ND
AUG 18 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
Economists don’t understand bonds. But they know just enough of
them to understand that they had
better change the subject...
Should anyone ask
if QE was effective, Bernanke (and Yellen) would always answer with “TERM PREMIUMS.” Not recovery, accelerating growth, or
robust inflation. Just Term
premiums!
Why?
Because these are just complicated enough so that no one really
understands what anyone referring to them might be talking about. ..SO, ‘Term premiums’ was “The perfect
getaway setup”.
The thing about
term premiums is really two things; first, forgetting
the fact that they are a ridiculous made up idea so that Economists can try
(and fail) to plug interest rates into econometric
models (in the few cases they do), simulations
already suggest term premiums have fallen more without QE than with it. Even
on its own terms, term premiums fail to live up.
Bernanke
in 2015 conceded
that point:
What about the decline in longer-term yields since early 2014? In the
US at least, that decline is somewhat surprising, as economic fundamentals have
recently seemed more consistent with rising, not falling, longer-term
yields… By the process
of elimination, with fundamentals stable
or improving, much of the decline in yields over the
past year must reflect a sharp drop in term premiums. [emphasis added]
What did he blame solely term premiums?
The reason it has to be term premiums is because Bernanke, Janet Yellen, or Jay Powell ALL SAY
INFLATION IS GOING TO RISE AND SO WILL SHORT-TERM INTEREST
RATES. GUARANTEED. TAKE IT TO THE BANK. The Fed will therefore be hiking short-term
rates and since they don’t believe the bond market would ever, ever disagree
with them, process of elimination, it therefore must be term premiums that
are causing yields to fall (when these same people say they should be rising).
See Chart:
Eurodollar:
Futures Curve history
US
Treasyry; Real Yields:
She chart
https://www.zerohedge.com/s3/files/inline-images/SABOOK-Aug-2019-Swaps-TIPS-Longer.png?itok=jh-t5c-Q
Whether in 2015 or
more recently, the market evidence for the other two pieces of the yield
picture are pretty unequivocal. The market is obviously
expecting a very different set of circumstances than policymakers, an
increasingly dangerous scenario OF LOWER INFLATION, not higher, at the same time it is thinking lower
short-term rates, not rate hikes.
It actually isn’t
all that difficult to challenge the assertion, especially with market prices in
hand. And it’s becoming even more of a necessity now
that people are (finally) paying attention to the yield curve.
This week Janet Yellen said:
I would be relying on the yield curve as the
best signal of that risk given the yield curve has obviously not got the same
sort of structure that it’s had historically.
Term
premiums are not science nor really math. They
are made up and more than that they are rationalizations, truly Orwellian,
intended to deny the obvious and straightforward signals coming from the
very fundamental building blocks of all finance and economy. The entire notion
is purposefully shrouded in unnecessarily complex concepts whose only true use
is to attempt to answer for the otherwise inexcusable.
SEE Charts:
US TREASURY CURVE 1
And chart:
US TREASYRY CURVE 2
As I often write, Economists don’t understand bonds. But they
know just enough to understand that they had better change the subject.
….
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The spread
differential between illiquid and liquid bonds, has been drifting wider in both
the IG and HY markets, reaching its highest level in two years
See Chart:
The underperformance of illiquid
bonds has been pronounced in NY
The liquid bonds outperformed by 2%
over the past two weeks.
As with the relative value of high
vs. low price bonds, Goldman thinks the risk-reward in being long
illiquid bonds remains poor despite the new highs made by the illiquidity
premium, especially when considering
recent market repricing events of illiquid securities such as those of
Woodford, H2) Asset Management, GAM and so on.
See Graphic:
The Liquidity Illusion
Of course, if the market is finally starting to correctly
account for an illiquidity premium, one will expect a violent bond dispersion
in both IG and HY, and that is precisely what is happening because as the chart below shows,
dispersion is surging from rock-bottom levels, with Goldman warning to
"brace for a new regime."
See Charts:
We expect dispersion will further increase in
both IG and HY
Goldman writes, "headlines
about bankruptcies and restructuring plans have recently intensified. And while
the 12-month trailing issuer-weighted default rate remains at a benign level,
higher frequency indicators show a notable acceleration in the pace of
defaults. This is illustrated in Exhibit 4,
which shows that the 12-month issuer-weighted default rate stands at 3%. The
3-month trailing HY default rate (annualized) now stands above 5% and has been
steadily rising since bottoming out at 1.3% in November 2018."
See Exhibit 4
The 3-month trailing default rate
points to higher point headline default rate ahead
What may come as a surprise to most is that on a dollar
basis, 2019 has been a banner year
for default volumes with over $36 billion notional of defaulted bonds year to
date, which is on
track to surpass the $43 billion in 2016 as the highest year for notional
default volumes in the post-crisis era (Exhibit
5).
See Chart:
On
a dollar basis, 2019 is on track to surpass the 2016 post crisis default
peak
In short a default tide has already
appeared, however thus far, defaults have been highly concentrated among
Energy issuers, a trend that reflects structural
as opposed to cyclical challenges. The lingering
weakness in oil prices coupled with weak growth sentiment may push issuers
in other structurally-challenged sectors towards
defaults.
….
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RELATED
"For these producers, the
game clock has run out of time to keep playing 'kick the can' with
their creditors and other stakeholders."
====
US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
La
violencia de los pedofilos va de la mano con las guerras del terrorism imperial
Bombing
Serbia was a family affair in the Clinton White House: “I urged him to bomb,” Hillary told an interviewer.
====
Ahora reconocen que el chantaje ‘tarifas’ agrava la Ec USA y las
pastergan: Ridículo
"The
inventory glut reflects a continued cooling of the US auto market."
----
La real historia es que se publicó esto “China
prepares its nuclear option in Trade-war” Lealo: https://rt.com/business/4667-china-nuc
. Un tit for tat destinado a agravar la crisis interna del US.. una
respuesta económica a la ingerencia política del US en Hong Kong. China es la
horma del zapato US.
====
In addition to being money for thousands of years, the price of gold is primarily a measure of
faith in central banks. If you believe central banks have everything
under control, don't buy gold...
….
Si los billonarios no creen en central Banks,
por que tendrían que creer en ellos los inversores medios del sector
productivo. El empresario pequeño que maneja la economía de la ciudad tampoco
cree en central Banks y cuando llegue la REV se aliaran con el mediano
empresario para crean Banco Propio.
….
See
Chart:
Gold vs. Fe
en Central Banks
….
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...automation is going to accelerate and jobs in Walmart nation are going to continue to disappear at
an exponential rate...
====
"They
pointed to three key advantages for Trump: He’s the incumbent, the U.S. economy
is strong and the Democrats have no definitive front-runner to challenge
him."
----
Point 1:
many incumbents have been defeated. P.2: it is totally false that the Economy is strong. P.3: Elizabeth Warren is ahead in electoral polls
today. In short:
A. foreign diplomats are paid to support
trump. B. One thing is right today more than
ever: 'PEOPLE DON'T WANT TO BE STUPID TWICE'
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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
This reckoning with
Beijing’s authority was baked into
the cake 22 years ago when the Union Jack came down over Government
House...
====
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
- El petrolero iraní Grace 1 zarpa desde Gibraltar pese a la demanda de incautación de EE.UU.
- España ofrece "el puerto más cercano" al barco de rescate Open Arms tras su negativa a desembarcar en Algeciras
- Trump reconoce estar "estratégicamente" interesado en Groenlandia
- Comandante de la Guardia Revolucionaria: "EE.UU. ha acumulado todo su poder en el campo de batalla con Irán"
- Una estadounidense pierde la custodia de su hija en Arabia Saudita por ser demasiado occidental
- US: Una gasolinera desata un caos vehicular luego de ofrecer el litro de combustible a 10 centavos de dólar
- Rusia y Venezuela consolidan sus vínculos militares durante una visita de Padrino López a Moscú
- Keiser Report "Hoy tenemos un sistema global de regresión infinita"
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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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