ND DEC 3 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
"So, where are we today? Today,
we have the S&P 500 is killing everybody..." But what happens next
could be devastating.
Jeff Gundlach sat down
with Yahoo
Finance and discussed how US stocks would get
absolutely crushed in the next recession. Gundlach said 2019 was the year when
investors could pick "just about anything...Just throw a dart, and you're up 15-20%, not just the United States, but global
stocks as well." He warns that it could all change in 2020, as a
recession is fast approaching.
"So,
where are we today? Today, we have the S&P 500 is killing everybody else
over the last ten years, almost 100% outperformance versus most other stock
markets," he said.
See Chart:
Equity
Market Tops
"My
belief is that pattern will repeat itself," said Gundlach, who has spent much of 2019 warning of a downturn ahead
of the 2020 elections.
"In other
words, when the next recession comes, the United States will get crushed, and
it will not make it back to the highs that we've seen, that we're floating
around right now, probably for the rest of my career, is what I think is going
to happen," he added — suggesting that a recovery won't be seen for years.
Last month, Gundlach warned about the levels of government debt, and the US equity markets are not sustainable. He told
investors that they should brace for significant disruptions.
"The
corporate bond market in the United States is rated higher than it deserves to
be. Kind of like securitized mortgages was rated way too high before the global
financial crisis. Corporate credit is the thing that should be watched for big
trouble in the next recession."
And maybe a downturn in the economy has already started, considering
credit markets usually lead. As shown below, significant
cracks in the junk bond space are beginning to appear:
The spreads on CCC US junk bonds have jumped above 1,000bps for the first time in more than three years as
a sell-off in energy weighs on the lowest-rated debt.
See Chart:
‘CCC’
–rated Corporate credit risk (OAS)
Blowing
the CCC market's risk out to its widest against single-B since April 2016...
See Chart:
Gap
between CCC, B bond spread flares to widest since April 201
Generic
CLO BBB tranche is starting to flash very red...
See Chart:
DOW vs. Generic CLO
‘BBB’ tranche
The broader junk bond market posted negative returns last
month... as stocks have soared..
See Chart:
S&P vs HYG
Gundlach's
Sept. presentation titled "The
Greatest Economy Ever!" made it clear that the next big move for the dollar is lower, and warned
that when the next recession occurs, the US dollar and
stocks will be in trouble, recommending investors to diversify into
other currencies and markets.
And since
his view on the economy is that it is anything but the
"Greatest Ever", pointing out the sharp slump in 2019 global GDP
projections...
See Chart:
World Real GDP Growth Forecast by Year
And as we've
said on multiple occasions, the next
shoe to drop is likely the consumer. Something that Gundlach is waiting for
as well explained in the latest interview with Yahoo.
Highlight: A recession probability "is around 40% right now," @truthgundlach says. "The ISM looks bad... Consumer sentiment, though, remain
at a decent level. What we have to watch for is consumer confidence declining,
because that's almost definitional we cause a recession."
LISTEN THIS VIDEO-Interview with Gundlush on
recession concerns:
….
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Puedes agarrar este toro por donde
quieras, menos por las astas. Por allí se lo mata o mueres
...and now bulls need to
prove that they can sustain new highs. It is key for how the rest
of 2019 plays out...
After weeks
of rallying on low volume on virtually relentless volatility compression the
inevitable has happened: $VIX has busted out of its latest compression
phase for another big spike very similar to what we saw this summer.
In process
most of the November gains were wiped out in 3 days. What does this mean for
the rally? Let’s have a look at a few key charts.
Firstly, like this summer, the $VIX burst
targeted an open gap above, the 17/17.5 gap left open
following the Fed’s QE announcement:
See Chart:
And like this summer $VIX has become short term overbought and
like this summer $SPX broke its up trend in the process. Hence on the surface this is all a very similar looking replay of structures.
BUT there is
a difference. Since the massive liquidity injections by
the Fed began $SPX managed to break above the megaphone and rallied until it
hit trend line resistance last week:
See Chart:
Oh yes,
markets can be this simple, trend lines matter:
Markets are simple.
We just make them complicated.$SPX
We just make them complicated.$SPX
See Chart:
At this link address:
And so the
rejection of $SPX makes perfect technical sense.
In the
summer I had pointed out that a breakout above the megaphone trend line that
gets successfully retested would be bullish, likewise a retest that fails would
be bearish.
Today $SPX is engaged in that retest process and it’s key
that bulls defend this trend line:
See Chart:
A COUPLE COMMENTS:
One: During
the recent rally the RSI became the most overbought in 2019.
Two: In
October $SPX broke above resistance (yellow line), and has now reverted and is
retesting this line as support. If a bounce can hold and make new highs from
here it’s bullish. If it can’t hold support or a bounce fails to make new highs
this would suggest a potential move to the lower trend line 3000-3030 support.
If that breaks watch out, things could get very shaky in markets.
Three: $VIX broke out of its most recent compression
pattern and filled its open gap of 17/17.5 today. Hence resistance and reversal
intra-day now along with $SPX are support conducive for a bounce/rally.
BUT should support fail on $SPX, $VIX has risk higher.
There are 3 trend lines above that suggest resistance on any $VIX spikes. Above
the first line the secondary line suggests 21/23, the next larger line, if the
previous doesn’t hold, suggests a move toward 27/28.
OF NOTE: Despite successive marginal new highs on $SPX
$VIX has maintained a general trend of higher lows. Hence if $VIX were to
break above all of these trend lines we may see a revisit of the 30-50 range.
Unfortunately? Not really if you look at $NYAD:
See Chart:
Here too we
can observe a very repetitive structure, in this case a large channel that is
now sitting at key support.
When the 2018 channel broke it led to a very ugly period for
markets marked by a period of very high volatility with lots of long and short
trading opportunities. Indeed the chart above suggests key trend line support
below on $SPX should this $NYAD channel break to the downside.
If it does
and $SPX experiences a more sizable correction than currently, bulls are faced
with a larger issue: That the megaphone breakout was
false and did not sustain. As I outlined in Game Over? $VTI is sending a different message altogether.
So yes, defending these support zones here is key for
bulls. Falling below the megaphone trend line would
risk that markets are repeating the pattern that we’ve seen over the past 2
years: That new highs are not sustained. The September 2018 highs
petered out 3.5% above the January 2018 highs. The July 2019 highs petered out
3% above the September 2018 highs. In all of these
previous cases we saw sizable corrections off of new highs. These highs here have
so far ended at 4% above the July 2019 highs.
And now bulls need to prove that they can sustain new highs. It is key for how the rest of
2019 plays out.
….
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Como y por que el capitalism nos
aplasta. Why capitalism smash & crash us?
This time really is different.
To regular
readers of Zero Hedge, and generally contrarians, it will come as no surprise
that the structural forces Lambregts is referring to relate principally to
our financialization thesis:
this refers to a trend that has been evident for decades in Western economies
(but arguably increasingly elsewhere in recent years) whereby corporations have increasingly favored
investment in financial rather than fixed assets.
The first chart below stylizes this thesis by showing
the holdings of financial and non-financial assets on the part of US
non-financial corporations since the beginning of the 1950s. As can be seen, since the
mid-1990s, US companies have clearly favoured financial investment vs. the
“real” thing. 2010
is highlighted on this graphic as it is at this point that the crisis-induced
correction in corporate financial asset holdings rapidly reverses. This is attributable to the onset of QE which only served to further encourage corporate
investment in financial assets owing to the de facto government put implied by
the central bank purchase program.
See Chart 1:
Financialisation in action
As
corporations focused largely on growing their financial assets, the flip side
was made apparent in the corporate behavior encapsulated in the next chart,
which as ING notes, shows the collapse in net fixed investment demand as a share of GDP
during the financial crisis and the fact that the subsequent
recovery has only taken investment’s share of the economy back to the cyclical
lows repeatedly forged through the post-WWII period.
This, then,
helps explain a conundrum economists have been struggling with in recent years which is why
fixed investment demand is still so slow this many years after the crisis
despite the historical and, in certain instances, record low cost of
capital. Rabobank's thesis argues that corporates have taken advantage of low borrowing costs but
not to invest in organic growth but as a means of undertaking financial value engineering.
Se Chart 2:
Fixed Investment demand remains in
the duldrums
This view
also provides a plausible means of addressing another post-crisis puzzle which is
why productivity growth has remained so low (since
2010, US productivity has been growing at its slowest speed on average in the
post-war era). This, as Rabobank further notes, should be no surprise given the clear bias of corporates to accumulate
non-productive financial assets rather than undertake productive fixed
investment.
This, in turn, helps explain why estimates of US potential
output have collapsed in the post-crisis period. The chart below
highlights this development in showing the sharp decline
in recent years of New York Fed’s estimate of the natural, or neutral, policy
rate. This is the real policy rate level deemed suitable for meeting the Bank’s dual mandate of full employment and 2%
inflation. Crucially, trend growth is a key
assumption underpinning this assessment.
See Chart 3:
The bi-product of a sharp decline in estimated US potential
output:
The US‘ estimated
natural rate of interest
This "financialisation"
thesis can also help explain the scarcity of developed world wage inflation
despite historically low levels of unemployment.
In large part, this is owing to the fact that higher wages in the
absence of productivity growth implies lower margins. This is a development
that has arguably been resisted by Anglo-Saxon
companies as higher wages within this context would result in workers enjoying seniority in terms of access to profits vs.
shareholders – the very opposite of the share-value maximisation corporate
governance model that ING argues has been increasingly prevalent since the
mid-90s.
The next
chart shows the long-running crowding out of the US
workforce in the form of labor’s share of (declining) national income from the
1960s onwards. The chronic nature of this trend reflects the fact that
there are other structural forces at play which have been disadvantageous to
developed world workers – specifically, globalization and robotization. Yet
while these factors have long been widely acknowledged, Rabo's focus is upon
the less appreciated “-ation” - that of financialization.
See Chart 4
US workers
taking home a a historically small slice of the pie
The
accelerated crowding out of labor at the turn of this millennium is also
reflected in the explosion of US corporate profitability shown in the next
chart. Taken together
with charts 2 and 4, Rabobank argues that these three visualizations make it
clear that these profits failed to make their way either to labor or to fixed
investment while Chart 1 implies
that financial value engineering was the ultimate destination.Taken
together, Charts 4 & 5 reflect a post-crisis
development that has been crucial from a social perspective.
See Chart5:
US Corporate
profits has exploded in post crisis period
To
summarize, Rabobank's core thesis is that recent decades have seen corporates
(initially in the Developed world) increasingly avoid fixed investment in favor
of that of a financial variety. Central banks have, ironically, accelerated this process by directly
intervening in financial markets. The upshot
of this has been a rapid appreciation of financial asset values BUT at the
direct expense of real world activity (a cannibalization of fixed investment
demand), a concomitant stymieing of productivity growth and, by extension, a
crowding out of labor.
In other
words, it is central banks themselves that are behind
the global economy's dismal - and ever slowing - growth rate.
Viewed in
this way, financialization
can be judged to be a zero-sum game whereby what is good news for those long
financial assets is bad news for those long income. The divergence of the lines in
Charts 4 and 5 thus reflects a yawinng inequality gap that has grown markedly
in the post-crisis period. This, in turn, has resulted in a growing segment of
developed world populations becoming disaffected as they fall further behind
and are, as a result, increasingly looking for none stablishment
political solutions. This
is not simply of sociological interest but also of keen strategic importance as
it argues that populism itself is structural in nature – it is a struggle for a
fairer slice of the pie.
….
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US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
"The decision to move forward
with an impeachment inquiry is not one we took lightly."
====
The bill is an amended version of the
Senate’s S. 178 to support the Uighurs, a Muslim ethnic group in western China,
and it passed Tuesday, on a vote of 407 to 1
The bill is an amended version of the Senate’s S.
178 to support the Uighurs, a Muslim ethnic group in western China, and it
passed Tuesday, on a vote of 407 to 1. Chinese
state media warned before the vote that the government could release a list of
“unreliable entities” that could lead to sanctions against U.S. companies. The
measure follows legislation supporting Hong Kong protesters signed into law
last week by President Donald Trump.
Based on what I know, since US
Congress plans to pass Xinjiang-related bill, China is
considering to impose visa restrictions on US officials and lawmakers who've
had odious performance on Xinjiang issue;it might also ban all US diplomatic
passport holders from entering Xinjiang.
China wants real human rights
in Xinjiang: people’s rights to have a peaceful life. West’s
hypocrisy won’t affect Xinjiang internally, nor will it influence Muslim
countries’ attitude. It’s just a few media outlets and politicians
pretending to be representing the world.Pathetic.
IF
Beijing will finally publish its black list, which it has been
threatening to do since May and which may include such names as Apple and Micron… well, now that the House has
passed the Uighur bill, Beijing may no longer be able
to delay, ... Needless to say, for a president for life such as Xi Jinping, that is hardly an option, so
stay tuned for China's response which may be due any moment.
….
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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
Threats & nuke-blackmail again.. Potus put at
risk or save NATO? This depends on Pol
"I hope he lives up to the agreement, but we're going to
find out."
====
SPUTNIK
and RT SHOWS
GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars
& danger of WW3
-Save
your insidious comment & tell us when you are going to quit from the race…
Trump
Campaign Congratulates Gabbard Over Harris’s Exit From 2020 Race IF you win is
because buying election (corp finance). IF win: you’ve no chances of
‘gobernability’
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NOTICIAS
IN SPANISH
Lat Am search f alternatives to
neo-fascist regimes & terrorist imperial chaos
REBELLION
Am-Lat: Se acortan los ciclos, se agudiza la crisis Colect Nuestra América
====
ALAI NET ORG
====
RT EN ESPAÑOL
-Países del
TIAR aprueban restricción de tránsito contra funcionarios venezolanos https://actualidad.rt.com/actualidad/335711-paises-tiar-aprueban-restriccion-transito
- ¿Quién es quién en el escándalo de corrupción
de la oposición en la Asamblea Nacional de Venezuela? https://actualidad.rt.com/actualidad/335514-escandalo-corrupcion-diputados-opositores-venezuela
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INFORMATION
CLEARING HOUSE
Deep on the US political
crisis: neofascism & internal conflicts that favor WW3
-Impeachm Rep Alleges Trump Solicited Foreign
Election Interfer By Adam
Schiff,
-
Iraq rise up against 16 years of 'made in the
USA' corruption By N J S
Davies
-
Could The U.S. Survive a Truth Commission? By Charles Hugh Smith
-
Hong Kong Unmasked Watch
-
Violence and the State By Craig Murray
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COUNTER
PUNCH
Analysis on US Politics &
Geopolitics
-R
Lachmann Can
the US Get Out of Its Endless Wars?
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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
- US House report accuses Trump of power abuse
- 'US invasion has left Iraq devastated'
- Gaza switches on its Christmas lights
- NATO summit: Trump condemned by British protesters
- ‘Iran, Russia, China to hold joint naval drills on Dec. 27’
- No to racism, no to Trump: Protesters at NATO summit
- Bipartisan support for US military aid to Israel
- Trump’s bald-faced Big Lies on Iran continue
- PROGRAMS
- ISR: Tuition crisis
- Israeli land grab
- US Hong Kong interference
- EU INSTEX moves
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