ND
SEP 2 19
SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social
+ Capit-compet in Eco
"The
roof was blown off, with wind and rain battering inside the house..."
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ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they
documented with graphics
For equity markets, August was the most violent month of
2019, with the S&P tumbling 2.6% or more on at least three occasions, the
same as the number of instances when the Dow plunged almost 1000 points - the
worst since Q4 of 2018 when the S&P briefly entered a bear market - only to
rebound furiously after Mnuchin's infamous Christmas Eve phone call. Worse, in August the number of days when the S&P moved up
or down by more than 1% was the highest since the February 2018 inverse VIX ETN
implosion.
See Chart:
One constant in August for markets however was the
unstoppable rally for government bonds. Indeed last month saw the amount of
negative yielding debt in the world touch a new all-time high
above $17 trillion, as the majority of European countries
saw their 10y yields hit new record lows with BTPs even closing below 1.00% for
the first time ever.
See Graph:
The last
time Bunds had a stronger month was June 2016 while for Treasuries you have to
go all the way back to November 2008.
As Deutsche Bank further notes, the big rally in rates also
helped investment grade credit to strong total returns last month. Indeed USD
IG returned +3.3% while sub and senior financials returned +2.7% and +2.2%
respectively. EUR IG on the other hand returned a more modest +0.7%. Wider
spreads in HY limited returns with USD and EUR HY returning +0.4% and +0.6%
respectively.
While credit and government bonds made up the bulk of the
assets which delivered positive total returns last month, Silver (+13.0%) and
Gold (+7.5%) actually occupied the top two spots on the returns leaderboard as
precious metals benefited from the risk-off in equity markets. All-in-all, 18 out of 38 assets
(excluding FX) in Deutsche Bank's asset scorecard that finished with a positive
total return in local currency terms while 14 did so in dollar terms.
See Charts
In terms
of where that leaves us year to date, there are still 36 out of 38 assets
with a positive total return in both local currency and dollar terms. The two laggards are Copper (-3.7%) and now
European Banks (-4.0%) following the move in August. Top of the leaderboard is the
Greek Athex (+44.1%) which is a fair way ahead of the next equity market in
Russia's MICEX (+22.0%). The S&P 500 and STOXX
600 have returned a solid +18.3% and +16.0% respectively.
See Charts:
Meanwhile, USD credit is up +10.5%
to +15.3% with IG outperforming HY while EUR credit is up +6.4% to +10.2%. As
for bonds, BTPs (+12.5%) lead the way while Treasuries and Bunds have returned
+9.0% and +7.6% respectively. Finally in commodities, outside of the decline
for Copper, Gold (+18.5%) and WTI Oil (+21.3%) have seen a big rally this year.
….
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"Against
this geopolitical backdrop we return from the summer to continue to see global
markets which now aggressively buy equities for their yield and bonds for
capital appreciation."
The Context today
How about Germany’s far-right AfD being projected to
achieve 27.8% of the vote in Saxony and 23.5% in Brandenburg? Yes,
they are not in power, or even close to power, but this is with low
unemployment and what had been until recently a healthy German economy. Quite the worrying historical irony there.
How about former Far-right Italian
Deputy PM Salvini, now out of power, calling for his supporters to march
on Rome? True, that’s more 1920s than 1930s, but given the technocratic PD look
like they will be running the finance ministry again, where they did so well
last time that we ended up with a populist government, many are betting that
Salvini will be back with a majority at some point.
How about Argentina reintroducing capital controls (yet
again)? Well, they have. Exporters now have to repatriate
USD within five days, and central-bank authorization is now required to buy
USD, except in the case of foreign trade. Individuals will be limited to
purchasing USD10,000 per month. Correct
me if I am wrong, but wasn’t the Argentina bail-out the
benchmark achievement of one Christine Lagarde, now about to run the ECB? I am
asking for a friend…
And literally talking of ‘back with
a bang’, yesterday we came
perilously close to the start of a full-blown conflict between Israel and
Hezbollah, which fortunately appears to still be lurking for some
future date for now. That might sound irrelevant for a market already looking
at the map with an expression like Munch’s ‘The Scream’ and asking “Where next?”, but when/if that war occurs it risks a far larger
regional conflagration.
Meanwhile, against this geopolitical backdrop we return from
the summer to continue to see global markets which now aggressively buy equities for their yield and
bonds for capital appreciation: which is a brilliant strategy until rates have
been cut to new negative terminal lows and stock multiple expansion is at new
highs: at which point the music stops and someone is left holding
seriously over-priced and under-delivering cans. And
nobody makes any returns at all – which will be a real big bang.
….
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As a
recession seems to be on everyone’s lips, allocation to bonds and cash keeps
growing and while Institutional investors are moving further away from
equities, retail investors are splurging on stocks, supported by stock buybcacks.
Finally, there is the most reliable "bagholder" in
the world to sell to: retail investors. Barclays also notes that retail
investors have not reduced equity exposure during the recent correction; in
fact quite the opposite. Flows into the most popular US
equity ETFs, which are a good proxy for retail exposure, have remained steady
in August, while they fell during the previous corrections of February ’18,
December’18 and May ’19. In other words, when it comes to believers in
BTFD, it's most retail that is left.
See Charts:
….
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Inequality get worse
...the soaring
CEO-to-worker pay ratio is not an example of why capitalism is
inherently flawed... it is a
byproduct of central banking and fiat currency rather than capitalism.
See Chart:
….
SOURCE: https://www.zerohedge.com/news/2019-09-02/why-has-us-ceo-worker-pay-ratio-increased-so-much
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A lingering
risk is that global macro hedge funds may be due for a reality check. Global
macro hedge funds look isolated in their bullishness; other speculative traders
appear less than eager to take on risk.
See Charts:
….
SOURCE: https://www.zerohedge.com/news/2019-09-02/market-thin-ice-have-stocks-sucessfully-averted-crisis
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Disappointing global
outlook:
The
business cycle transition matrix is very sticky meaning that as soon as the
leading indicators on the business cycle enters the recession phase (below
trend and declining) then its stays in this state with an 87% probability.
Summary:
Our main view remains to underweight equities vs bonds as
leading indicators on the global economy continues to weaken. The drivers of
the next recession will centre on the US-China trade war which inherently
cannot be modeled and thus Fed's macro models will not flash red on aggressive
rate cuts before it's too late. The highly correlated market structure we have
observed in 2019 is cause for concern if investors switch into risk-off mode
during the coming months.
* * *
Still
underweight equities
Global equities in local currency were down 2% in August as
the US-China trade war escalated reminding investors that we might be a long
way from a resolution to the biggest geopolitical confrontation since the fall
of the Berlin wall. In August global government bonds
rose 2.9% in local currency playing into our Q3 Outlook theme that investors
should be underweight equities relative to bonds. This outlook remains our view.
But how underweight equities should investors be?
See Chart:
South Korea-China trade is going
down
See Chart:
Over the weekend a new round of US tariffs worth $112bn went
into effects on consumer goods such as shoes, nappies and food. This comes on
top of new tariffs from China and Trump administration has more tariffs in the
pipeline with the intention to go into effect in mid-December. Also, China will
celebrate on October 1, 2019 the 70th anniversary of the founding of the
People’s Republic of China which means that Xi
Jinping will most likely not soften any stance against the US as this is an
important milestone for China.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
“...it can’t be Warren and it can’t be
Sanders.” That’s
the decision from Wall Street. The decision fromMain Street is yet to be heard...
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"What a fascinating
environment; each week bringing something extraordinary. Yet there is
this dreadful feeling that things are advancing toward some type of cataclysm..."
The Fed’s
political problem will not end with Donald Trump or Chinese trade negotiations.
I expect
Trump's attacks are the first salvo in what will be only more intense political
pressure directed at the Fed to employ aggressive stimulus measures.
The rise
of populism is in its initial stage. The
situation turns much more serious when the current Bubble deflates. There are
major costs associated with the Fed’s loss of independence – independence from
politics as well as from market pressure. For now, however, markets are trading on the
prospect of aggressive global monetary stimulus (rate cuts and QE).
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Without a
doubt, the market is more primed
for a crash than it has been at any point since 2008, and it definitely
will not take much to make this a “September
to remember”...
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"The 34 passengers were
trapped below decks... The fire was so intense that even after it
was put out, we're not able to actually embark the vessel..."
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"I characterize that as a reset, and it does have the potential to fall farther."
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Elon Musk continues to suggest a population collapse is in store within a few decades
time...and he is 110% correct if you make two caveats...
The Big Picture
Annual global
population change, excluding Africa, peaked in 1988 and growth has decelerated
since. However, growth really
decelerates from here and is projected to end entirely by 2055...and global
depopulation (excluding Africa) is the primary global feature there-after
See Chart:
….
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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
5.7% of all energy companies with junk rated bonds are defaulting as of
August, the highest level since
2017. The metric is "considered a key indicator of the industry’s financial stress."
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Bitcoin trading has hit a giant new record yet again in Venezuela as the country’s crippling hyperinflation
continues to play out...
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"I
have not been on the streets, not in shopping malls, can’t go to a hair salon.
I can’t do anything..."
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"The
end is coming for those attempting to disrupt Hong Kong and antagonize
China."
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OPEC’s
production increased in August thanks to Iraq and Nigeria a Reuters survey
found on Friday.
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
- It's Necessary to Find Way to Counter US,
Otherwise Nuclear Deal Won't Be Only Loss, Iranian FM Says
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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
Polit-Econ: Wallerstein sin anestesia Atilio
Boron
Polit-Econ: Immanuel Wallerstein: In
Memoriam Ana Esther Ceceña
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RT EN
ESPAÑOL
- Primer ministro de Bahamas: El huracán Dorian ha generado una "devastación sin precedentes" en las islas Ábaco
- Bolsonaro cancela asistencia a cumbre regional sobre la Amazonía por recomendación médica
- Desaparece la medallista olímpica española Blanca Fernández Ochoa: ¿qué se sabe?
- "¿Para qué he sobrevivido?": Recuerdos de la trágica toma de rehenes en la escuela de Beslán
- Descubren dentro de un meteorito un mineral nunca antes visto en la naturaleza
- VIDEO: Roger Waters de Pink Floyd canta en apoyo a Assange ante el Ministerio británico de Interior
- Registran la segunda mayor tormenta magnética del año que está afectando a la Tierra
- El huracán Dorian se acerca a Florida tras su devastador paso por Bahamas
- Keiser Report "Insurrección mundial": la nueva era del oro y el bitcóin y la rebelión contra el dinero fíat y los bancos
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
- A Society Is Only As Free Is Its Most
Troublesome Political Dissident
By Caitlin Johnstone
By Caitlin Johnstone
- The end of the dollar as we know it By Andy Langenkamp
- The Last Act of the Human Comedy By Chris Hedges
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
Christine Owens Democracy
Needs Unions
Ralph Nader From
Trump Tower to Trump Power Over Law
Binoy Kampmark Justifications
for Inequality: The Neuroses of Kochland
Robert Koehler We Are
All Indigenous
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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
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PRESS TV
Resume of Global News described by Iranian observers..
- ‘Hezbollah raid was game changer, sent warning to Israel’
- Huawei denies US allegations of technology theft
- Iran, France hold intensive expert-level talks on JCPOA
- China takes US to WTO amid escalating trade war
- 2 politicians killed with long-range weapons in Colombia
- IMF calls for negotiated solution to US-China trade dispute
- UN official blasts Nigeria’s use of ‘lethal force’ on Muslims
- Bahama PM confirms Dorian deaths on Abaco Islands
- PROGRAMS
- 'Fear: Trump in the White House' by Bob Woodward
- Recent confrontation between Lebanon's Hezbollah and Israel
- Another Saudi massacre in Yemen: over 100 killed
- Hezbollah shattered Israel's sense of impunity: Expert
- Hezbollah hits back
- Is Modi targeting Muslims in India?
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