Oct 21 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
Who is really suffering more
from Trump stupid trade-war? Our nation is: everyday the prices are going up.. our dollar has less
value.. Before election this will evaporate his support inside
US
equity futures are sliding after an Axios report that "the trade war
between the U.S. and China is just getting started" as Trump has no
intention of easing tariffs which he believes need more time to fully kick in.
After closing Friday's session unchanged,
S&P futures have slumped 0.4%, or 10 points, to 2,757 dipping below both
Thursday's and Friday's lows...
See Chart:
... with the Nasdaq down -0.6%
so far in early trading...
See Chart:
According to Axios, and contrary to
recent hopes of a detente in the ongoing trade war between the two superpowers,
Trump has no intention of easing his tariffs on China.
Instead, Axios' sources say "he wants Chinese
leaders to feel more pain from his tariffs" which he believes need more
time to fully kick in.
"He wants them to suffer more" from tariffs on $200 billion of
Chinese goods Axios said, citing a source
with direct knowledge of Trump's thinking, and the president believes the
longer his tariffs last, the more leverage he'll have.
In other words, Trump's
trade war with China is at the "beginning
of the beginning,"and his
team doesn't expect much from the tentatively planned meeting between Trump and
Chinese President Xi Jinping on the sidelines of the G20 summit in
Buenos Aires next month.
So why are the two leaders
meeting?
INSTEAD of preparing
concessions to Trump, China has been
more focusing on boosting investor confidence in the stock market, although the
recent rout shows there is much more work left. On
Sunday, none other than president Xi Jinping joined this confidence boosting
exercise and vowed “unwavering” support for the country’s private sector,
the latest response from Beijing to concern over the outlook for the economy.
“Any words and practices that
negate and weaken the private economy are wrong,” Xi said in a letter to private entrepreneurs, Xinhua News Agency
reported Sunday. “Supporting the development of private
enterprises is the Party Central Committee’s consistent policy,” Xi said
quoted by
Bloomberg.
…
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"An
exogenous additional 10% decline in stock prices would increase the drag to 0.75pp annualized and
could be enough to push GDP growth below potential next year, given the
simultaneous waning of the fiscal impulse."
In a Friday
note from Goldman economists, which tries to quantify the growth effect of the
equity sell-off, and finds that "the stock market is likely to turn from a
significant contributor to strong growth at the start of the year into a modest
drag next year, barring a further rebound in equity prices."
Picking up
where another recent Goldman note left off, which as
we discussed yesterday concluded that the Fed
will have to hike rates more than the market expects in order to substantially
tighten financial conditions and slow down the economy, bank
economists Jan Hatzius and Dean Struyven write that "the 6% decline in the stock market since late September has
been the most important driver of the recent tightening in financial
conditions." As a result, the bank now estimates "that the 0.5% boost to GDP growth from higher equity
prices at the start of the year has already disappeared."
See Charts:
Looking ahead, between the Fed's
own tightening posture and potential continuation of the equity
selloff, Goldman expects
a decline in the equity impulse to real GDP growth to about -0.25% in the first
half of 2019. This assumes that the equity component of the Financial
Conditions Index stays at current levels, which is "roughly consistent" with Goldman's forecasts for
a 2019 year-end level of 2,850 on the S&P 500 and $159 EPS by end-2018.
See Chart:
Next, the not so good news: should the sell-off continue and stock prices fall an additional 10%
in Q4 to around 2,500 and stay flat, some 15% below the September all-time
high, Goldman estimates that the growth impulse from
equity prices would turn from a neutral factor today to a -0.75pp drag by Q2 2019,
as shown in the chart below. According
to its calculations, Goldman concludes that such a decline would push GDP
growth down to 1.6% in 2019 on a Q4/Q4 basis, "below our
estimate of potential and well below our 2.0% baseline forecast."
See Chart:
In other words, if stocks do tumble, and GDP in early 2019 prints sub-2.0%, below
Goldman's estimate of potential and well below its 2.0% baseline forecast,
expect the war between the White House and the Marriner Eccles? (China) building to escalate dramatically in the coming months and
certainly ahead of the 2020 presidential election. The question then
will be whether Powell will end the hiking cycle,
or - to indicate the Fed's independence from the White House - will keep pushing rates higher, until the market cracks far
more than just 10%.
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SOURCE: https://www.zerohedge.com/news/2018-10-21/goldman-10-drop-stocks-would-send-gdp-sharply-lower-2019
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Any such a rally then has to produce new highs or this bull market is
likely to have seen its end...
As mentioned in previous updates from a
technical perspective the underlying weakness in the internals leading up to
the September/October peaks amidst tightening technical patterns and negative divergences
(Lying Highs) was not a surprise.
And if you view this recent correction
through the lens of simply supply & demand, this correction also makes
perfect sense. After all insiders cashed out aggressively
in September and then 2018’s biggest artificial
liquidity infusion, buybacks, temporarily ceased into the earnings window.
From a bullish
perspective this correction will be simply another
temporary dip before buybacks return and then stocks can embark on another
major rally into the positive mid term seasonality window:
See Chart:
This may well happen and that is clearly
the script many expect.
However,
for counter balance, I’d like to offer a couple of other considerations.
Firstly, in regards to the mid term
seasonality window, let’s be clear, 2018 so far has not followed the mid term
seasonality script very well. It would have called for a market peak in April,
then a low in to late September/early October. None of that has happened in
2018. We saw a first peak in January and a low in February and then another
peak in September. So if one is relying on a mid term
seasonality script they are relying on a pattern that hasn’t really applied all
year.
So bulls have a historically strong case
for a major rally to emerge into year end.
And frankly they need one. Badly.
Because
if you can’t rally on supposed 4% GDP growth, a $1.5 trillion tax cut, record
buybacks and record earnings what can you rally on?
$SPX
is barely up 3% on the year and while $DJIA and $NDX are still up on the year
many indices and sectors are either flat or down on the year:
See Chart:
However
let’s be clear there is precedence for markets not to rally into end of year.
Look to 2007 and you get the perspective:
See Chart:
Similar to what we are
currently seeing:
See Chart:
And when I say we are on a
knife’s edge I really mean it:
See Chart:
See more charts at
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When
it goes up, prices go down. It's going up?...
A calculation known as the Weighted Average Cost Of Capital (or "WACC").
It's All About
The "Risk Free" Rate
So, to recap:
- Companies (really, any asset with an income stream) are valued off of the present value of their discounted future cash flows
- This present value is highly dependent on the discount rate used
We just talked about how the WACC is
commonly used as the discount rate (or, at least, its foundation).
The
Future Of Rising Rates (And Falling Asset Prices)
Most reading this are aware that we've
been living in a falling interest rate environment for most, if not all, of our
adult lives. And since the 2008 financial crisis,
interest rates were held down at essentially 0% (or even lower) by the world's
central banks:
See Chart:
It has taken a while for the higher cost
of capital to ripple through the system, but the repercussions are now becoming
apparent.
Bonds have been in sell-off mode the
longest, pretty much since since l gave warning at the end of 2016:
See Chart:
Meanwhile, the stocks of
homebuilding companies have been selling off hard since the 10-year Treasury
cracked above the psychologically-important 3% threshold:
See Chart:
You see: it is the Economy stupid waco
See More charts at:
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"If you just look across the spectrum,
interest-sensitive equities are screaming
late-cycle."
Hypothetical?
“I was asked to lay out the case for the
US being mid-cycle,” said my favorite strategist. “Residential housing is 4% of
GDP now, that’s consistent with past recessionary levels. So perhaps it jumps
to 8%,” he continued.
“You think about that hypothetical and
it’s possible,” he said. “BUT then you listen to what the companies are
saying, and you walk away with the sense that there’s
just no way.” Homebuilding stocks are -30% from
the January highs.
See Chart:
“If
you just look across the spectrum, interest-sensitive equities are screaming
late-cycle.”
“Making the mid-cycle case raised my
conviction that we’re late-cycle,” he said. “America’s fiscal boost masked the
natural cycle dynamics.” The US is the outlier. In dollar terms, of the major
markets, only American stocks are higher on the year.
“So if US stocks catch up and crash from here, what happens next?” he
asked rhetorically. “I think most
people will conclude we’re headed into another depression. But I think there will be great things to buy. Probably in the places that are already crashing and burning.”
….
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...complacency
across all 'risk-off' assets had reached epidemic levels as
equities broke out to new highs... Then the calendar rolled over to October
and everything changed...
See Chart:
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete;
it’s full of frauds & corruption. Urge cambio
"This is why we are seeing the hysteria out of the Deep State players
that are the mid-level puppets... They know if people vote for rule of law candidates across the
board... globalists will
be in the crosshairs of a true justice system as opposed to a justice system that is just smoke and
mirrors..."
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Migrants policy & Trump ‘blah-bla’: The FACT is that migrants are getting inside because our farmers in
the South-border need them to push working salaries down. They are getting bracelet in one leg so the MIGRA will know
where they are. Migrants are offered the chance of being legal permanent
residence if they report year salaries.. for 1 year at least. They have to do
the dirty work in construction & cleaning buildings that our American
workers don’t want to do it.. and for less than the minim salary in some
work-places. The future legalization offered to them is very humane. We hope
that authorities comply with such promise. I already saw 2 recent migrants here
in Pgh PA with small chuckle in the bottom of one leg. It will be
impossible to contain them.. Trump bla-bla is mere
business –as usual- with big Corp offered to build the wall. US farmers
will bring migrants inside.. they know how.. even if the FED don’t wanted. If they are Killed.. that will make Trump re-election impossible..
that is a FACT.
…
Trump:
"I will seal off the border before they come into this country, and I'll bring out our military."
[[
The latest news was the call from
Trump to Ms Pelosi from the DEM party to negotiate a deal regarding Migrants..
of course they have something in common.. not to allow them to vote in the
Midterms of NOV.. but using the army against them .. she may disagree it
.. at least in blah-blah. The bad news:
Dems is trying to make Elec fraud with them.. The corp press anti Dem.. showed
evidences on this regard. Migrants promised not to be used for elect fraud..
they will placed in jail & deported.. but, they need to survive & they
may use false ID to get the money & then no vote.. very
risky. ]]
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"Perhaps totalitarian Neoliberal repression is no consequence of Google, as
long as it gets still more market share?" [[ right.. it makes sense this paragraph ]]
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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
"There comes a time when hard choices must be made..." WW3 will be stupid
Today, we don’t
speak of duty, except in so much as a slogan to promote war, but we certainly
do speak of benefits for ourselves and our “group” of entitled peeps. We
will fail because of our greed and avarice. The United States of Empire has
become quite simply too big, too
diverse, and too “exceptional” to survive.
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The world is changing faster than ever before... But where do
all of these big picture trends intersect, and how can we make sense of a world
engulfed in complexity and nuance?
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It's
"inconceivable"
that the territories would be given up by Israel, says an Israeli
official.
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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
On contact Wikipedia
– a tool of the ruling elite What about Facebook that you promoted bef
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NOTICIAS IN SPANISH
Lat Am search f alternatives to
neo-fascist regimes & terrorist imperial chaos
VIENTO SUR
Debate sobre prostitución
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RT EN ESPAÑOL
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that
leads to more business-wars from US-NATO
allies
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PRESS TV
Resume of Global News described by
Iranian observers..
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