Wed
SEP 26 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 Economic
situation today:
Bienaventurados los que juegan el casino neoliberal de WS.. de ellos
será el reino del caos. The BIBLE, edición corregida por los mamones del siglo
XXI. Grupo operativo del FED lead by POW
Stocks had rallied into the Fed
statement, kneejerked higher, then drifted lower after Powell mentioned
valuations, then accelerated lower on a big MoC Sell..
See Chart:
On the week, all major indices are
red (Nasdaq hovering around unch)...
See Chart:
Equity performance post-Fed was
ugly...
See Chart:
Bank stocks took a hit today...
See Chart:
The Dollar and Treasury yields ended
lower...
See Chart:
UST 10Y Yield Bond Bears took a beating as the entire curve
legged down 4-5bps at the longer-end..
Does anyone else look at this chart
of the great Dollar Index and think - penny stock?
See Chart: Bloomberg
Dollar Index
Amid the chaos in the dollar, PMs
and WTI slipped (crude build), copper was flat...
See Chart:
Gold and Silver chopped around after
The Fed...
See Chart:
Certainly: awesome flight to hell
…
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Another
interpretation: the opposite of the above
[[ Bienaventurados los que juegan el casino
neoliberal de WS.. de ellos será el reino del cielo. Que sigan engordo,
solo que en este puente colgante entre el cielo y el infierno solo pasa uno ..
los flacos son los preferidos de Dios. Los que ya sufren el infierno neolib
están cortando la soga del puente, asi que dejen sus maletas de dólares para
ellos o no pasan al cielo. Lo dijo FDR ]]
The initial reaction to The Fed statement has been wiped away as Fed's
Powell began speaking...
Comments by Powell
that "financial conditions matter" and that "some asset prices
are in the upper reach of historical ranges" seems to have spooked
stocks...
The dollar
and bond yields are now surging...
See Chart:
And stocks
have given up there gains...
See Chart:
Plenty of
kneejerk reactions in bonds and FX but all of that has disappeared now leaving
Treasury yields and the Dollar Index practically unch since The Fed - however,
stocks found something to love and are higher...
Bonds
Unch...
See Chart:
Dollar
Unch...
See Chart:
But stocks
loved it... but are starting to catch down to bond/FX reality...
See chart:
….
….
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"...a transition toward Stagnation is
looming...the easy part of the bull market is over..."
Two more
hikes by year-end shouldn’t spell the death-knell for stocks, on the face of
it. After all, estimates of the
Fed’s real neutral policy rate are on the rise -- using market-based measures
-- and the Fed itself has suggested the short-run neutral level could
be higher.
Nevertheless, as policy becomes less accommodative, the Fed no longer suppresses
risk premiums.
Note that
Fed tightening typically leads equity volatility by two years or so. Remember the January-February volatility
shock? It came 25 months after the first Fed hike. So
expect more such episodes, even if they’re not of the same magnitude.
See Chart:
A higher
risk-free rate suggests that P/E expansion, which has contributed a large
portion of the equity gains since 2009, is coming to an end. That means the market has to rely entirely on
earnings growth for gains.
Alas,
earnings estimates look too optimistic. Sure, tax cuts are offering a boost, but there seems to be little
discount for the trade war or wage pressures. A simple regression analysis
suggests earnings estimates should be growing about 6%, given trade growth
around 4%. Instead, EPS is seen rising 23% over 12
months -- the outlier red star in the chart below.
See Charts:
Trading
can be categorized into four phases.
- “Reflation” is characterized with high readings on manufacturing PMIs and wages,
- "Goldilocks" is when PMIs are high but wage gains are restrained,
- “Stagnation” is the reverse of Goldilocks and
- “Slowdowns” see both low PMIs and weak wages.
See the
median monthly equity returns and 30-day volatility for each, since 1990
See Table:
Stocks
perform best during Reflation periods, which often come after a recession. Goldilocks -- where we’ve been the past
year -- comes second, with Stagnation and Slowdown episodes the worst.
Currently, the PMI
is above 90% of its historical experience, and unemployment is drifting ever
lower. That suggests a transition toward Stagnation is
looming.
It doesn’t
necessarily mean the bull market’s demise -- that would probably take a
recession on the horizon, and/or wage gains accelerating towards 3.5%. What it does means is the easy part of the bull market is
over...
….
….
SOURCE: https://www.zerohedge.com/news/2018-09-26/buyer-beware-fed-always-hikes-until-it-breaks-something
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RAY DALIO:
AMERICA HAS ABOUT 2 YEARS UNTIL THE NEXT RECESSION
Dalio explains,
there are six stages to every debt crisis:
- "There's the early part of the cycle where debt is being used to create productivity incomes and then, it can be serviced well, asset prices go up, everything is great."
- "And then, you come to the bubble phase of the cycle. And in that bubble phase, you're in a position where everybody extrapolates the past. Because asset goes up, they think its assets are going to continue to rise. And you borrow money and they leverage. And when you are in that phase, when we do the calculations, you can start to see that maybe you won't be able to sustain that level of debt growth."
- "Then, you come into the third phase of the cycle, which is the top. That's typically the part of the cycle when central banks start to put on the brakes, tighten monetary policy, and the like."
- "Then, you come into the down leg..."
- "...and when interest rates hit zero percent, you come into a depression part of that cycle because monetary policy doesn't work normally when interest rates hit zero."
- "Then, you have to have quantitative easing and you begin that expansion. And then, you carry that along and you begin the cycle."
These
phases are illustrated in the chart below:
See Chart:
[[ Any lineal graphic in future history assumes determinism
.. that principle doesn’t apply to
economics & politics that are highly correlated. Then this is a mere guess
or assumption like the one in the next article. ]]
While
downturns are inevitable, the real risk arises when the wealth gap blows out...
"Because that process creates a gap between the rich and the poor.
Those that have more financial assets see those asset prices go up. And for various other reasons, a wealth gap
has developed. If you look at, right now, the top 10%, the top one tenth of 1%
of the population's net worth is equal, about, to the bottom 90% combined.
That's very similar to the late '30s when we had that stimulation and so on."
..And the
levels of wealth inequality present today are very similar to the 1930s.
See Chart:
Wealth
inequality, Dalio argues, breeds a populist reaction which has clearly
manifested in the election of President Trump, Brexit and the enduring popularity
of anti-establishment parties in Greece, Italy and elsewhere in Europe. This
mirrors the rise of Communism in the Soviet Union and Facism (another type of
populist movement) in Italy, Japan and Germany.
I think the cause-effect relationships are analogous, meaning that if you
have a wealth gap and you have a downturn in the economy where you're sharing
the pie, how do you divide a budget, sharing the budget? There's a risk that both sides are at odds
with each other and there's also a greater international risk in tensions.
Economic tensions produce global tensions, for various reasons. So I think that, in this expansion, we're about in the
seventh inning of a nine-inning game, let's say. We're in the later part of the
cycle, the part of cycle in which monetary policy is tightening and there's not
much capacity to squeeze out of the economy. And that, as interest rates
tend to rise, if they rise faster than is discounted in the curve, it can hurt
asset prices.
What's really
concerning for Dalio is the fact that, now as then, there
are two powers vying for economic supremacy. In the 1930s, it was the US
and the UK vs. Germany. Today, it's the US and China.
But I think that, what concerns me is that. It concerns me also
internationally because the situation, internationally, is quite similar to the
late '30s, in that, in these periods of time, these geopolitical cycles, there is an established power and an emerging
power that then, have a rivalry. At first, it's an
economic rivalry, and then, it can become quite antagonistic. So back then, the
United States and England won World War I and we had the peace. But then, as
there was a rising Germany and a rising Japan, there became that kind of
economic rivalry that became more antagonistic. I think that we have a
situation where there is a rising China, and the United States is an existing
economic power, and there is a rivalry about that. And there can be an
antagonism about that.
Dalio is more
concerned about the amount of dollar-denominated debt that the Treasury will
need to sell to fund its deficits.
The private sector debt, for the most part, I don't have much in the way
of concerns for. When we do our pro forma financial numbers and we look at, we
see pockets that will probably have problems servicing their debt. There's a lot of cash around. I am concerned in about a
two-year period about the amount of dollar-denominated debt that we're going to
have to sell abroad because we're going to have to fund the deficits. And
then, in addition, we'll have our balance sheets, the Federal Reserve's balance
sheets go down. And that'll involve a significant amount of selling of
dollar-denominated debt.
…
SOURCE: https://www.zerohedge.com/news/2018-09-25/ray-dalio-we-have-about-2-years-until-next-recession
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"My
position today is very much focused on managing the tail risks for that... we
are late in the cycle, the animal spirits have been unleashed and when these
correction occur they happen with very little notice."
[[
If we are very late in the cycle.. the crack could come in 1 or 4 months
]]
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With the
Dollar down and yield curve flatter since the June hike, The Fed needed to
persuade the market that it means (hawkish) business and it did by removing the word "accommodative"
and the new dots confirm a 4th hike this year and 3 hikes in 2019.
According to Neil Dutta from Renaissance Micro, the main news in the statement is that the Fed removed its accommodative language, which
might indicate one of two things: "that the Fed is close to the end of hiking or
the Fed is moving closer to a restrictive policy setting."
The Dots: The near-term dots were unchanged,
except for the longer-run dot, the so-called
r-star estimate, which rose from 2.875% to 3.000%
See Chart:
Sequence:
- 2018 2.375% (range 2.125% to 2.375%); prior 2.375%
- 2019 3.125% (range 2.125% to 3.625%); prior 3.125%
- 2020 3.375% (range 2.125% to 3.875%); prior 3.375%
- 2021 3.375% (range 2.125% to 4.125%)
See Chart
Implied FED funds target rate
Continue reading & watching more charts at:
….
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"I am aware of no
plausible conditions under which current extremes are likely to work out well
for investors... There are a few possibilities that could involve a
smaller loss than the two-thirds
of market capitalization that I expect to vanish..."
It is that
time of the year again. Every year,
people start talking about a possible stock market crash in October, because
everyone remembers the historic crashes that took place in October 1987 and
October 2008. Could we witness a similar stock market crash in October 2018?
Without a
doubt, the market is
primed for another crash. Stock
valuations have been in crazytown territory for a very long time, and financial
chaos has already begun to erupt in
emerging markets all over the globe. When the stock market
does collapse, it won’t exactly be a surprise. And a lot of people out
there are pointing to October for historical reasons. I did not know
this, but it turns out that the month with the most market volatility since the
Dow was first established has
been the month of October…
The difference is quite
significant, as judged by a measure of volatility known as the standard
deviation: For all
Octobers since 1896, when the Dow Jones Industrial Average was created, the
standard deviation of the Dow’s daily changes has been 1.44%. That compares to
1.05% for all months other than October.
Unfortunately,
as a society we have not learned very much from history, and most Americans
seem to think that this bubble of artificial prosperity is going to last
indefinitely.
….
Read comple art
at:
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
[[ If you missed.. here it is. I
hope is the one transmitted live in RT internat. It was unfair when people
start laughing.. Do the audience believed that our Presid is the greatest clown
of the World.. No way ..Chaplin was the best and he woulden’t even smile on our POTUS, it was not his style
.. Yes Trump said few small lies, but who doesn’t do it in the current
political circus?]]
War with Iran? Assad's a big loser? Putin's not a pal anymore? Kavanaugh is a great
guy? Rosenstein's fired? CNN's
fake? Avenatti's a low-life? Xi's a great friend (but a thief on trade)? Trudeau can suck it? We love Mexico?
NoKo and SoKo are our new best friends? Powell's
a disappointment? Record high stocks? Record low unemployment?
[[ Oh my
good .. there were not small lies. Anyway, it doesn’t make me anti-american,
perhaps only a stupid nationalist.. to say GOD BLESSES OUR LIARS in White House! ]]
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How many
women were
needlessly raped as a result of her silence?
[[ Do
they do it for fun or for money? Wait a minute..Gang rape? Who was the victim? Kavanough or the
lad? This circus lost sense..tomorr
they’ll say a battalion of rapists ]]
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Meanwhile
Lindsey Graham: "I am not going to
be played"
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US-WW ISSUES (Geo Econ, Geo Pol
& global Wars)
Global depression is on…China, RU, Iran search for State
socialis+K-, D rest in limbo
“China does not want a trade war, but it is not afraid of one and will fight one if necessary...”
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Russia
vaunts its long-range ship killer,
claiming it's immune from enemy defense mechanisms.
[[ Is
this true or a false flag destined to ask more money for US military? ]]
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
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RT SHOWS
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
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Costa Rica Fraude fiscal tiene enorme impacto ambiental
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El
Zoom China: La obsesión de Trump
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
The Path to World War III By Philip Giraldi Continue
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Is Russia Being Betrayed By Its Own
Intelligensia? By Paul Craig
Roberts
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The Battle for Our Minds By Patrick Lawrence Continue
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All Wars Are Illegal, So What Do We Do About
It? By M Flowers & KZeese
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Noam Chomsky on the State of the Empire By J Scahill and Noam Chomsky
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Journalist in Palestina Show Me Something
Shocking – By Robert Fisk
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How Conservatives
Rationalized Their Being Cold Warriors
By William Blum
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Trap Failed -
Rosenstein Neither Fired Nor Resigned
By Moon Of Alabama
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Jonathan Cook Time
to Wake Up: the Neoliberal Order is Dying
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James Rothenberg Why Not
Socialism?
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John Feffer There’s
a New Crash Coming
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
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DEMOCRACY NOW
Focus on Trump policies & the Econ & Pol crisis
inside US
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PRESS TV
Resume of Global News described by Iranian observers..
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