ND
DEC 01 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
Equity CTA
long positions have already reached the levels last seen in mid-October 2018,
and they have been steadily hiking their leverage ratios. Meanwhile bonds CTAs
have stopped selling and may resume buying soon.
While the jury is still out whether the modest economic
rebound that took place at the start of September - just in time to crush the
value/growth trade - and appeared to fizzle by mid-November, when the "jitters"
returned to virtually every asset class except
stocks which have continued to ramp to new all time highs ...
See Chart:
S&P 500 and 10Y Yield
... is over, and a new wave of
economic uncertainty and/or deflation has set in, remains to be seen.
So what do positional indicators tell us?
According to Nomura's Masanari Takada, amid the ongoing
market euphoria - a consequence of the Fed's QE which
has pushed the Fed's balance sheet and stocks higher
for 7 of the past 8 weeks...
See Chart:
Weekly Change in S&P 500 vs.
Weekly Change in FED Balance Sheet
... it is now high time to look more cautiously at the
steady accumulation of long positions on US equity futures (S&P 500, NASDAQ
100, DJIA) by trend-following CTAs that is one of the factors behind the
strength of the US equity market (perhaps the explanation is as simple as that
CTA buy if the Fed's balance sheet rises, and vice versa).
Looking at the action in the last days of last week, CTAs
were in wait-and-see mode, but Nomura expects them to continue to lean toward
buying, especially since their long positions have already reached the levels last seen in
mid-October 2018, and they have been steadily hiking their leverage ratios (re-leveraging).
Of course, if CTA demand overextends, Nomura warns that the upward momentum in
US stocks could lead to an overheating - assuming of course that the last 100
or so S&P points were not just that - "and markets are then likely to
start viewing day-trading moves by fleet-footed investors with
trepidation." Meanwhile, a modest cool-off in
stocks, one that doesn't bring the S&P 500 down past around
3,100 (breakeven for CTAs' most recent positions), could conversely spur
dip-buying by investors that have fallen slightly behind this trend.
See Chart:
CTAs positions on S&P 500 futures
(Nomura estimates)
What about bonds? As we wrote
three weeks ago, when bond yields peaked just shy of 2%, that's the time that
CTAs stopped selling Treasurys, and sure enough, 10Y yields promptly dropped by
over 20 bps. Fast forward to today, when 10yr TSY
yields can be found around 1.76%, a level that Nomura says is "a key
strategic line for CTAs", as it represents the cost of cumulative net
buying since June.
As a reminder, CTAs have already
unwound nearly 80% of their long UST (TY) positions, and it is more difficult
for them to unwind these positions in the interest of avoiding losses with
yields at 1.7-1.9%. If anything, if trade war
fears re-emerge and deflationary worries bubble up to the surface again, it is
more likely that CTAs will start buying here again, potentially sending 10Y
yields south of 1.50% in a hurry.
See Chart:
CTAs positions on 10yr UST Futures
(TY) [Nomura Estimates]
Of course, position adjustments within the range of what can
be justified by actual market conditions cannot be ruled out, but as Nomura
notes, there now seems to be little risk that CTAs will unilaterally sell off their long
positions unless 10yr UST yields were to break above 1.9%.
In short, with just one
calendar month left in the year, and the decade, what
happens next may depend on the tug of war between equity and bond CTAs, and
which group ends up prevailing.
And since the outcome of that particular duel is still
unknown, we will instead shift our perspective a bit
and look at cross-asset seasonal patterns for the end of this year and the
beginning of the New Year.
Here, we highlight Nomura's calculations for the average
performance in December and January since 2009 for investment in equity, FX,
and 10yr yields (in all cases assuming that positions are held from the first
trading day through the last trading day). For the 10 major asset classes,
the Japanese bank compared a total of 55 patterns for building buy & hold
or long/short positions.
Among major equity markets, EM equity indices such as
MSCI-EM and KOSPI tend to maintain upward momentum in December and January. In contrast, indices such as the Nikkei 225 and CSI 300 tend
to rise in December but reverse in January. The S&P is modestly in the
positive category, with strong seasonals for both December and January.
See more charts at:
….
SOURCE: https://www.zerohedge.com/markets/ctas-caught-tug-war-between-bonds-and-stocks-year-end-looms
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Contradict bet investors
and FED emerge. The expected explosive inequality burst
"The system doesn't
work, it's gone mad, then the reason the system is broken is because it's not an equal
opportunity system..."
Read my opinion on this article at the end.
HERE MAIN EXTRACTS from the article
above.
“Speaking directly after Connecticut Gov. New Lamont, with
whom Dalio is working to bolster Connecticut's schools via a $100 million
gift - the largest charitable gift the state has ever received, PTJ and
Dalio largely focused their "Fireside Chat" on the flaws of Fed policy, the dangers of
America's ballooning budget deficit, and the steps that must be take to
"stop us from killing each other" in a violent revolution, as
Dalio warned.
“PTJ spoke
first, starting with a few words about President Trump, praising him as
"the greatest salesman" to ever enter the American political arena. After all, Trump didn't convince the Republican Party -
once the party of fiscal piety - that 5% budget
deficits 10 years into an economic rebound are necessary to protect the economy.
Similarly, didn't he also convince the Fed - "through great moral
suasion" - that returning to real negative rates
with unemployment at 50-year lows was a necessity?
“Both
Dalio and PTJ agree that, while clearly stimulative in the short-term (obviously
just take a look at the S&P 500), these decisions will set up the US economy for one of the most punishing
downturns in history, which is why PTJ always laughs when Jerome Powell
is quizzed about financial conditions and whether he sees bubbles anywhere. Because at this point, the whole market is a bubble.
“And when we look abroad, the full scope of this heady
"fiscal-monetary mix" becomes even more obvious.
"I look at our fiscal-monetary mix, it's the most stimulative that
I've ever seen - again, economically adjusted - no wonder the stock market is
at new highs. It's literally the most conducive
environment - certainly in the short run - for economic growth and
strength that I've ever seen. You add on that an 11%
budget deficit in China, the second largest economy, at 3%."
“Dalio jumps in: Today, the number
of companies producing earnings is the lowest since the dot-com bubble because
"companies can sell dreams rather than earnings." That's thanks to
the $15 trillion sloshing around the financial system that has been injected by
central banks
"Because the world is looking for yield, companies can sell dreams
rather than earnings. The
number of companies that produce earnings is the lowest since the dot-com
bubble in terms of their need because you can sell a dream."
"As a result of the accumulation of the money at the top and
technology we have a situation where, naturally, those who have a lot of money
also have a lot of money in credit...but it doesn't trickle down. And as a result, we have a situation with a LARGE
WEALTH GAP."
“All of this is
happening at a time when, according to Dalio, the current dollar-centric global reserve system is nearing
its end.
"In my opinion, we're near the end, in the
late stages, of our reserve currency system - it's a fiat monetary system. Not
only do we have negative rates, but we're going to have much bigger deficits...and
that's half the story. Because the larger story is the
unfunded liabilities...those are pension
liabilities and debt liabilities."
“Dalio explained,
there's a trade war, a technology war, a geopolitical war and THERE COULD BE A CAPITAL WAR.
“And the US is a great place to carry on this fight. The situation
will be even worse when the cycle turns and we're plunged into a punishing
economic downturn.
“It's not just the budget
hole, there are also pension shortfalls and other obligations that the federal
government must backstop: "We have a lot of IOUs?? (QEs?) that are either going to be funded by tax increases or
spending cuts."
“If we don't find a
way to fix the system and fix wealth inequality,
bad things are going to happen.
"The system doesn't work, it's gone mad,
then the reason the system is broken is because it's not an equal opportunity
system. There are justifiable complaints about
education...it needs to be reformed in a way that works better - we can
increase the size of the pie in the same way that you can divide it
better."
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MY
OPINION ON THIS ARTICLE:
Notes
on Capitalism vs. Socialism
In this article there
are clear views on the collapse of the current capitalist system and the way to
go beyond this system: capital
revolution. But there are also naïve dreams
& contradictory statement bet
the time for Rev (capital uprising) vs. increase the size of
the pie & divided better (if so, investors Rev is not needed). This
interpretation may not be the fault of the authors since I did notice some
intentional distortion in this article regarding economics and politics, but those
are irrelevant. Nothing to do with main contradictions.
The main problem here
is the miss perception of contradictions: it is not the internal -unequal
distribution of wealth among investors the real issue, the problem is that the
neoliberal system (they did not mentioned) is obsolete and that is the main
cause of contradiction betwen productive
investors vs. speculative investors (those who receive QEs
& Bailouts to recycle the dynamic of neoliberal system via buying-selling
the same staff with a fake currency –USD- created from the thin air).
The defense of productive capitalism vs. speculators from WS is right
& clear in some parts of this article. IT stand to reason to say: “The number of companies that produce
earnings is the lowest since the dot-com bubble in terms of their need because
you can’t sell a dream”.
The only way to go beyond neoliberalism is to dismantle this system by
taxing the big Corp of speculators as FDR did it, and canceling the debt of
productive capitalists under the condition of fair income for the labor or
working classes.
Only a solid DEAL between productive Capital and labor can create a new
path to post neoliberal economy.
The taxing and/or expropriation of the 1% (big billionaires) is the REV
we need. The return to USD supported by
gold is key part of this policy; we
cannot design a post neoliberal agenda
with the current dollar.
The alliance of productive investors
(big & smalls) with the working
classes is the key to assure sustainable development as FDR got it.
This new system cannot be called capitalism nor communism, it is a mix
of both of them, though simplified by the word ‘socialism’.
Socialism existed before the Marxist “manifesto” as the opposite option for economics and
politics. Socialism has nothing to do with Stalinism. Socialism is in fact the real
name of democracy.
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US
DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds
& corruption. Urge cambio
A UN study shows the “U.S. has world’s highest rate of children in
detention". That was under
the Obama administration...
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"... the Fed is kind of out of bailout bullets. "
====
"Again, this is another
example of the DNC being arbitrary and inconsistent..."
====
A UN study shows the “U.S. has world’s highest rate of children in
detention". That was under
the Obama administration...
====
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
Is the
global economy recovering from its 2018 slump or is the dreaded double dip on
deck?
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“NATO is a collective defense
organization, but against what or against who? Who is our common
enemy? We need to clarify that. And it is a very strategic question,”
====
A subversive attempt by
America to divert global portfolio investment from China by
destabilising Hong Kong will force
China into a Plan B to fund its infrastructure plans...hastening the end
of the dollar as the world’s reserve currency...
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO
..Focus on neoliberal expansion via wars & danger of WW3
- 'Article
5, Not F-35': French Minister Lashes Out at US for Forcing NATO Members to Buy
Its Weapon
Tim
Korso
- US
Envoy to Germany Fumes as More States Opt for INSTEX in Defiance of American
Anti-Iran Sanctions
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NOTICIAS IN SPANISH
Lat Am search f alternatives to neo-fascist regimes &
terrorist imperial chaos
RT EN ESPAÑOL
- López Obrador y su primer año de mandato en
México: logros, obstáculos, presiones y retos pendientes https://actualidad.rt.com/actualidad/335204-lopez-obrador-primer-mandato-logros
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more
business-wars from US-NATO allies
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