ND
JUL 17 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
There will be Blood
Update: Bloomberg reports that progress on a trade agreement has stalled as Trump
administration works out how to address China’s demand that it ease
restrictions on Huawei.
According to Dow Jones, citing people familiar with the
talks that it didn’t identify, no
face-to-face meetings have taken place or been scheduled since President
Trump and Chinese President Xi Jinping met in Japan in June.
Stocks accelerated lower as the
headlines hit...
See Chart:
"There was blood" in the oil complex as Iran tensions were
de-escalated.
US markets were ugly today with
Trannies trounced (hurt by a collapse in CSX) erasing all the gains from
yesterday and then some (to go from first to worst on the week)... All majors red on the week...
See Chart:
The S&P 500 fell back below
3,000..
See Chart:
Treasury yields tumbled hard today...
See Chart:
10Y yields are back at post-Powell
prepare remarks levels...
See Chart:
The dollar was weak today with
selling pressure coming as US equity markets opened...
See Chart:
Oil prices plunged further as Iran
de-escalation continued... (and inventory data did not help the bull's case)...
See Chart:
Finally, we note that the global
aggregate volume of negative-yielding debt is on the rise again and along with
it both gold and bitcoin...
See Chart:
Correlation is not causation but if
anything is a sign of policymaker-idiocy, $13 trillion of negative-yielding
debt must be close.
….
SOURCE: https://www.zerohedge.com/news/2019-07-17/gold-bonds-bid-stocks-skid-crude-clubbed-silver-soars
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OPEN:
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At stake, is at least a decade of global
technological, economic and military dominance that would create three million new jobs,
$500 billion in GDP and $275 billion in private sector investment. ..
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Even if you think the data is not weak enough to
warrant Fed cuts, the Fed has to cut to control Fed Effective. You simply cannot have rising yields any more.
The first thing to note is that after more than a year of
the US data disappointing; economic surprise indices
have entered the zone where the index tends to mean revert.
See Chart:
Let’s identify a few major potential catalyst to a data
pivot and assess if it can drive a reversal:
1) US/China
Trade Wars
2)
China stimulus – since Q4 2018,
China has instituted something like 88 incremental stimulus measures and there is always a multi month lag between the stimulus and
the economic data. Here is an easy way to show the effects of stimulus to the
data….
See Chart:
3) The
global Central Bank dovish pivot
1)
Deficits are increasing and projected to increase more
See Chart:
https://www.zerohedge.com/s3/files/inline-images/marco41.jpg?itok=EtLvqvka
2) Increased deficits mean increased Treasury
supply to fund the deficit (see chart in point #4)
3) Decreasing foreign demand in UST’s means
domestic demand is needed to take down the supply
See Chart:
Therefore,
even if you think the data is not weak enough to warrant Fed cuts, the Fed has
to cut to control Fed Effective. You simply cannot have rising
yields any more.
What do I mean by you can’t have rising yields? Just look at
how S&P’s traded yesterday after the US received its strong retail sales
report and fixed income sold off. The 5yr note future made its lows at 9am EST and by 11am, S&P’s were
breaking down.
SEE Chart:
As we saw in December, you can’t have S&P’s falling off
a cliff or the whole economy goes with it and that puts the massive credit
market also at risk. Therefore……the
Fed has to act to compress yields which means whether this is a reversal of the
data or not, the Fed will cut rates.
….
SOURCE: https://www.zerohedge.com/news/2019-07-17/will-recent-run-strong-data-change-feds-easing-plans
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...equities are unlikely to be
good real-returning investments [in this new paradigm]... those
that will do best will be those that do well when the value of money is being depreciated and domestic and
international conflicts are significant, such as gold...
OPEN IT
And read these subtitles
How
Paradigm Shifts Occur
Part I:
Paradigms and Paradigm Shifts over the Last 100 Years
-1920s =
“Roaring”: From Boom to Bursting Bubble
-1930s =
Depression
-1940s = War and
Post-War.
-1950s = Post-War
Recovery
-1960s = From
Boom to Monetary Bust.
-1970s = Low
Growth and High Inflation (i.e., Stagflation)
-1980s = High
Growth and Falling Inflation (i.e., Disinflation).
-1990s =
“Roaring”: From Bust to Bursting Bubble.
-2000-10 =
“Roaring”: From Boom to Bursting Bubble.
-2010-Now =
Reflation.
The
tables that follow show a) the growth and inflation rates that were discounted
at the beginning of each decade, b) growth, inflation, and other stats for each
decade, c) asset class returns in both nominal and real terms, and d) money and
credit ratios and growth rates of debt for each decade.
See Tables:
Part 2:
The Coming Paradigm Shift
To be clear, I am
not saying that this shift will happen immediately. I am saying that I
think it is approaching and will have a big effect on what the next paradigm
will look like.
The chart
below shows interest rate and QE changes in the US going back to 1920 so you
can see the two times that happened—in 1931-45 and in 2008-14.
See Chart:
The next three
charts show the US dollar, the euro, and the yen since 1960. As you can
see, when interest rates hit 0%, the money printing began in all of these
economies. The ECB ended its QE program at the end of 2018, while the BoJ
is still increasing the money supply. Now, all three central banks are
turning to these forms of easing again, as growth is slowing and inflation
remains below target levels.
There
has been a wave of stock buybacks, mergers, acquisitions, and private equity
and venture capital investing that has been funded by both cheap money and
credit and the enormous amount of cash that was pushed into the system.
See Charts:
Profit
margins grew rapidly due to advances in automation and globalization that
reduced the costs of labor.
The chart below on
the left shows that growth. It is unlikely that this rate of profit margin
growth will be sustained, and there is a good
possibility that margins will shrink in the environment ahead. Because
this increased share of the pie going to capitalists was accomplished by a
decreased share of the pie going to workers, it widened the wealth gap and is
leading to increased talk of anti-corporate, pro-worker actions.
See Charts:
Corporate
tax cuts made stocks worth more because they give more returns.
The most recent cut
was a one-off boost to stock prices. Such cuts won’t be sustained and there is a good chance they will be reversed, especially if
the Democrats gain more power.
See Chart:
These were big
tailwinds that have supported stock prices. The
chart below shows our estimates of what would have happened to the S&P 500
if each of these unsustainable things didn’t happen.
See Chart:
The Coming
Paradigm Shift
Right now,
approximately 13 trillion dollars’ worth of investors’ money is held in zero or
below-zero interest-rate-earning debt. That means that these investments
are worthless for producing income (unless they are funded by liabilities that have even more negative
interest rates). So these investments can at best be considered safe
places to hold principal until they’re not safe because they offer terrible
real returns (which is probable) or because rates rise and their prices go down
(which we doubt central bankers will allow).
Thus far, investors have been happy about the rate/return decline
because investors pay more attention to the price gains that result from
falling interest rates than the falling future rates of return. The
diagram below helps demonstrate that. When interest rates go down (right
side of the diagram), that causes the present value of assets to rise (left
side of the diagram), which gives the illusion that
investments are providing good returns, when in reality the returns are just
future returns being pulled forward by the “present value effect.” As a result
future returns will be lower.
See Chart:
That will
end when interest rates reach their lower limits (slightly below 0%), when the prospective returns for risky assets
are pushed down to near the expected return for cash, and when the demand for
money to pay for debt, pension, and healthcare liabilities
increases. While there is still a little room left for stimulation to
produce a bit more of this present value effect and a bit more of shrinking
risk premiums, there’s not much.
At the
same time, the liabilities will be coming due, so it’s unlikely that there will
be enough money pushed into the system to meet those obligations.
Then it is likely that there will be a
battle over 1) how much of those promises won’t
be kept (which will make those who are owed them angry), 2) how much they will be met with higher taxes (which
will make the rich poorer, which will make them angry), and 3) how much they will be met via much bigger deficits
that will be monetized (which will depreciate the value of money and depreciate
the real returns of investments, which will hurt those with investments,
especially those holding debt).
The charts
below show the wave of liabilities that is coming at us in the US.
Said
differently:
The
enormous amounts of money in no- and low-returning investments won’t be nearly
enough to fund the liabilities, even though the pile looks like a lot.
That will happen at
the same time that there will be greater internal conflicts (mostly between
socialists and capitalists) about how to divide the pie and greater external
conflicts (mostly between countries about how to divide both the global
economic pie and global influence).
In such a world, storing one’s money in cash and bonds will
no longer be safe. Bonds are a claim on money and governments are likely
to continue printing money to pay their debts with devalued money.
That’s the easiest
and least controversial way to reduce the debt burdens and without raising
taxes. My guess is that bonds will provide bad
real and nominal returns for those who hold them, but not lead to significant
price declines and higher interest rates because I think that it is most likely
that central banks will buy more of them to hold interest rates down and keep
prices up. In other words, I suspect that the new paradigm will be
characterized by large debt monetizations that will be most similar to those
that occurred in the 1940s war years.
As a
result, the world is leveraged long, holding assets that have low real and
nominal expected returns that are also providing historically low returns
relative to cash returns (because
of the enormous amount of money that has been pumped into the hands of
investors by central banks and because of other economic forces that are making
companies flush with cash).
I think these are unlikely to be good real
returning investments and that those that will most likely do best will be
those that do well when the value of money is being depreciated and domestic
and international conflicts are significant, such as gold.
Additionally, for reasons I will explain in
the near future, most investors are underweighted in such assets, meaning that
if they just wanted to have a better balanced portfolio to reduce risk, they
would have more of this sort of asset. For this reason, I believe that it
would be both risk-reducing and return-enhancing to consider adding gold to
one’s portfolio. I will soon send out an
explanation of why I believe that gold is an effective portfolio diversifier.
….
SOURCE: https://www.zerohedge.com/news/2019-07-17/ray-dalio-warns-new-paradigm-coming-buy-gold-sell-stocks
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
AOC-CALYPSE PUT DOWN
TRAMP
"The simple fact of the matter is, the
four Congresswomen think that America is wicked in its origins, they think
that America is even more wicked now, that we are all racist and
evil..."
….
Trump’ Orwellian rhetoric:
“IGNORANCE IS STRENGTH:
2+2=5
WAR IS PEACE”
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“The Federal Reserve
has capitulated on liquidity tightening yet the US economy is
'stronger than ever',isn't that weird?”
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"This
should never be allowed to happen to another President of the United States
again!"
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FASCISM THE ONLY PATH FOR
TRUMP’ GOBERNABILITY
After the 4 ladies, now comes the work of Senator E-Warren on Trump’ crimes against humanity to
stop Trump (case in point: Migra-infants & money
issues + others) IN my opinion these cases should go to Supreme Court
& to ICC simultaneously. IT is the
only way to uncover the inhumanity of Trump’ policies and the chances of
fascism & WW3.
TRUMP’ LEGITIMACY &
GOVERNABILITY IS AT STAKE.
Legitimacy: the capacity to
generate support To Econ & Pol plans will be discussed among investors, especially
the mid sector and small entrepreneurs; the unions of working classes will
demand better salaries & working conditions, University students & millennials
will demand ZERO debt.
THE ARMY: they knows that
cuts to their health services is underway (big corp and billionaires are
against them. In Fact they don’t need them
because Finance is the new form of warfare: via credit creation they can buy foreign
resources, real state, public and private infrastructure, bond & corporate stocks
just by printing USD from the thin air, all they need is a small army of technocrats
to ‘persuade’ foreing bankers to accept
our electronic credit and then charge high interest rate for a USD in decline.
They do not need the army. All they need is the
speculators of Wall Street) .
WOMEN: Women don’t need the
misogynous Trump, they recently have said BASTA, we
don’t need Trump, he is a shame to our Nation and to the world, and perhaps we
will have two ladies in the top of our new goverment. All depends on a new democratic rules for
elections to stop corruption and Frauds from those who buy elections.
GOVERNABILITY: the capacity
to run a Govt for the future of our society depends on creating a
post-neoliberal agenda without wars. It implies the negotiation of PEACE and solidarity with other Nations and the DISMANTLE OF NUKES. With
Trump we have the opposite policy perspective (more nuke-blackmails, more economic
sanctions & illegal piracy). The Trump’ economics
depend on manufacturing weapons and promoting wars to sell them. Governability
also depends on confidence and credibility on the Gvt: Trump’ team doesn’t have
that. Our nation hate them and the world too.
Other factor in
Governability is the level of social-conflicts inside
our Nation and Trump just opened the magic bottle that hide the evils of human
nature described by Hobbes in Leviatan (1641). In
time of economic & political crisis men return to the state of nature where
every man is enemy of other man. Men became ‘solitary’, poore, nasty, brutish, empty
of solidarity and rationality. In that situation, he concluded, order and tyranny is the only solution to society. In
1933 that solution was called Nazism & fascism, the
authors of WW2.
Fascism could be the only
path for Trump, if the Nation, their State institutions and their Academic
intelligence don’t stop him Now. That chance
of Governability for Trump implies the
risk of WW3. We wonder if member of the current senate
are ready to be accomplices of this human disaster.
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"...this is not happening
in the streets of Beirut or on the West Bank. This is happening right here in the United
States, and it is happening right
now."
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Of course
most of the “experts” are assuring us that all of this seismic activity will
soon settle down, but what if they
are wrong?
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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
Google and IBM are leading
an effort via the non-profit "OpenPOWER Foundation" that
is supporting China's authoritarian government in conducting mass surveillance against its citizens..
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"No one realized that it’s easier to get inflation down than up. Therefore, central bankers
need to keep considering, and in some cases delivering, more and more extreme forms of easing..."
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
- US Preparing to Deploy Additional Troops to
Saudi Arabia Amid Spat With Iran – Report “Terrorists united .. will always be
defeated”
- Ex-Norwegian
PM Discourages Country From Joining US in Persian Gulf, Cites 2003 Iraq War
'Mistake'
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
REBELION:
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ALAI ORG
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RT EN
ESPAÑOL
- El Congreso de EE.UU. bloquea la venta de armas a Arabia Saudita promovida por Trump
- Puerto Rico se echa a las calles para exigir la dimisión de su gobernador por sus mensajes sexistas y homófobos: ¿qué está pasando?
- 'La Alcatraz de las Rocosas': la cárcel donde 'el Chapo' pasaría el resto de sus días (y de la que nadie ha escapado)
- Turquía insta a EE.UU. a rectificar el error de expulsarla del programa F-35
- Heredera de Disney visita su imperio y denuncia que sus empleados se ven forzados a "buscar comida en la basura"
- OMS declara el ébola como una "emergencia de salud pública de interés internacional"
- Policía peruana emplea gases lacrimógenos para dispersar huelga de médicos
- El Zoom EE.UU.: Inmigrantes entre dos fuegos
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Gary Leupp Epstein,
Jane Doe, and Trump
Elliot Sperber Don’t Open
the Door
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
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DEMOCRACY NOW
Amy Goodman’ team
- Happiest
Place on Earth? Meet the Disney Heiress Speaking Out Against Disneyland’s Abuse
of Workers
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PRESS TV
Resume of Global News described by Iranian observers..
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