Nov 7 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
500 Dow points... on an expected
outcome? "That escalated quickly..."
Since The Dems were confirmed as
taking the House last night, the dollar is down but bonds, stocks, and gold are
all higher...
See Chart:
US Futures show a surge at Asia
open, European open, and US open... (Dow futs 650 point ramp off overnight
lows)
See Chart:
The Nasdaq
Composite is up over 2%, yet only 62% of stocks in the index are higher, below
the readings seen during October's snap-back rallies. Another factor that
suggests a lack of verve is the percentage of volume in advancing stocks on the
NYSE
Strong bid all day...
But another super-low volume day...
See Chart:
FANG Stocks soared...finally filling
the gap-down-open from Oct 26th...
See Chart:
After 22 days of inversion (longest streak since 2011), the
VIX term structure normalized today (barely)...
See Chart:
But the 30Y still ended the day
lower in yield (so not exactly reflective of the exuberant risk-on appetite in
stocks...
The dollar was swinging around like
a penny stock on Midterm elections before everyone settled on the Dems taking
the House and that sparked the selling...
See Chart:
Finally, we note that Inflation
Break evens have decoupled from Oil's collapse...
See Chart:
WHO IS RIGHT?
It’s amusing that pundits are
talking about market implications from a political event that consensus had
bang-on: a congressional split that’s happened every
time in the past 18 midterms after a presidential sweep. Immigration, trade,
and Fed policy all unaffected by the results
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“I made my money selling
too soon...”
See Chart:
Context?
See Chart:
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"The Fed will
continue to raise rates and cut assets. The trade war will escalate.
Thehousing market will continue to
falter, auto markets will implode, and corporatedebt will become a millstone on the neck of stock markets..."
Here are the
facts:
New home sales, an indicator highly
valued by mainstream economists, has been in decline for the past year, hitting two-year lows in September.
The housing “boom” hailed in the mainstream over the past few years was a
farce driven primarily by corporate behemoths like Blackstone. Companies buying up distressed properties
across the U.S. using cheap loans and bailouts through the Federal Reserve and
turning them into rentals hardly constitutes a “recovery” in housing.
Regular
homebuyers have also enjoyed artificially low mortgage rates for many years.
But now, mortgage
costs are spiking as the Fed raises interest rates, and corporate debt
is becoming more expensive, making it less profitable for companies to continue
vacuuming up properties. These are the same
securities that constituted a “toxic” influence that led to the mortgage and
derivatives bubble. It is hard to say exactly what the effects will be as they
add to existing ARM-style mortgages and derivatives already on the market, but
I suspect the result will be destabilizing.
Auto sales, another fundamental indicator used in the
mainstream as a signal for economic health, is also failing recently. U.S.
auto sales plunged in September from 11 percent to 25 percent depending on the
company and make of vehicle. While the mainstream media argues this massive
year-over-year decline was due to destructive hurricanes in 2017 creating overt
demand, the truth is that the average monthly payment on new vehicles has
rocketed to over $525 and interest rates rise due to the Federal Reserve.
Car sales, new and used, have thrived in recent years in most part
because of artificially low rates and ARM-like loans to people who cannot
afford them. Much like
the mortgage bubble in 2008, the auto bubble is set to implode as car payments
become too expensive for the average buyer and defaults increase.
The US budget deficit climbed to six year highs under Donald
Trump's watch in 2018 as fiscal spending skyrockets. Conservatives
hoping for budget responsibility and reduced government spending are given a
rude awakening once again, as Republicans and Democrats and Trump ALL seek
bigger government. This is hardly gridlock. In fact, there has been
resounding unity in Washington for ever increasing power, and ever increasing
costs.
The trade deficit, which was supposed to decline aggressively in the face
of Trump's trade war, has actually climbed to record highs with
China (among other nations). I have heard claims that the outcome of the
midterms will force Trump to end the trade war because he is no longer
receiving backing from the Federal Reserve or Congress. The trade war
will not stop. It provides perfect cover for central banks as they
continue to remove artificial support from the overall economy.
Perhaps
the biggest
factor in economic decline in the U.S. will be
corporate debt, as mentioned earlier. Corporate debt has jumped to record highs not seen since 2008, with
debt-to-cash levels in 2017 hitting lows of 12 percent. Meaning,
on average for every $1 of cash a company has in reserve it owes $8 in debt.
How is all
this debt being generated? It’s
all about stock buybacks. In 2018, U.S. corporations
increased spending on stock buybacks by 48%, while only increasing spending on
development by 19%. Meaning, corporations are spending far more capital, and
borrowing far more money, just to keep their stock prices artificially propped
up than they are spending money to invest in future growth.
For almost a decade stock markets have been dependent on two pillars:
near zero interest rates and asset purchases by the Fed. Stock buybacks are
reliant on low rates and the corporate ability to borrow essentially free
money, which they then cycle into equities to buy up shares, reducing the amount of existing shares on the
market and thereby increasing the value of the remaining shares through a form
of legal manipulation.
But as the Fed raises rates and stops acting as the buyer of last resort,
corporate borrowing becomes more expensive and buybacks will decline. In fact, the last half of 2018
shows a marked drop in announced buybacks, as the apparent peak in July
fades. As December approaches, the Fed is set to match interest rates
with their official inflation rate, or the "neutral rate". This
is something that has not been done for decades.
I believe stock buybacks will falter at this time, as the cost of the exorbitant debt needed to continue
propping up stocks will become too high.
Continue reading at:
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"...the boys and
girls in the momo tradeare about to find themselves up close and personal with the great central
bank Pivot soon enough..."
To wit, it is absolutely guaranteed that during the next two years
there will be a non-functioning government and that Washington's abject fiscal
incontinence will reach the point of downright embarrassment---even down
there in the Imperial City.
US 10-year Treasury bond yield
(quarterly log scale chart)
See Chart:
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SOURCE: https://www.zerohedge.com/news/2018-11-07/stockman-demise-bubble-finance-and-folly-trump-o-nomics
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Between
supply concerns, fiscal deadlines and Trump continued unpredictability, rates
strategists expect the current period of clam in the bond market to be short
lived.
Despite the sharp decline in rate
volatility, the recent stability in the bond market is not seen as
lasting long, with a confluence of factors converging to impact the "most
important" catalyst behind this year's instability in risk assets - the
10Y yield - which will likely continue rising after the
current period of calm.
There are several reasons for that,
among which:
Supply Concerns
Fiscal Deadlines
The International "Diversion"
That could spur further swings in
the Chinese yuan and emerging markets, which could in turn affect U.S. assets.
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SOURCE:
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...it’s time to do away with the “multilevel marketing scheme that the VC-LP-user growth game has become”...
More to the point, he says, it’s time to let the air out of this “bizarre Ponzi balloon”.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
The best news today:
...a "jobs
guarantee", free college tuition,medicare for all, abolishing ICE and"housing as a human right"
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"This is the honeymoon... This isn’t going to be some
version of a Grand Coalition...And
issues like the budget and debt ceiling
will only be further complicated."
"This is the
honeymoon," says former fund manager and FX trader Richard
Breslow, reflecting on the buying panic in US equities overnight (despite lower
bond yields, lower dollar, and higher gold). However, Breslow reminds the over-enthused: this is "not
for the rest of your life."
See Chart:
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Pelosi
wants a real honeymoon .. no tiene pelos en la lengua.. What about
stamina?
In a fig
leaf offering of cooperation, Democratic House leader Nancy Pelosi, fresh off
her victory in the House, said she spoke with President Donald Trump and Mitch
McConnell about working together on infrastructure spending that would help
create jobs.
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After
months of being publicly denigrated by President Trump, Jeff Sessions is finally out at the DOJ...
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Despite
record voter turnout and a staggering $5 billion political spend between both
parties, Democrats' hoped-for 'blue wave' failed to materialize on Tuesday.
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"The markets will get harder,
not easier, to navigate over the next six to 12 months..."
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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 short and simple
answer is no. Democrats and Republicans alike favor more theft of the
American paycheck, and the trade
war is one sneaky way to get more money flowing into their hands and out of
ours..."
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"What China needs to offset both its growing oil and gas
dependency is more domestic
production, but therein lies the problem.China's oil fields are maturing and it’s unlikely that significant
discoveries can be found to replace depletion reserves. "
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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
ALAI NET
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RT EN ESPAÑOL
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Garry
Leech US
Americans Are Not the Only Americans
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Binoy
Kampmark Taxing
the Digital Giants
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Dan
Corjescu Electoral
Fetishism
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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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