DEC
9 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
Investors will be happy to bid
farewell to2018, a miserable year in
which all assets underperformed US dollar cash. For next year,
three questions are critical...
In his
latest Strategy Monthly, Louis-Vincent Gave writes...
Investors will be happy to bid farewell to 2018, a miserable year in which all
assets underperformed US dollar cash.
See Chart:
But, Gave notes that for next year, three questions are critical:
1) Will the US-dollar liquidity squeeze ease?
2) Will the expanding US budget deficit prove a
decisive factor? and
3) Are we witnessing the slow-motion unraveling of the “Chimerica”
synergy between the US and China?
And what they imply is critical:
See Graph:
OPTION 1
A
Liquidity Squeeze (And How It Ends)
See Chart:
Option
2:
Growing
US Budget Deficits Are Crowing-Out The Private Sector
Despite record-high tax receipts, the US budget deficit once
again expanded in 2018. This
is unprecedented. We have never seen
consecutive deficit expansions outside of a recession.
See Chart:
So what happens next? Will the US
government:
1) Shrink spending,
2) increased tax revenues, or
3) continue to expand deficits?
And if so, then will easy
fiscal/easy money mix end the deflationary era?
See Graphic:
This would have massive consequences for portfolio
construction - long bonds did
terribly, and equity portfolios were best hedged by gold.
Option
3:
The End
Of "Chimerica"
This year's single most-important event has been the rise in
China-US tensions. Are these tensions:
1. A by-product of President Trump's negotiating methods, so that by
April a deal will be struck which brings us back to something approaching
the previous status quo? Or,
2. The direct consequence of the fact that so many Trump advisors see
China as a long-term threat to the US and want China cut down to size through
an economic cold war?
China's
response: de-dollarization
China remains highly dependent on resource imports priced in
US dollars. To reduce its dollar-dependence at a time of rising conflict with
the US, and to advance its own imperial ambitions, China has an incentive to de-dollarize commodity
prices, and promote greater use of the renminbi.
To shift Asian trade and commodities pricing away from the
US dollar, the renminbi needs to be a credible alternative.
One step in this direction is
establishing a track record for the renminbi as a strong currency - as
illustrated by the strong returns of renminbi cash over the past two decades.
Another is the creation of renminbi-denominated oil
futures and gold futures.
See Chart:
Which raises the question - Is the renminbi managed against a basket? Or against
gold?
An interesting side-note on the renminbi: It fell sharply
this summer, not only against the dollar, but against
the CFETS trade-weighted basket that is supposedly the target of PBOC policy. Yet it barely moved against gold...
See Chart:
This could
be a coincidence - or evidence of Beijing's long-term plan of de-dollarizing
commodity prices.
By linking the renminbi to gold, even if loosely, it can
crate an alternative for international payments, without losing control of its
currency.
See Table:
Full Cavical Research Note is
missed
Open the source below:
…
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Amid stern words from both sides (China
over Huawei, US
over "hard deadlines" and "predatory behavior"), US futures have tumbled at the open, back
below Thursday's pre-panic-bid lows...
Of course, it's not just China-US tensions, as Bloomberg
notes: Here's a non-exhaustive list of potential risk-off drivers hanging over
Monday's open:
- China summons U.S. Ambassador over the Huawei case
Trump
Chief of Staff Kelly to leave, amid a welter of fresh Mueller developments
- China reports weaker trade and inflation data
- May pushes ahead on Brexit vote despite Cabinet, DUP opposition
- Soggy U.S. payrolls, though not soggy enough to stop a December Fed hike
- France protests intensify, raising concern of economic damage
And given that list Dow -200 is ‘not
too bad’...
See Chart:
The S&P and Nasdaq are also
falling...
See Chart:
Gold and Crude are modestly higher..
See Chart:
Treasury futures are bid, implying
10Y Yields down around 2bps.
See Chart:
…
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The credit
bear market has started, and until valuations have truly priced in long-term
fundamental risks, our advice is that investors should use rallies to move
up-in-quality.
Authored
by Vishwanath Tirupattur, Morgan
Stanley's head of Fixed Income Research
As the Cycle Turns…
It is worth noting
that this reversal of fortunes is precisely what our US credit strategists had
predicted for this year. They now expect this bearish
turn to continue in 2019.
The tricky handoff from quantitative easing (QE) to
quantitative tightening (QT) that is under way is central to the cracks that
have appeared across risk markets and credit markets in particular. Global QE provided the necessary conditions for corporations
to lever up, which is exactly how they responded.
See Chart:
As the credit cycle turns, an important distinction needs to
made about how this credit cycle turn would evolve compared to past cycles. We
would argue that this credit cycle turn would be much like the ones we saw
during the early 1990s and late 1990s – a gradual pick-up in defaults and
downgrades over multiple years – and unlike what we
experienced during the last cycle turn during the financial crisis of 2008-09,
when there was a spike up in defaults and downgrades which was followed by a
spike down to historical average levels in a relatively short period of time.
See Chart:
The consequence of this shape of evolution of the credit
cycle is that the large systemic dimension of the last crisis would be much
less pronounced and what we will realise is a more garden-variety credit cycle
turn, something credit investors have more experience in dealing with. That said, no doubt a cycle turn is
coming, and this bearish turn will be painful for credit investors, in our view.
The silver
lining is that investor complacency is lower and valuations have gotten cheaper
in the last few months. Even if the consensus has embraced the idea that
end-of-cycle risks are rising notably, at the least, sentiment is much less
uniformly bullish than it was at the beginning of 2018. That said, the credit bear
market has started, and until valuations have truly priced in long-term
fundamental risks, our advice is that investors should use rallies to move
up-in-quality.
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RELATED
ONE
JPMORGAN STRATEGIST FINDS THE BUYBACK PARTY IS OVER (BUT DOESN'T WANT TO BE
BRANDED "FAKE NEWS")
"The
repatriation-induced exuberance in share buyback announcements is behind
us."
See Chart:
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US-China
trade relations, the pace of Fed tightening, and concerns about recession.
According to Goldman's chief equity strategist David Kostin,
with an increasingly uncertain economic background, coupled with renewed
concerns about the US-China trade war and the Fed's balance sheet, in 2019
Goldman expects "a continued
environment of low risk-adjusted US equity returns." As
the bank outlined
in its 2019 outlook, it forecasts a combination of
modest absolute returns to the S&P 500 and elevated risk.
See Graph:
However despite its upbeat year-end price target, and
echoing other banks' increasingly cautious stance, Goldman
also lays out an upside and downside case, which would see the S&P rise
either as high as 3,400 or drop as low as 2,500.
See Chart:
See more charts at
….
SOURCE https://www.zerohedge.com/news/2018-12-09/three-things-goldmans-clients-are-most-worried-about-now
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
"We don’t want to create a precedent where the Congress of one party unseats
a president of another party."
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"Nick couldn't give POTUS a two-year
commitment so he's going to help him on the outside instead..."
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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
"OPEC needed to do this and it signals that things are going to get much worse in 2019 than
better. They wouldn’t have cut so deeply if they were bullish on global growth in 2019."
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"US
actions have violated the legitimate rights and interests of Chinese citizens
and are extremely bad in nature. China
will take further action based on the U.S. actions."
….
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RELATED
There are reasons to be concerned
[that easing is becoming less effective]...
As the following chart from Goldman Sachs shows, it is not working as the Current Activity Indicator continues to slump...
See chart:
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US media is inventing enemies where there is none. Our enemies are inside.. in the structure of
power and in big Corp who profit from wars. The Fact is that no even 32 Mill of Amer are in favor of war.. and if
WW3 comes, not even 3 Mill will support Trump. The media is doing a
dangerous game in support WW3. Posible-effect: Mill of Amer will demand PEACE in streets.. and collect signatures to impeach Trump. Why .. Our Nac is risk with provocat policies
& he commit Peace-crime Accdg to Nurem Trial
"327mm
Americans now see China as our rival, our adversary, an enemy, a rising threat
to be contained. And that really matters."
[[ NASTY INVENTION!.. Who are behind this anonymous stupidity?
]]
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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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NOTICIAS IN SPANISH
Lat Am search f alternatives
to neo-fascist regimes & terrorist imperial chaos
RT
EN ESPAÑOL
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PRESS TV
Resume of Global News described by Iranian observers..
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