APR 26 20 ND 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
"Sharp declines in market breadth in the past have often
signaled large market drawdowns. Eventually narrow market breadth is always
resolved the same way..."
The 65% of US companies that have
reported beat estimates (vs 50% in Europe and Japan),
this represents the worst margin in a decade.
See Chart:
Meanwhile,
those hoping for some guidance will have to keep waiting as visibility from the
C-suite is so poor that almost 90%
of reporting companies have withdrawn guidance.
Worse, the actual numbers for
Q1 which caught the tail end of March as much of corporate
America shut down, are coming in horrendous with US EPS of -24% yoy is coming in some 9%
lower than consensus expectations, which raises questions about whether a
prevailing view for rapid earnings recovery in H2 are too optimistic, as
JPM cautions.
On a rolling four-quarter basis, the consensus has S&P
earnings surpassing pre-crisis levels by Q4 2020, which would be tough to reconcile with the JPM
Economics view that GDP will not return to pre-crisis levels until after
2021,even though
JPM's Marko Kolanovic now
expects new S&P500 all time highs in the first half of 2021 (using
a rather ornate DCF of the entire S&P500 to justify his view).
Which in turn brings us to something
we showed
two weeks ago when we noted that the "the S&P is now just a
handful of mega stocks, because as the chart below
shows the largest 5 stocks in
S&P500 now account for 22% of market cap, even higher than during the dot
com bubble."
See Chart:
According to the Goldman strategist David
Kostin , "the
gap between the three month returns of the S&P 500 stock one standard
deviation above the average vs. one standard deviation below the average has
registered 40%,nearly twice the 10-year average of 23%."
See Chart:
Growth vs. Value
To validate this observation, Kostin
notes that Goldman's Strong Balance Sheet basket has
returned -5% YTD while the Weak Balance Sheet basket has returned -27%.
More confounding for so-called
"stock pickers" is that not only did return
dispersion rise during the market sell-off, but it has also increased during
the market rebound. AS a result, many stocks that outperformed during the
market sell-off have continued to outperform even with the S&P 500
retracing half of its drawdown, and nowhere is this more obvious than in the
steamrolling of value stocks by "growth" names...
See Chart:
... and also
of LARGE-CAPS OVER SMALL-CAPS...
See Chart:
Which brings us to what is the one
concern more often cited among Goldman clients. According to Kostin, the persistent outperformance of a
handful of mega-cap stocks has supported the level of the S&P 500 index but
raised investor concerns about narrow market breadth.
As Kostin puts it, "many market participants
– ourselves included – have expressed incredulity at
the fact that the S&P 500 trades just 17% below its all-time high amid the
largest economic shock in nearly a century."
However, below
the surface of the market, the
median S&P 500 constituent trades 28% below its record high. This
11percentage point gap is one measure of market breadth...
See Chart:
.. which now
stands roughly a standard deviation below its historical average.
See Chart:
Market Breadth
Going back to our thesis
that "The
Market Is Now Just 5 Stocks", Kostin next notes that because many of
the recent outperformers had also been market leaders prior to the
coronacrisis, their recent gains have led to a surge in ALREADY- ELEVATED MARKET CONCENTRATION.
While coming into 2020, the five largest S&P 500
stocks accounted for 18% of index market cap, matching the share at the peak of
the Tech Bubble in March 2000, since then, those stocks
(MSFT, AAPL, AMZN, GOOGL, FB) have risen to account for 20% OF MARKET
CAP, representing the highest concentration on record.
See Chart:
The Concentration of Market
CAP
Which brings us to Goldman's ominous warning #1: "We opined in January that the earnings power and
valuations of the top five stocks suggested they could avoid the fate of the
top stocks in 2000. However, the further market concentration rises, the harder it will be for the
S&P 500 index to keep rising without more broad-based participation."
In other words, if the dispersion continues to
soar, and if the entire upside in the S&P500 is thanks to just five
stocks, not even Goldman
can see a happy ending.
If that wasn't enough, Goldman also
has an ominous warning #2, in addition to the Tech Bubble,
breadth narrowed ahead of the recessions in 1990 and 2008 and the economic
slowdowns of 2011 and 2016.
That said, Goldman refuses to put a
timeline to its dour outlook, and notes that periods of
narrow market breadth can last for extended periods. Since 1980, the breadth measure charted in
Exhibit 2 has indicated 14 episodes of breadth narrowing more than one standard
deviation, as it does today.
The median episode persisted for three months, with the
longest lasting 27 months from 1998-2000.
However, eventually, "narrow market breadth is always resolved the same way.
Often, narrow rallies lead to large drawdowns as the handful of market leaders
ultimately fail to generate enough fundamental earnings strength to justify
elevated valuations and investor crowding.
In these cases, the market
leaders “catch down” to weaker peers." This is the scenario laid out by NOMURA last week
in our post "Spectacular Momentum Crash" Imminent As Record Human Hedge Fund
Selling Meets Furious Robot CTAs Buying."
In other cases, an improving economic
outlook and strengthening investor sentiment help laggards “catch up” to the
market leaders, which
also results in a violent drawdown as the leaders get repriced sharply lower.
The bottom line, however, is that in
both cases, "on a relative basis the outperformance of market leaders
eventually gives way to underperformance."
What does this mean in practical
terms? In short, while it may not necessarily be "spectacular", Goldman agrees with Nomura that a momentum crash is dead ahead.
Finally, Goldman has a word of hope for all those who have been crushed by the growth-over-value
and large-over-small cap steamrolling:
First, small-caps
and laggards have outperformed coming out of every bear market and major market
correction during the last 40 year. Furthermore,
"in the past, wide valuation dispersion has been a strong signal for value
stock outperformance over 2- and 3-year horizons but has been a much weaker
indicator for short-term returns."
Now if only we had the same
level of comfort as Goldman, that we are coming out of a major market
correction instead of just enjoying a record bear market rally as shown in this
chart from Deutsche Bank...
See chart
Today compared with 1919 [ Currrent
debacle is gona be worse]
... before we enter the next
one.
….
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"No one is going to be able to dodge this bullet."
As the recent OPEC summit so vividly
demonstrated, the marginal price of oil is no longer
determined by supply or cuts thereof (such as the recently announced
agreement by OPEC+ for a 9.7mmb/d output cut), but
rather by demand, or the lack thereof, which according to some estimate
is as much as 36mmb/d lower, or roughly a third of the
global oil market every day, as billions of
people are stuck at home instead of driving, while major corporations mothball
production in a world where major economies have ground to a halt.
See Chart:
The economic impact of the
coronavirus has ripped through the oil industry in dramatic phases, Bloomberg's Javier Blas writes. First it destroyed demand as lockdowns shut factories
and kept drivers at home. Then storage
started filling up and traders resorted to
ocean-going tankers to store crude in the hope of better prices ahead.
See Chart:
Now shipping prices are
surging to stratospheric levels as the industry runs out of tankers, a sign of
just how distorted the market has become.
See Chart:
"We are moving into the
end-game," said Torbjorn
Tornqvist, head of commodity trading giant Gunvor Group. "Early-to-mid May could be the peak. We are weeks, not
months, away from it."
Yet
after the catastrophic price plunge on Monday, when West Texas Intermediate
fell to -$40 a barrel, it’s the U.S. shale patch that is leading
See Chart:
"Before the coronavirus crisis
hit, oil companies ran about 650 rigs in the US. By Friday, more than 40% of them had stopped
working, with only 378 left."
And while there is a delay between
total US oil production and the rig count, it is now
obvious that US production is set to collapse next:
See Chart:
Incidentally, Trafigura, one of the
largest exporters of US crude from the U.S. Gulf of Mexico, believes that output
in Texas, New Mexico, North Dakota and other states will now fall much faster
than expected as companies react to negative prices...
See Chart:
As Bloomberg's Blas points out, the
U.S. Coast Guard on Friday said there were so many tankers at anchor off
California that it was keeping an eye on the situation.
But if the two dozen or so tankers
piled up off the coast of California is bad...
... and those next to Galveston, TX is worse... ... what is going on in that tanker parking lot
off of Singapore is absolutely insane.
There is
some good news: oil traders say after plunging by a
third, US oil consumption has probably hit a bottom, and will start a very
gentle recovery, although that also depends on how fast the US economy can
reopen from the coronavirus coma.
See Chart:
And so, as the oil industry shuts down - at least for a few
weeks (or perhaps months) - more refinery shutdowns are
coming, oil traders and consultants said, particularly
in the U.S. where lockdowns started later than in Europe and demand is still
contracting.
Steve Sawyer, director of refining at Facts Global Energy,
said that global refineries could halt as much as 25%
of total capacity in May.
“NO
ONE IS GOING TO BE ABLE TO DODGE THIS BULLET.”
….
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RELATED 1:
"Absorbing a financial asset glut is
easy for a committed central bank. They credit a column, change a ledger, hit a
button, hire the Blackrock boys. Add a server, maybe two. That’s the Fed’s
storage cost.Which leaves the oil price as a rare indicator of what’s
real."
….
RELATED 2:
Governments and
central banks will bail out the entire malinvestment binge of the past
decade and, more importantly,incentivize even more overcapacitythrough
massive stimuli, liquidity injections, and negative rates...
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JPM has put together the three steps of an
"exit plan" building in stages of community transmission, imported
cases, and relaxing social distances.
See Chart:
More details
below:
OPEN:
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds &
corruption. Urge cambio
Depressions become a political event...
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Fundamentals, liquidity, and technicals...
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"Newport Beach appears to be pretty crowded..."
….
Si vamos a morir con CV que sea nadando en la hermosas
playa d CA
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For generations America has fattened up the very nations that would seek
to destroy us...
====
As a general rule, the earlier you recognize someone is trying to
kill you, the better off you’ll be...
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"Of course that jump in cases is Covid-19, because influenza is
on its way out this time of year..."
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It is insane to play with WW3. ICC
will condemn TRUMP for it. We will too!
AC-130 gunships and Apache attack helicopters increasingly
being deployed against small surface threats like Iranian speed boats...
====
Does Trump twit make miracles in time
of solidarity?
"This is ridiculous!"
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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
SAY IT, DON'T SPRAY IT...
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"I think there's a lot of incorrect and unfair things
said..."
====
The eurozone is a gigantic machine of monetary redistributio.
….
RELATED:
...the start to a flattening is especially visible in Germany...
See Chart:
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Stupid official –story tell
Open Borders and Free Trade induce
national suicide slowly and gradually,without
the victims waking up to what is going on until it is too late...
….
It is d lack of strong Health System + military-drills-contamin+ww3 fear
====
The March IG debt issuance total surpasses the prior record for the
busiest month by over $80 billion, and as companies flood the market with new
debt, they plant the seeds of their own over-levered demise.
See Chart:
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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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RT EN ESPAÑOL
Casa Blanca: Trump y Macron
convienen en la "necesidad de reformar la OMS" https://actualidad.rt.com/actualidad/351264-trump-macron-convenir-reformar-oms Uno que se va y el otro que
no sabe adonde va
ExMinist de Salud denuncian
a Bolsonaro ante la ONU por "potencial genocidio" https://actualidad.rt.com/actualidad/351231-denuncian-bolsonaro-onu-potencial-genocidio-pandemia-coronavirus
La petrolera USAna Diamond Offshore se declara en quiebra [pro-bailout] https://actualidad.rt.com/actualidad/351275-petrolera-estadounidense-diamond-offshore-declararse-quiebra
"Soy el presidente más
trabajador": No un miron de la Tele, diceTrump https://actualidad.rt.com/actualidad/351273-trump-arremete-reportes-horas-viendo-tele-no-manejar-covid19
El principal infectólogo del
US dijo le gustaría que Brad Pitt lo interpretara y el actor lo hizo https://actualidad.rt.com/viral/351262-brad-pitt-imitar-infectologo-fauci-eeuu-parodia-frases-trump-coronavirus
Qué es el 7mo dominio de la
guerra y por qué US quiere ser 1ro en aplicarlo? Qué es el séptimo dominio de la guerra y por
qué EE.UU. quiere ser pionero en aplicarlo?
El CV deja vía libre a las estafas bancarias y a la
ciber-delincuencia https://actualidad.rt.com/actualidad/351162-coronavirus-deja-via-libre-estafas-bancarias
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INFORMATION CLEARING HOUSE
Deep on the US political crisis:
neofascism & internal conflicts that favor WW3
-Capitalism: The Deadliest Pandemic By Paul Edwards
- Monitoring the Public After Coronavirus By Philip Giraldi
- The Digital Rev Is Inconsistent With Liberty
By Paul Craig Roberts
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COUNTER PUNCH
Analysis on US Politics &
Geopolitics
Vijay Prashad How
China and W H O Handled the Coronavirus
Henry Giroux et al Militarization
in a Time of Pandemic Crisis
Richard Moser the
General Strike and You
Eve Ottenberg The
World’s Most Unfair Health Care System
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GLOBAL RESEARCH
Geopolitics & Econ-Pol crisis that leads to more business-wars
from US-NATO allies
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