SEP 24 17 SIT EC y POL
ND denuncia debacle d Globaliz neoliberal y
propone State-Social + Capit-compet in Econ
ZERO HEDGE ECONOMICS Sept 24/17
Neoliberal
globalization is over. Financiers know it, they documented with graphics
In conversations Goldman is having with its clients, there was one
question that stood out this week: "Where to from here?" Here is
Goldman's answer on what the most likely path forward is...
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According to the investment bank's chief equity strategist, David Kostin there are no less than 7
reasons why, as Goldman itself admitted, "the
question every client asks: Is an equity correction imminent?” As a reminder, the reasons - summarized -
were the following:
- History. Many investors argue the bull market is “long in the tooth” and will soon come to an end.
- Volatility (or lack thereof). Realized 3-month vol is nearly the lowest in 50 years. Implied vol as measured by the VIX stands at 12, a 6th percentile event since 1990.
- Valuation. Equity valuations are stretched on almost every metric. The typical stock trades at the 98th percentile and the overall index at the 87th percentile relative to the past 40 years
- Economics. The current US economic expansion just celebrated its 8th birthday making it one of the longest stretches without a recession
- Fed policy. The FOMC has lifted the funds rate by 100 bp since it started tightening in December 2015. During prior hiking cycles, equity P/E multiples typically fell but multiples have actually expanded during the past two years.
- Interest rates. Two months ago, Treasury yields equaled 2.4%, ten-year implied inflation was 1.7%, and the S&P 500 stood at 2410.
- Politics. President Trump’s fluid positions on domestic policy disputes in Washington, D.C. and geopolitical gamesmanship with Pyongyang and Beijing make political forecasting a precarious activity.
Incidentally, like a
good shepherd, Goldman quickly comforted said worried clients, giving two
reasons why a
crash is not imminent:
- First, investors are not complacent.
- Second, US economic growth persists led by consumers that account for 69% of GDP.
So what are Goldman's
clients worried about now? According to the latest note from David Kostin,
what Goldman's clients want to know now that an imminent crash is no longer of
concern, is "where to from here?"
or as Kostin writes, "what is the likely
path forward now that the 8½ year long bull market has lifted the S&P 500
index by 1824 points (270%) since its 667 low on March 9, 2009" and
just broke the 2500 threshold for the first time and this week set a new high
of 2508.
Or, in other words,
"how should investors think about the next 100
point move?" Here is
Goldman's answer:
In terms of price targets, Kostin says that the forward path
of S&P 500 during the next few years will be determined more by sales
growth than a shift in valuation, however the Goldman analyst is hopeful that
sustained modest economic growth will support top-line revenue growth. This view is the basis for Goldman's year-end 2019 target of 2600 (+100
points), while its year-end 2018 forecast of 2500 implies a flat 1-year price
return, and Kostin expects that
stocks with high expected sales growth will outperform during the next
12-months.
Before Goldman elaborates on what happens next, first looks at
how we got here:
Earning growth since 2009 has been powered by a combination
of changes in sales and margins. Margins expansion disproportionately explains
the growth in profits.
…
Keep reading. OPEN : http://www.zerohedge.com/news/2017-09-24/one-question-goldmans-clients-are-asking-week-where-here
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"But let’s be very clear about one thing... The
Fed does NOT honestly believe in the strength of the recovery, that
inflationary pressures are present OR that employment is as strong as stated... It’s actually quite the opposite."
…
The announcement was notable for two reasons:
- The Fed did NOT hike rates because the underlying economic data, and, in particular, the inflation data, suggests the economy is too weak to absorb a further increase currently, and;
- The unwinding of the balance sheet is generally believed to be bullish for stocks.
It is specifically the second point I want to address today,
although, as shown below, commodities, PCE inflation, and interest rates
currently suggests there is downside risk to current economic projections.
1-
2-
3-
As I discussed on Friday, while the Fed talks a good game about a
strengthening economy, improving jobs and rising asset prices, it is interesting to see the “coincident timing” of
the Fed’s reinvestment of their balance sheet.
With that in mind here is the observation to consider.
As shown in the table
below, since 2009, there has been clear evidence
that unbridled Central Bank interventions directly supported the market’s
advance. All them considered “BULLISH” for asset prices.
4-
Of course, after $33
Trillion in liquidity injections, bailouts, and supports, it should not be surprising that asset prices have
been elevated well beyond the underlying growth of the economy or corporate
revenue.
Furthermore, the ROI on those investments have been poor at best with each
$1 of injections yielding just a $0.063 return economically speaking.
Now, ironically, despite the clear evidence of the support
for the markets provided by near zero-interest rate policy and trillions in
monetary injection, it is believed that “unwinding” those
supports will have “no effect” on the market.
Apparently, it doesn’t matter
what the Fed does, it’s “bullish.”
…
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Ahead of the Trump administration's official disclosure of what its
latest tax proposal would look like, overnight Axios leaked some of the more salient highlights, the first being that the tax rate for the wealthiest Americans would
be cut to 35% and second, taxes on on big and small
businesses would be reduced substantially, from 39.6% to 25%.
…
Morgan Stanley
concludes with the following five takeaways for Investors:
- Stimulus may disappoint, but progress is enough for risk markets near term;
- US dollar flow from repatriation may disappoint;
- Relative fundamental equity sector winners include retail, telecom, energy, & utilities;
- Tbills issuance may grow by $200B in 1Q18;
- Be prepared for Q4 volatility, opportunity.
In any case, President Trump plans to give a speech unveiling the Big Six framework in Indiana on
Wednesday.
…
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After the FOMC meeting last week, it was (yet)
again apparent that the Fed are still keen to maintain a normalisation path
designed to not only get rates back to neutral levels, but also build up the
policy tool kit again as well as staving off excessive leverage which has boosted
stock markets to record highs.
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POLITICS
La seudo democ y sist duopolico es obsoleto por fraudulento y
corrupto. Urge cambiarlo
In the latest sign of the paranoid times we live in, startled
Southern Californians flooded 911 with calls Saturday night after the US
launched its newest spy satellite into orbit from
Vandenberg Air Force Base...
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SE DIVIDEN porque en el chiquero GOP
no hay mamadera grande para todos
Ted Cruz is now saying he won’t support the
Graham-Cassidy Obamacare repeal bill...
[[ Adolecen de principios
y honestidad.. Lo que reina de arriba para abajo es la corrupción.
No hay diferen alguna con los DEMS de Mrs Clinton.. Los 2 Pdos han sido cortados
con la misma tijera. Abajo la inmundicia duopolica!.
Forjemos un nuevo Partido: Un FRENTE POPULAR! ]]
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WORLD ISSUES and M-East
Global depression is on…China, RU, Iran search
for State socialis+K- compet. D rest in limbo
GOOD MOVE! La maniobra imperial
de manipular Kurdos para dividir Siria se viene abajo
The diplomatic and economic noose is tightening
around Iraqi Kurdistan one day ahead of its historic independence
referendum. On Sunday, the Iranian government announced closure of its airspace to northern
Iraq's Sulaimani and Erbil Airports, at the request of Iraqi authorities.
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NADA CRECE DE ARRIBA PARA ABAJO… El Mov Catalan por autonomia VENCERA!
Following the confiscation
of millions of ballots in recent days, and the Spanish
governments' pressure on local mayors to deter the October 1st independence
referendum, AP reports that
the grassroots groups driving Catalonia’s separatist movement defied Spanish authorities on Sunday by
distributing one million ballots for the vote that Madrid has called
illegal and vowed to halt.
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The German polls have officially closed, and the first exit polls
numbers come in, confirming the expected fourth victory
for Angela Merkel, however with a far lower than expected 32.5% of the vote, while
her main challenger, the SPD gets only 20%. What
is striking is the dramatic (late) surge for the
nationalist AfD party, which got a higher than expected 13.5% of the vote.
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GLOBAL RESEARCH
Global Econ-Pol
crisis leads to more business-wars: profiteers
US-NATO under screen
The
US Federal Reserve 4.5 Trillion Sell-Off. “Central Bankers at the End of Their Ropes” By Jack Rasmus,
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SPUTNIK and RT SHOWS
The nasty business of
US-NATO-Global-wars uncovered .. pro RU view
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'Nazis Have Returned': German Chancellor
Merkel Wins Unprecedented 4th Term but Party Suffers Losses
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RT SHOWS
The World According to Jesse The
Poisoned Land
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NOTICIAS IN SPANISH
Latino America fight
to break with collapsing Empire: leftist
view on alternatives
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Keiser
Report Si el dólar se muere, ¿en qué
invertir ahora?
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PRESS TV
Global situation
described by Iranian observers.. Titles distorted n incomplete sentences
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