ND APR 13 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
Historic
levels of debt – check; Major recession
signal proven reliable for 50 years - check; Massive amounts of money being sucked out of the financial system - check!
Authored by Alt-Market's
Brandon Smith, originally published at Birch
Gold Group,
It’s been more than 10 years since the
last economic recession.
Since the U.S. economy generally operates in cycles, it looks like the time is drawing near for
another.
In fact, late last year the Dow Jones
took a dive,
but that was likely just an appetizer for the course to
come…
A recent piece from
Bloomberg reported the risk of
a recession has “more than doubled this year as leading economic indicators
deteriorate, the yield curve inverts and monetary policy tightens,” referencing a note by Guggenheim Partners.
[ INDICATORS of
recession at portas:]
-Debt, Yield
Curve Inversion & QE Signaling Recession Risk
This dangerous “debt
trifecta” has even gotten the attention of several billionaires.
Rising national debt currently tops $22 trillion.
Corporate debt topped $6 trillion at
the end of 2018. And the “ATM” of consumer debt has hit $4
trillion. Americans are tapped out. Combined together, this signal alone
should sound recession alarms.
But
this is just one of multiple major warning signs…
The yield curve is dangerously close to
inverting at only 16
basis points between 2- and 10-year treasuries. What’s even more
troubling is yield curve inversion has preceded every major recession over the
last 50 years.
The third big warning sign comes from the
Federal Reserve. They used Quantitative Easing (QE) to
help bring the economy out of the depths of the last recession. But
right now that process is going in reverse. In other words, they are sucking hundreds
of billions of dollars out of the banking system in a process
called Quantitative Tightening.
The Fed said they would stop
unwinding QE in September. But for now,
Wolf Richter reports this unwinding process is still on “autopilot”
at $535
billion and counting.
So let’s review our recession risk:
- Historic levels of debt — check
- Major recession signal proven reliable for 50 years — check
- Massive amounts of money being sucked out of the financial system — check
It’s pretty clear why Guggenheim is so
worried. In fact, would not surprise us if their
warnings are confirmed in the very near future.
….
SOURCE: https://www.zerohedge.com/news/2019-04-13/imminent-recession-risk-doubled-3-signals-sounding-alarm
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[[
Neil Kearns is Interview by Goldman on BUYBACKS ]]
Meet
Neil Kearns, a name few have previously heard of. He may well be the most
powerful person on Wall Street today.
Amid a rising legislative chorus
demanding a halt to corporate buybacks (an activity
which was illegal until 1982), with Congress realizing that most of the
funds released by Trump's tax cut and offshore tax repatriation were used not
for capex or hiring but merely to levitate stock prices, last
week Goldman's chief equity strategist published the most
"inspired" defense of buybacks, in which he said that from a
portfolio strategy perspective:
"the
potential restriction on buybacks would likely have five implications for the
US equity market: (1) slow EPS growth; (2) boost cash spending on dividends,
M&A, and debt paydown; (3) widen trading ranges; (4) reduce demand for
shares; and (5) lower company valuations."
Or, as
we summarized it, if Congress were to ban buybacks, it would likely crash the market. Hence Goldman's increasingly
vocal defense of corporate buybacks, which
incidentally are the biggest source of stock demand in
the past decade..
Then, just a few days later, Goldman -
clearly worried that the anti-buyback push is gathering steam in Congress -
published yet another research report discussing the "Buyback
Realities", in which it paradoxically tried
to mitigate the role buybacks have on price formation and capital misallocation
just one week after it explained how banning buybacks would have disastrous
consequences for stocks.
Goldman explained that "in the past buybacks were not illegal [ZH: they
were illegal prior to 1982] but were typically avoided because
US companies feared government charges of market
manipulation."
[[ Just what
we have now: Trump ‘ manipulation to keep his candidacy in election 2020 alive
]]
As a result, for decades US companies returned cash
to shareholders almost exclusively via dividends, and from 1880 to 1980,
the dividend payout ratio averaged 78% of earnings (companies
also had the option to repurchase shares via tender offers, in which they would buy a certain amount of shares at a pre-determined
price/time, however the price moving impact of such operations was
virtually nil).
Then, everything
changed in 1982 with the passage of Rule 10b-18,
which provided companies a safe harbor against charges
of market manipulation when repurchasing their shares.
In short, buybacks were illegal until 1982 for a reason - market
manipulation- and then they gradually became mainstream, with
stock buybacks and dividends rising to 90% of the cumulative payout ratio of
S&P 500 earnings in the 2002-2018 period. The
cherry on top: in 2019, Goldman forecasts companies will
spend a record $940 billion on buybacks (with $1.1 trillion in buyback
announcements) up 16% from the prior record hit in
2018. See Charts below.
[[ This billionaires gula is what we called Neoliberal Economics .. We will explain later the Economic damage it cost
to our nation.]]
See Charts:
Some more staggering context: since the 2008 financial crisis, the S&P 500 companies
have repurchased about $5 trillion of their own shares, which represents
approximately 20% of the current market capitalization.
So while it remains to be seen if
Congress will ban buybacks, one thing is certain: as Goldman's David
Kostin cautioned last week, without company buybacks, demand for shares
would fall dramatically, for one simple reason: repurchases have consistently been the largest
source of US equity demand. Since
2010, corporate demand for shares has far exceeded demand from all other
investor categories combined. Net buybacks for all US equities averaged $420
billion annually during the past nine years. In
contrast, during this period, average
annual equity demand from households, mutual funds, pension funds, and foreign
investors was less than $10 billion for each category – despite the fact these
categories collectively own 83% of corporate equities.
Buybacks represented the largest source of equity demand in 2018. This is shown in
the table below.
See Table
Corporations are the largest
source of Equity Demand
Then, overnight, Kostin reiterated this
point, saying that "buybacks remain the largest
source of net demand for US equities. Other ownership categories have been
generally reducing equity exposure, including mutual funds."
What this means is the following: with buybacks having become the most important marginal buyer
of stocks, the one trading desk that dominates the daily flow of
buybacks - which amount to just under $3 billion in
gross purchases each and every day - has more influence on the overall
market than even the NY Fed. And the person who
controls that trading desk will be the most powerful person on W St: Neil Kearns.
Meet Neil
Kearns.
Kearns, besides Stevie Cohen, Israel Englander, Larry Fink, Lloyd Blankfein,
Jamie Dimon, Bill Dudley and any other hedge fund billionaire, is part of the Wall Street folklore - is the head of Goldman Sachs’ corporate trading desk: the desk that executes hundreds of
billions in corporate buyback orders for clients all around the world. Neil is the most powerful man
on Wall Street right now.
In its latest "Top of Mind" publication,
Goldman sat down with Kearns, this "master of the buyback universe", to address the size, impact, and outlook for US share
repurchases. Since Neil is the man that sees more buyback dollars
executed in any year than anyone else, he is just the right man to answer all
buyback related questions.
[ Here the
questions ]
Q: How large is the corporate bid in the stock market?
Q: What is the major driver of volatility in share
repurchases?
Q: How much seasonality is there in share repurchases?
Q: We are in the midst of a blackout window for
share repurchases, which occurs four times a year around quarterly earnings.
Does that mean companies can’t buy stock?
Q: How do companies judge the success of their stock repurchase
programs?
Q: How would you judge investor focus on stock
buybacks today?
Q: Do you see any evidence that the corporate bid is diminishing,
especially given increased focus in Washington, DC?
To read all answers open the source below:
Regarding these answers I would like to know the opinion of Michael Hudson, Richard Wolff, James Petras, Atilio Boron,
Michael Snyder on this regard.
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In
recent weeks, retail investors have become convinced that a market crash is
imminent while institutional investors have rarely been more complacent. Who
will be right?
Back in January 2018, just weeks ahead of
the infamous VIX termination event on Feb. 5 2018 that wiped out virtually all
inverse VIX ETPs in seconds, we
predicted that such an event was imminent as a result of a sharp spike
in the total outstanding Vega across the entire levered and inverse volatility
derivative space, which had reached an all time high. Since then, while the VIX
ETP market had been relatively quiet as a result of last year's fireworks which
wiped out countless retail investors and other vol sellers, another VIX "event" is coming, and it will be the
result of a silent war being waged between retail and institutional investors.
As we noted two
weeks ago, JPMorgan's Bram Kaplan recently pointed out that after a year of
relative quiet, the net exposure among VIX ETPs 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:
VIX ETPs shift significantly
net long in recent weeks
However, when it comes to asset flows in 2019
- which has seen the S&P rise back to all time
highs even as equity investors have been pulling money from equity funds week
after week - here too the situation is not nearly as simple.
Commenting on the latest VIX flows,
Deutsche Bank's Parag Thatte reiterates JPMorgan's point, observing that long VIX ETPs have seen significant inflows totaling $2bn
YTD, as retail investors hedge equity gains. This
record inflow into VIX ETPs, amounting to $2 billion in notional, is shown on
the chart below.
See Chart:
Yet while retail investors,
which traditionally prefer ETPs to hedge exposure, have been loading up on crash bets, institutional
investors which traditionally prefer the greater liquidity of the futures
market, are taking the other side of the volatility
trade and as the latest CFTC commitment of traders report shows, THE
SPECULATIVE NET SHORT POSITION IN VIX FUTURES IS APPROACHING A RECORD,
See Chart:
VIX Futures NET Specs
If one believes institutions, one look at
the chart above confirms that not only is market complacency greater than its
was either ahead of the Q4 mini bear market and February 2018 Volmageddon, but
it is just shy of a record.
And so the question emerges: who is right - retail investors, who are not only pulling
billions from equity funds but have pushed their crash bets to all time highs
via VIX ETPs, or institutions, who oddly are on the other end of the spectrum,
and not are complacent to an almost record degree, but
in their pursuit of yield and carry trades have pushed the net VIX futs short
position to unprecedented levels. And while conventional wisdom would
say that institutions, i.e., the smart money is always right, for the 9th year
in a row, hedge funds and their peers are
underperforming the market (with macro funds getting demolished once again).
See Chart:
Total Return
So who will be right - retail
or institutions. Since both positions are at or near record levels, the answer
should emerge in the very near future.
….
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Make time to read this one:
“If you understand valuations and market history, you know we’re not joking.”
There are three principal
phases of a bull market: the first is represented by reviving confidence in the future of
business; the second is the response of stock prices to the known improvement
in corporate earnings, and the third is the period when speculation is rampant
– a period when stocks are advanced on hopes and expectations.
There are three principal
phases of a bear market: the first represents the abandonment of the hopes upon which stocks
were purchased at inflated prices; the second reflects selling due to decreased
business and earnings, and the third is caused by distress selling of sound
securities, regardless of their value, by those who must find a cash market for
at least a portion of their assets.
– Robert Rhea, The Dow Theory, 1932
– Robert Rhea, The Dow Theory, 1932
The recent bull
market clocked in as the longest in history. Even if the September 20, 2018 peak in the S&P 500 was the final
high, the preceding advance outlived the 1990-2000 bull market by nearly 8
weeks.
Meanwhile, based on the valuation measures we find
best-correlated with actual subsequent market returns across history, the
current market extreme already matches or exceeds those of the 1929 and 2000
peaks.
There’s little question that the market
is long into what Rhea described as the final phase of the bull market; “the
period when speculation is rampant – a period when stocks are advanced on hopes
and expectations.”
As I’ll detail below, the economic expansion we’ve
observed since the 2009 economic low has been a rather standard mean-reverting
recovery, with a trajectory no different than could have been projected on the
basis of wholly non-monetary variables. The primary effect of extraordinary monetary policy wasn’t to drive real
economic gains, but instead to amplify speculation and contribute to wealth and
income disparities. Wages and salaries as a share of GDP are clawing higher
from the historic low set in 2011, but have only begun to erode the elevated
profit margins on which Wall Street is basing its permanent hopes and
expectations.
Continue reading at the source
below:
…
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete;
it’s full of frauds & corruption. Urge cambio
Take away that punch bowl, good man...
====
US Politics degrade you more
than porns.. It would be fine if LAS VEGAS
brothel is closed, but top politician,
very top ones, invested in this type of business
as they do in wars. If they don’t invest, they are the whores of politics ready
to sell their soul to Saudis & other royalties of the world. That degrade
our nation more than porns. Regarding taxing our Nation already victimized with
exclusion, racism, class exploitation and many injustices, better cut their taxes
and/or return their money.
The only way that those living in our fair state
could have uncensored Internet access would be to prove they are at least 18 years old and pay a $20 unblocking fee to the
state...
====
Forget
debt and deflation: the biggest threat to the global economy and the future of
modern civilization as we know it, may be demographics.
====
San
Francisco judges have been a persistent thorn in the side of the administration
as it seeks to implement its immigration agenda.
====
The
migrants were attacking local
police in the Mexican village of Metapa...
====
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
Killing innocent people in Syria.. what a
nasty way of celebrating Election victory
Syria's
newly installed Russian S-300 system reportedly not used.
====
ARE we really a FASCIST regime?
...you can’t
just go around imprisoning journalists willy-nilly simply for telling the truthabout
your government. That’s something other
countries do, bad countries, the kind of country the US routinely
invades...
====
Belmarsh
Prison holds terrorists and some of Britain's "most notorious
inmates"
====
We
must "stand with victims of sexual violence."
====
Japan
recorded a record net inflow of more than 161,000 migrants, but the overall
pace of decline still hit a new high of minus 0.21%.
====
"The
Western liberal model of development, which particularly stipulates
a partial loss of national sovereignty...is losing its attractiveness and is no more viewed as a perfect model for
all..."
====
"Looks
like at least one Ecuadorian government subdomain has been
hijacked."
====
"But to
hell with that. Let the thugs go in. Directed by the quasi-fascists
in Trump’s Washington..."
====
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
REBELION
Blase
Bonpane, ¡presente! Amy Goodman y Denis Moynihan
Políticas
culturales: ¿El futuro ya pasó? Angel Marqués
De 10 de abril en 10 de abril Luis
Toledo
====
ALAI ORG
====
RT EN ESPAÑOL
- "Historias demenciales": WikiLeaks responde a sugerencia de Ecuador de que Assange usó su gato para espiar
- USA promete al "nuevo gobierno" de Ven financiación del comercio por un total de 10.000 millones de dólares
- Maduro solicita otorgar rango constituc a la Milicia Nacional Bolivariana
- El avión más grande del mundo realiza su primer vuelo
- Netflix pierde 8.000 mill de USD tras el anuncio del lanzamiento de Disney+
- 'Hackean' tres servidores del FBI y "más de 1.000 sitios" y afirman haber recogido "más de un millón de datos" Roban huevos al águila asesina
- WikiLeaks distrib imág del gato de Assange mirando la detenc de su dueño
- Presid de Cuba presenta medidas contra los ataques económicos de EE.UU.
- Pompeo viaja al Sur para reforzar rechazo contra Maduro
- Keiser Report ¿Fracaso del capitalismo... o del monetarismo?
- El Zoom Assange: preso de la verdad
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PARA MAÑANA:
INFORMATION CLEARING HOUSE
Deep on the US political crisis:
neofascism & internal conflicts that favor WW3
====
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
Amy Goodman’ team
====
PRESS TV
Resume of Global News described by
Iranian observers..
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