DEC
8 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
... while
markets are starting to price in recession, policy makers have yet to price in
recession.
In the past two months we have written extensively on how
most market participants got caught offside by the dramatic reversion in risk
assets, and which after several attempts at bottom-fishing - attempts which have failed because as Morgan Stanley first
noted two
months ago the Buy The Dip trade no longer
works...
See Chart:
... increasingly more traders have thrown in the towel,
resulting in YTD returns which are truly "historic" with not one
single asset generating positive returns for the first
time since the Nixon presidency.
See Chart:
Well, that's not exactly right: one asset is outperforming -
the one which usually does best just as the economy slides into a recession or
worse: cash. As Bank
of America notes, as of last week, the YTD score for the top assets is the
following:
- equities -4.2%,
- bonds -2.3%,
- commodities -6.2%,
- cash 1.7%,
- US$ 4.9%.
Drilling down, reveals an even uglier picture: the 2018 bear
market has spared nobody with US Treasuries down -4.9%, the 5th largest loss since
1970, US IG bonds -3.3%, their 4th largest loss since 1970, meanwhile 1881 of
2767 global stocks are in a bear market, down more than 20%, 86 of 94 equity
indices underwater, and the cherry on top - the FAANG bull market
"leader" is down -26% from highs, which according to BofA's Michael
Hartnett is "a big nasty bear market."
The result, per Bank of America, is that "capitulation to
lower credit & equity allocations begins but from high allocations to risk
assets."
That's the good news: the bad news
is that even as investors are getting out of risk assets, they are also
dumping safe havens like treasuries, and in the last week we saw broad based
risk-off flows, including $5.2BN outflow from equities, and $8.1BN outflow from bonds this week.
Looking at the latest EPFR data, Hartnett observes 3 flows
trends:
- value to growth...inflows to tech (largest in 11 weeks) & healthcare, big outflows from financials;
See Chart:
https://www.zerohedge.com/sites/default/files/inline-images/cum%208%20week%20flows.jpg?itok=02nhNqd4
Yet while "capitulation" is now in full force, the
BofA CIO makes another interesting observation, namely that "Everyone is
bearish but no-one is short!"
This can be observed in the inability of oversold markets to
react positively to the "Trump blink" while last week's "Fed
blink" indicates capitulation to lower credit & equity allocations has
begun. Yet the starting point for capitulation to lower risk allocations is
high 67% equity allocation at world's largest SWF, high 60% equity allocation
at BofAML, <5% cash levels at long-only in BofAML FMS, still high 35-40% net
long at HFs.
In other words, there is a long way
to go, and the next leg of the bear market will emerge when the 2s10s US yield
curve becomes fully inverted. As Hartnett sarcastically points out, an
inversion is not normally
associated with GDP & EPS upgrades; in fact quite the opposite - curve
inversion preceded 7 out of 7 past US recessions;
See Chart:
Finally, with the yield curve about
to inverted, Hartnett warns that the 2019 global EPS forecast of 8.3%...
See Chart:
... is far too high (someone please inform JPM's Marko
Kolanovic), and while markets are starting to price
in recession, policy makers have yet to price in recession.
Which brings us to what Hartnett sees as the "big risk,
namely that while the Fed is "strongly hinting" it's "one &
done" the market is also "strongly hinting" this is not enough
to increase risk appetite when EPS falling, spreads widening.
As a result, Hartnett doubles down on what he suggested
first two weeks ago, namely that the "Big
Low" in markets will hit in early 2019, and will occur as a result
of bearish Positioning, Profits,
and Policy Panic driven by credit & equity flush in coming
months.
Only then, when the Fed capitulates
and not only stop hiking but hints at cutting and QE4, will it be time to start
buying.
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"The largest source
of mortgage lending in the United States is now being done by non-banks...not subject to
standard banking oversight and can
engage in risky lending."
The housing crash of 2008 is now 10 years in the rear view mirror, but the danger of another
crisis lurks despite assurances to the contrary.
We’ve been told that the housing bubble and collapse was
about predatory
lending and high-risk borrowers who were duped into loans that they
couldn’t afford. The massive regulatory response to the subprime crisis meant
that banks were no longer allowed to behave badly. So they have chosen to behave differently –
and that’s not a good thing, Pamela says.
“The largest source of
mortgage lending in the United States is now being done by non-banks – financial entities that offer unsecured
personal lending, business
loans, leveraged lending, and mortgage services, but do not hold a banking license,” she
says.
“As a result, they're not subject to
standard banking oversight and can engage in risky lending.”
Where do they get
the money to make these loans?
Wells Fargo coughed
up $81 billion; Citigroup and Bank of America ponied up $30 billion each; and
JP Morgan threw in another $28 billion.
“By funding these ‘shadow’ banks, the big
financial players are still in the risky loan business,” Pamela says.
Pamela notes we should be
worried about startling facts such as these:
- Loans to non-bank financial firms increased six-fold from 2010-2017, hitting a record $345 billion.
- Shadow lending is now "larger than the world economy and poses a risk to financial stability."
- An astonishing 6 out of 10 mortgage lenders in the U.S. are now shadow banks – many operating online and peddling subprime loans.
“It was precisely this type of non-transparent, under the radar,
backdoor lending that led to the soaring foreclosures,
cratering home values, failing banks and dwindling
retirement accounts of a decade ago,” Pamela
says.
…
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"It can’t go on forever,
of course. But when it will end isn’t knowable... All we do know is
that prices have been roaring
higher at a speed rarely seen in American history..."
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The numerous important
trendline testscurrently underway across the financial markets suggest
this is a key juncture.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
"Get ready, the sum of a whole lot of bad policies and broken systems are about to,
very sadly, come to fruition..."
The federal
government is already red-lining stimulus...before a
slowdown or recession has even officially begun.
See Chart:
See more interesting charts at:
….
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Though the
date of Milley's takeover has yet to be determined, the announcement
comes months earlier than expected...
[[ Si el cielo está cargado de nubes
oscuras.. lo prudente es usar umbrela ]]
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"John
Kelly will be leaving – I don’t
know if I can say ‘retiring.’"
[[ Ni siquiera las apariencias de gratitud al empleado.. un poquito de
decencia no quita ni agrega la apariencia. Me pregunto ..que hizo? ]]
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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
statement accuses Canada of "severely violating the legal, legitimate
rights of a Chinese citizen"
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Chinese imports from the US tumbled 25% in November: this was the single biggest monthly decline since January
2016 when China's economy and its capital markets were reeling in the aftermath
of the Yuan devaluation and stock bubble bursting.
[[ Lo que viene, me temo que va a ser peor. Con china no vale el nuke-thrt..
No tiene sentido tratar de venderles pólvora a quienes la inventaron]]
See Chart:
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While the
price of bitcoin drops, miners
get more creative... and
some flourish.
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US beefing
up its presence in Persian Gulf...
[[
For what? To keep the habit of wasting US money & feed bureaucrats? ]]
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"In this way, Venezuela will free itself from the currency used by Washington to create
economic pain..."
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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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Brussels Police Detain 450 People in Yellow
Vest Rally (VIDEOS) Quien los invito?
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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
VIENTO SUR
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RT EN ESPAÑOL
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Debieran darles el premio nobel de la paz que
no le dieron a Juana d Arco
Hagan el
amor y no la guerra, dijo ella.. y hoy lo dicen 2 turistas en la cima del Keops
Yo y Flor
de Maria lo hicimos en el confesionario de 1 Igleia y es nuest + hermos Rdo
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Keiser Report "Adiós al imperio
estadounidense"
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PRESS TV
Resume of Global News described by Iranian observers..
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‘Israel
authorized sale of spyware to Saudis’ Ambos dan asco
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