ND DEC 15 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
When looking at tomorrow's $100
billion liquidity drain, the repo market should be able to digest it without a
surge in the G/C repo rate. If, however, the first repo prints on monday come
in at 2% or higher, it will mean that Pozsar's year-end doomsday forecast may
well come true.
Last week's apocalyptic
report by repo market guru Zoltan Pozsar, which for those who missed
it predicted that an imminent market crash and loss of control of overnight
rates by the Fed would spark nothing short of QE4, sparked an unprecedented
panic at the Federal Reserve, which just two days
later unveiled a historic liquidity injection,
in which the Fed promised to inject no less than $500
billion in the next 4 weeks to avert a catastrophic freeze in the repo market
as we approach the year end "turn", which would consist not only of a
continuation of the Fed's T-Bill POMO, but also a massive injection of nearly
$500 billion in overnight and term repos in the coming days.
See Table:
In other words, instead of a reactive QE4 - as predicted
by Pozsar - the Fed will flood the repo market with a proactive firehose of
liquidity.
There's more: add in the
incremental liquidity from the expanded overnight repo of about $50 billion and
another $60 billion in T-Bill purchases, and the Fed will inject a total of just shy of $500 billion in the next
30 days. This also means that by Jan 14, the Fed's balance sheet
would have grown by a cumulative $365BN in "temporary" repos, and
together with the expanded overnight repos, and the
$60BN in monthly TBill purchases, and
by mid-January, the Fed's balance sheet, currently at $4.066 trillion, will
surpass its all time high of $4.5 trillion!
See Chart:
FED
Balance Sheet
Well, since the next key catalyst in the potential
repo market turmoil is imminent, we may know as soon as tomorrow, when
there is another large December corporate tax payment date (with as much as
$78BN being remitted to the TSY) and another $54 billion in US Treasury
settlements.
Recall, that as we explained
last week, the mid-December funding dynamics looks very similar to mid-Sep
except for the outsized role of the Fed. On Monday, Dec 16, Bank of America anticipates that $54Bn of UST
coupon settlements coupled with what has historically been $30-50BN of
corporate tax payments to UST. This could
result in a UST cash balance inflow - or a liquidity drain - of up to
$80-$100bn in just one day.
See Table
Also
recall, every dollar of UST cash
balance increase represents a similar USD reserve drain from the banking
system, and a similar liquidity drain in mid-September culminated with the now
historic explosion in overnight repo rates.
See Chart:
Cash Balance and SOFR jumped in
mid sept
Consider
that as of last week, the Fed has provided $340bn in funding through their
existing repo and bill purchase operations:
See Chart:
FED
cash add through open market operations ($ Bill)
https://www.zerohedge.com/s3/files/inline-images/liquidity%20injections%20so%20far.jpg?itok=eVNRgPds
As a result, Cabana notes that
even with this operational change, funding could still be volatile as bank portfolios and money fund
deposits get pared back amidst corporate outflows, while dealer intermediation of
Fed repos may also be challenged with year-end regulatory reporting dynamics
limiting how smoothly this funding gets passed along,
something Pozsar discussed extensively last week.
See Table:
Still, as Skyrm cautions, "there is still
one major phantom year-end risk looming around the market. If the
Fed's term RP operations fully fund the Primary Dealer bank balance sheets and
the banks cannot increase their
balance sheets further, the last few Fed operations of the month might not have
any takers. There
is a chance there will be little Primary Dealer bank balance sheet left by
year-end."
In any case, when looking at
tomorrow's massive $100 billion liquidity drain, the repo market should be
able to digest it without a spike in the G/C repo rate now that the Fed has
effectively backstopped any and all year-end liquidity needs. If, however, the first repo prints
come in elevated: at 2% or higher, it will mean that not even the Fed's half a
trillion dollar liquidity injection was enough, and that Pozsar's fire and
brimstone forecast is starting to come true.
….
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Paul Volcker from USA : un
Paretiano a destiempo: connect actions with
Nat-needs
Volcker understood at a deep and
intuitive level that all government institutions – including the Fed - have to
connect their actions to the needs of ordinary citizens.
====
Economically
speaking, hyperinflation is the inevitable
consequence of an ever-greater rise in the amount of money...
Increases in the Money Supply
Hyperinflation is perhaps the darkest side of a government fiat money
regime. Among mainstream economists, hyperinflation
typically denotes a period of exceptionally strong increases in overall prices
of goods and services, thus denoting a period of exceptionally strong
erosions in the exchange value of money. Some people
consider a rise in overall prices of 10 percent per month (which implies an
annual rate of price increases of around 214 percent) as hyperinflation; others
indentify hyperinflation as a monthly price rise of at least 20 percent (which
implies an annual increase in prices of nearly 792 percent).
According to the Austrian school, money is, like any other good, subject
to the irrefutably true law of diminishing marginal utility.
Money Demand
People hold money because money
has purchasing power (which people desire, given the fact of
uncertainty as an undeniable category of human action), and the purchasing
power of money is determined by the supply of and demand for money.
If a rise in the money supply is accompanied by an
equal rise in money demand, overall prices and the purchasing power of money
remain unchanged.
The Unrelenting Power to Inflate
If people expect a forthcoming,
drastic increase the money supply — but if they at the same time expect that
such an increase will be limited (i.e., a one-off increase) —
the central bank can actually orchestrate a debasing of money without causing
its complete destruction.
Debt Levels
Today's fiat-money regimes are characterized by
ever-greater amounts of debt relative to real income — caused by policies that try to solve the
economic problems caused by credit and money creation out of thin air by using
even greater amounts of credit and money created out of thin air. And it is fair to say that the higher an economy's overall
debt level is, the more likely hyperinflation becomes.
Should investors in such a situation expect that the government and its central bank would opt for bailouts financed through
additional money creation, the demand for money and fixed claims would most
likely dry up. This would make it necessary for the central bank
to extend ever-greater amounts of money to struggling borrowers in order to
prevent the spread of bankruptcies. The larger the
amount of outstanding debt is, the larger will be the potential increase in the
money supply. The more the money
supply grows, the more likely it is that there will be hyperinflation and a
potential breakdown of money demand: the unfolding of a crack-up boom.
Read the full article at
….
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Market performance in 2020 will
largely depend on two things: response sensitivity to inflation and growth
data.
See Chart:
Inflation
sensitivity declined in 2019 as the FED pivoted to easing
In
contrast, sensitivity to growth
data picked up sharply in 2019, reflecting slowing growth
and the return of recession fears. In fact, growth sensitivity in the bond
market is already back to its level during the shale
bust and capex-driven growth scare of 2016-17.
See Chart:
Looking
ahead to 2020, Goldman expects another signal reversal, as its forecast
of improving growth and diminished trade risks suggests scope for a modest pullback in sensitivity to growth data. Treasury-market sensitivity has already overshot relative to
the bank's predictions (see blue and red line in the left panel of
Exhibit 6), and the end of the mid-cycle adjustment
coupled with its expectation of firming US growth argues for more a normal
degree of data sensitivity in early 2020.
See Charts:
https://www.zerohedge.com/s3/files/inline-images/data%20senstivity%20normalization.jpg?itok=c1a0RvlN
Similarly,
equity-market reactions to growth data could also wane a bit early next year if growth picks up.
See Charts:
Equities
reacting to growth data remains uncertain
The implications for 2020 are
shown by the dotted lines above (i.e., a short-lived lull in data reactions in
the coming fall 2020).
In
contrast, the bank finds no such effects for inflation sensitivity. This may suggest that market participants
view elections as more important for the growth outlook than for the near-term
trajectory of core inflation (such that inflation news
continues to be an important driver of price action, even if growth surprises
are faded). In conclusion, Goldman expects inflation reactions to pick up
gradually in 2020 as inflation rebounds towards the target and the Fed begins
to contemplate its next move. All of that, of course,
assumes that inflation will rebound next year as most on Wall Street now openly
expect. However, if there is anything that 2019 once again vividly
demonstrated, it is that when everyone expects something, the opposite happens.
….
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"Predictions
that seem obvious are obviously not obvious. How do you build a probability
tree for what comes next? What’s the output?"
====
US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
It’s been a bad last 24 hours for the war propagandists...
====
Trump may have taken what wasn't
broken, namely the tried and true strategy of ramping the market higher on
daily speculation and "trade deal optimism", and "fixed
it", in the process opening a trade deal Pandora's Box.
See Chart:
Adverse
feedback loop between the FED and Trade policy
….
SOURCE https://www.zerohedge.com/economics/how-trump-opened-pandoras-box-announcing-phase-one-trade-deal
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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
More countries see China as their No. 1 friend than you might
think...
See Map:
The Pew survey was pretty
ambitious: 38,426 people in 34 countries participated between May and October
of this year.
….
See Source: https://www.zerohedge.com/geopolitical/china-or-us-worlds-superpower-heres-what-world-thinks
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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
VIENTO SUR
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GLOBAL
RESEARCH
Geopolitics & Econ-Pol
crisis that leads to more business-wars from US-NATO allies
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