feb 2011 (at highest since July 2015)
- Gold down 4 weeks in a row to 10 month lows
Stocks on the week
stunned investors, with Small Caps and Nasdaq suffering their worst weeks since
Feb 2016 (and Dow and Trannies clung to unch)
SEE IMAGE AT: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/12/02/20161202_EOD21_0.jpg
Financials (and
Energy) remain the biggest post-Election winners (with Utilities and Staples
worst) but both banks and energy stocks faded today... (banks worst day in over 2 months)
SEE
IAMGE AT: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/12/02/20161202_EOD5_0.jpg
Just two charts to
consider... difference between Bank stock and Bank Credit
SEE IMAGE AT: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/12/02/20161202_EOD7_0.jpg
So bonds and stocks
down on the week - as Risk-Parity funds suffer the 7th week of losses in the
last 9 weeks... SEE
Big image at: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/12/02/20161202_EOD9_0.jpg or here
SEE ALL IMAGES
AT: http://www.zerohedge.com/news/2016-12-02/tech-small-caps-suffer-worst-week-10-months-trump-hangover-hits
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HOPE? The ilusiones está
sembrado el camino al infierno, dicen los desconfiados. Yo no!
Donald Trump today announced that he is
establishing the President’s Strategic and Policy Forum. The Forum will
be called upon to meet with the President "frequently to share their
specific experience and knowledge as the President implements his plan to bring
back jobs and Make America Great Again. The Forum will
be chaired by Stephen Schwarzman, Chairman, CEO, and Co-Founder of Blackstone."
Its members also include Jamie Dimon and Larry Fink.
[[ DIME CON QUIEN ANDAS
y te dire adonde vas y adonde llegaras. Son decires. I DO HOPE TOO: is the best that could’ve done by a naive in
economics & politics. I hope Tramp invite Econ from the left. And I hope
specialized Forum be called for specific issues, and before his tongue said
something wrong. ]]
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POLITICS
"If allowed to proceed, the statewide hand
recount could cost Michigan taxpayers millions of dollars and would put
Michigan voters at risk of being disenfranchised in the electoral
college."
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“I think the only thing that will surprise
them is that Washington, D.C., is going
to get an awful lot done in a short period of time.”
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A new study from the University of New Hampshire Carsey School of
Public Policy brought some welcome news to disaffected Hillary supporters as it confirmed that white
populations are shrinking fast in the key swing states of FL, PA, NV and AZ.
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Because the debt lifestyle has been normalized, there now exists social stigma to live below one’s
means. To not give the appearance of wealth one doesn’t have by
purchasing – on credit – things one can’t really afford. That – as much as the regulatory burden of government – is what’s driving up the cost of life for all
of us (including those still trying to live within our means).
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The House has passed H.R. 6393, a bill which calls for the government
to target "Russian Propaganda" websites and
"counter active measures by Russia
to exert covert influence … carried out in coordination with political
leaders or the security services of the Russian Federation"
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Bogus news stories did flood social media throughout the campaign, and
the hack of the Clinton campaign chair John Podesta’s e-mail seems likely to
have been the work of Russian intelligence services. But,
as harmful as these phenomena might be, the
prospect of legitimate dissenting voices being labelled fake news or Russian
propaganda by mysterious groups of ex-government employees, with the help of a
national newspaper, is even scarier.
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If the American mainstream media were officially state-controlled, would they look or sound
significantly different when it comes to U.S. foreign policy?
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Continuing the debate over a massive expansion
of the Selective Service, the White
House today announced that President Obama is in favor of expanding registration for the military draft to include all women when they turn 18. The
White House has repeatedly insisted they have no plans to bring the draft back, but want to force
everyone to register anyhow to “foster a sense of public service.”
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"I just wish that I had not voted... I have no faith in our
government anymore at all. They all
promise you the world at the end of a stick and take it away once they get in."
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Who
creates federal laws? Civics
books say it is Congress, but the real answer today may be the executive branch. A recent
report showed that the 229 major regulations issued since 2009 added over $100
billion in annual costs (according to the regulatory agencies), $22 billion
coming in 2015. With estimates of the total regulatory costs now exceeding
income tax burdens at over $2 trillion annually, regulations
were far more burdensome for many Americans than legislation.
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WORLD ISSUES and ME
While
the post-Trump euphoria in US stocks has been the perfect distraction from the
ugly realities elsewhere, this weekend's Italian Referendum could well be the
biggest 'revolt' yet, topping Brexit and Trump. Should Italy vote "no", as polls
forecast, PM Renzi may quit, leaving the Italian bank recapitalization would
then be in jeopardy and, as Bloomberg's Mark Cranfield warns "we could be looking at a Greece-like market reaction on
steroids."
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Until
today, the White House had not pushed for an extension of the Iran sanctions
act, but that changed moments ago when Reuters reported that Obama is expected
to extend the Iran sactions, in effect not only jeopardizing his own Nuclear
treaty, but also threatening to cut as much as 1 million barrels in Iranian oil
output should Trump reimpose the full Iranian sanctions next year. In response
oil jumped to new 2016 highs.
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A man from the French region of Normandy
recently inherited a house from a
deceased relative, only to discover his newly acquired home was actually a
secret gold depository. However, this story of good fortune doesn’t
end as happily as we would like...
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A MALAS NOTICIAS.. BUENA CARA
If anyone is cheering the news of an OPEC
deal it is U.S. shale
producers.
…
Saudi Arabia has agreed to
swallow the pain by lowering its oil production, reducing the global surplus to the
benefit of everyone else. But it also managed to convince some of its
intractable peers to chip in some production cuts, including Iraq, which had
previously resisted any cuts. OPEC was even able to bring Russia on board for
300,000 barrels per day in reductions, even though Russia is not an OPEC
member.
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