JUN
1 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
US & Worldwide Economic collapse today:
The peaceful days of
2017 are long gone, and after the furious January market melt-up, the February
vol explosion, the March tech crunch, the April dollar and rate spike, the
month of May was perhaps the most memorable of all.
And while May
featured a mini EM-collapse, ongoing trade disputes between US and China and
geopolitical tensions there is little doubt that the month will be best
remembered for the Italian political developments in the last week or so.
Indeed, as Deutsche Bank's Jim Reid writes, the huge
selloff across BTPs (-6.7% in local currency terms) stands out most when
looking at Deutsche Bank's monthly performance charts and indeed this was the
biggest one-month fall for the BTP index since the German bank started
collating monthly data at the start of 2007.
So May
eclipsed anything seen during the Euro sovereign crisis although part of that
will be down to duration as there are comparable monthly yield moves between
May 2018 and in 2011. Italy’s
FTSE MIB (-8.0%) also suffered its worst month since the Brexit-impacted June
2016, as did European Banks (-8.1%). European High Yield (-1.4%) had its worst
month since the energy crisis in December 2015 while European Sub Bonds (-1.8%)
had their worst month since June 2015.
Finally, commodities were also more mixed last month. Interestingly
there was a large divergence in the Oil complex with Brent rising +4.6% and
leading all assets but with WTI down -2.2%. Gold fell -1.3% while softs like
Wheat (+2.7%) and Corn (+0.4%) rose slightly.
See Charts:
European
Banks are also -9.3% and the IBEX -4.4%. However the S&P 500 (+2%) is back
to positive territory joining the Stoxx 600 (+0.7%). Credit markets remain
negative across the board. In Europe returns are -0.3% (IG Non-Fin) to -2.7%
(Fin Sub) while in the US returns are -0.1% (HY) to -4% (Fin Sub).
See Charts:
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The Status Quo is in trouble if the bottom 95%
wake up to the asymmetric gains that are the only possible output of our
hyper-financialized economy...
We now inhabit a
hyper-financialized economy in which the only way to get ahead is to
speculate.
In a
hyper-financialized economy, hype is the most valuable skill. Those who can raise $100 million in capital
for a fancy juicer win, as do those who sell the Big Idea to global
corporations desperate not to miss out on the Next Big Thing.
Entrepreneurs
seek to generate "value" only as a means of cashing out via an
initial public offering or selling their company to a global corporation. The "value" sought now is the perception
of value--the magic of future promise that boosts valuations into the
millions, or better yet, billions.
In a
hyper-financialized economy, future income is pulled into the present and
monetized to benefit the top dogs. We borrow from the future to fund the inefficiencies of today. It's a
great system, and the Status Quo has the answer to everything: the
government can never go broke because all it has to do is print more money.
See Chart:
Here's my
favorite chart of asymmetric gains. The vast majority of the gains reaped since the 2008-09 Global Financial
Meltdown have flowed to the top .1%. This is not a bug, it is a feature of
hyper-financialization. Indeed, it is the only possible output of
the current system.
See Chart:
Meanwhile,
the bottom 95% live in an economy where wages go nowhere and costs are
soaring. The financial media cheers when wages (supposedly) rise by 2%,
but nobody dares measure the impact of rising costs in services such as
healthcare and higher education.
See Chart:
The Status
Quo is in trouble if the bottom 95% wake up to the asymmetric gains that are
the only possible output of our hyper-financialized economy.
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CREDIT,
CHINA, THE US.
Looking at the latest weekly EPFR fund flow data, BofA's Michael Hartnett writes in his latest Flow Show that
while there was a tepid "buy the dip" reaction to the recent
volatility ($3.0bn into equities of which $5BN ETF inflows and $2BN mutual fund
outflows, $0.5bn into gold, $1.1bn in redemptions from bonds), the notable
shift this week was another major outflow from Emerging Markets and Europe,
with investors continuing to park their capital in the "cleanest dirty
shirt", America:
EM
outflows accelerate: largest weekly EM equity
outflow since Dec'16 (Chart 6); EM debt
& equity redemptions >$8bn the past 5 weeks; but remember this
pales in comparison to $235bn EM inflows since Feb'16.
See Chart:
Meanwhile, as investors put
money into US stocks, they liquidated US debt holdings resulting in another
week of substantial credit outflows, to the tune of $1.2 billion from IG and
$1.4 billion from HY, although as Hartnett notes, "this pales in
comparison to $360bn inflows to IG+HY Feb'16 to Feb'18."
A defensive posture was also
observed when looking at sector rotations, where inflows went to defensive
sectors (Health, Consumer), REITs, Tech (which remains 2018 flow leader YTD -
Chart 5), offset by redemptions from Fins & Energy.
See Chart:
Similar retrenchment was also observed among BofA private
(aka high net worth retail) clients, as a result of the first week of equity ETF redemptions since Dec'17,
driven entirely by selling of EM equity ETFs. This
bearish sentiment impacted BofA's proprietary Bull & Bear Indicator, which
this week fell to only 4.1, the lowest reading since Jan'17, on HY & EM
outflows, more HF positioning, and weaker technicals.
See Charts:
https://www.zerohedge.com/sites/default/files/inline-images/bull%20bear%20june%201.jpg?itok=eO2BtFq-
And yet despite the tepid bearish sentiment, there has been no bull capitulation yet.
That may change soon because according to Hartnett, we are
now entering a "June risk" zone in which there are three key
catalysts that could result in liquidation: Credit, China and Tech, to wit:
- CREDIT: if lower Treasury yields fail to incite a bid to EM, EU, HY, IG credit, that - to Hartnett - means excess debt, all $320 trillion of it + lame bank lending + weak global growth = deleveraging cycle begins (something one can already see in a handful of German banks, whose CDS is rapidly widening vs US).
See Chart:
CHINA: watch
export growth next week as well as the ongoing Korea & Japan weakening:
Hartnett predicts that should China export growth fall, investors will
anticipate CNY devaluation and EM contagion, something which the Securities
Daily already hinted at last night when it reported that China may further cut
the RRR by 0.5-1.5% by year end. As a reminder, it was
the April 17 RRR cut that launched the surge in the USD/10Y Yield, so another
cut will send the dollar surging even more, with very adverse consequences for
US corporations and emerging markets.
See Chart:
US: Here
keep a close eye on the record delta between US and EU equities which are
at record high; Meanwhile the one catalyst that can spoil the US equity
party is the return of stagflationary data to the US, such as a surge in US
wage growth (AHE >0.4% which "traps" the Fed) & weak payrolls
(<150k), both of which are negative US equities although neither of which
will take place today, however, after May's "spectacular" jobs
report. Meanwhile, the biggest threat to the "last bull market"
remains forced selling of US equities, specifically tech stocks.
See Chart:
What about the bigger picture? Here Hartnett
says that he remains "tactically defensive" until asset prices force
the Fed to "pause" tightening in Sep-Dec'18, i.e. stocks fall enough
for Powell to end up on the rate hike cycle in roughly 2-3 more rate hikes.
See Chart:
That covers the big June risks. What
about the bigger picture? Here Hartnett says that he remains "tactically
defensive" until asset prices force the Fed to "pause"
tightening in Sep-Dec'18, i.e. stocks fall enough for Powell to end up on the
rate hike cycle in roughly 2-3 more rate hikes.
See Chart:
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US
DOMESTIC POLITICS
Seudo democ y sist
duopolico in US is obsolete; it’s
full of frauds & corruption. Urge cambiarlo
"WAR IS PEACE, LOVE IS HATE, JOBS ARE BAD..."
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The visit
follows two days of meetings in New York between the North Korean envoy and
Secretary of State Mike Pompeo.
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"There's no sign we’re
getting that anything is going to slow down at the moment..."
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US-WW ISSUES (World & War): M-East .. plus
Global depression is on…China, RU, Iran search for State
socialis+K- compet. D rest in limbo
Global oil benchmarks are suddenly heading in different directions, upending what have consistently been close linkages between
prices in various parts of the world...
See Chart: Case Crude
WTI, for its part, is trading at a
multi-year low relative to Brent. As of May 31, WTI was down below $67 per barrel during midday trading, dropping to an
$11-per-barrel discount relative to Brent.
See Chart: Case Brent
Bloomberg reports that refiners in South Korea, India,
Thailand, China and Japan are scrambling to buy up as much U.S. shale oil as
possible from where they can get it, including from the Eagle Ford, the Bakken
and the Permian. Interestingly, Chinese buyers are cut purchases from Saudi
Arabia for the second consecutive month, swapping them out with more American
cargoes. Why buy oil from the Middle East for $10-per-barrel more than from the
U.S.?
It is
often said that the oil market is global, that oil is a “fungible” commodity,
meaning that prices are largely the same everywhere. There are always
regional discrepancies, but as a general rule, oil is globally priced. However,
infrastructure bottlenecks, geopolitical fears, supply increases and outages
are cropping up in various parts of the world, leading to an unusual divergence
in the top benchmarks. With
many of those factors not set to immediately go away, the price differentials
may not dissipate anytime soon.
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SPUTNIK and RT SHOWS
US inside GEO-POL n GEO-ECO ..News
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We spent billion financing terrorist bunkers & tunnels
while US Nation don’t have It in case WW3
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RT SHOWS
#ICYMI with Polly Boiko
#ICYMI:
Trump and Kim keep the world asking, 'will these two crazy kids ever get
together?'
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NOTICIAS IN SPANISH
Latino America looking for alternatives to neoliberalism to
break with Empire:
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-AQ fue mi Prof en Areq-Pe: a él debo mi tenacidad antimperial
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Tan pronto como se retiren las del Imperio
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Keiser Report "Nos encontramos en el ocaso
del imperio"
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COUNTER PUNCH
Focus on US issues
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Jeffrey
St. Clair Badge of
Impunity
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The
Hudson Report US
vs China Housing…and Those Millennials
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Roger
Harris Venezuela
Defies the US Empire Reelecting Maduro
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John
Feffer Trump’s
Korean Shell Game
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Howard Lisnoff Back
in the USSR? No, It’s Actually Back in the U.S.
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Roy
Morrison The
Challenge of a Trump Era: What’s Coming Next?
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars: its profiteers US-NATO
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DEMOCRACY NOW
US politics crisis: Trump captured by Deep state to
reproduce old cronyism without alter-plan
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PRESS TV
Global situation described by Iranian observers..
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