DEC
24 18 SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
FELIZ NAVIDAD y que la lucha por PAZ y
prosperidad continúe..
ZERO
HEDGE ECONOMICS
Neoliberal
globalization is over. Financiers know it, they documented with graphics
The S&P crashed to 2,351.10, closing below its bear
market level of 2352.7 - the lowest since April 2017 - ending the longest bull market in history
See Chart:
It was the worst Christmas Eve drop and
the worst December for the S&P 500 on record (technically, since The Great Depression although this is interpolated as
back then there was no S&P500)
See Chart:
S&P 500 December –to--date Performance
“Risk aversion is now extreme; even though the Street may point to a ‘less dovish’ FOMC and
concerns about a U.S. government shutdown as possible reasons for the selloff,
the apparent lack of positive drivers and headlines has curbed risk appetite,”
Nomura strategist Masanari Takada wrote in a note.
“While sentiment looks to be skewed towards fear, most market
participants seem to be looking for a plausible excuse to sell.”
Steve Mnuchin epicly failed to calm the market over the
weekend...
As Michael O’Rourke, JonesTrading’s chief market strategist,
said:
"...nothing says don’t panic like saying ‘I’m
calling the plunge protection team tomorrow.' I honestly think that’s the type of event that’s going to startle markets
and create more panic and fear when it’s meant to create confidence."
And sure enough, the plunge
protection team's best efforts utterly failed to stem the tide...
See Chart:
A bloodbath...
See Chart: PPT
As waves of selling hit the market...
(very notable for such a normally quiet
day - volume was almost double the recent average)
See Chart:
PPT: NYSE Uptick - Downtick
S&P volume set to be almost
triple that of the past 9 pre-Christmas sessions
See Chart:
S&P 500 Composite Volume in the last session before
Christmas
Bank stocks suffered...
See Chart:
S&P Banks Index
And just the mention of the word
'liquidity' sent bank credit risk soaring...
See Chart:
Broker CDS
Even the supposed safe-haven stocks were pummelled... The S&P 500 utilities index
drops as much as 4.6% intraday, most since August 2011, amid the broader market rout and continued threat of higher
interest rates in 2019.
See Chart:
S&P Utilities
And along with stocks, the dollar
was dumped wholesale...
See Chart:
Bloomberg Dollar Index
Bonds were bid (with 30Y back below
3.00% intraday)...
See Chart:
30Years TSY Yield
And inflation breakevens were
clubbed like a baby seal...
See Chart:
1 Year Inflation Breakevens
Despite the dollar weakness, crude
prices collapsed further as PMs rallied...
See Chart:
Gold soared (in dollars) on the day...
See Chart: FED
WTI tumbled to almost a $43 handle...
See Chart:
Finally, since The Fed hiked rates
and Powell didn't back down on auto-pilot, the S&P is down 8%, the dollar
is down over 1%, and gold and the long bond are up around 1%...
See Chart:
And the odds of a rate hike in 2020
are now the same as the odds of rate-cut.
See Chart:
…
…
SOURCE: https://www.zerohedge.com/news/2018-12-24/longest-bull-market-history-over-sp-enters-bear-market
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WHERE
ARE RATES GOING IN 2019 MUST READ!
[[ Here only extracts.. go to Source below to
read full article ]]
Last Monday, Jeff
Gundlach, famed bond fund manager and CIO of Doubleline, made an
interesting comment during an interview with CNBC when he stated that the 10-year Treasury yield would top 6% by 2020 or 2021. 6%
would be the highest yield since 2000.
"...the current 30-year treasury rate at 3% seems ridiculously
low. In the near future, at
1.5%, the 3% yield will seem generous... "
The chart below shows Gundlach’s estimated yield as compared
to the long-run range of economic growth. (Note that real GDP growth was running at 5.27% in
2000 as compared to 3.0% today which is also getting weaker.)
See Chart:
Gundglash Estimated
vs. Estimated GDP Growth
More on US
Econ Prosperity
Given the
structural backdrops to the economy, there is an inability to substantially
increase rates of productivity, output, wage growth, savings, or consumption
which would lead to stronger rates of economic growth. In
fact, we are currently running some of the weakest rates of economic growth,
productivity, and wages on record
See Chart:
Econ Prosperity has
never been so Poor
…
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On Dollar Issue
Jeff states, there are many countries now looking for an alternative to
currency issue. The main problem for America comes as the status of “reserve currency” diminishes.
I agree that other countries are looking for alternatives to the dollar
as a reserve currency. However, there are two primary
reasons why this will likely not be a real threat soon:
- If you are any other country where are you going to store your reserve currency: China, Russia, India, Brazil, the Eurozone? Many of these economies are corrupt, weak, too small, or a combination of all three.
- When global investors are seeking “safety” from “risk,” where are they going to go?
Both of these reasons have the same foundations:
- Liquidity: the U.S. Treasury market is vastly deep and can support billions in transactions without a major dislocation.
- Safety: despite all of the flaws in the U.S., it is still the safest country in the world to conduct business with. While there are certainly many issues, the “rule of law” in the U.S. still provides a relative level of safety for storing capital not found in other countries.
- Return: the rate on U.S. Treasuries is high enough to attract capital from other areas as a “safe” store of value.
- Dollar Value: the rising U.S. dollar is attracting capital flows from weaker currencies and economies.
…
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On Bond Yields
See Chart:
Lon term Bond Yields from US-JA compared
I agree.
Currently, interest rates are at a level that has historically
led to some sort of event. Whether it was economic, financial, or both, there is no real precedent which suggests rates could rise
another 3% from here without severe ramifications. Of course, as the market
declines, the demand for “safety” would ultimately push rates
lower.
See Chart:
At some point, the Federal Reserve is going to step back in
and reverse their policy back to “Quantitative
Easing” and lowering Fed Funds back to the
zero bound.
When that occurs, rates will not
only go to 1.5%, but closer to Zero,
and maybe even negative.
…
See More Charts at:
…
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Reinhart Warns: The
Biggest Emerging Market Debt Problem Is In America
A decade after the subprime bubble burst, a new one seems to be taking
its place in the market for corporate collateralized loan obligations. A world economy
geared toward increasing the supply of financial assets has hooked market
participants and policymakers alike into a global game of Whac-A-Mole.
Emerging economies are, of course, a very diverse group. But the yields on
their sovereign bonds have climbed markedly, as capital inflows to these markets have
dwindled amid a general perception of deteriorating
conditions.
Historically, there has been a tight positive relationship
between high-yield US corporate debt instruments and high-yield EM sovereigns.
In effect, high-yield US corporate debt is the emerging market that exists
within the US economy (let’s call it USEM debt). In the course of this year,
however, their paths have diverged (see Figure 1). Notably,
US corporate yields have failed to rise in tandem with their EM counterparts.
See Chart:
2018: EM and USEM divergence
What’s
driving this divergence?
- Are financial markets overestimating the risks in EM fixed income (EM yields are “too high”)?
- Or are they underestimating risks in lower-grade US corporates (USEM yields are too low)?
I am inclined to the
second interpretation.
In what is still a low-interest-rate environment globally, the perpetual search
for yield has found a comparatively new and attractive source in the guise of
collateralized loan obligations (CLOs) within the USEM world.
In the language of
emerging markets, the USEM is attracting large capital inflows.
See Chart:
US amount outstandg: Jan 1, 08 vs.
Dec 4, 2018. S&P/LSTA: US Levera-Loan 100 Index
A decade after
the subprime bubble burst, a new one seems to be taking its place. The networks for financial contagion, should
things turn ugly, are already in place.
….
….
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Things are
just breaking left and right in the market now..
See Chart:
2Y Yield vs. 12 Month Bill Yield
https://www.zerohedge.com/sites/default/files/inline-images/tsy%20bill%20inversion.jpg?itok=4Bmck0ep
As one would expect, this was yet
another of those "since 2008" events, because the last time the 1Y-2Y
curve inverted was during the panic of the 2008 financial crisis.
See Chart:
And with a massive short overhanging still waiting across
the entire curve as we discussed yesterday, expect many
more such "breakage" events to take place in the coming days.
…
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RELATED:
If you
thought the frenzied, panicked selloff into abysmal liquidity would end when
the stock market plunged into the close... you were wrong.
You were wrong, because while stocks closed at 1pm, bonds
are still open (until 2pm), and just after 1:24pm, the 2Y Treasury yield flash
crashed (as prices Flash Smashed).
See Chart:
What caused this latest algo-driven
market freakout? It certainly wasn't today's poor
2Y auction which saw the lowest bid-to-cover since December 2008 and
a nearly 2bps tail.
The most likely culprit is what we discussed
just yesterday when we noted that the short
squeeze observed by Jeff Gundlach has yet to materialize, and not just at the
long end, where net specs have never been shorter...
See Chart:
Ultra-Long Futures
net spec
. but also the short end, where 2Y
treasury net specs have rarely been shorter.
See Chart:
2Y futs net specs
With stock markets in freefall,
record low liquidity across all asset classes, and yields sliding all day, it
was only a question of "max pain" before yet another big short was
stopped out and threw in the towel, capitulating and
covering their position at any price which appears to be precisely what
happened with the 2Y Treasury.
Expect many more fireworks as more
TSY shorts across the curve follow suit.
…
…
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Short News:
It
depends who you ask...
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The
difference between the average sellside S&P500 consensus and the actual
S&P500 has never been greater.
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" Given the major market impacts during the relatively minor balance sheet reductions in
2007 and again at present, there is every
reason to believe a 50%+ fall in the asset prices is imminent absent
a policy 'U-turn' by the Fed..."
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" The only problem our
economy has is the Fed. They don’t have a feel for the Market, they don’t understand ..."
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And now the
bond market is sending a worrying signal.
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...the suddenly weak oil-to-gas pricing ratio, combined with the U.S.-China trade war, acts as “an additional
hindrance to development,”
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The longest
bull market in history - as measured by the E-mini future - is now less than 1%
from ending.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
"Different
people from the White House are saying different things about what the
president would accept or not accept to end his Trump Shutdown, making it
impossible to know where they stand at any given moment."
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Residents
of New Jersey were given a deadline to turn in their gun magazines or become felons
overnight,
and so far, no one is complying...
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Blackrock's ETF business attracted more than $25 billion in November
inflows, a record monthly inflow for the world's largest asset manager.
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US-W ISSUES (Geo Econ, Geo Pol &
global Wars)
Global depression is on…China, RU, Iran search for State
socialis+K-, D rest in limbo
Netanyahu
is hoping to expand his coalition's razor-thin one-vote majority in the
legislative body to help pass a controversial bill to expand conscription
requirements for ultra-orthodox Jews.
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If the goal
of the OPEC+ cuts was to boost oil prices, then the deal is clearly failing...
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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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SHOWS RT
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
VIENTO SUR
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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
|
The Vocabulary of Economic Deception By Michael Hudson
|
|
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The United States is able to run
deficits and avoid the kind of unemployment and austerity that Europe is
imposing on itself . - Continue
|
|
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Blinded by Anti-Trumpism By Finian Cunningham
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Our Poor, Defenseless Military Industrial
Complex By Alan MacLeod
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Endless War Has Been Normalized And Everyone
Is Crazy By Caitlin
Johnstone
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The Implications of Macron Implosion By Peter Koenig
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Michael D. Yates Why
Capitalism Must be Attacked with Equal Force on Every Front
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Steven Colatrella Capitalism
in the United States and in Europe
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
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Is there any evidence? Or is this mere speculation?
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DEMOCRACY NOW
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
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PRESS TV
Resume of Global News described by Iranian observers..
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