ND JAN 14 20 SIT EC y POL
ND denounce
Global-neoliberal debacle y propone State-Social + Capit-ompet in Eco
ZERO
HEDGE ECONOMICS
Neoliberal
globalization is over. Financiers know it, they documented with graphics
Increased
concentration risk is a clear sign of fragility increasing and the system is
destabilizing underneath the surface. It’s historically a recipe for violent
moves so it should definitely be on investors’ radar.
The rapid rise
of the large US technology stocks has catapulted the five largest stocks on market
value to reach an index weight of 18%, the highest level observed in the
S&P 500 in 25 years. Increased
concentration risk is a clear sign of fragility increasing and the system is
destabilizing underneath the surface. It’s historically a recipe for violent
moves so it should definitely be on investors’ radar.
See Chart:
Share of Top 5 Companies in the S&P 500: Market gap vs. Net Income
See more
Charts at:
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The US market's price-to-sales ratio has reached a new record
high (but it's different this time)...
See Chart:
S& P 500 Price-to- Sales
And its PEG ratio has also never been higher...
See Chart:
PEG ratio (PE/LT EPS
Growth )
Nomura's Charlie McEllligott lays out what is holding this
malarkey toegther...
- “perpetually easy” US financial conditions make this an “everything rally” environment for investors, where risk assets / spread product should be supported by “firm” USTs over the course of 2020 (as I do not see scope for a large US Rates selloff as some are expecting, nor a massive rally for that matter)
- “Goldilocks” US economic backdrop with benign inflation
- Fed reaction function clearly skewed asymmetrically (super-low bar to ease, almost impossible bar to hike)
- My belief that the current “QE-Lite” (in that the Fed are NOT buyers of “Duration,” just short-term Bills) will transition to standard “QE” over time, moving toward towards USTs / outright “Duration” purchases in an effort to provide “ample” reserves in the banking system and offset money market stress points
- Long-term view from investors that the “Three D’s” will continue to create secular disinflation which makes will keep policy “easy” and rates “low”—the overall 1) trajectory of Debt growth, 2) fading Demographic impulse and 3) tech Disruption.
And positioning in options is extreme to say the least...
See Charts:
And the market keeps rising on the back of the biggest 2-day
short-squeeze in 2 months...
See Chart:
“Most Shorted” Stocks
For a few
brief minutes today, the machines hiccup'd on China tariff headlines... but that didn't last... until NYFed reduced the size of its
repo plans and that dipped stocks again (briefly)... S&P and Nasdaq dared to close red!
See Chart:
Credit markets are (for once) leading the shift in protection
costs higher (even if VIX was also higher today)...
See Chart:
Despite the gains in stocks, bonds were also bid with
Treasury yields down 2-3bps (short-end underperformed)... Today's rally erases
yesterday's losses...
See Chart:
And the yield curve flattened to almost one-month lows...
See Chart:
UST 2S 10S Yield
spread
The B-Dollar trod water for a 4th day...
See Chart:
And finally, in case
you wondered when this malarkey would end, Morgan Stanley's Global Risk Demand
index soared to +2.3 - above 2.00 has historically been a significant turning
point for risk...
See Chart:
THIS WON'T END WELL..
….
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In 2020, increasing monetary and fiscal stimulus will be the equivalent of spraying gasoline on a fire to
extinguish it...
The problem is that these policies create
distortions that cannot be fixed with more of what
caused the distortions in the first place: more extreme monetary and fiscal stimulus.
Systemic distortions include:
A. Soaring
wealth-income inequality across the entire global economy.
See Chart:
Relentless 50 years decline in wages’ share of the ECON’
total income
https://www.zerohedge.com/s3/files/inline-images/wages-share-income7-19a%20%281%29.png?itok=hh-BEye8
B. Dependence on
asset bubbles to generate the "wealth effect" that encourages
spending by the top 5% who own two-thirds of the assets bubbling higher.
See Chart:
Relentless rise of financialization & soaring wealth vs.
Income Inequality
C. Dependence on asset bubbles to generate
capital gains and property tax revenues for state/local governments.
D. Loss of cost discipline: the solution across the entire
spectrum--government, corporate and household--is now to borrow more, not trim
costs via innovation or increases in productivity and efficiency.
E. Reliance on debt to fund spending leads to
rising defaults which will collapse the system. (Soaring auto-loan defaults are
the canary in the coal mine.)
F. Zero interest rates have generated over-capacity/over-production as
everyone seeks a return on capital by expanding market share. Now there are
global gluts in everything from autos to natural gas to electronics.
G. With the yield on savings now less than zero
due to inflation, investors must gamble in the asset-bubble casino as this is
only available way to earn a return.
H. Buffers are thinning. I've discussed this in depth over the years;
dependence on stimulus lowers systemic resilience, rendering the entire system
increasingly vulnerable to a phase-shift that fatally destabilizes the system.
I. Prior to the 2008-2019 era, the "real
economy" of sales, wages and profits led the stock market. Now the stock
market dominates the real economy, as the central banks have turned the stock
market into the 'signaling device' that all is well and the source of bringing
demand forward (i.e. the wealth effect).
In Mohammed El-Erian's words: "The Fed
can't pull back because it's worried it will disrupt markets that can be a
spillover on the economy. The Fed's in a lose, lose, lose situation, they can't
stay where they are, they can't do more, they can't do less."
In Andy Xie's words: "The Fed has gone
from the financial bubble's hostage to its guardian."
J. There are limits on encouraging more borrowing by lowering interest
rates to zero. Even at zero interest rates, income must
be devoted to paying principal. At some point, all available income is already
consumed in debt service. Anecdotally, we're already there: zombie corporations
(that only survive by increasing their debt loads) are becoming more numerous,
and households burdened with student loans, auto loans, credit cards and
mortgages cannot afford more debt even at zero interest.
Policy makers are now trapped. Unable
to reverse the policies that have created the distortions lest that crash the
system, they only have two
responses, neither of which actually address the distortions undermining the
system:
1) push extremely distorting policies to new
extremes, or
2) attempt policy-tweaks--higher taxes on the wealthy, etc.--that ignore the causes of the distortions. These policy tweaks are the classic
"band-aids treating cancer."
In 2020, increasing monetary and
fiscal stimulus will be the equivalent of spraying gasoline on a fire to
extinguish it. These two charts
summarize the disastrous consequences of permanent monetary stimulus: wages' share
of the economy are in relentless decline, while the equally relentless rise of
financialization has generated soaring wealth / income inequality that
increasingly threatens to rip our society and economy to shreds.
….
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Good economic
news over the last couple months belies the fact that a recession could strike as soon as March 2020...
See Chart:
Citigroup U.S. Surprise Index: 4 month span, data through
01/10/2020
Placing the recession
See
Chart:
There are a few conclusions to this.
- First, five recession indicators have signaled.
- Second, there is nothing unusual in the timing that the recession hasn’t started yet.
- Third, no matter which of the five indicators you use, a recession will likely begin in 2020 and the average center-point of the indicators is in March, just a little over two months away.
Don’t confuse the Fed’s “on-hold”
stance to have any more meaning than
the hope that the consumer and labor market’s strength will
continue. History
suggests that this is not a good bet to make.
….
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RELATED:
The Fed once was an insurance vehicle
for the economy. No longer... Now that they see themselves as the permanent intervener in everything...
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More on
‘everything is awesome’:
After 5
straight down days, oil managed modest gains today but gave some of that back
after API reported a surprise
crude build and major product inventory increases...
WTI hovered
around $58.40 ahead of the data, and dropped ‘modestly’
on the surprise build...
See Chart:
"Unfortunately for the bulls, the
fundamental outlook over the first half of this year is not overly constructive. The market is set to see a
sizable surplus, which should mean weakness for both
the flat price and time spreads," said
Warren Patterson, head of commodities strategy at ING, in a note.
….
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US DOMESTIC POLITICS
Seudo democ
duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio
"The
system cannot work without leverage, but a system with too much leverage is
unstable."
….
Is this another Trump bla-bla?
====
Trump’ tyranny
has not limits: after peeing FBI ask them not flush toilet
"A 5 and a 7? You can absolutely get into that."
….
Does
it apply to the Commander in chief of Imperial terrorism?
====
Is this Trump directly targeting Mike Bloomberg's golden
goose?
See Graph:
Lockup How one Fed Agency & the Labor Dept releases ECON reports
….
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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
And a
separate attack against police in northern Iraq suggests [our] ISIS is popping up
again...
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The two were at an ancient
site connected with Paul's conversion when Assad offered: "IF TRUMP ARRIVES ALONG THIS
ROAD, HE WILL BECOME A GOOD MAN."
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Is
Schizophrenia contagious? Or is this another
theatrical bla-bla?
As most
experts laugh it off, Goldman sees a way for China to boost imports from the US
by $200 billion.
….
Yesterday : RU-Chi are our enemies.
Today this. What about Tomorrow?
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"There is a reason Stalin had Gulags"
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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
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ALAI NET ORG
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RT EN ESPAÑOL
Trump
contra Apple: "Siempre los ayudamos y hoy nos niegan acceso a los móviles
de asesinos y narcos" Que lo pida un Juez, no un asesino. https://actualidad.rt.com/actualidad/339920-trump-arremeter-apple-negar-acceso-moviles-asesinos-narcos
Trump:
"Dejé tropas en Siria para controlar el petróleo, y debíamos haberlo hecho
en Irak también" https://actualidad.rt.com/actualidad/339929-trump-dejar-tropas-siria-controlar-petroleo-irak Ahora les toca salir como perros con la cola entre las piernas
Atacan
con misiles la base militar de Taji, que alberga tropas USA. https://actualidad.rt.com/actualidad/339894-reportan-misil-caer-base-militar-irak-taji-eeuu
Sistema
de defensa antiaérea siria repele ataque de ISR en la provincia de Homs https://actualidad.rt.com/actualidad/339908-reportar-sistema-defensa-antiaerea-siria
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INFORMATION CLEARING HOUSE
Deep on the US
political crisis: neofascism & internal conflicts that favor WW3
-WikiLeaks: ‘A Political Meltdown for US
Foreign Policy’ By Elizabeth
Vos
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COUNTER PUNCH
Analysis on US
Politics & Geopolitics
John Feffer The
40 Year Cold War With Iran
Ron Jacobs Iranian
Opposition—1970s to 2020
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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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ASIAN NEWS
Press TV
- EU3 triggers dispute mechanism with Iran in blow to nuclear deal
- Rouhani: Regional nations must not rest until US troops go home
- Demonstrators in London demand Julian Assange release
- ‘Rockets target US airbase north of Baghdad’
- ‘Iraqis must put up resistance if US forces refuse to withdraw’
- McConnell announces impeachment trial to start Tuesday
- Iran FM to EU3 countries: Stop bowing to US diktat
- NGOs boycott pre-G20 meetings in Saudi Arabia over rights abuses
- President Rouhani wants special court to try plane tragedy cases
- Iran’s Judiciary: Arrests made over downing of Ukraine jetliner
- US House threatens to subpoena Pompeo on Iran
- US court rejects bid to seize $1.7 billion of Iranian assets
- Turkey to ‘teach a lesson’ to Libyan rebel commander if anti-govt
- China defends Iran trade as US cranks up pressure
- US constantly lies in attempt to justify assassination of Lt. Gen. Soleimani Case in point below:
- Trump tweets in Farsi to support the 'brave Iranian terrorist nation'!
- US House threatens to subpoena Pompeo on Irann
- Bolivia authorities dismantle Evo Morales statue
- Negotiations on Libya in Moscow ended without results
- Demonstrators in London demand Julian Assange release
- Negotiations on Libya in Moscow ended without results
- PROGRAMS
- Iran nuclear deal
- UK US military breakup
- The final JCPOA backstep
- US presence in Iraq
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