JUN 29 20 ND SIT EC y POL
ND denounce Global-neoliberal
debacle y propone State-Social + Capit-compet in Eco
It's the latest, and most
sweeping, rollback yet...
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ZERO HEDGE ECONOMICS
Neoliberal globalization is
over. Financiers know it, they documented with graphics
After July
31 the US economy is set to fly off a
fiscal cliff that could be just as painful as what happened in late March/April
unless there is a bipartisan agreement in Congress on trillions more in fiscal
stimulus. The clock is now
ticking.
by Tyler Durden
One look at the latest economic data, conveniently summarized
by the exploding Citi US econ surprise index, should be
sufficient to convince most that the US is well and truly following a V-shaped
recovery path.
See Chart:
Bank of America writes, the economy is facing fiscal cliffs
which could cause the recovery to disintegrate, with four particular areas of
focus:
1.
expiration of extended
unemployment insurance,
2.
the fading support from
stimulus checks,
3.
exhaustion of PPP
4.
stress from state and
local aid gov'ts.
In response, BofA expects another stimulus bill to be passed
in late July to address some - but not all - of these concerns, and
"instead of a cliff, we will likely be facing a hill." That may be
optimistic, because any stimulus would need to be bipartisan, and if the
Democrats wish to crush Trump's re-election chances, now is the time for them
to push the economy into a depression with elections in just 4 months.
Fiscal:
look out below
In the face of the shock from the COVID-19 pandemic, fiscal
stimulus has poured into the economy. Washington has pushed in roughly $2.8tr of stimulus, equaling 13% of GDP
while the Fed has expanded its balance sheet to $7.1tr.
Washington has pushed
in roughly $2.8tr of stimulus, equaling 13% of GDP while the Fed has expanded
its balance sheet to $7.1tr.
- Unemployment insurance (UI): the incremental $600/week is set to expire on July 31st. To put some numbers around this, at the current level of nearly 20 million people receiving unemployment insurance this would equate to a reduction in personal income of $48bn ($576bn annualized) or 2.7% of GDP.
- Stimulus checks are no longer rolling in: the majority of the tax rebates / checks were distributed in mid/late April. To date, around $270bn of the $290bn has been pumped in. We find that consumers quickly spent the additional cash which means a diminishing support to spending.
- Payroll Protection Program (PPP): of the $670bn allocated to the PPP, around 77% has been approved.
- State & local aid: the CARES Act allocated $150bn to state & local governments to be used for unexpected coronavirus-related costs. But this did not address the revenue shock state and local governments have experienced.
Quantifying the
impact
In Table 1, BofA groups the stimulus
programs to date into major sectors. About 23% of the funds have been directed
toward households to offset the significant strain on household incomes from
massive job cuts. Moreover, if you include the required wage portion of the PPP
loans, the household share of stimulus is over 40% of funds.
The good news is that these measures have worked. Personal income jumped 10.5% mom SA in April. An $879bn
annualized decline in compensation was offset by a $2,999bn increase in
transfer payments, of which $361bn was from unemployment insurance. Given
that PPP was first getting underway in April BofA assumes it had little/no
impact on labor income in April. If one nets out the
boost from stimulus checks and unemployment insurance, personal income would
have declined by 5.6% mom SA in April vs. the 10.5% reported increase.
The good news is that these measures have worked. Personal income jumped 10.5%
mom SA in April. An $879bn annualized decline in compensation was offset by a
$2,999bn increase in transfer payments, of which $361bn was from unemployment
insurance. Given that PPP was first getting underway in April BofA assumes it
had little/no impact on labor income in April. If one nets out the boost
from stimulus checks and unemployment insurance, personal income would have
declined by 5.6% mom SA in April vs. the 10.5% reported increase.
SEE CHARTS:
Given that the
majority of those on unemployment insurance earned more
from benefits than when they were working, the move back to employed will
actually be a net negative for overall income. Indeed a
recent paper (Ganong et al. 2020) found that roughly two-thirds of UI recipients are earning
more than their lost wages.
The big question is
what happens in August?
Assuming
it is 16mn, the loss of the $600/week benefit would translate into roughly a
$36bn drop in income in August, or a 2.3% mom decline.
From income to
spending
A paper
from the Chicago Fed (Karger et al. 2020) found that in the two weeks after
households received their stimulus check, they spent roughly 48% of it. Then spending fell back to normal levels.
The state and local
stress
In addition to the impending
"cliff" for household income, many state and local governments are
facing a concerning revenue outlook as they move closer to the start of FY
2021. According to CBPP (Center on Budget and Policy Priorities),
initial estimates of the revenue impact from the
COVID-shock indicate that state revenue
could drop in FY 2021 by more than it did during the Great Recession.
Congress to take
action in late July/early August
A
middle ground may be a smaller dollar amount (perhaps $250-300/ week) with
back-to-work bonuses that will create an incentive to return to the workforce.
In summary, after July 31 the
US economy is set to fly off a fiscal cliff that could be just as painful as
what happened in late March/April unless there is a bipartisan agreement in
Congress on trillions more in fiscal stimulus. The
clock is now ticking.
…..
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"a
full recovery is unlikely until
people are confident that it is safe to reengage in a broad range
of activities."
====
Stocks
up, Bonds up, Dollar up, Gold up, Bitcoin up... COVID-cases Up...
Kudlow excited everyone at the
close with "v-shaped recovery" comments but
the Dow did well thanks to BA and AAPL (+200 points between them)...
See Chart:
Small
Caps were ramped above Friday highs to the edge of the cliff on Thursday before
fading...
See Chart:
But the
entire stock market move was ignored by bonds...
See Chart:
FANG
stocks opened down notably (FB under pressure), but dip-buyers stepped in
quickly...
See Chart:
Despite
the yield curve steepening, financials underperformed the market today...
See Chart:
The
B-dollar managed another modest gain erasing almost all the losses for June...
See Chart:
Commodities
were all higher with oil best despite the dollar gains...
See Chart:
And
ETFs backed by gold haven’t seen a surge in demand like this
quarter’s since the world was reeling from the financial crisis.
See Chart:
Finally, we note Nomura's Charlie McElligott's warnings over the
'excitement' at recent "positive" revisions in earnings sentiment.
See Chart:
Recall that perversely,
“NEGATIVE revisions” in earnings are a bullish signal for forward returns
(+2.3% in SPX with 72% hit-rate over 6w of earnings season), while “POSITIVE
revisions” are actually a local “negative” signal for Equities over the
same “6w of earnings” window (-0.1% SPX with just a 47% “higher” hit-rate).
….
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US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
Our life & US future is at
stake, so we must participate. Avoid dangerous murders in Pol
Curiosity is
natural but it can also be dangerous...
…..
By ‘curiosity’ rebels must study the criminals dressed as policeman..which
station they come from.. the legal process on them & its conversion to
Communal Police require such INFO. But don’t
confront them, never ever, do what Juan Santos recommended in Peru.. We
need their arms & perhaps their uniforms too and their building too. . Take
their horses (now their cars) . We don’t need them, but
we need what they have. It happens in Peru with the Spanish soldiers
that come to take our gold. When the liberator army of Bolivar come from the
north to help the Quechuas resistance, the Spanish were already decimated an
even their Arabian commanders send from Spain changed position, they became pro liberation. So we stole their
commanders & they couldn’t steal our Gold. Spain send more soldiers and the Quechuas defeated them in
Ayacuho (1824). The strategy of Juan Santos worked, the center of Spain
colonialism in South America was destroyed, his army was defeated . Juan Santos
changed his name and disappear (according to one ‘cronista’ rebelde) but his intelligence
and courage remains in our mind. Why he
change his name? He was expected more
armies to rescue their colonies . Juan
Santos Atahualpa was their target, but the Spaniers never came back.
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Common decency doesn’t exist in any member of
the current system of power
...by allying with this swamp creature,
progressives, liberals and anti-imperalists are strengthening the very people who are the architects of the empire you
believe you are fighting against.
….
Besides
incurring in Ad Hominem Fallacy (the personal
attack on Bolton) the main issue ‘WW3’ was left untouched. Both Bolton & Trump were involved on this
issue. The Fact is that PENTA and NATO designed the attack to China-RU with 48
thousand troops + nuke missile, this project failed & not because of the
pandemia nor the personal agreement-disagreement between Trump-Bolton . The
cause-effect determinism on war at that level
need to be correlated with non-deterministic factors that cause main
actors (beyond Trump-Bolton) to cancelled the project. This is the analysis we need now, not stupid
moralism.
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NEARLY
40% OF VOTERS THINK BIDEN HAS DEMENTIA He is improving. Drs said
55%
No wonder #BarelyThereBiden has been trending...
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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
This is that Trump wants:
INDIA
DEPLOYS 'QUICK REACTION' ANTI-AIR MISSILES TO BORDER WHILE CHINA WARNS OF
"PROLONGED STANDOFF"
India moves its 'Akash' systems along
border to
prevent any misadventure by the Chinese Air Force fighter jets ...
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This is that Trump didn’t want:
Since
China is now the world’s largest
importer of oil it only makes sense they would flip the switch and act as price makers
rather than be price takers...
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This is what xenophobic USAnos
like to read:
“While
work restart levels are high, the
recovery of demand has been slow, weighing on the pace of improvement in
industrial production,”
In a sign that
China's massive stimulus injections as the nation reopens are working,
tonight's PMIs both rose from May and beat expectations.
·
The
government's official Manufacturing PMI rose from 50.6 to 50.9 (beating
expectations of 50.5)
·
The
government's official Services PMI rose from 53.6 to 54.4 (beating expectations
of 53.6)
SEE CHART:
However, as Bloomberg report, while parts of the
economy have recovered from the virus shutdowns, there’s an apparent divergence between demand and
supply - factories and companies have
returned and output is growing again, but exports and
domestic retail sales are shrinking (and
manufacturing employment fell back into contraction at 49.1).
SEE CHART:
“While work restart levels are high, the recovery of demand has been
slow, weighing on the pace of improvement in industrial production,” Lu Zhengwei, chief economist
at Industrial Bank Co in Shanghai, wrote in a report this week.
Additionally, a separate PMI indicator that gauges
China’s high-tech industries slowed significantly this month. The Emerging Industries Purchasing
Managers’ index fell to 51.4 this month from 55.9 in May,according to the bank, citing a research firm connected to
the Federation of Logistics & Purchasing that compiled the data.
SEE CHART:
BUT.. “The new export orders sub-index remained low at 32.6 in
June, unchanged from May and April, suggesting sustained headwinds from overseas markets,” Nomura
economists led by Lu Ting wrote in a report.
The surge in exports
of coronavirus-related medical supplies is largely due to price rises, which is
“likely unsustainable,” they wrote.
“We
expect a bumpy recovery path filled with uncertainty, as China is caught
between domestic policy stimulus, remaining social distancing rules and
slumping external demand,” according
to the report.
One possible caveat
for the lack of momentum is that severe flooding in southern China may also have slowed the pace of
production in some areas, and a
recent flare-up of the coronavirus has also hit confidence.
….
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"We environmentalists have misled the public."
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SPUTNIK
and RT SHOWS
GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars
& danger of WW3
- Russian
Academics to Launch Projects Studying Epidemic Patterns and Psychology Due to
COVID Crisis
- Two
Terrorists Killed as India and Pakistan Exchange Gunfire in Major Skirmish on
Border in Kashmir
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THE
REST FOR TOMORROW
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