domingo, 31 de marzo de 2019

ND MAR 31 19 SIT EC y POL



ND MAR 31 19  SIT EC y POL 
ND denounce Global-neoliberal debacle y propone State-Social + Capit-compet in Eco


ZERO HEDGE  ECONOMICS
Neoliberal globalization is over. Financiers know it, they documented with graphics

The long VIX trade in various ETPs is getting dangerously crowded...
According to JPMorgan's Bram Kaplan, after a years of relatively quiet, the net exposure among VIX ETPs has recently spiked to their largest net long position in 1.5 years, tilted long by ~$150Mn vega, which is just shy of the record vega exposure hit in early 2018 and which precipitated the VIX ETP implosion. However, unlike 2018, this time the trade is in the other direction as investors piled into long and levered VIX ETPs beginning in February, as soon as the VIX index fell below 16, to as JPM suggests. "position for/speculate on the next volatility spike."
See Chart:

Specifically, over this period, investors have deposited $600MM net into unlevered long VIX ETPs, and $1.1Bn into levered products (the majority of which went into 2x levered TVIX). Following these flows, the vega notional in levered and inverse VIX ETPs has increased significantly, but remains well below pre-Feb’18 levels.
See Chart:
Inverse ETP collapse

And here is the cautious conclusion from JPM, which notes that while the bank doesn't - yet - expect these ETPs to drive end-of-day short gamma rebalancing effects anywhere close to those experienced on 2/5/18, "their end of day rebalances are becoming material." To wit, the next chart illustrates how the end of day rebalance requirements for levered and inverse VIX ETPs has been increasing as a percentage VIX futures volumes, but remains small (so far, at least) compared to pre-Feb’18.
The key thing is that as noted above, unlike last year's vol selling stampede, the current build-up of long vega exposure in VIX ETPs suggests they could provide a headwind to the next volatility spike... 
See Chart:

... as investors are likely to take profits on these positions and/or invest in inverse products to monetize the spike. On the other hand, should the EOD rebalance persist, growing increasingly skewed in one direction as contrarian traders boost their bets on a VIX spike in the coming months using various ETP products, then it is only a matter of time before another major VIX spike takes place, only this time instead of wiping out the vol buyers, it results in a very generous pay day.
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SOURCE: 
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"As one client quipped this week, it really depends from which direction the jaws close – through higher rates or via lower equity prices."
There have been two conflicting themes in the market so far in 2019: the first one has been the relentless selling by equity investors since the start of the new year despite the market's remarkable surge in 2019, offset by buying of fixed income securities in a scramble to lock up yield ahead of potential rate cuts and/or QE by the Fed later in 2019 or in 2020 (most recently discussed here).
See Chart:
Dovish Central Banks are pushing more money into fixed income v. equitites

The second theme, which is closely tied to the first, has been the market's so-called "jaws", where stocks have moved sharply higher while yields have tumbled to multi-year lows, sparking investor confusion: is the bond market right in anticipating a period of acute deflation and/or recession, or is it wrong and stocks, which are less than 5% below their all-time highs, correct in their optimistic outlook.
See Chart:
S&P500 10 Year Yield

As Goldman's David Kostin writes, it is this decoupling that is dominating client discussions:
Ten-year US Treasury yields have plunged to 2.4%. From an investor perspective, stable equity prices coupled with falling interest rates means a wider earnings yield gap and implies a more attractive relative value for stocks assuming the economy does not fall into recession.
As Kostin recounts, one client told the chief Goldman equity strategist, that it all really "depends from which direction the jaws close – through higher rates or via lower equity prices."
That's the question that the bank tries to answer in its latest US Weekly Kickstart report.
For its part, Goldman remains as usual cautiously optimistic: The bank which last December incorrectly predicted no less than 4 rate hikes in 2019, now forecasts the 10-year US Treasury yield will rise to 2.8% at year-end 2019 (down from the previous forecast of 3.0%).
See Chart:
Golman Sachs US Treasury yield curve forecast 2.8% at year end 2019

Next up is the deteriorating corporate earnings picture, with Q1 looking especially grim with the risk of a mini earnings recession on the horizon. To be sure, starting with Apple in early January, management teams have been tempering earnings expectations. In fact, more than 140 firms have reduced 2019 EPS guidance since the start of the year and 67 firms have cut guidance by more than 2%. As Goldman notes, earnings revisions have been more negative than usual. During the past three months, analysts have cut expectations for full-year 2019 S&P 500 EPS by 4%, nearly four times the usual rate of roughly 1% per quarter. On the other hand, 1-month revision sentiment has rebounded to a reading of 0%.
See Chart:
S&P500 EPS revision sentiment has rebounded to 0% as of March 28, 2019

And while sell ide earnings sentiment may have finally troughed, consensus now expects aggregate S&P 500 EPS to fall by 2% in 1Q, which would be the first year/year decline since 2Q 2016 even as consensus still expects strong 5% sales growthOne thing to note: while the average print will be negative, the median S&P 500 stock is expected to grow EPS by 2%, indicating that a few outsized firms (AAPL, MU, WDC, CVX, XOM, NVDA) are weighing on the aggregate measure according to Goldman. This dichotomy is also present for full-year 2019 EPS growth, with the median firm projected to grow EPS by 6% while the aggregate index grows by just 3%.
See Chart:
Median S&P500 stock is expected to grow EPS  by 2% in 1Q 2019

Conslusion:  JPM strategist concludes that "there appears to be a disconnect between rate and risky markets at the moment with rate MARKETS SIGNALING MORE ELEVATED GROWTH AND RECESSIONS RISKS, and equity, credit and commodity markets pricing in more optimistic scenarios."
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"But if investors believe America is succumbing to the secular stagnation that has gripped Japan and Europe, and if they’re growing scared that global central banks are no longer capable of rescuing markets, then we have a real problem."
Three Worlds
America’s yield curve inversion can mean one of three things,” said the CIO. “We’re either living in a world of secular stagnation and investors worry that central banks no longer have sufficient policy tools to spur growth and inflation,” he continued. “Or the economy is simply sliding toward recession and the inversion will persist until the Fed panics and spurs a recovery,” he said. “Or we’re living in a world, where the market is moving in ways that defy historical norms because of global QE. And if that’s the case, the curve is sending a false signal.”
See Chart:
Treasury Yield Curve

If we’re sliding toward recession, then it seems odd that credit markets are holding up so well,” continued the same CIO. “So keep an eye on those,” he said. “And if the curve is sending a false signal due to German and Japanese government bonds yielding less than zero out to 10yrs, then the recent Fed pivot and these low bond rates in America may very well spur a blow-off rally in stocks like in 1999.” A dovish Fed in 1998 (post-LTCM) and 1999 (pre-Y2K) provided the liquidity without which that parabolic rally could have never happened.
See Chart:
S&P%500  10 Year Yield

“But if investors believe America is succumbing to the secular stagnation that has gripped Japan and Europe, and if they’re growing scared that global central banks are no longer capable of rescuing markets, then we have a real problem,” said the CIO. “Because a recession is bad for markets, but not catastrophic provided that central banks can step in to spur recovery. But with global rates already so low, if investors lose faith in the ability of central banks to do what they have always done, THEN WE’RE VULNERABLE TO A STOCK MARKET CRASH.
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Liquidity and central banks rule, nothing else matters... Yet, bulls have not proven their case.
The first quarter of 2019 was a smash hit for bulls. Capitulating central banks, record buybacks flushing the system with artificial liquidity, constant jawboning by dovish central bankers and permanent promises of progress on a China trade deal, and a collapsing yield picture bringing back TINA (there is no alternative) all of which produced a relentless 3 month move higher back in equities that rendered any fundamental issues of slowing growth, earnings and even a yield curve inversion irrelevant and erased the losses of a disastrous Q4 of 2018.
Liquidity and central banks rule, nothing else matters. Optimism is back and hope is pervasive that 2019 will replay the earnings recession case of 2016 meaning that all bad news is priced in, any slowdown will be temporary and markets will resume their 10 year bull trend with new highs to come.
Yet, bulls have not proven their case. So far lower highs on all key indices risking major potential topping patterns and hence the upcoming earnings season may serve as a key pivot for markets in the weeks ahead. Dovish central banks have been fully priced in by markets and the liquidity of buybacks will at least temporarily disappear during the buyback blackout window.
Bears have managed to keep price below the January 2018 highs as well as the long term 2009 trend line, but are also running out of time as a confirmed break above the January 2018 highs could set markets on a path to at least retest the highs or make new highs.
Hence the time period in April into May sets up for decision time for markets.
Risk to markets: The rally off of the December lows remains untested and uncorrected with plenty of open gaps below while indices have formed specific patterns that could be interpreted as bearish. Indeed the rally has been so steep that it will require ever higher prices to avoid a confirmed break of these patterns. Due to the vertical nature of this rally these patterns are at risk of breaking to the downside if markets were to experience just a few days of downside. As these patterns are very large sizable downside and an increase in volatility could emerge on a confirmed break of these patterns.
Timing matters as structurally bulls have not been able to confirm a resumption of the larger bull trend hence April may be a key month and bulls can hardly afford a down month.
I’m discussing technicals and select key charts in the video below:
See VIDEO:
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This time is unlikely to be different.
A Run For The Highs
Friday wrapped up the first quarter of 2019, and it was the best quarterly performance since 2009. As shown in the chart below, if you bought the bottom, you are “killing it.”
See Chart:

However, you didn’t.
Despite all of the media “hoopla” about the rally, the reality is that for most, they are simply getting back to even over the last year. 
See Chart:

That is, assuming you didn’t “sell the bottom” in December, which by looking at allocation changes, certainly appears to be the case for many.
See Chart:

If we deconstruct the ratio we can see the rotation a bit better
See Chart:

Not surprisingly, historically speaking, investors had their peak stock exposure before the market cycle peak. As the market had its first stumble, investors sold. When the market bounces, investors are initially reluctant to chase it. However, as the rally continues, the “fear of missing out or F.O.M.O” eventually forces them back into the market. This is how bear market rallies work; they inflict the most pain possible on investors both on the bounce and then on the way back down.  
However, for the moment, we are still in the midst of a bear market rally. This will be the case until the market breaks out to new highs. Only then can we confirm the previous consolidation is complete and the bull market has been re-established. 
The good news is on a very short-term basis, the market IS INDEED bullishly biased and coming off an extremely strong first quarter rally. The current momentum of the market is strong as bullish optimism has regained a foothold.
But, as we noted for our RIA PRO Subscribers last week, (Free 30-Day Trial with Code: PRO30) complacency has moved back to extremes which suggests that a further rally isn’t “risk free.” 
“The graph below is constructed by normalizing VIX (equity volatility), MOVE (bond volatility) and CVIX (US dollar volatility) and then aggregating the results into an equal-weighted index. The y-axis denotes the percentage of time that the same or lower levels of aggregated volatility occurred since 2010. For instance, the current level is 1.91%, meaning that only 1.91% of readings registered at a lower level.
See Chart:
Multi-Asset Volatility Index

Nonetheless, the markets are close to registering a “golden cross.” This is some of that technical “voodoo” where the 50-day moving average (dma) crosses above the longer-term 200-dma. This “cross” provides substantial support for stocks at that level and limits downside risk to some degree in the short-term
See Chart:

The next chart shows the longer-term version of the chart above using WEEKLY data. The parameters are set for a slightly longer time frame to reduce the number of “false” indications. I have accentuated the moving averages to have them more clearly show the crosses.
See Chart:

From a portfolio management standpoint, what should you do?
In the short-term the market remains bullishly biased and suggests, with a couple of months to go in the “seasonally strong” period of the year, that downside risk is somewhat limited.
“Ignore the yield curve they said. It’ll be fun they said.” 
“Historically, equity markets tended to produce some of the strongest returns in the months and quarters following an inversion. Only after [around] 30 months does the S&P 500  return drop below average,”
See Chart:
S&P500  after inversion:

Conclusion
Pay attention to these longer-term trend changes as historically they signify bigger issues with the market. 
It is unlikely this time is different. There are too many indicators already suggesting higher rates are impacting interest rate sensitive, and economically important, areas of the economy. The only issue is when investors recognize the obvious and sell in the anticipation of a market decline.
The yield curve is clearly sending a message which shouldn’t be ignored and it is a good bet that “risk-based”investors will likely act sooner rather than later. Of course, it is simply the contraction in liquidity that causes the decline which will eventually exacerbates the economic contraction. Importantly, since recessions are only identified in hindsight when current data is negatively revised in the future, it won’t become “obvious” the yield curve was sending the correct message until far too late to be useful.
While it is unwise to use the “yield curve” as a “market timing” tool, it is just as unwise to completely dismiss the message it is currently sending.
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US  DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio

... for “roughly three minutes a night, every night, for an astonishing 791 days,” the media has been poking this mystical Russian bear which has turned into – in the president’s words – a Collusion Delusion.
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Why is it that no one defends free markets, and socialism, despite all the evidence of its failures, comes back again and again? Unsurprisingly, the answer lies in politics...
Why is it that no one defends free markets, and socialism, despite all the evidence of its failures, comes back again and again? Unsurprisingly, the answer lies in politics, which have always led to a boom-bust cycle of collective behaviour. Furthering our understanding of this phenomenon is timely because the old advanced economies, burdened by a combination of existing and future debt, appear to be on the verge of an unhappily coordinated bust. But that does not automatically return us to the free markets some of us long for.
Check these subtitles:
CYCLES OF COLLECTIVE BEHAVIOR
To understand why free markets are more often than not unpopular, we must put them into a context of human behaviour. In this regard we can stylise a cycle of collective behaviour into three characteristic phases.
  • The first is a lawless condition of no secure ownership of property rights; in the absence of enforceable law the means of possession are necessarily violent and uncertain. It is the natural condition of tribalism and pre-civilisation societies. It is the condition to which humanity returns when the cycle completes.
  • The second phase is the consolidation of property ownership, with enforceable laws to define and protect it. Out of the chaos that fails to advance the condition of the people comes order, and with it the aggregation of the means of production. Capital in all the forms necessary for production accumulates, and being scarce, is used most efficiently. The backbone of this phase is freedom for the individual to dispose of his or her resources at will. The pace of improvement in the human condition is governed by the level of accumulated wealth and technological innovation.
  • The third phase is the abandonment of free markets in favour of state control. The state, whose primary function in economic terms is to act as provider and facilitator of the law, increasingly supresses commerce by extracting escalating levels of tax. Taxes are imposed to redistribute wealth from those that earned and conserved it to those that did not. The state takes control of money, issuing its own currency which it can print at will. The damages to the economy are covered up by all the artifices available to the state.
The state regulates. The state confiscates. The state deprives its people of their freedom. The state’s demands become so insatiable, so counterproductive, so impoverishing that the economy collapses back into the first phase of the next cycle.

EMPIRICAL EVIDENCE OF THE CYCLE.
The assembly of German states into a unified nation in 1871 gave credence to a new socialising phenomenon, whereby Bismarck, Germany’s first Chancellor, promoted the state as a socialising entity, superseding free markets. He was the first politician to create a welfare state, introducing accident and old-age insurance and socialised medicine. Shortly after unification, in the mid-1870s Bismarck abandoned free trade and introduced trade protectionism.
More subtitles:
THE PSYCHOLOGY OF DENYING FREE MARKETS
CONTEMPORARY SOCIALIST EVOLUTIONS
Conclusion?
Witness the struggle with Brexit, where it turns out the Westminster Parliament is comprised of an overwhelming majority of members who are committed to the EU’s socialising masterplan to the exclusion of democracy. Even a majority of Tory MPs, the party of free enterprise, prefers a federal socialist system to free markets.
It is the stuff of late-stage socialism. The whole world is in its grip, rather than just Germany, just the USSR, just America, just the EU, or just Britain. And these are only some among the traditionally advanced nations. Being cyclical, the bankruptcy of it all in time is for sure. It is set to throw up greater challenges than ever seen before because of its ubiquity. Assuming it does not end in a nuclear destruction of the human race, we will eventually turn our backs on the follies of socialising governments and go back to free markets. Then the cycle of humanity’s socialising madness will start all over again.
[[ Certainly this author needs to know What is what is not socialism. I’be back on this ]]
The same with the coming article:
RELATED:
When the economy collapses, everybody will blame capitalism, because Trump is somehow, incorrectly, associated with capitalism... the young and poor will look to the government to 'do something'... andsocialism as a kind and gentle answer.
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"The political correctness people are the most alienated and emotionally weak element in the society.  Yet they dominate in the media, entertainment, universities, and art world..."
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"...If you don’t treat me right, my people will get you..."
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US-WORLD  ISSUES (Geo Econ, Geo Pol & global Wars)
Global depression is on…China, RU, Iran search for State socialis+K-, D rest in limbo

And Europe is starting to take notice, and follow suit...
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Several Russian banks have joined the China International Payments System (CIPS) also known as China's "SWIFT", to ease operations between the two countries
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"Russia is not changing the balance of power in the region, Russia is not threatening anyone."
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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
                Financiarización y pensiones privadas  Mikel de la Fuente

Yemen  Atroz balance de una guerra sin fin  Helen Lackner
Perdon   Que viva México, cabrones!   Antonio Pérez
COL        Ent: Jesús de la Roza: Colombia, la violencia que no cesa   Tino B
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RT EN ESPAÑOL
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more business-wars from US-NATO  allies

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PRESS TV
Resume of Global News described by Iranian observers..

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