Oct 25 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
What goes
down, dead-cat-bounces back up on negligible volume... because..
China
opened ugly but was rescued into the close of the afternoon session...
See Chart:
It is not entirely surprising that
European markets bounced up today...
European bank stocks were the most
oversold in over a decade as of last night's close...
See Chart:
US Markets also 'dead-cat-bounced'
after Nasdaq's RSI reached extreme oversold levels again
See Chart:
And as stocks dead-cat-bounce for the umpteenth time in this
October onslaught, Bloomberg's Smart Money Flow Index (which aggregate opening and closing
price trends) has collapsed to its weakest since Lehman...
See Chart:
As Bloomberg notes, regardless of its predictive value, the index is useful for its reflective value: it paints a picture of how the U.S. stock
market has tended to be much stronger at the open than the close this year. Perhaps
that lends credence to the theories that the return of volatility in 2018 has
created de-risking by market makers and systematic quant strategies that react
to price swings, rather than discretionary bearish selling.
The equal-weight S&P 500 has
seen a notable regime shift from the 'bounce off the 200DMA' uptrend...
See Chart:
And hedge funds are really suffering
as their favorite stocks have collapsed once again..
See Chart:
For a sense of just how chaotic
things have become in US markets - here is the Nasdaq 100's realized volatility...
See Chart:
Another day, another big
short-squeeze…
See Chart:
FANG Stocks surged today, after
yesterday's bloodbath, but were unable to get near to retracing the losses..
See Chart:
Thanks to Euro weakness (driven by
Brexit comments from Draghi), the US Dollar jumped to new cycle highs...
See Chart:
Cable dropped notably on the day
after Draghi and knee jerked late on after headlines that May's group cannot
agree (not exactly earth shattering news)
See Chart:
Finally, we note that the commodity Lumber - is trading at Nov 2016 lows...
See Chart:
Which fits with the plunge in actual
hard economic data and the collapse in financial conditions...
See Chart:
S&P 2,300?
…
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"Tell me this isn’t crazy..."
A few days ago the creator of the most famous consumer
‘credit score’ in the United States announced a major overhaul in how it rates
borrowers.
Consumers
live and die by this ‘FICO score’. A high FICO score means that it’s easy to
obtain loans at lower interest rates.
So FICO decided that they
would reinvent the way they calculate the scores– giving a big boost to people
with bad credit.
Virtually overnight, people who have a history of not paying
their bills will immediately be deemed creditworthy.
And poof…
they’ll have access to more debt than ever before.
See figure:
No
offense, but what a bunch of idiots.
This company is deliberately lowering its standards and pretending that
people with a terrible credit history are actually top quality borrowers.
….
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"Today,
we are finding it exceedingly difficult to deploy capital with an acceptable
margin of safety"
While growth stocks are suffering one of their worst bouts
in recent history, the recent rebound in "value" has come too late to
help one venerable asset manager
See Chart: Growth vs. Value
Value investors said: "Today, we are finding it exceedingly
difficult to deploy capital with an acceptable margin of safety," wrote Eli Weinberg, SPO co-managing
partner, in a letter to investors seen by Bloomberg
.
"Businesses we admire, in well-positioned sectors with attractive
growth prospects, are priced to perfection",
and in some cases, thanks to central banks, well beyond.
BUT It isn't just value investors
however: as the Goldman Hedge Fund VIP basket reveals, it has been an abysmal year for the most widely held stocks
by the hedge fund industry which finds itself in a crisis period, scrambling to
find ways to outperform the market, or simply to generate positive results.
See Chart:
The recent period of underperformance
was a striking reversal for SPO, which since its founding posted an average
annual return of 23% across its investments, the fund's letter said.
WORSE, its YTD performance wasn't even that bad: the
SPO Partners II fund has gained 1.3% in the first nine months this year.
[[ Si el capital GRANDE no puede
reproducirse significa que la fiesta neoliberal se acabo ]]
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"Buying expensive stocks
hoping that they’ll go even higher is not investing, it’s gambling..."
See Chart:
The higher
the price-to-sales ratio, the more expensive stocks are.
See Chart:
….
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Revenue growth at the two biggest e-commerce titans, Google and Amazon,
appears to have finally peaked.
See Chart:
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IS THE
MARKET PREDICTING A RECESSION?
It is nothing to
worry about? Obviously, the recent
spasms of the market this year are really nothing more than just one of the
normal market corrections which happen every now and then. The chart below shows the S&P 500 going back to 1960 with
some “interesting green dots.” (Cheap trick to get you to keep reading.)
See Chart:
Before we get to
those “interesting green dots,” we
need to make a point about Gwynn’s assessment of the current economic outlook.
While Gwynn is
absolutely correct about the current state of economic growth, the view is also
wrong. The problem with making an
assessment about the state of the economy today, based on current data points, is that these numbers are “best guesses” about
the economy currently.
Let’s go back to
those “interesting green dots” in the S&P 500 chart
above.
Each of
those dots are the peak of the market PRIOR to the onset of a recession. In 8 of 9 instances the S&P 500 peaked and turned lower prior to the
recognition of a recession.
In words, the
decline from the peak was “just a correction” as
economic growth was still strong. In
reality, however, the market was signaling a coming
recession in the months ahead. The economic data
just didn’t reflect it as of yet. (The only exception was 1980
where they coincided in the same month.) The
chart below shows the date of the market peak and real GDP versus the start of
the recession and GDP growth at that time.
See Box:
The
problem is in the waiting for the data to catch up.
Let’s take the chart
of the S&P 500 index above, and add official recessions as dated by the
National Bureau of Economic Research (NBER) and the dates at which those
proclamations were made.
See Chart:
Importantly, the market had warned of a recession 14-months in
advance.
See Box:
There are
three lessons to be learned from this analysis:
- The economic “number” reported today will not be the same when it is revised in the future.
- The trend and deviation of the data are far more important than the number itself.
- “Record” highs and lows are records for a reason as they denote historical turning points in the data.
We do know,
with absolute certainty, when this cycle will end.
“Economic cycles are only sustainable for
as long as excesses are being built. The
natural law of reversions, while they can be suspended by artificial
interventions, cannot be repealed.”
While there may
currently be “no sign of recession,” there
are plenty of signs of “economic stress” such as:
- Rising delinquency rates
- Rising levels of charge-offs
- Weakening rates of consumption
- Collapsing yield spreads
- Surging consumer and government debt levels
- The Fed’s insistence on hiking interest rates and reducing liquidity.
- Housing and automobiles have already shown signs of cracking.
- Tariffs, and higher oil prices, are an additional tax on both production and consumption
Being optimistic
about the economy and the markets currently is far more entertaining than doom
and gloom. However, it is the honest assessment
of the data, along with the underlying trends, which are useful in protecting
one’s wealth longer-term.
The best
advice I have is the same as a recent
quote from John Stepek:
“Be defensive when everyone else is being
aggressive.
Why? So that when the time comes when there
are lots of opportunities but hardly any money around (and it will come,
because markets are cyclical and winter eventually arrives again), you’ll be in
a position to take advantage.
And keep an eye on corporate debt. That’s
where we’ll see the strains first.”
While the
call of a “recession” may seem far-fetched based on today’s
economic data points, no one was
calling for a recession in early 2000, or 2007, either. By the time the
data is adjusted, and the eventual recession is revealed, it won’t matter as the damage will have already been done.
The
market may already be trying to tell you something.
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Here an story-tell
for kids:
"...the actual figures have been
consistently lower than expected"
A funny thing happened on the way to hog slaughter this
year; after much talk of the domestic herd swelling in size - and a setback
after Hurricane Florence hit North Carolina which should have normalized by
now, analysts expecting a a spike in slaughter rates have been left scratching
their heads over a puzzling shortfall, according to Bloomberg.
See Chart:
Further compounding supply
woes is a highly contagious pig virus, African Swine Fever, which
is spreading rapidly through China - the world's #1 consumer of pork. Several new outbreaks of the disease were reported his
week.
See Chart:
Rich Nelson, chief strategist at Allendale Inc. in McHenry,
Illinois - who suggested that perhaps USDA estimates of rising animal
inventories may have been improperly calculated.
Nelson says that the industry had
anticipated a prolonged slaughter this year, topping 2.6 million animals
per week - yet the actual figures have been consistently lower than expected,
and are unlikely to breach the expected figures until just before Thanksgiving
at this point.
See Chart:
"Where are all of the hogs?," asked Archer
Financial Services senior account exec, Dennis Smith last week. "We’re missing
4 percent to 5 percent" of the expected supplies, he said.
….
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Big Corp tactic: you get more free money if you dramatize
more the issue
According
to a recent survey of Wall Street professionals, the Fed would stop hiking if
the S&P 500 fell to 2390, suggesting the "Powell put" strike
price is about -12% below current levels.
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 Could be propaganda… check other sources to confirm or
dismiss them
Republican-affiliated
voters are outpacing Democratic-affiliated voters in early voting in seven
closely watched battleground states.
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It was about time
"conspiracy
to provide materially false statements to Congress and obstruct a congressional
committee investigation"
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This latest attack on
corporate sovereignty will drive companies and jobs out of California...
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"[California's] middle class conservatism that propelled national
figures like Ronald Reagan is gone. It has been replaced with virtue signaling and policies by the wealthy that hurt
struggling families..."
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If this is an Official
story.. check other sources!
"Some migrants complained
of a sleepless night on Tuesday in the town of Huixtla because of a
rumor that a band of baby
snatchers was prowling the encampments."
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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
"No turning point" a top
Russian defense officials says after John Bolton asserted,“There’s a new strategic reality out there.”
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“If there are concerns
about Apple calls being listened-in on, then you can change to Huawei
phones..."
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
War is war.. they know when they will respond to US piracy
RELATED 1
RELATED 2
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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
REBELION
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ALAI NET
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RT EN ESPAÑOL
Keiser Report " US se gasta todo el dinero
tras ganar la lotería"
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
George Ochenski We’re
a Better Society Than You Think, Mr. Trump
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Kathleen Wallace American
Unreality
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Ryan LaMothe The
Occult Injustice of Laws Supporting Capitalism
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Ryan LaMothe The
Occult Injustice of Laws Supporting Capitalism
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JW. Whitehead Has
America Become a Dictators Disguised as a Dem?
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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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