ND
AUG 3 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 trade
war hinders economic growth, therefore prompting additional Fed easing, which
in turn allows for greater trade war escalation, rinse, repeat until the world
slides into a depression.
See Chart:
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SOURCE: https://www.zerohedge.com/news/2019-08-03/how-fed-now-underwriting-trumps-trade-war-one-chart
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More and more stimulus – leverage – is ultimately a bridge to nowhere. Investors would do well to recall the down on the farm
wisdom of Stein’s law: if it can’t
go on forever, it won’t.
Do we have any way
to assess what the fruits of “stimulus” have been thus far? Perhaps the following charts provide some help:
See Charts:
Let’s ask
ourselves: has the credit this cycle been used to drill productive wells, metaphorically
speaking? Measured by
income generated, it doesn’t look that way to me! Evidently, too much credit
has been employed in “stimulating” asset prices. Alas, if asset prices
“correct”, lots of debt will be written down, and what
was understood as “stimulus” will be re-classified as mal-investments.
No household nor
business can stay on a path of forever rising debt to income, nor can any
society in aggregate. More and more stimulus –
leverage – is ultimately a bridge to nowhere. Investors would do well to recall
the down on the farm wisdom of Stein’s law: if it can’t go on forever, it
won’t.
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The front end is currently implying that even if the Fed cuts rates three
more times over the next year, the curve would still be inverted at the front
end!
As is traditional,
Panigirtzoglou starts off by focusing on the most important recent macro event,
in this case the unexpected re-escalation in the US-China trade war, which
similar to May, is creating recession-like/risk-off market dynamics with
government bonds rallying and equities and risky assets selling off, resulting in the infamous "alligator jaws" chart.
See Chart:
The re-steepening
that the Fed had managed to engineer at the time is shown in Figure 1 which shows that the very front end of the US
curve stopped being inverted and re-steepened sharply following 75bp of rate
cuts (unlike now).
See Fig 1
During both 1995 and
1998 episodes the forward spread i.e. the 1-month rate
2-years forward minus 1-year forward, entered negative territory only very
briefly.
See Fig 2:1
However, as the JPM
strategist shows, the persistent negativity of
this forward spread at the moment is reminiscent more of the 2001/2007
recession episodes rather than the 1995/1998 mid-cycle Fed policy adjustment
episodes.
The flattening at
the front end of the US curve following this week’s FOMC meeting is also depicted in Figure 3 which shows the 1-month US OIS
rate at different forward points in the future, pre-FOMC (July 30th) and post-
FOMC (July 31st).
See Chart:
Which brings us to
the $64 trillion question: will the Fed keep cutting rates by another
100bp by the beginning of 2021 to only provide insurance in a good growth
environment to satisfy both equity and bond markets at the same time. In other
words - and here we urge readers to once
again look at the alligator jaws chart above - the only way the divergence
between bonds and stocks is sustainable, is if the Fed cuts at least another 4
times.
See Chart:
Will the
Fed do this? According to
JPMorgan, "most likely not" unless of course Trump manages to
transform World Trade War III into something even more dire, so as Panigirtzoglou concludes, "one of the two markets is
likely to prove wrong." It was so obvious which one, that the JPM
strategist didn't even both to point out which.
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At this point in the business cycle, corporations have loaded
themselves up with so much debt
that they are extremely fragile. Should the economy slow ever so
slightly, it will be game over for
countless over-leveraged companies.
The
economy, after 10 years of growth, appears to be heading for a respite too. Second quarter earnings, currently being
reported by S&P 500 companies, have been a mixed bag thus far. But in
sectors that actually make stuff, like materials and
industrials, earnings are suffering double
digit declines.
See Chart:
For context, a Chicago
PMI reading below 50 indicates a contraction of the manufacturing sector in the
Chicago region. So far this year, the Chicago PMI has been
down five out of seven months. On top of that,
weaker demand and production pushed the employment indicator into contraction
for the first time since October 2017.
See Chart:
Unfortunately, the
weakness in manufacturing extends beyond the Chicago
region. On Thursday it was reported that the U.S.
Manufacturing PMI dropped in July to its lowest level since September
2009. Employment also fell for the first time
since June 2013. What is going on?
See Chart:
Making lemonade from
these economic lemons is generally impossible. Still, that
doesn’t mean companies don’t try by taking on
greater and greater levels of debt. And the big
banks, which are backstopped by the Fed, continue
extending credit to keep the sham going.
U.S. non-financial corporate debt is
about $10
trillion, or roughly 48 percent of gross domestic product (GDP). That is up about 52 percent from its last peak in the third
quarter of 2008, when corporate debt was about $6.6 trillion, roughly 44
percent of 2008 GDP. In short, corporate debt is
at record levels and is rising much faster than economic output.
See chart:
Do You Hear a
Bell Ringing?
Promises of more cheap credit from the Fed have propelled
stocks to record highs. Year-to-date, stocks, as measured by the S&P
500, are up over 17 percent.
On Wednesday, however, some
uncertainty was added to the market. At the conclusion of the July Federal Open
Market Committee (FOMC) meeting, Fed Chair Powell cut
the federal funds rate 25 basis points. But instead of telegraphing that
additional rate cuts would follow like Wall Street expected, Powell said it was
merely a mid-cycle adjustment. In other words, he’s winging it.
See Chart:
Yesterday, after sleeping on the Fed’s ambivalence, traders
showed up to work with focus and intent. They bought the dip with
confidence. And everything was great until about mid-day. The
S&P 500 was up 33 points – and then something unexpected happened.
President Trump, via
Twitter, dropped a turd in a crowded swimming pool:
“…the U.S. will start, on September 1st, putting a small additional
tariff of 10% on the remaining 300 billion dollars of goods and products coming
from China into our country. This does not include the 250 billion
dollars already tariffed at 25%.”
The
market gets whacked by the God Emperor… [PT]
Following Trump’s tweet, Wall Street
freaked out. The S&P 500 dropped 68 points, ending the day at 2,953.
“No one rings a bell at the top of the market,” says the old Wall Street adage. Make of this
week’s manifestations what you will. We hear a bell ringing. Do
you?
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
US Wars everywhere create environment for any crazy person
to shoot everywhere
According to a police scanner the shooter was armed with an automatic weapon, possibly an AK-47,and
that they began shooting in the car park before entering the business...
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The big
billonaires tambien devinieron crazy.. en contradic internas se destruirán
"Some of the other stuff
we’ve encouraged, such as The EU, ETFs, Hi-Frequency Trading, Neil
Woodford and Deutsche Bank look likely to be highly effective vectors of short-term economic destruction and
destabilisation..."
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Querran destruir el centralism y acelerar la
div y autonomia Reg.. y la alianza del Inversor medio con el labor se encargara
de expropiarlos.. adiós al especul
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Mexico is diving deeper into a murder crisis
as cartels and narcos overrun the country, leading to more than 17,000
people killed in the first half of this year.
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Militaristic malady turns into pandemia= if
they shoot, we shoot too. No difer
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A 'routine
website redesign'...
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CA fue el fuerte del Viejo Pdo Dem y Kamala hizo temblar a los Reps.. Su
error fue no aliarse a los socialistas.. aun puede hacerlo y demandar: 1- “best educat & Health
for all” lo que implica pedir “zero-debt para los estud-Univ y egresados
y “one single payer” (El Estado Central) para garantizar la buena salud de
todos. Seria el adiós a la Pharma: los parasitos que engordan con el neliberal
health system we have. Como financiar esto? . 2- Exigir
el recorte del Presupuesto Militar. El Penta - Nato y su WW3 son
una amenaza no solo para nuestra Nacion, lo son para todo el Universo. Esto supone
un PACIFISMO tan agresivo como lo es el militarismo
actual. Y ello implica denunciar
y encausar a las empresas del Milit-Industrial Complex y exigir inmediato
impeachement de Trump. K-H debe unirse a los candidatos socialistas para
llamar Movilizac-popular en Washington a favor de la PAZ
MUNDIAL. Pero ya debe empezar con
un manifiesto claro en favor del punto 1 y 2. Si no lo
hace, solo le queda unirse a Joe
Biden y los de la vieja guardia Dems. Si lo hace,
Kamala Harris reactiva
este Pdo en CA y CA vuelve a ser el fuerte del Pdo Dem y ella real candidata a
la Presidencia, no mera aliada de un bufón de la vieja guardia.
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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
No es la
politica “garrote vs. zanahoria” lo que usa Trump contra Zarif. Da 1ro el
garrotazo como hampon de esquina y luego dice ‘dialogo’. Eso es vulgar coaccion
y chantaje. Zariff debe exigir el retiro público de
la sanción para asistir a dial-honesto
After
rejecting the surprise overture for direct negotiations, Zarif was sanctioned this week by
US Treasury.
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Maduro
retorted Venezuela's seas will remain "free and independent"...
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Trump puede enviar
a VEN todos los terroristas Saudis que no pudo enviar a Europa.. Igual da: las
brigadas civil-militares están listas para responder y los misiles listos para
mandar abajo aviones y barcos con comandos USA y sus saudis. La ‘bienvenida’ a
estos miserables esta lista. Brazil acaba de enviar brigadas Rev bien armadas
para defender VEN, la patria latina hermana. Lo demás lo harán las brigadas rev
de cada país de sur contra las embajadas USA y los empresarios del US. Asi
están las cosas, sin duda veremos otra V de Ven
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La
mejor sirvienta del Imperio y el USD se va .. quiera o no.. será cambiada
If new institutional reform is to come to the Eurozone, it will entail a major paradigmatic shift...
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Si se va pronto,
mejor para ella y el IMF. Posible una Rusa tome su puesto.
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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
- Todo lo que se sabe sobre el tiroteo en El Paso que ha dejado 20 muertos y al menos 26 heridos
- VIDEOS: Publican las primeras imágenes del tiroteo mortal cerca de un centro comercial en Texas
- FOTOS: Qué se sabe hasta ahora del tirador de Texas
- El nuevo buque de asalto anfibio de la Marina de EE.UU. llegará con retraso debido a problemas técnicos
- Trump empuja a Guatemala a la catástrofe humanitaria y al conflicto internacional Luis Gonzalo Segura
- Nuestro presidente racista: Trump y la política de crueldad Eva Golinger
- Keiser Report Capital Pirata y Recorte de tasas: "Las corporaciones zombis le dan dos tiros en la nuca a la economía estadounidense"
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
- Why The End Of The INF Treaty Will Not Start
A New Arms Race By Moon Of A
- Tainted Meat Market By Paul Edwards
- A Blockade of Venezuela Must Be Opposed By Daniel Larison
- CBP agents interrog US citizen and seize his
phone after Ven solidarity trip By MB
- More Fake Happy News About Jobs By Paul Craig Roberts
- More Fake Happy News About Jobs By Paul Craig Roberts
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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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