ND
AUG 10 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
Les gusto la mamadera
"The Fed may need to start
open market operations sooner rather than later to inject reserves into the US
banking system." [ To re-buy their inversion? ]
US Treasury actions will likely
tighten USD liquidity in coming years
See Chart:
This model suggests that this broad
US excess liquidity evaporated during the course of 2018 and shifted further
into negative or contractionary territory this year.
See Chart:
Open
market operations is, of course, another name for QE, which as we have been saying all
along is inevitable if for no other reason than to monetize the upcoming wave
of UST supply especially if China decides to boycott (or outright sell) US
Treasurys. Indeed, the Fed may have no choice but to launch QE
simply because of too much Treasury supply and the market's ability to
warehouse it - a challenge that will only grow in the coming years, which is
why we have been warning for much of the past year to watch out for market
crashes - just like the failure of Lehman - these are a convenient and easy
scapegoat for the Fed returning launching another round of QE... much to
Trump's applause.
….
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It wasn't
supposed to work this way.
The sequence of events is familiar to all by now: at first,
Powell's rate cut spooked the market which had been expected either a 50bps
cut, or an explicit promise of an easing cycle. It got neither, and neither did
Trump, who the very next day realized that with the Fed now explicitly focusing
on global uncertainties, read trade war, as a catalyst
for future rate cuts as demonstrated by the following
infamous chart...
See Chart:
.... decided to escalate the trade war with China by
announcing 10% tariffs on the remaining $300BN in Chinese imports, sending
stocks and bond yields plunging, and the market pricing in as much as 100bps of
more rate cuts in 12 months, forcing Powell to cut far
more than just another 25bps or so as the Fed Chair suggested in the July FOMC
meeting.
See Chart:
Expected Rate Cuts by Dec 2020
When the S&P 500 tumbled as much as 1.2% on Friday, it marked the eighth straight
session the index traded in an intraday range of more than 1 percentage point (before
closing a more modest 0.7% down), according to calculations by the Financial
Times. It was the longest streak of 1%+ moves since a 29-day run that ended
on January 10, when the market was convulsed by bouts of sharp selling and
subsequent buying.
See Chart:
YESTERDAY The S&p 500 suffered
one of the sharpest ever one day loses
See Chart:
One thing is certain: with stocks set to drop, the the
dollar rising (for various reasons discussed here) Trump will not be happy, and
what's worse, Trump's latest calls for 1% in rate cuts (or more), will only
make the situation worse as rate cuts of that magnitude would only confirm that
a juggernaut of a recession is coming. In any event, the
Fed may have no choice but to comply with the president's and market's demands,
and with
Rabobank's recession probability index now the highest it has ever been...
See Chart:
... the bank does one better, and
lays out how the Fed will cut over the next 16 months as it sends rates back to
0%.
….
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"I
don’t think this [Fed] rate cut is a big gain to consumers with credit card
debt - [their] rate is already high and even if it goes down slightly...[they]
very well might end up paying higher fees in other areas..."
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...there’s something insidious going
on underneath the valuation equation.
Why? Because corporate profits are actually not expanding.
Not only are they not expanding they’re shrinking on an aggregate level.
What if I
told you corporate profits before taxes actually peaked in 2014, 5 years ago? Really,
it is true:
See Chart:
National Income: Corporate profits before tax (Without IVA
& CCAd)
And if you look closely you realize that this a trend that
happens preceding recessions. Now this trend can last a few years as it has
now, or in the period in the mid 90’s leading to the 2000 top, or it can
happen more quickly as in the 2006 – 2007 time frame.
But note, this decline in corporate
profits presages the end of a business cycle, i.e. an upcoming recession, but
markets tend to keep rising until that happens:
See Chart:
Why don’t markets react to this decline in corporate
profits? The last cycle and this cycle in particular
give a clear answer: BUYBACKS.
Since 2007 we are still in a very aggressive buyback cycle
and this form of financial engineering masks a lot of
things:
1-Sven Henrich :
How this works?:
Say you earn $1 in year 1 and $1 in year 2.
Earnings are flat.
But because you shrank your float via buybacks you can claim earnings growth.
$1 over 1 share = EPS of 1
$1 over 0.9 shares = EPS of 1.11 Look: 11% earnings growth. Magic.
Say you earn $1 in year 1 and $1 in year 2.
Earnings are flat.
But because you shrank your float via buybacks you can claim earnings growth.
$1 over 1 share = EPS of 1
$1 over 0.9 shares = EPS of 1.11 Look: 11% earnings growth. Magic.
….
2- Daniel Lacalle on
Twitter:
See Chart:
Ratio of Negative to Positive at T-9
S&P 500 Guidance relative to Consensus Expectations
T=0 is end of quarter
….
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Why hard assets are so
important given the current state of global markets...
Why hard assets are so important given the current state of global markets
The cliff notes version is this: The numbers just
don’t add up.
Giant Step
#1: Growth
The age of unrestricted growth is over. It was a good run.
But now we’ve got to live within certain ecological and resource budgets which
means we’ve also got to live within some fiscal and economic budgets.
The big problem with business-as-usual BAU is that it’s
a broken model without a future. Economic growth was the solution to every
problem. Now it is the problem. It’s so prevalent in your life that you
probably take it for granted and might not appreciate all that it provides. You are the fish and where is the water?.
Here it is:
See Chart:
Fossil fuel energy is responsible
for providing every creature comfort and material abundance in your life and
it’s has been growing exponentially for your entire life.
Sooner or later there’s a limit to the exponential
extraction and use of fossil fuels. Someday it just becomes too difficult to
extract the remaining dregs and dribbles at a faster pace. That’s when the peak
occurs. Then everything we take for granted changes. The water
drains from our tank. We will rather suddenly become acutely aware of the
water’s absence.
That day is not as far off as you might imagine. A decade,
perhaps two.
Giant Step
#2: The Economy & Energy
Economic growth depends on energy.
It is this concept, more than any other, that serves to cast
light on the future.
Out of all the economic charts and data I have, and I have a
lot, this next one is the most robust, rock-solid of them all. It shows that economic growth (GDP) and growth in energy
consumption over the past 50 years have been tightly coupled.
See Chart:
GDP & ebenrgy are tightly
coupled
Well, as we pointed out above that
exponential economic growth is based on energy growth, and that cannot continue
forever (or even very much longer).
So the operative question becomes,
what happens to the linked economic and financial systems when they cannot grow
exponentially anymore?
Back in 2008 when the financial system almost blew to
smithereens. The entire banking system almost seized up and ceased to function.
They were desperate times. Why?
Simply because credit stopped growing exponentially, for the
first time since the 1950’s. That tiny wiggle on the
chart below almost wrecked the global financial system.
See Chart:
Connect
the Dots
For our purposes today it’s sufficient to connect these two
dots:
- The financial system requires exponential growth
- Fossil fuels are finite
Okay, one other point to weave in here. Currency (“money”)
and debt are not wealth, they are claims on real wealth.
It’s pretty common to mistake of money & debt as wealth.
If you own a billion dollars of US Treasury notes and corporate bonds you are
said to be very wealthy.
The data shows that debts are
compounding at 2x the rate of GDP and have been since 1971.
Is that sustainable? Nope. How
could it possibly work out? Only if GDP growth comes roaring back and is 2x the
pace of debt growth for many decades into the future. How likely is that? Well,
let me tell you a story about how energy and the economy are linked
The Vital
Role of Hard Assets
Can’t afford a war? Clip the coins! Empire too large? Go
into debt! (And then print your way out of your pickle.)
Global economy no longer growing, debts too large, and the
claims too many? Quantitative easing (QE)!
Really there’s nothing new under the sun here. Same old,
same old.
In every case when the “solution” was printing or its
equivalent, fortunes were made and lost, but mostly lost. Claims on wealth were
mistaken for actual wealth. When the claims evaporated in various panics the
holders were financially ruined.
That’s going to happen again for the same reasons as before,
only this time it’s a global phenomenon. There are no borders to scurry across
and hide out while things blow over.
This is where hard assets come in.
The real wealth, again, are the real things that either are
the source of real wealth (farmland,
oil wells, mines, timberlands, etc.) or are the tangible things that
come from those assets. Gold, silver, lithium, copper, lumber, cash flowing
real estate and the like.
By far the simplest and easiest thing you can do, as a
starting point, is to have a portion of your wealth
safely tucked into gold and silver.
If you were forced to choose between the certain losses of
negative yields (which means paying an entity to lend them money) and holding
gold, which at least offers a zero yield, which is more attractive?
The answer screams “own gold!” to
many investors which explains why this chart of the total amount of negative
yielding debt and the price of gold line up so well:
See Chart:
Continue reading at:
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Given the rapidity with which the global economy is now declining, we
will be lucky if a credit crisis
leading to deeply negative nominal rates doesn’t happen later this year...
====
The Fed has no awareness
of the pending crisis that it has set up for itself...
See Chart:
….
SOURCE: https://www.zerohedge.com/news/2019-08-08/paul-craig-roberts-asks-fed-losing-control-gold-price
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
What the US military adventure to the Strait of Hormuz has
to do with PEACE. This is a stupid provocation
that could spark WW3. Jerusalem’ bunker
for print USD in danger
“If Israel enters the Strait of Hormuz, it will be engulfed in the wrath of the region and its
smoke will rise from Tel Aviv”
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“It just shows,” says Hawaii congresswoman Tulsi Gabbard, “that launching a smear campaign is the only
response to the truth...”
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New York City’s $15 minimum wage, which began to take effect Dec. 31,
2018, was meant to bolster
earnings and quality of life, but for a lot of residents, it’s doing the
opposite...
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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
REBELION
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RT EN
ESPAÑOL
- Venezolanos marchan en rechazo a las sanciones de EE.UU. (FOTOS)
- ¿Por qué le costaría a China atacar un portaviones de EE.UU.?
- Estas son las familias más ricas del planeta (y la número uno gana 4 millones de dólares a la hora)
- "Vender un riñón para pagarse la operación de corazón" y otras realidades del sistema sanitario de EE.UU.
- Maduro: "Venezuela está preparada para resistir y vencer el bloqueo racista de Trump"
- Presentan por primera vez al público los misiles hipersónicos Kinzhal
- Agentes de la Patrulla Fronteriza de EE.UU. son atacados a balazos desde Méx
- Keiser Report "Vender un riñón para pagarse la operación de corazón" y otras realidades del sistema sanitario de EE.UU.
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
-The
Chinese Ban on U.S. Agricultural Products Will be a Death Blow for Countless
U.S. Farms By Michael Snyder,
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PRESS TV
Resume of Global News described by Iranian observers..
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