JUN 18 ND SIT EC y POL
ND denounce Global-neoliberal
debacle y propone State-Social + Capit-compet in Eco
California just made wearing a mask while in public legally
mandatory...
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ZERO HEDGE ECONOMICS
Neoliberal globalization is
over. Financiers know it, they documented with graphics
This was not only the first shrinkage
in the Fed's balance sheet since the week ended February 26, but also the
biggest drop since May of 2009.
After three months of record gains, which saw an increase of
$3 trillion to $7.2 trillion, the Fed's balance sheet
has finally posted its first weekly decline since the start of the corona
crisis according to the latest H.4.1
statement.
SEE CHART
Fed Balance Sheet
This was not only the first shrinkage in the Fed's balance
sheet since the week ended February 26, but also the biggest drop since May of
2009.
SEE CHART:
The drop, however, was not due to a reversal or even slowdown
in QE which continues almost every single day, with the
Fed adding over $100 billion in Treasurys and MBS, but due to an $88 billion
decline in outstanding repos to $79 billion for the week ended Jun 17, 2020, as
well as a $92 billion decline in liquidity swaps to $352 billion.
SEE TABLE:
With the S&P500 closely tracking
the Fed's balance sheet in the past three months, which has served as the
primary factor behind the rebound in the market, the latest weekly drop
coincides with the period of heightened volatility in the past two weeks.
SEE CHART:
S&P 500 VS FED
Balance Sheet
The shrinkage comes at a time when
the Fed's monthly liquidity injection has been tapered to approximately $120
billion, which suggests that while the balance sheet is likely to resume
growing in the next week, it will be at a more gradual pace.
SEE CHART:
It also means that for the stock
market to surge from this point on, Powell will need to find another
justification to expand the Fed's QE aggressively.
Finally, those keeping track of how much corporate bonds the
Fed has bought, the latest total for the Fed's Corporate Credit Facilities LLC
which includes purchases of both ETFs and corporate bonds, the Fed disclosed that as of June 17, there was $6.6
billion in book value of holdings (the Fed does not break out how many actual
bonds it has bought vs ETFs).
SEE TABLE
Having started corporate bond ETF
purchases on May 12, this means that the Fed has
bought on average roughly $1.1 billion per week, a pace which has been more
than sufficient to result in record fund inflows into various investment grade
and junk bond ETFs.
….
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If
"Leading Indicators" lead, then the stock market has a problem...
See Chart:
But stocks barely budged
(lifted a little late on after Trump said talking with Dems about extending
PPP)... Nasdaq outperformed (up 5 days in a row), Dow lagged with S&P and
Small Caps scrambling to hold unchanged...
As
stocks saw one of their quietest days of the year (range-wise)...
See Chart:
"Most
Shorted" Stocks drifted lower today but again a narrow range...
See Chart:
The Virus Fear trade dropped
notable (less fear) at the open but rallied (more fear) into the close...
But
while stocks were quiet, the B-dollar Index jumped (cable weakness), this was
its 2nd biggest daily jump in over 2 months...
See Chart:
And
Treasuries were bid (with 10Y yields back below 70bps)...
See Chart:
HY
Bonds drifted lower once again...
See Chart:
WTI
rallied up to $39 today...
See Chart:
Finally,
the decoupling between the market and the economy has
never been wider...
See Chart:
As Bloomberg notes, earnings
dropped in the first quarter by 16%, the biggest decline since 2008, and are
poised to fall again in the second
quarter because of business disruptions tied to the coronavirus. Yet the S&P 500 has recovered most of its
34% plunge after setting a record in February.
….
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Here the analysis on US Econ is OK
but his anti-China view I don’t like it. He wanted a separate economy in
Hong Kong with USD and that project was defeated by Yuan Eco
"Markets
driven by euphoria never end well.
The US stock market today is in
la-la land..."
The chart below is a
great illustration of how insanely disconnected equity
prices are from their underlying fundamentals. S&P 500 profit margin
estimates are plunging! “Buy the dip” investors are not paying attention and have
simply been too eager to call the bottom.
SEE CHART:
US Imbalances
Aggregate enterprise
value to EBITDA for the S&P 500 has never been higher. The set-up reminds
us of early February when stocks were also grossly misaligned with economic
reality. We think we are about to see another reckoning
moment which will mark the second leg of the bear market.
SEE CHART:
Markets driven by euphoria never end well. The US stock market today is
in la-la land. It
is discounting a new expansion phase of the economy at the same time as a major
recession has only just begun.
Money Printing
vs. Economic Activity
Money
printing does not fix the economy.
It is visually astonishing how divergent the Fed’s balance sheet assets and the
Weekly Economic Index (WEI) has been. Developed by the Federal
Reserve of New York, WEI measures activity by combining a series of other
baseline indices such as same-store retail sales, consumer sentiment, initial
jobless claims, temporary and contract employment, steel production, fuel
sales, and even electricity consumption. The chart below shows clearly
that this index hasn’t experienced any level of
improvement since the March lows, a drastic comparison to the recent vertical
growth in Fed’s assets.
SEE CHART:
We are also seeing a
significant liquidity withdrawal due to the historic debt imbalance today. The
Fed’s weekly monetary stimulus has not only been drastically reduced but is
also being dwarfed by the amount of government debt growth. We just had the
largest monthly net issuance of Treasuries in history, $760B in May alone. This number surpassed the Fed’s quantitative easing by over
$300B! It is the largest net decline in Fed assets vs. government debt since
the repo crisis started back in September of 2019. The government debt is more
than crowding out all the new liquidity.
SEE CHART:
Fed
Stimulus vs. Government borrowing
In our view, the Fed
is incapable of injecting enough liquidity to quell the losses in asset values
associated with what was $250 trillion in global debt at a record three times
global GDP before the Covid-19 crisis even began without also triggering a fiat
money crisis. This is what we call a liquidity trap.
Another part of the
market and economy that looks particularly fragile is
SMALL CAP STOCKS. These stocks have never
been so indebted relative to EBITDA. In terms of valuation, the Russell 2000 stocks
now trade at a historic 15x EV to 2020 EBITDA estimates! There is a stunning
and totally unwarranted level of optimism still priced into the markets today.
SEE CHART:
Us Small
CAP Stocks
US labor markets
unexpectedly improved last month but were not enough to support the bullish
narrative of late. To put things into perspective, since the market peak we saw
nonfarm payrolls drop by close to 22 million employees. May’s positive number,
the best monthly change ever, was an improvement of close to 3 million
payrolls, but even the Department of Labor questioned the validity of these
numbers. The DOL said it believed the unemployment rate
was understated in both April and May while May indeed did register
improvement. In any case, we would need 7 months like the prior to regain the
same level of strength in labor markets prior to the virus outbreak. The timid
“V” shape recovery looks nothing like a “rocket ship” as Trump referred to in
one of his recent tweets.
SEE CHART:
US
Employees on Non-Farm payrolls
The current monetary stimulus is severely amplifying the wealth gap
problem in the US. When inverted, the Fed’s balance sheet asset
has followed the share of total assets held by the bottom 50% remarkably close.
Logically, this relationship makes sense. As
shown in the chart below, since QE 1 started, the less
financially privileged parts of the society have suffered from a shrinkage of
wealth relative to the overall pie. If the economy continues to prove uncapable
of growing organically, further monetary stimulus will be necessary and
therefore only exacerbating the inequality problem.
SEE Chart:
Fed Assets
(inverted) vs. The Bottom 50%
Crescat’s New Precious Metals Activist Campaign
with Quinton Hennigh as Advisor
We are encouraged
that small cap precious metals miners have recently started to outperform big
caps. The junior-to-senior ratio is exactly where it was ahead of the 2016 gold
rally. If you recall, back then, after 6 months: the
GDX ETF (seniors focused) went up 87% while the GDXJ ETF (juniors focused) was
up 137%!
SEE CHART:
Precious
Metals Juniors vs. Seniors
Crescat’s Precious
Metals SMA strategy with its overweighting in more of the smaller cap names,
including many of Quinton’s favorites, handily outperformed its benchmark in
May rising 18.2% for the month versus 5.7% for the Philadelphia Stock Exchange
Gold & Silver Index.
CHINA
In our analysis, the
Chinese Communist Party is running a $42 trillion banking Ponzi scheme that is
ripe to implode in a currency crisis. The US and other highly leveraged
democratic developed economies are in bad shape economically today, no doubt,
but its peoples need not fall into a Thucydides’ trap, i.e., to be unduly
threatened by a perceived rising power.
Hong Kong sits on
one of the most overvalued property markets in the world that has just started
to burst. For instance, Hong Kong office properties are
now plunging by 24% YoY, the worst decline since I the Global Financial Crisis.
One major difference, however, is that Hong Kong’s under-reserved massive $3.3
trillion banking system was not 9 times the size of its economy back then.
SEE CHART:
Hong Kong
Office Properties
Hong Kong maintains
sufficient foreign reserves to maintain the value of its currency. We believe the reserves supporting both the yuan and Hong
Kong dollar are encumbered. Necessarily, these reserves are the
collateral in the global interbank FX markets that have been posted in defense
of these currencies against years of Chinese capital outflow pressure. We believe China and Hong Kong are not netting the collateral
posted for their short FX positions from their FX reserves. A currency crisis
is potentially just a margin call away.
SEE CHART:
Hong Kong
Banks (collapsing)
With the Covid-19 shutdowns, we just experienced an economic shock
likely worse than any single quarter of the Great Depression. It was made worse
by the pre-existing imbalances that were threatening to send the economy into a
recession of their own accord as had been forewarned by Crescat’s macro model.
Persistent, bi-partisan abuse of Keynesian policies has been a poor
substitute for free market capitalism. The lesson is clear. Excessive and
ongoing government intervention only creates mounting non-productive debt that
stifles future real economic growth. Credit imbalances
in the world today are at a historic high relative to global GDP.
….
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US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
"This is only half of the line
of people waiting to have unemployment claims resolved..."
As the US labor market recovery
stalls, the second wave of layoffs is underway. The overhyped nonfarm payrolls
"recovery" and bounce in retail sales (ignoring the lack of 'V'
in industrial production), was reversed on Thursday morning when 1.508
million more Americans filed for unemployment benefits.
With plunging demand and fractured supply chains -
companies are not highering at the pace that would support President Trump's and Wall Street's claims of a V-shaped
"rocket ship" recovery in economic growth and employment. Leading
indicators are showing the economy barely
bounced after the most significant crash in six decades.
SEE CHART
Unemployment in the US
Any green shoots observed in the
last month will be stifled by stubbornly high joblessness through the
summer, resulting in slower recovery and the shape of the recovery
resembling a "U" or "L."
So far, about 29 million people
are collecting unemployment insurance, while millions of others have yet
to receive any checks.
The cost of late unemployment benefits will not just
damage the labor force and recovery - but has already resulted in thousands of
people swarming a government building in at least one state - pleading for
help as the economic depression crushes their household finances.
This is not a Trump rally at the
Kentucky Capitol in Frankfort on Wednesday - but a massive unemployment
line, filled with people who have filed but are unable to get their
unemployment insurance checks.
….
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The Trump administration failed to
adequately
justify terminating the program...
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The Presidential Candidate & 12-Term Congressman
is Back
Dr. Ron Paul’s
Urgent Message for Every American
Urgent Message for Every American
Most
Americans will be blindsided by what’s about to happen… But not those who learn
the critical steps necessary to protect yourself and your family from what’s
coming next.
LISTEN VIDEO
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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
...border disputes existed since 1947...worth understanding the importance of Tibet -
the major source of waters for
China, India, Pakistan, Nepal, Myanmar, Laos, Thailand, Cambodia, and Vietnam.
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There is a one-in-three chance that
at least one of four major tail risks will occur within the next decade: a
major influenza pandemic killing more than 2 million people; a globally
catastrophic volcanic eruption; a major solar flare; or a global war.
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Iran is one of the most systemically anti- racist countries on
the planet...
….
Red message hast to
be fit with title, unless it is Irony, otherwise I will make the correction.
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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
ALI NET ORG
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INFORMATION
CLEARING HOUSE
Deep on the US political
crisis: neofascism & internal conflicts that favor WW3
-The Global Reset – Unplugged By Peter Koenig
-Churchill, Columbus and Leopold Fall Down By Margaret Kimberley
-John Bolton: The Scandal of Trump’s China
Policy By John Bolton
-Get Rid of the Presidency By Matthew Stevenson
-Speaking of Freedom By Tom Feeley
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VOLTAIRE
NET ORG https://www.voltairenet.org/en
News in Brief
Turkey
has imposed its currency, the Turkish lira, in the areas it occupies in
northern Syria.
The
governorate of Idleb, controlled by Al-Qaeda [1],
became in effect an extension of Turkey
mirroring the way in which the Turkish Republic of Northern Cyprus on the
island of Cyprus was taken over by Turkey in 1974 during Operation Attila.
The
annexation of Idlib is concomitant with the implementation of the siege of
Syria by the West (Cesar Act) [2],
the coordinated burning of Syrian fields by US forces and jihadist
groups [3],
and the announcement of Iran’s turnabout to align with Turkey in Libya [4].
Such a
move corresponds to the “National Oath” [5],
written by Mustapha Kemal Atatürk, against the Peace
Treaties of the First World War. Plans to annex other Iraqi, Syrian and
even Greek regions are also highlighted in the document.
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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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