ND
NOV 25 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
Is everything going great?
Stocks decoupled from bonds, gold,
and the dollar today, melting up aggressively at the US cash market open and
close...
See Chart:
Thanks to the continuation of the
biggest short-squeeze since early October...
See Chart:
Which sent Small Cap stocks exploding higher...NOTE - markets really went nowhere after Europe
closed...
See Chart:
As Morgan Stanley warned - Smaller-capitalization
companies could see a second full year of negative EPS growth.
Additionally, the Russell 2000
massively outperformed S&P SmallCap 600 massively today...
See Chart:
S&P SmallCAP 600/ Russell 2000
Dow futures Algos were entirely
focused on 28,000 today
While VIX was clubbed like a baby seal to the lowest since Oct 2018...
See Chart:
Treasury yields tumbled early and
held the gains on the day...
See Chart:
The Dollar extended its rebound
today, taking out last week's highs...
See Chart:
Commodities were chaotic today with oil
higher and PMs lower...
See Chart:
Finally, as Bloomberg
reports, market
participants submitted $49.05 billion in bids for the Fed’s 42-day term repo
operation, which matures Jan. 6, 2020. That was more than the $25 billion on
offer. This was the
first of three term operations to provide funding past the year-end period. The
others will be held in the coming weeks. Meanwhile,
overnight repo demands remain anything but transitory...
See Chart:
All of which is a huge deal as global liquidity is starting to decelerate
(just as it did in April)...
See Chart:
….
SOURCE: https://www.zerohedge.com/markets/vixtermination-sends-stocks-surging-amid-massive-short-squeeze
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OPIUM DREAMS?
Maxims in
politics such as "United we stand, divided we fall" do not
necessarily hold in investing.
Overnight, in his 2020 US Equity Outlook, Goldman's chief US
equity strategist David Kostin shared some other
key considerations how he sees the way forward in the equity market, as well as
his year end forecast, which for the first time bifurcates into two explicit
targets, depending on key variable.
Curiously, Kostin's forecast bifurcates not only from an
"event-risk" standpoint, but also chronologically and as the
strategist writes, the "durable profit cycle and continued economic
expansion" will lift the S&P 500 by 5% to 3250 in the early part of
2020. However, the rising political and policy
uncertainty will keep the index range-bound for most of next year.
"Goldman also reveals the bank's baseline forecast for
2020, which he expects to rise by 6% to $174 in 2020 and by 5% to $183 in 2021.
Yet here too Goldman reveals that things may change
depending on whether or not Trump's tax cut is reversed - in which case the
bank's baseline 2021 EPS estimate of $183 would be reduced by 11% to $162.
Assuming the bill is applied retroactively to the start of the year, S&P
500 earnings growth in 2021 would equal -7%, compared with the baseline
estimate of +5%.
See Chart:
S&P 500 earning
However, this time the risk
exists of a sharp multiple re-rating lower as the election result will affect
equity valuations through changes in policy uncertainty and consumer
confidence. here, Goldman uses its macro model of the yield gap between the
S&P 500 earnings yield and 10-year US Treasury yield to estimate the impact
of uncertainty and confidence on equity valuations. And
while the bank's baseline forecast assumes that following the election the
S&P 500 forward P/E multiple expands slightly to 18.6x, if US policy
uncertainty post-election rises rather than falls - read if a Democrat wins the
election - or consumer sentiment declines, the equity risk premium would
increase and the P/E multiple would compress by approximately 2 points to 16x.
See Chart:
S&P 500 valuation
What does this mean from a simple
price perspective? Well, one can multiple one by the other and get the answer.
For those who can't, Goldman writes that the election
outcome "could magnify risks or the economic growth outlook could
deteriorate", by which it means Trump may not be re-elected. But more importantly
should Democrats also regain sole control over Congress, "a unified
federal government post-election could prompt investors to assume the tax cut
is reversed and lower projected 2020 EPS to $162 (-7% year/year growth),
compressing the P/E multiple to 16x consistent with an index level of 2600."
See Chart:
Path of the S&P 500 in 2020
And while Goldman's price target "range" is indeed
quite broad, the bank's confusion appears to be prevalent because as Kostin
notes, as investors consider the outcome of the election, the distribution of
S&P 500 levels implied by the options market at year-end is wide: "The options
market currently implies a 22% probability the S&P 500 ends next year above
3400 and a 28% probability the index ends 2020 below 2600."
In other words, much like the Fed, Goldman appears to have
taken its price target based on what the market is already discounting.
Here, Kostin points out something we noted last week when
analyzing the latest report by Goldman's derivatives strategist Rocky Fishman,
according to whom the options market was indicating "different distributions of risk before and after Election Day."
Skew is higher for the September and October 2020 maturities than for the
November and December 2020 maturities. This can be seen
from the spike in upside implied volatility from October to December and little
gap in downside implied volatility.
See Chart:
Difference in SPX implied volatility between expire dates
Which brings us to the key issue at the heart of Goldman's
schizophrenic forecast: whether government will be united or divided. This is
how Kostin frames it:
Maxims in politics such as “United we stand,
divided we fall” do not necessarily hold in investing. In the United States, equity returns during periods of divided federal government
have typically exceeded returns achieved when one political party controls the
White House, Senate, and House of Representatives. Since 1928, excluding
recessions, when the federal
government was controlled by a single party, the S&P 500 median 12-month
return equaled 9%. However, the median return under a divided government was 12%. Prediction markets currently suggest the most probable 2020
election outcome is a divided government.
See Chart:
S&P 500 returns based on the control of FED Gvt since 1928
As Kostin further
adds, "investors focused on equity market implications of policies
discussed on the campaign trail need to take into account the probability that
these outcomes will be realized." What this means is that a candidate
would need to win the presidency, have the support of both chambers of
Congress, and actually pass legislation.
Indicatively,
online prediction markets such as PredictIt- which are notoriously illiquid and
can be easily gamed with one modestly sized wager - currently
assign a 74% probability that Democrats control the House, a 54% likelihood
that they win the presidency, but only a 35% probability that they control the
Senate.
See Charts:
Prediction
Market probabilities over time
And if the
composition of US government is the dependent variable, the emerging two key
risks to Goldman's baseline forecast are tax rates and tariffs. Kostin
explains:
The S&P 500 YTD effective tax rate has equaled 19%, well below
consensus expectations for 21%. Analyst estimates currently imply a 21% tax
rate in 4Q and in 2020. If the 2019 YTD pattern continues, it could mitigate
likely negative revisions to consensus EPS estimates. However, several
presidential candidates have proposed raising corporate tax rates,and we estimate
every 1 pp change in the effective tax rate would lead to a roughly 1% change
in S&P 500 EPS. Our model suggests a complete
reversal of the tax cut would translate into 2021 EPS of $162 rather than our
current estimate of $183. The impact of tariffs on profits remains highly
uncertain. Recent reports suggest that pending tariffs may be delayed or rolled
back. Currently, tariffs have been levied on roughly $370 billion of imports
from China.
See Charts:
Effective tax rates declined
by 8 pp following tax reforms
And
Sensitivity of S&P 500 EPX to tax rates
There are also a bunch of secondary variables, or macro
drivers, which will be less dependent on the election outcome yet which will
directly shape the path of the S&P 500: for example, higher interest rates and oil prices provide a boost to
Financials and Energy EPS, respectively, but weigh on the profitability of
companies outside of these sectors. Higher inflation boosts nominal sales
growth but pressure margins, resulting in a modest impact on EPS.
See Table
Sensitivity of our top-down EPS Forecast
Continue reading and see two more
charts here:
TINA may incentivize allocation of equities
And
Yield Gap typically narrows late in the cycle
To summarize Goldman's
multi-modal model, no pun intended, the bank expects that as we approach the
2020 election, clarification of policy will expand the P/E multiple to 18.6x
and - assuming a divided government - push the index to 3400 by year-end 2020.
However, should the US end up with a unified government after the election, it
will likely result in lowering 2021 EPS to $162 and compress P/Es to 16x, "resulting in
the index closing next year at 2600."
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Strip-mining the planet to maximize profits isn't progressive or
renewable - it's just exploitive
and destructive.
….
It is Trump who will destroy the planet with WW3
to maximize the profits from the 1% & his own profits
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"Higher stock prices will boost consumer wealth and help increase
confidence, which can also spur spending." -
Ben Bernanke
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“If you run out of chips,
you are out of the game.”
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
...most shocking thing to come out of the hearings thus far is confirmation that no matter who is elected President
of the US, the permanent
government will not allow a change in our aggressive interventionist foreign
policy...
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Scattered around the nation, there are parts of the
country in which millions of Americans are living without the basic amenities that most of us take for granted...
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And it has
not Russia, nor China, nor any other enemy, foreign or domestic, to blame...
except for one: the Federal
Reserve Bank of the United States.
In some ways, we sympathize with Neel Kashkari's concern
about the unprecedented wealth inequality that has emerged in the US
in recent years and which has resulted in a slow, methodical
and relentless destruction of the US middle class ... or rather make
that precedented because
there was another time when the top 0.1% had amassed as
much wealth and it was just before the Great Depression.
See Chart:
US top 1% owns as many assets as the
bottom 90%
After all, who hasn't seen charts
such as these showing the tremendous divergence in income earned by America's
Top 1% at the expense of the middle and lower classes:
See Chart:
Share of income earned
Or that the top 10% now own 70% of
all the US wealth, the same as the middle
and lower classes combined...
See Chart:
Top ten owns 70% of
the wealth
Yet we find Kashkari's "jaw-dropping" virtue
signalling proposal to grant the Fed wealth redistribution power not only
laughable but absolutely terrifying: after all it was
the Fed's ZIRP and QE that was behind the greatest wealth redistribution in the
past decade...
See Chart:
Growth in Household Wealth ,
1950-2016
.. a redistribution that started almost 50 years ago,
when Nixon
decided to end the Fed's biggest nemesis - the
US gold standard - launching an unprecedented increase in income growth
for the "Top 1%", even as the income of the
"Bottom 90%" has remained unchanged ever since 1971
See Chart:
August 1971Nixon Ends US ends the US
Gold Standard: start the explosive inequality
For those confused, Rabobank's Michael Every put it best: of
course the Fed can redistribute wealth but "that redistribution has been from the poor and
middle-class to the rich, not the other way round."
And so, over a decade after the start of the biggest
monetary and wealth redistribution experiment in history intermediated by the
world's central banks, we find ourselves in a place where Deutsche Bank writes
that at the very top of its Top 20 risks for 2020 is none other than the "continued increase in wealth
inequality, income inequality and healthcare inequality."
See Table:
20 Risks to markets in 2020
To be sure, the issue of wealth and
income inequality is shaping up as the most sensitive topic not only during the
Democratic primary race, but the entire 2020 presidential race, with one
of the most salient questions emerging who can tax the richest the most.
See Chart:
BUT
CONSIDER THIS FIRST:
Al comparar ‘income tax plans for Presid Candidate’ se
incurre en 2 falacias lógicas:
Slippery slow+ Cir-Arg . En Econ el GDP (gasto vs ahorro & deuda
vs inflatio-deflation) depende de 3 actores: el
consumidor, el estado, el inversor, y de ellos depende el rate d import-export en el Mdo mundial. La Politica solo depende solo de 2 actores: el votante y el
Gbo electo. Y en esto los indicadores de Gobernabiliad
lo deciden todo. Se incurre en Slippery Slow cuando se asume un futuro evento sin
probar causación ni su probabalidad causal. Se incurre
en Circular Arg cuando se asume que si A is true, B is true & y a la
inversa. Aquí la causa no es ‘real causa’ ni precede el efecto. ‘A’ es cierto
porque lo dijo el pope o la biblia, u otra autoridad asumida como tal (aqui se
asume que un grafico Stad valida el argumeno).Estas
son FALACIAS LÓGICAS que invalidan un arg como el que se propone arriba: la Econ (taxes) depende de quién es el candidato. Si es Sanders –se asume aqui- los taxes van a subir
y si es Trump, van a bajar. Este razonamiento
ridículo es conocido en el análisis político como “manipulación
pre-fraude-electoral” . El
grafico Stad de abajo ha sido inventado de la
nada: NO se menciona la muestra estudiada: no tiene validez el
argumento: Véanlo:
See Chart:
Comparing Income Tax plans for
Presidential Candidates
….
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Como darle
vida a la farsa?
...what is being
desperately defended on Capitol Hill is not the rule of law,
national security or fidelity to the Constitution of the United States., but a giant Neocon Lie that is needed to
keep the Empire in business...
====
The great mistake foreign
observers make observing the latest impeachment farce in Washington is assuming that there must be some order,
rationality and linear logic behind it. There is none...
====
Never with Trump in power:
A
surprising number have already made their peace with that...
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Why do so many American Progressives wish to put even larger swathes of our lives under
political control given their belief that politics is so very easily corrupted by oligarchs and
big-money donors?
====
“No, you don’t understand. It
was the Russians, I tell you, the Russians!”
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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
...the world has started to witness an incremental de-dollarization push by a handful of nations.
====
From a big picture perspective, the largest rift in American politics is between
those willing to admit reality and
those clinging to a dishonest
perception of a past that never actually existed...
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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
Or
Pr: Turquía, ¿aliado o
adversario estadounidense? A
Al-Khaled
México: A contracorriente de Latinoamérica? Óscar García
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ALAI NET ORG
COL: Habló la diversidad social.
¿La escucharon? Alejo Vargas
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RT EN ESPAÑOL
Toques de queda y militares en las calles: Colombia
se suma a las protestas contra el neoliberalismo https://actualidad.rt.com/opinion/luis-gonzalo-segura/334794-protestas-colombia-neoliberalismo-ejercito-policia
- La importancia geopolítica del 'Triángulo del
litio' en Sudamérica (y su conexión con el golpe en Bolivia) https://actualidad.rt.com/actualidad/334451-importancia-geopolitica-triangulo-litio-sudamerica
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INFORMATION CLEARING HOUSE
Deep on the US political crisis: neofascism & internal
conflicts that favor WW3
-The Lies About Assange Must Stop Now By
John Pilger
- Netanyahu’s Get-out-of-Jail Card... War With
Iran By Finian Cunningham
- Israeli Settlements :Not Only Illegal. They
Are Immoral By Peter Beinart
- Ukrainian Peddling Rings—How Imperial Wash Rolls By David Stockman
- Why the Hell Did Democrats Just Extend the
Patriot Act? By Sam Adler-Bell
- Land of the free? Voter surpression in the US By Molly McCracken
- Eroding Exceptionalism - America In Decline By Mark Hannah
- Deep State Coup D’Etat: from JFK to Trump By Michael Welch et-al
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COUNTER PUNCH
Analysis on US Politics & Geopolitics
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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
Middle East n world news
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