domingo, 1 de septiembre de 2019

ND SEP 1 19 SIT EC y POL



ND  SEP  1   19  SIT EC y POL 
ND denounce Global-neoliberal debacle y propone State-Social + Capit-compet in Eco

Maximum sustained winds of 220 mph
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ZERO HEDGE  ECONOMICS
Neoliberal globalization is over. Financiers know it, they documented with graphics

Authored by Michael Wilson, chief US equity strategist at Morgan Stanley

The bullish narrative today is that while the US industrial/manufacturing part of the economy is weak, the US consumer remains strong, so the US economy can avoid a further slowdown or recession.

The estimate for 3Q19 was +10% a year ago. Most importantly, 4Q19 and 2020 estimates still look way too high and far above the normal “overestimate” that bulls argue is always the case. In particular, the positive operating leverage baked into current consensus estimates seems fantastical to me.

See Chart:
Small and mid-cap companies saw negative earnings growths in 1H19

An even broader measure of US corporate profits, the National Income and Products Account (NIPA), shows the same trends as the S&P small and mid-caps. This matters because the bullish narrative today is that while the US industrial/manufacturing part of the economy is weak, the US consumer remains strong, so the US economy can avoid a further slowdown or recession. Though that may be true for now, this profit trend is unequivocally bad, and getting worse. Such a broad profits recession, if it doesn’t get better soon, is exactly what could lead to layoffs. Obviously, such an outcome would negatively affect the US consumer and is really all that separates the US economy from a recessionary outcome. On that score, we’re already seeing companies take action on labor by reducing the number of hours worked and hiring at a much slower pace than last year.

While it’s not yet clear whether layoffs are coming, the risk is elevated, and it’s unlikely that the third quarter earnings season will bring much comfort, given the newly enacted tariffs that kick in this week. Therefore, I continue to expect further downside in US equity markets this quarter and believe that the S&P 500 will trade to 2700. 
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There has been a record $160 billion in inflows to bond funds over the past 3 months, which reveal deep global recession fear & global capitulation into "Japanification" theme; such big bond inflows often precede big policy changes.

See Chart:
Big global Bond fund inflows often  precedes  big policy changes

... even if it does pose the question: just who is buying stocks here?
See Chart:
The gap between  equity flows & market levels remains wide despite recent correct
See more interesting charts at

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...it’s akin to the government admitting it has no intention to ever pay back the debt. 100 years, for all intents and purposes, is akin to a permanent bond. Government is asking to take the principle and never pay it back, only interest.

With central banks globally once again suppressing the borrowing cost of sovereign entities to near zero rateswith yields in some countries even going negative, there is significant talk of issuing a 100-year bond to take advantage of these rates. Part of the argument is to lock in low rates now to hedge against future increase; though if the past decade is any consideration, central banks globally will fight until they collapse to keep sovereign borrowing near zero permanently because they legitimately have no choice in the matter. Even if governments do lock in these rates now, it won’t matter considering interest rate manipulations have placed banks on shaky groundBut if we assume this is a good idea on a purely financial basis (it’s not, I’ll get into that later), the concept of these ultra-long bonds are highly unethical.

One of the key reasons behind the relatively short maturity rates of United States debt instruments is to maintain the illusion that the federal government is a responsible debt payer. While debt may be formally paid, it’s done by borrowing additional funds to cover the maturity of the bond. This is demonstrated by examining the federal cash flow statements, which show that $9 trillion was spent paying debt, or over twice the formal federal outlays. Two-thirds of all cash that transitions through the US Treasury today is related to debt maintenance.

However, with the issuance of the 100-year bond or even a perpetual bond, such as this incredible bond that was issued 371 years ago and is still being paid by the Netherlands to this day, is that it’s akin to the government admitting it has no intention to ever pay back the debt. 100 years, for all intents and purposes, is akin to a permanent bond. Government is asking to take the principle and never pay it back, only interest.

It’s Financially Foolish

A major concept in organizational finance, be it a for-profit or non-profit, is maturity matching. The term of any debt should match, or be shorter than, the productive life of the asset it is used to buy. Organizations generally want to avoid paying debt on obsolete assets as this is a dead-weight loss. Setting aside for a moment that the vast majority of debt activity by modern governments is to give it away as a hand-out, the 100-year bond blows up this concept.

With the typical four-year bond issued by the government, the initial issuance fits perfectly with the concept of maturity matching.

Taxation without Representation

The major issue here is that the 100-year bond throws out the entire notion that no prior governing body can bind a future governing body to any activity. The 100-year bond is a solemn promise that people a century from now are obligated to cover the expenses of today’s borrowings. Obligating hundreds of millions of unborn people to pay for our expenses today is the very meaning of taxation without representation. The only option handed to the future generation is to either pay for today’s excesses or default on that debt and undermine their own priorities in the process.

While the four-year bond has some questionable elements since the life of these bonds do extend beyond the life of both the current and subsequent Congress, the ethical impact is limited to whoever turned 18 during the following Congressional session. That Congress can then decide at the time to either pay it or roll-over to what are still, effectively, the same people it represents. Congress today doesn’t even have this overlap as no one of voting age now will likely be alive when the debt is due.

The concept of public debt is already on shaky ethical grounds, but those ethics are generally limited by the short-term nature of those debts. They do give the option to those who issued the debt to eventually pay it off. However, the 100-year debt is highly questionable as they’re designed to safely insulate the beneficiaries from the costs.

 In the immortal words of John Maynard Keynes, “In the long run, we’re all dead.” And what better way to leverage that long run than by issuing a century bond? We’ll be dead when it comes due, SO WHO CARES?
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SO WHO CARES?.. about  BONDS WRECK PENSION PLANS.. YOU will know it SOON

“It is financial vandalism and the government and central banks need to wake up to this.”
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YES it is financial vandalism or pillage. People  WILL REVOLT… no doubts about 


Unnaturally Low and negative yield bond yields are wrecking pension plans.
See Chart:
Bloomberg Barclays Global Agg Sovereign Bond Yields

Negative-yielding debt has spread to more than 30% of the world’s investment-grade bonds -- the most ever.
See Chart:

Pension World Reeling

Most US pension plans assume returns of six to seven percent. They have shied away from government bonds because yields have been too low.

“The true madness is pension funds being forced to invest in assets which will be guaranteed to lose, such as in the case of long dated inflation-linked gilts at real yields of -3%,” said Mark Dowding, chief investment officer at BlueBay Asset Management, which has pension-fund mandates.
It is financial vandalism and the government and central banks need to wake up to this.”

Vandalism or Fraud?
Five Choice Terms
  1. Fraud
  2. Theft
  3. Counterfeiting
  4. Robbery
  5. Vandalism ( as pillage & intentional plundering)
Please read the above link if you don't understand why negative yields constitute fraud, theft, or counterfeiting, and why negative yields can never occur in the absence of manipulation.
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RELATED:

"This, on its face, is blatant price fixing..."
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Changes in the prices of sushi offers one example where prices are rising much faster than is reflected in the 'official' data...

Prices are rising much faster than the CPI would have you believe.
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The official story: well documented.  El Coronel Trump tiene quien le escriba

...this isn’t 1995. 

From a short-term market perspective, the risk is to the downside next week:
  1. Historically, September is one of the weakest months of the year, particularly when it follows a weak August.
  2. The market remains range bound and failed at both the 50-dma and downtrend line on Friday
  3. The oversold condition has now reversed. (Top panel)
  4. Volatility is continuing to remain elevated.
  5. Important downside support moves up to 2875
  6. The bulls regain control of the narrative on a breakout above 2945. 

See Chart:
$SPX S&P 500 Large Cup Index

BREAKING DOWN THE BULL/BEAR ARGUMENT
Here few of the “myths” which prevail in the markets currently. 

1) Sentiment Is Hardly Bearish

Currently, individuals could not be more confident about the markets or the economy. As shown in the chart below both investor confidence about the economy, and expected returns from stocks over the next 12-months, are near record highs, not lows.

See Chart:
Consumer Composite Indices

2) Record Outflows?

 In total, long-term fund flows collected $224 billion in the first half of the year, slightly ahead of 2018’s $219 billion.”
See Chart:

Furthermore, it is hard to suggest there are record outflows when the market is extremely overbought. As Ned Davis noted: 
“Stock market bulls have been arguing for months that muted stock market valuations and consistent equity-fund outflows are proof-positive that stock-market investors are not feeling the sort of euphoria that typically exists before the start of an economic recession or bear market. But a longer-term view of equity valuations and allocations indicates ‘excessive optimism.'”

See Charts:

Davis, in a note, said that the value of the S&P is much higher today than the index’s average growth would predict. In fact, it’s higher relative to the average than it has been 80% of the time.

3) The Myth Of Cash On The Sidelines. To wit:

“Underpinning gains in both stocks and bonds is $5 trillion of capital that is sitting on the sidelines and serving as a reservoir for buying on weakness. This excess cash acts as a backstop for financial assets, both bonds and equities, because any correction is quickly reversed by investors deploying their excess cash to buy the dip,”
However, the reality is if they haven’t done it by now after 3-consecutive rounds of Q.E. in the U.S., a 300% advance in the markets, and ongoing global Q.E., exactly what will that catalyst be?

Clifford Asness previously touched on this issue as well.
“There are no sidelines. Those saying this seem to envision a seller of stocks moving her money to cash and awaiting a chance to return. But they always ignore that this seller sold to somebody, who presumably moved a precisely equal amount of cash off the sidelines.”

Every transaction in the market requires both a buyer and a seller with the only differentiating factor being at what PRICE the transaction occurs. Since this is required for there to be equilibrium in the markets, there can be no “sidelines.” 

Furthermore, despite this very salient point, a look at the stock-to-cash ratios also suggest there is very little available buying power for investors current.

See Charts:


The reality is that investors remain more invested in riskier assets than has historically been the case. And, as Ned Davis noted:
“Cash is low, meaning households are fairly fully invested.” 
See Charts:


4) Not A Bull In Sight

“Our full year GDP is on pace for 2.6%, which is stronger than the average annual GDP of this entire 10½ year expansion. Unemployment is near record lows. Consumer confidence is near record highs. And corporate earnings continue to impress.

None of that says recession.

But let me just play along for a moment and pretend that the inverted yield curve actually meant something this time around – the fact of the matter is that the economy often expands after an inversion, and the stock market goes up on average of double-digits afterwards.
If anything, the inverted yield curve is one of the best buy signals of all time.”– Kevin Matras, Zacks Research
Or, this:
“Despite recent recession fears and yield curve inversions, the bull market should live on until early 2021, analyst Tom McClellan said Thursday on CNBC’s ‘Closing Bell. ‘ Everyone needs to just keep their pants on for now and realize that the yield curve gives a really long early warning about trouble. It doesn’t say that trouble is upon us now. It takes several months to over a year before we get the final price high after a yield curve inversion. If you get an instance like 1995, there was a very momentary yield curve inversion and then it backed off and the bull market kept on going. So that is possible.” – CNBC

You can’t get much more bullish than that.
However, as I wrote previously in “The Yield Curve Is Sending A Message:” 

“While everybody is ‘freaking out’ over the ‘inversion,’ it is when the yield-curve ‘un-inverts’ that is the most important.

The chart below, shows that when the Fed is aggressively cutting rates, the yield curve un-inverts as the short-end of the curve falls faster than the long-end. (This is because money is leaving ‘risk’ to seek the absolute ‘safety’ of money markets, i.e. ‘market crash.’)”
See Chart:

Lastly, this isn’t 1995. 
The Fed is cutting rates with the “yield curve” inverted. 
I wouldn’t dismiss that too quickly.

Kevin Matras is correct. The stock market DOES indeed go up double digits following a yield curve inversion. The only issue is that it is the first step in recovering from the bear market that preceded it.
[ Interesting .. I will re-read it to make my comments ]
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US  DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio


"If I had hair, I’d be pulling it out. I’m really concerned about the financial performance of the business, knowing that if we continue to eat this cost, how much it hurts."
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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



Hezbollah claims successful attack on an Israeli military vehicle which "killed and wounded those inside"...
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The People’s Bank of China (PBoC), the country’s central bank, has announced that it is planning to launch a central bank digital currency (CBDC), inspired in part by Facebook’s Libra project...
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO  ..Focus on neoliberal expansion via wars & danger of WW3


-London Mulls Sending Drones to Persian Gulf Amid Escalation of Tensions With Iran - Reports  The whole middle East will be burned & then London & Jerusalem bunkers + 
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes & terrorist imperial chaos

RT EN ESPAÑOL 

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PRESS TV
Resume of Global News described by Iranian observers..

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