Fri Oct 5
19 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
The US Economic situation today
SMALL
CAPS, SEMIS SMASHED; HOMEBUILDERS HAMMERED AMID GREATEST JOBS DATA IN 49 YEARS Goldilocks is death!
A BIG
WEEK...
- Unemployment Rate at 49 year lows
- US Stocks - worst 2-day drop since May
- Small Caps, Nasdaq - biggest weekly drop in 7 months
- Small Caps - biggest 5-week drop since Nov 2016
- China (closed) ETF - biggest weekly drop in 7 months
- Semis - biggest weekly drop in 6 months
- FANGs - biggest weekly drop in 7 months
- Homebuilders - worst.losing.streak.ever...
- USD Index - best week in 2 months
- HY Bonds - biggest weekly price drop in 8 months
- IG Bonds - biggest weekly drop since Nov 2016
- Treasury Yields - biggest weekly yield spike in 8 months
- Yield Curve - biggest weekly steepening in 8 months
- Gold - best weekly gain in 6 weeks
….
Chinese stocks were closed for
Golden Week but the China ETF slumped...
European Stocks tumbled on the
week...
US Small Caps stocks were the worst -
though Nasdaq was close - suffering their biggest drop since March...Even The
Dow gave up early week gains...
Small Caps - down 4 of the last
5 weeks (the biggest 5-week drop since Nov 2016 - Trump Election) - broke the
most below their critical technical support 50DMA since May... but bounced off
its 200DMA today...
The S&P bounced off its 50DMA...
The Dow-Small Caps divergence
remains yuuge... (the last 5 weeks have been the biggest divergence since Sept
2011)
See Chart:
FANGs f##ked...
See Chart:
Banks bid but weak...
But homebuilders are getting
hammered - down 13 days in a row...lowest since April 2017.
See Chart:
VIX exploded above 17...
See Chart:
And the VIX curve inverted...
See Chart:
But while stocks caught a lot
of eyes, bonds were really where the bloodbath hit..
See Chart:
Don't forget Bonds are closed on Monday
(Columbus Day)
Treasury volatility exploded
from record lows this week...
See Chart:
Breaking bond yields to
multi-year highs...
See Chart:
The yield curve exploded this
week - steepening most since February..
See Chart:
The Dollar managed solid gains
on the week but slipped in the latter half..
See Chart:
…
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“Any fool
can buy a stock.
It takes a smart investor to know when to sell...”
Earlier this week, Eddy Elfenbein has an
interesting post discussing the “Bull
Market In Dividends.”
“For the third quarter, dividends from the S&P
500 grew by 10.96%. That’s the strongest growth rate in more than three years.
It’s the 34th quarter in a row of dividend growth.
Over the last eight years, dividends are up
234%, which is pretty close to what the S&P 500 price index has done.
Considering how simple it is, the S&P 500 has
tracked a 2% dividend yield fairly closely for the last several years.”
See Chart:
It is an interesting point particularly
when you consider that there are a lot of dividends which have been “financed”through “cheap
debt.” There is also the issue of record debt issuance by companies
with marginal balance sheets at best or are walking “zombies” at
worst.
Let’s start with the notion that “dividends always increase.”
First, the statement is
incorrect because during market reversion “cash dividends” DO NOT increase – but
the YIELD does because of the
collapse in prices.
But, more to the point, that notion is
only true, until it isn’t.
During
the 2008 financial crisis, more than 140 companies decreased or eliminated
their dividends to shareholders. Yes, many of those companies were major banks, however, leading up to
the financial crisis there were many individuals holding large allocations to
banks for the income stream their dividends generated. In hindsight, that was
not such a good idea.
But it wasn’t just 2008. It also occurred
dot.com bust in 2000. In
both periods, while investors lost roughly 50% of their capital, dividends were
also cut on average of 12%.
See Chart:
Of course, it wasn’t EVERY company
cutting dividends by 12%. Some didn’t. Many did,
and some even eliminated their dividends entirely to protect creditors. The last point is the most
important. For any company shareholders are a secondary
concern. However, access to the debt market is a far more important
consideration when it comes to financial decision making, who gets paid, and who doesn’t.
Since 2009, due to the Federal Reserve’s
suppression of interest rates, investors have piled into dividend yielding
equities, regardless of fundamentals, due to the belief “there is no
alternative.” The resulting “dividend chase” has pushed
the valuations of dividend yielding companies to excessive levels disregarding
underlying fundamental weakness.
As with the “Nifty Fifty” heading
into the 1970’s, the resulting outcome for investors was less than favorable.
These periods are not isolated events. There is a high correlation between declines in asset prices and the
actual dividends being paid out throughout history. The chart below
shows the history of inflation-adjusted dividends and the S&P 500 going
back to 1900. (Data courtesy of
Dr. Robert Shiller.)
See
Chart:
Here is another way to look at the same
data. The chart below shows the percentage deviation above and below the 5-year
average annual cash dividend. There are two things you should take note of.
- When deviations have exceeded a 20% deviation it has denoted very overvalued markets.
- Reversions below the 5-year average have been coincident with secular bear markets.
See Chart:
Dividends
may well already be telling us of a more troubling trend for investors is
coming.
While I completely agree that investors
should own companies that pay dividends (as it is a significant portion
of long-term total returns), it is also crucial to understand that companies can, and will, cut
dividends during periods of financial stress. During the next major market reversion, we will see much of
the same happen again.
It is during these times when
prices collapse, and dividends are slashed, the “I bought it for the
dividend plan” doesn’t work out.
EVERY investor has a point, when prices
fall far enough, that regardless of the dividend being paid, they WILL
capitulate and sell the position. This point generally comes when dividends have been cut and capital
destruction has been maximized.
Here your weekend reading list.
Economy
& Fed
- Fed Admits Its Road Map Is A Fuzzy Blur by Caroline Baum via MarketWatch
- Conservatives Hate Debt – Add $2.4 Trillion by Committee For A Responsible Federal Budget
- Political Divide In America Is Worst Ever by Tyler Durden via ZeroHedge
- The “Almost” Too Good To Be True Economy by Heather Long via Washington Post
- New Fiscal Year Gets Off To An Ominous Start by Hunt Lawrence via American Spectator
- 11-Takeaways From NYT’s Trump Investigation by Buettner, Craig & Barstow via NYT
- A $1 Trillion Dollar Blunder by Stephen Moore via The Washington Times
- The Enduring Scam Of Corporate Tax Breaks by Bryce Covert via NYT
- Workers Receive Only A Fraction Of Corp Tax Cuts by Tyler Durden via ZeroHedge
- The Important Economic Event Of The Decade by Neil Irwin via NYT
- Absurd Theory On Why Wages Aren’t Rising Faster by Jordan Weissmann via Slate
- The China Tariff Mess by Martin Feldstein via Project Syndicate
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Markets
- Shiller: A 1929 Redux? by Tyler Durden via Zerohedge
- Get Ready For An 8-13% Correction by Mark Hulbert via MarketWatch
- We Are Only A Few Ticks From “DotCon” Stupidity by Shawn Langlois via MarketWatch
- Do Spectacular Earnings Justing High Stock Prices by Robert J Shiller via Project Syndicate
- Post Mid-Term Rally Not A Definite by William Watts via MarketWatch
- This Only Happens Near Market Peaks by Dana Lyons via The Lyons Share
- Is Gold Poised To Pop? by Simon Constable via Forbes
- Why You Can’t Decide On Lunch Or Funds To Buy by Jacob Passy via MarketWatch
- Rare Divergence Could Spell Trouble For Stocks by Ryan Vlastelica via MarketWatch
- This Chart Shows Why Another VIX Surge Is Coming by Jesse Colombo via Forbes
- 4-Reasons China Is At Risk Of A Slowdown by Ed Yardeni via Yardeni.com
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Most
Read On RIA
- Irrational Exuberance by Lance Roberts
- Sailing Vs. Rowing: Active Vs. Passive by Michael Lebowitz
- How To Invest For A Hard Landing by Vitaliy Katsenelson
- Debts & Deficits – A Slow Motion Train Wreck by Lance Roberts
- Bubbles & Zombies by John Coumarianos
- Do You Believe In Magic by David Robertson
- The Risk Of An ETF Driven Liquidity Crash by Lance Roberts
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Research /
Interesting Reads
- BIS Issues Urgent “Zombie Alert” by Nomi Prins via The Daily Reckoning
- Powell Hints He May Crash The Markets by Tyler Durden via ZeroHedge
- Powell Has Cost Investors $1.5 Trillion In 2018 by Mark Decambre via MarketWatch
- US Debt Soars $1.27 Trillion In 2018 by Wolf Richter via Wolf Street
- Markets Are Cyclical, But Where Are We In The Cycle? by John Stepek via MoneyWeek
- Larry McDonald: It’s Going To Get Really Ugly by Christoph Gisiger via Finanz Und Wirtschaft
- Marks: 5-Tips To Make You A Better Investor by Howard Marks via MarketWatch
- 10-Years After Lehman: Bubbles & Zombies by Edward Chancellor via ThinkMarkets
- 100-Years Of Ineptitude by Helmut Anheier via Project Syndicate
- Elon Musk’s Deal With SEC Doesn’t Fix Biggest Problem by Charles Gasparino via NY Post
- Bad Financial Moon Rising by William White via Project Syndicate
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SOURCE: https://www.zerohedge.com/news/2018-10-05/weekend-reading-are-dividends-telling-us-something
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Authored by Charles Hugh Smith via
OfTwoMinds blog, [[ Check his previous articles! ]]
[[ This art doesn’t contain hard evidence.. so weak Argts is a call to
check its author ]]
In the present era of decadence, Universal
Basic Income (UBI) is the modern
equivalent of Bread and Circuses.
"As the eventual collapse of decadent empires attests, Bread and Circuses are no
substitute for social mobility, low
barriers to accumulating capital and a political stake in the system..."
The
dynamics of decadence are easy to understand: as affluence becomes the norm that is widely assumed to be permanent,
shared purpose and sacrifice for the common good is replaced by self-absorbed
decadence and an ethos of maximizing personal gain.
In his seminal essay The Fate of
Empires, Sir John Glubb listed these core dynamics of imperial decline:
(a)
A growing love of money as an end in itself.
(b) A
lengthy period of wealth and ease, which makes people complacent. They lose
their edge; they forget the traits (confidence, energy, hard work) that built
their civilization.
(c)
Selfishness and self-absorption.
(d) Loss of
any sense of duty to the common good.
Glubb included the following in
his list of the characteristics of decadence:
-- An
increase in frivolity, hedonism, materialism and the worship of unproductive
celebrity.
--
A loss of social cohesion.
-- The
willingness of an increasing number to live at the expense of a bloated
bureaucratic state.
Glubb’s list may at first glance be
largely psychological--self-aggrandizement and a focus on hedonistic pursuits--but the dynamics of decadence have
economic, political and social ramifications.
First and foremost, the
aristocratic financial and political elites secured their position at the
expense of social mobility by erecting barriers that protect them from
competition and accountability. In effect, they
eliminated the risk posed by change by rigging the system to their benefit.
To fund their extravagant
lifestyles, they took more of the earnings of those below them, widening the
inequality between the aristocracy and commoners to extremes. Historian Peter Turchin reports that where the patricians of the
Roman Republic had 10 or 20 times the wealth of an average Roman citizen, by
the late Empire the elites possessed up to 200,000 times the wealth of the
average commoner.
The
heavier burdens on the productive class and the decay of social mobility
divested commoners of a financial stake in the system, and the concentration of political power in an
oligarchy disenfranchised them of political influence.
When
social mobility and shared purpose are lost, there is little motivation to
contribute to a system that benefits the few at the expense of the many. People respond by
reducing their productive participation and becoming dependents of the state, a
phase captured by the phrase Bread and Circuses in the late
Roman era, when a significant percentage of the Rome’s populace received free
bread and access to costly entertainments in exchange for their political
compliance.
Disenfranchised
commoners with few prospects for advancement form a volatile political class; a small event can trigger a non-linear
explosion that threatens the stability of a status quo that benefits the few at
the expense of the many. To counter this threat, the elites bought the
compliance and complicity of the masses with Bread and Circuses. As
Glubb noted, the willingness to live off the state is a reflection of general
decadence; if there is no other hedonistic pursuit within financial reach,
then Bread and Circuses will do.
As
the eventual collapse of decadent empires attests, Bread and Circuses are
no substitute for social mobility, low
barriers to accumulating capital and a political stake in the system. In the present era of decadence, Universal Basic Income (UBI) is the
modern equivalent of Bread and Circuses. But buying off the
disenfranchised doesn’t transform an unstable system into a stable system; it
merely masks the instability for a time.
The core belief of decadent
eras is that the status quo is so powerful and permanent that it can withstand
the predations of the few and the Bread and Circuses lavished
on the many. This is of course a false confidence.
Every status quo is a social construct that is inherently non-linear. The
decline of productive sectors, the divestiture of commoners from ownership of
productive assets and the political disenfranchisement of commoners hollow out
the economy and the society.
These dynamics of decadence
weaken the social and economic order, creating conditions that favor a loss of
faith in the status quo and the failure of key institutions.
Read this:
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[[ Data on jobs use to be manipulated & distorted… we’ll check this one ]]
A
record net 37% of owners reported they are raising overall compensation in
hopes of hiring and retaining employees in what is increasingly cited as the
tightest labor market in decades.
This surpasses the previous record of a
net 35% in May 2018.
See Chart:
The competition for qualified workers is
pushing up compensation as there are currently 660,000 more
job openings than job seekers.
See Chart:
Thirty-eight percent of owners reported
job openings they could not fill in the current period, unchanged from last
month. Reports of job openings were the most frequent in construction (56
percent), manufacturing (54 percent), transportation (51 percent), wholesale trades
(44 percent), and retail (43 percent).
See Chart:
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VS. 1
Mall
vacancy rates have risen to 9.1% in the third quarter from 8.6% in the second
quarter. This is the highest
they've been since the third quarter of 2011.
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VS.2
Only 9 of the 517 spaces
in the mall have opened for business since May, when owners were first allowed to
take possession...
See this advertising:
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More small news with huge Info:
1-
"I
was looking for an opportunity for my kids. They were growing so fast, and I
said, why not make the sacrifice for them?"
2-
After
a surprising slump in the use of credit cards, US consumers rediscovered their
long-running love with purchasing stuff which they can't afford.
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete;
it’s full of frauds & corruption. Urge cambio
"In order for a nation to be great, it needs to be made up of great people, and
at this moment it is very difficult
to be optimisticabout the future of our nation..."
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"The battle over Kavanaugh’s nomination, and
the disparagement of the
Republicanswho have stood strongest by the judge,seems to have awakened even the most congenial to the new political
reality... We are all deplorables now."
FACTS:
My view
Hugo Adan
1-
Critical political balance at stake: It
was expected the victory of Kavanaugh’s
nomination for more than 1 vote.. it didn’t happen. What happens is that Democrats
betray their conscious of fairness (there was not consistent evidence to blame Judge Kavanaugh of the alleged sexual misconduct) ..
On reverse, there might be evidence of paid-defamation and that has not been
investigated.. that is deplorable. If we get such INFO .. those ladies who
vilified Judge KAv must go to jail and the Dems defeat will consolidate the sense
of fairness at national level. Today the fake party-ritual in favor of duopoly
system has prevailed (I voted because I’m Dem and voting for fairness may challenge
my political aspirations). How much the Clinton Foundation, the Saudis and
known billonaires expend on buying
political consciousness?. Nobody Knows yet. Senators were ‘forced’ to vote for the worse -but presently convenient choice- instead of
voting for the best future of Law and real
commitment to freedom and democracy in the US. Then the victory of Kav is a
partial victory that need to be consolidated asap. We need to go beyond the
electoral trap of voting for the lesser evil choice. We need a conclusive
victory of the best choice.. We need to investigate the investors in the fake
rules and fake democracy and freedom. We need to get out from the trap of
voting for lesser evil. While evilness exist.. our system will be always weak and anything can happens.
2- All is a matter of political credibility and sense of
legitimacy to the ruler in power. The partial victory of Kavanough is only
a partial victory of political stability for Trump: he won’t be impeached as
the Dems wanted with their shameful theater. But it won’t restored Trump’ political credibility and sense of legitimacy
needed to consolidate democracy in America. His policies at economic level are
based on war mongerism (we produce guns and wars to benefit few big
corpotations and that is suicidal and lethal for our economy too. To get out
from this trap we need to make deal for PEACE to dismantle nukes with RU-China.
This can’t be done if we keep the Pentagon and NATO allies doing what they do (putting
at risk the whole humanity with the chances of WW3). There are many human
problems that we need to face together and that requires negotiation for PEACE
among the current superpower Nations. If WW3 is not taken out from the horizon
their current main leader like Trump won’t have credibility no legitimacy to
talk in the name of whole humanity. The victory of Kavanough is only a partial
victory of political stability for Trump. There is not chances for impeachment
so far, but the critical political balance may be vanished is we put at risk the
life of Americans and other nations with our wars abroad. We need to stop that and then KAv & Trump
victory will be real.
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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
The documents relating to the secret lab were published last month by former Georgian minister for state security Igor
Giorgadze, who says he obtained
100,000 pages of data pointing to
questionable US practices...
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[[ The nasty competition for weapons distorted economies & make US-Ru-Chi
Corp happy ]]
India is slowly moving away from the US sphere of
influence...
RELATED:
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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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Keiser
Report Cartel
Member Discovers Labor Unions Max and Stacy discuss Google’s Eric Schmidt’s discovery of labor
unions after he tweets a ‘unicorn’ for workers. They note that
Schmidt himself is part of a cartel, able to dine privately with the heads of
state. In 2nd half, Max interviews Ellen Brown (‘Web of Debt’),
about the public bank measure on the ballot in November. Will the voters back
it?
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NOTICIAS IN SPANISH
Lat Am search f alternatives to
neo-fascist regimes & terrorist imperial chaos
REBELION
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Nicholas Levis Empire
of Fraud, Made in America
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Olivia
Alperstein Don’t
Arm This President with These Nukes
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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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