DEC
4 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
China stocks held up overnight...
European Stocks continued to give back Sunday night gains...
US Equity indices rapidly erased not
just Sunday night gains but Friday afternoon's pre-emptive push and Wednesday's
Powell Put levels...
See Chart:
“The Dow vigilantes have managed to get both a Powell put and a Trump
put for the market,” said Ed Yardeni, lead strategist at his namesake research
firm. “Jerome Powell turned into Santa Claus last Wednesday, markets certainly
reacted joyously to his hints that Fed tightening would occur at an even more
gradual pace. So if Jerome Powell is Santa Claus, then
the two elves are President Trump and President Xi.”
But the Grinch just took that all away... From Friday's
close…
See Chart:
On the day, Trannies worst day since
Brexit, but it was all a disaster...
See Chart
Dow down 800 points!
See Chart below:
The S&P stalled at 2800 once
again and completed a triple top of lower points...
See Chart below
TICK shows the massive sell programs
hitting as stocks broke key technical levels. Momentum stocks collapsed...
See Chart below:
Bank stocks have been battered,
tracking the curve lower...
See Chart below
For some context:
- Global Systemically Important Banks are down 30% from 52-week highs.
- US Financials down 14.5% from 52-week highs.
- Goldman Sachs is down 33% from 52-week highs.
And regional banks crashed most since Brexit...
See Chart
But while banks were busted, FANG
stocks got monkey-hammered... back into bear market (down 22% from 52-week
highs)
See Chart below
(FB -36%, AMZN -17%, NFLX 34%, GOOGL -17%. AAPL -24%)
Stocks ( 10 Years Yield) plunged
back to bond's reality...
See Chart:
Treasury yields tumbled today with
the long-end dramatically outperforming and collapsing the yield curve...
See Chart:
The yield curve collapsed too with
2s5s, 3s5s inverted and 2s10s into single-digits...
See Chart:
Massive decouple from The Fed's
guess...
See Chart:
The dollar repeated yesterday's fund
by diving overnight and ramping from the European open... (note it remains
lower from Powell's Put last Wednesday)...
See Chart:
Finally,
the biggest picture of all signals that volatility is coming... just like
winter...
See Chart:
And with markets closed tomorrow, [[ Why? Is this a Dic 4 data or not? ]]
we suspect this is the scene on many
trading floors...
…
…
SOURCE: https://www.zerohedge.com/news/2018-12-04/bloodbath-triumphant-truce-deal-dysphoria-36-hours
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MARKET UPDATE: J.P
MORGAN
G 20 Removes important obstacles
for Market Upsite. ALERT!
[[ Announced but the INFO was not
reported.. or blocked ]]
See the bottom of this Art:
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Interesting Art.. that you
MUST READ
I provide here only subtitles & some charts in it. Go to
source below to get full art
"...comparing the current debt super-cycle to the previous one,
which ended with the outbreak of
World War II in 1939, 2007-09 were similar in nature to 1929-32,
and the phase we are going through
now is similar to 1935-39, where a sharply rising gap between poor
and rich led to a monumental rise in
populism"
"... the debt-financed overspending of the 1960s had continued
into the early 1970s. The Fed had funded this spending with easy-credit
policies, but by paying back its debts with depreciated paper money instead of gold-backed
dollars, the U.S. effectively defaulted."
-Ray Dalio, Bridgewater Associates
1- Debt crises of different sorts
That dynamic changes the nature of the crisis.
Where the former are very much disinflationary in nature, the latter are often
inflationary – sometimes even hyperinflationary. Consequently, monetary
authorities react very differently.
2- Debt cycles of different sorts
Debt super-cycles are a different kettle of
fish. They typically last 50-75 years and have (unbeknown to many) existed for
thousands of years.
3- The dynamics of debt crises
All debt cycles start with a period of healthy borrowings, which is good
for GDP growth (stage 1 in Exhibit 1 below). It
is also worth noticing that, in the early stages of a typical debt super-cycle,
a dollar of added debt leads to approx. a dollar of GDP growth. The two grow
more or less in line, but that changes dramatically later in the super-cycle –
more on that below.
See Chart:
Exhibit 1: The seven
stages of an archetypal long-term debt cycle
Source: “Principles for Navigating Big Debt Crises” by Ray Dalio
Source: “Principles for Navigating Big Debt Crises” by Ray Dalio
Healthy
borrowing eventually turns into what Ray calls the bubble stage (stage 2). At this stage, excesses are creeping in;
borrowers assume that the good times will continue forever, so they continue to
borrow, even if they cannot always afford it.
Three conditions are typically
prevalent during the bubble stage:
1. Debt grows faster
than income.
2. Equity markets rally.
3. The yield curve
flattens.
All three
conditions have been prevalent in recent years.
Borrowings
eventually peak (stage 3), and depression follows (stage 4)
Deleveraging
(stage 5) follows
This was a condition first recognised by central bankers in the 1930s,
and they even coined a phrase to describe it: Pushing on a String,
they called it.When that happens, you have come to the end of the debt
super-cycle.
4- The dynamics of debt super-cycles
As risk assets tend to appreciate in value during the bubble stage of the
debt cycle, people feel - rightly or wrongly - that they can afford to spend
more than they earn.
5- The problem in a nutshell
Phrased differently, the key issue facing the economy today is that we
have under-invested massively for years and continue to do so.
The inevitable consequence of all of this is that real interest rates
will stay low for years to come. Otherwise society simply cannot afford to
service all that debt. Absent of any interventions, i.e. in a truly
capitalist economy, debt-to-GDP would never have reached current levels.
Debtors would have defaulted en masse by now. However, in the managed economy we
are ‘enjoying’ these days, interest rates are kept artificially low, allowing
debt-to-GDP to continue to rise.
6- The case of debt fatigue
If we compare the current debt super-cycle to the previous
one, which ended
with the outbreak of World War II in 1939, 2007-09 were
similar in nature to 1929-32, and the phase we are going through now is similar to 1935-39, where a sharply rising gap between poor and rich led to
a monumental rise in populism (Exhibit
2).
See Chart:
Exhibit 2:
Populism index % of votes across key countries Population weighted (LHS) and DM
financial crises (RHS)
Source: Deutsche Bank Research
7- The meaning of debt destruction
Debt super-cycles always end with plenty of debt
destruction. The slate needs to be wiped clean, so to speak. In a typical
cycle, there are only two ways debt destruction can be accomplished – either
through inflation or through defaults.
The big challenge for investors now is to identify which path the end
of this super-cycle is most likely to follow – default, inflation or …?
a-
Debt
destruction through vanilla defaults
See Chart:
b-
Debt
destruction through creative defaults
A recent example of the need to think out
of the box when having to deal with a possible default is none less than Donald
Trump. In May 2016, when he was campaigning to become the next tenant of the
White House, he said (and I quote):
“I would borrow,
knowing that if the economy crashed, you could make a deal. If the economy was
good, it was good. So, therefore, you can’t lose.” (Source: New York Times)
In other words, Trump will continue to borrow
until all wheels come off, and then he will make an offer to creditors they
cannot afford to decline.
c-
Debt
destruction through inflation
Let’s assume inflation gathers momentum to
5% per annum and stays at that level for five years. Let’s also assume that
property prices rise in line with the underlying rate of inflation. Finally,
let’s assume you are smart enough to spot the opportunity and have bought a
property worth £1 million. You finance the transaction with an interest-only
mortgage. For simplicity’s sake, we’ll assume that you can borrow 100%.
After five years of property prices rising by
5%, the house is now worth about £1,276,000, but you still only owe £1,000,000
to the mortgage provider. From the lender’s point of view, in
inflation-adjusted terms, the £1,000,000 he lends to you at the outset is only
worth £783,500 after five years. That is essentially
debt destruction through inflation.
8- Final few words
At least one of the following three misfortunes characterise
virtually all debt crises:
1.
Excessive leverage;
2. Highly
concentrated lending portfolios; and/or
3.
Asset/liability mismatch.
I am sure you don’t
need to be reminded that all three are in full bloom at
present all over the world!
Going forward, when and where is the next debt crisis likely to strike? And,
when it happens, will it mark the end of the current super-cycle?
The easier one first. Given
the information I have available today, I don’t think we
are years away from the next major debt crisis.
As far as the second question is concerned, could the next major debt crisis also mark the end of this
debt super-cycle? It depends! Every super-cycle in history has ended
with something major happening.
For now, my favorite to mark the end
of this debt super-cycle is a complete meltdown - and subsequent revamp
- of the defined benefit (“DB”) pension system, but I
do keep an eye on the rise of populism.
The problem is quite simple. In many countries around the world, large amounts of pension savings are still managed per the DB
model; i.e. the risk is still overwhelmingly the employers’ (including the
government). With falling interest rates and risk assets only delivering modestly positive returns, particularly
outside the US, liabilities have grown much faster than assets in many
pension funds in recent years.
One day in the not so distant future, one of our political
leaders will have to stand up and say something along the following lines:
“Either we all take a haircut and convert to
defined contribution plans [aka DC plans where the risk is transferred to plan
members], or our country will go bankrupt, and you will get nothing at all. Which of the two
outcomes would you prefer?”
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Here’s why few investors ever beat
the market: they’ve been lied to about what really drives stock prices.
Discover exactly why stocks rise or fall, and you’ll easily avoid losers and
find more, bigger winners. Check out this “open secret” to wealth.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
...the face of homelessness
is changing...
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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
"The meeting was very
successful and we have confidence in the implementation... China
will start from implementing specific issues that have reached consensus,
and the sooner the better."
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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
REBELION
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ALC Honduras
Mujeres en el banquillo. ¿Turismo para quién?
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ALAI NET
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Anexion? Los derechos legítimos del Pueblo Saharaui
Luis P
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RT EN
ESPAÑOL
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Keiser Report Sin libertad de elección
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
Trump Lost His Nerve By Ron Paul
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What Foreign Threats? By Philip Giraldi
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The Pentagon’s Massive Accounting Fraud
Exposed By Dave Lindorff
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The Price of Free Watch
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
DEMOCRACY NOW
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Econ
TOMORROW
PRESS TV
Resume of Global News described by Iranian observers..
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