JUL 1 20 ND SIT EC-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
Nasdaq
soared to new record highs, Small Caps were dumped and the Dow unch...until the
last 10 minutes.
FANG stocks soared on this
first day of Q3
Bank
stocks underperformed despite a modest steepening of the yield curve...
See Chart:
Notable
reversal in value/momentum today...
See Chart:
Despite stocks gains, credit
ain't buying it...
Treasury
yields were marginally higher on the day (up around 2bps across the curve) but
on the week 2Y remins flat while the long-end is up 6bps...
The 10Y topped 70bps briefly
but did not hold it..
The
USDollar was lower today, extending yesterday's losses...
See Chart
Gold
was slammed lower on the vaccine news, running stops back below $1800...
WTI ended higher on the day,
after last night's API inventory draw but chopped around after the DOE
inventory data (but ended back below $40)...
Finally,
as we start H2 of 2020, the question is - will this divergence recouple? And if
so, will it be stocks or bonds that are sold?
See Chart:
Nasdaq vs. UST 10 Y Yield
….
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Here
the true: fake Economy with fake Americans: the speculators or billionaires.
... and only more QE can fix it.
Fed officials had "many questions" about the
benefits of yield-curve control when they discussed its pros and cons at the
latest Fed meeting, even as the Fed reiterated that it would keep rates at zero
and continue to buy bonds "for many years."
As the bank's quant Nick Panigirtzoglou writes in his latest
Flows and Liquidity report, looking ahead at the second
half, it is neither the second virus wave, nor the outcome of the president
election that is keeping him at night, but rather a policy mistake that "worries us the most", to wit:
The downside risks
to the equity and risky market outlook into the second half of the year. Of the three main risks mentioned by clients, a second virus
wave, a Democratic sweep in the US presidential election; and a policy mistake, it is the third one
that worries us the most.
As Panigirtzoglou explains, "the
risk of policy mistake is related to the idea that there is a need for
additional stimulus going forward and if policy makers fail to deliver it, they
would effectively slip behind the curve rather than staying ahead of the curve,
risking a negative market response."
In other words, having injected over $3 trillion in liquidity
in the past three months, JPM argues that this is nowhere near enough, and incidentally,
the House of Morgan is not alone: after all this is precisely the same argument
that Goldman made in mid-May when the bank "spotted
a huge problem for the Fed", namely that the Fed will need to monetize much more debt - about $1.6
trillion more - than it currently envisions in order to avoid a disorderly
surge in Treasury yields.
SEE TABLE:
Which brings us to the next question: "How should we monitor this
risk of policy mistake?"
In his answer, Panigirtzoglou writes that "the lesson from the past and in particular from the Fed's
policy mistake of 2018, is that rate markets are likely to be more sensitive
and more prompt in signalling any risk of policy mistake. The slope of the
yield curve is an important metric to watch in this respect to gauge whether
the risk of a policy mistake is re-emerging."
Here we take a slight detour to the first time the JPM quant
made a similar warning, which was back in early April 2018 (as extensively
discussed here), and around the time the Fed was overtightening and would
continue to hike rates into December of that year, sparking the first bear
market of the post-crisis era as markets turmoiled in response to the Fed,
which had repeated the error of 1937 and nearly tightened right into a
recession. While few warned this would happen at the time, Panigirtzoglou was
one of them, highlighting that the curve between
the 2-year and 3-year forward points of the 1-month OIS had inverted...
SEE CHART:
... with "such inversion
generally perceived as a bad omen for risky markets."
So if we fast forward to today, what
is the yield curve signaling at the moment?
There's some good and some bad news: while
the 10y UST-Fed funds yield curve slope remains firmly into positive territory
(Figure 1), this is not true with the slope at the front end of the US curve
(Figure 2), which to the JPM quant "is a better signal of policy
expectations" and is
precisely the curve that JPM was focused on back in 2018 when the inversion
accurately predicted the upcoming Fed policy error.
SEE CHARTS:
Fig 1: 10y
UST YIELD- Fed Funds rate
Fig 2: 1m
US OIS rate 1-2 years forward spread
This, according to JPM, "is because the information
content of the 10y UST-Fed funds yield curve slope might be blunted by investor
flows and imbalances between bond supply and demand rather than expectations
about policy", which is a polite way of saying the yield curve is losing
its signaling powers and is turning into pure noise as everyone scrambles to
front run the Fed.
As a result, the right curve to keep an eye on is that of the
very front end of the US curve as shown in Figure 2, and which as JPM lament "is unfortunately
more negative than the message from Figure 1", and here is
the same punch line to what was observed back in 2018:
While the spread
between the 1- and 2-year forward points of the US OIS curve in Figure 2 had
improved rapidly and turned significantly positive after the dramatic policy
response to the virus crisis last March, it has been
slipping over the past couple of months and turned negative last week. It printed -3bp negative on Monday, June
29th.
For those who missed the prior two explanations (here and here)
JPM had argued before - correctly - that the inversion at the front end of the yield curve
had been one of the most important market indicators over the previous two
years.
During 2018, OIS rate, had been an important market
signal, suggesting
markets were concerned over the risk of a policy mistake (Fed over tightening
at the time) and thus downside risk for equity and risky markets.
Questions about JPM's - or the coronavirus' - role in
triggering massive QE episodes in the recent past aside, the lesson we learned
from the past two years as well as from the previous cycles is that as long as the inversion at the
front-end of the US yield curve persists, it may act to limit the upside to
equity and risky markets and signals vulnerability to further negative shocks.
Meanwhile, JPM notes that markets signaling that further policy accommodation may be required is not only
confined to the US. As shown by Figure 3 the inversion at the front end
is prevalent across most DM yield curves. In some cases, e.g. with the BoE and
RBNZ, the central banks have already signaled an
openness to consider negative rates, while in others, e.g. with the Fed,
markets price in a possibility of negative rates even where they have been more
dismissive of the prospect.
SEE CHART:
To JPM, this suggests that rate
markets are signaling the need for further monetary and/or fiscal policy
stimulus across DM economies. And, logically, if the Fed turns a deaf
ear to this latest extortion attempt by market, and additional stimulus is not
delivered, then the
inversion at the front end could worsen, "eventually becoming a more
problematic signal for equity and risky markets going forward."
Bottom line: we live in a
world where everything is disconnected from reality, from fundamentals and
certainly from cash flows, and in order to keep suspending the disbelief the Fed has to inject a fresh trillion (or more) every
quarter, if not every month. And with the Fed's balance sheet now shrinking
for 2 consecutive weeks, having resulted in a
plateau of sorts in the S&P500...
SEE CHART:
Fed Balance Sheet and S&P
... the only thing that can push
stocks higher according to JPMorgan, is another dramatic liquidity injection.
Ironically, this also means that an end to the coronavirus crisis is the worst
possible thing that could happen to a world that is now habituated to
helicopter money and virtually unlimited handouts, which however need a
state of perpetual crisis.
Translation: expect a major crisis in
the coming months, one which gives the Fed a green light to do whatever it
needs to avoid another market crash.
That, incidentally, would also be the
beginning of the end for the current monetary regime, which is why anyone
hoping that officials, policymakers and the establishment in general will allow
the coronavirus crisis to simply fade away, is in for the shock of a lifetime.
….
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[ In short: this is my game
& I set the rules, said speculators. In similar crisis FDR
make the right policy: Expropriate them.
Trump-Biden won’t do it. The PEOPLES REV will do
it. Do we need to borrow the French guillotine used by Roberpierre? Or just ‘Paredon’
after force them to dig their grave.
They deserved, they are not Americans,
they descended from bad pilgrims. First they
kill natives, then killed blacks & Latinos (they fumigated latinos with Monsanto gases ++ ) they continue killing up to now. They deserve
to die.]
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See Charts
Staying on commodities, gold continues to be the top performer on a
YTD basis, with a +17.4% advance in the first half of the year. That
comes on the back of another positive performance in June, with a +2.9% return,
that saw prices end the month at a 7-year high. Other commodities have also
performed strongly, with copper up +11.9% this month, in its own best monthly
performance since November 2016. And on a quarterly
basis, its +21.8% return is the best since Q3 2010.
See Charts:
Finally on the fixed income side, sovereign bonds underperformed equity
indices for the most part in June. US Treasuries were up by just +0.1%, with
bunds also up +0.3%. Nevertheless, they remain
among the strongest performers on a YTD basis with gilts (+9.7%), Treasuries
(+9.2%) and bunds (+2.3%) all in positive territory since the start of the year.
See Charts:
….
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...with rates at zero and a $7 trillion+ Fed balance sheet,
The Dow remains below Jan 2018 highs... hasn't gone anywhere in 2.5 years.
Reminder: It was the Fed’s balance sheet expansion in Q4 2019 into Q1
2020 that led to the largest market cap to GDP expansion on record: 158% in
February before markets collapsed triggered by the Covid crisis.
Now, following even
more aggressive and historic interventions, market cap to GDP remains far beyond any levels we’ve ever seen during a
recession, never mind the worst recession in our life times:
See Chart:
TMC/GDP (Current: 146.9)
And yes you
have the Fed’s unprecedented and historically absurd interventions to thank for
that:
See Chart:
Firstly, let’s start
with some basic history here and this history shows that the signals that were
ignored in 2019, namely the yield curve inversion as well as the declining
participation of equal weight, indeed foresaw a recession coming. Equal weight meaning the broader market lagged versus select
leaders that concentrated market cap amongst each other, basically repeating
the same patterns we’ve seen during the previous boom/bust cycles:
See Charts:
….
See many more
interesting charts at:
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The Fed's
Minutes show that officials reviewed other options to provide more support
for the economy but Fed officials did agree there was no more need to
analyze yield curve control.
After moving hawkishly higher after the FOMC meeting, the market has drifted notably dovishly in the last
two weeks
See Chart:
As a reminder, the FOMC kept rates unchanged at
0-0.25%, at the June 9-10 meeting, as was expected; it did not announce any
enhanced forward guidance, nor did it announce any yield curve control policy
but did formalize its QE program.
Perhaps Powell should check this chart out before the next FOMC meeting?
See Chart:
Wall Street vs Main Street
….
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US DOMESTIC POLITICS
Seudo democ duopolico in US is
obsolete; it’s full of frauds & corruption. Urge cambio
Socialism is a system that depend
on their environment: other system & subsystems
Once again socialism fails...
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It is the big neoliberal system that
is failing.. they sabotage Seattle and tried to destroy this popular initiative for whatever means. Our fake economy is failing: the collapsing heath system is
the most recent prove. The middle and small entrepreneur are agonizing,
the explosive inequality & unemployment created the rebellion we see in
streets. The circus of elections don’t attract common
people. Huge abstention is underway. The duopoly system (Reps
& Dems ) suffer decomposition (not only honest people abandon their parties but old
corrupted people (the Clintons among them still control Dems party). Whoever wins
(Dems/Reps) won’ t have chances for right governance: Their legitimacy will be
poor (less than 50% of total electorate
will come to vote). The
raise of conflicts will be worse not social peace at all. Chances of fascistic militarism will also be worse and the
cohesion of the political elites will disappear. The duopoly system don’t have plans to
go beyond neoliberalism. We will have status quo with
same rotten institutions and same “deep state”.
The whole neoliberal system is a failure. Socialism at global scale inside the US is the only solution . Socialism
needs to interact with a new environment that we have to be created step by
step. SEATTLE
will succeed!!
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ROTTEN
STAF FROM THE SAME PAC
“For four
years, we have watched with grave
concern as the party we loved has morphed into a cult of personalitythat
little resembles the Party of Lincoln and Reagan,”
====
The Oher side from BLM: A TINI MINORITY
"You've been warned..."
….
YES .. YOU
WARNED: YOU GONA LOSE YOUR JOB
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If the June consensus is realized, we
will have seen around 5.5 million of those jobs return highlighting the uphill
task the economy faces in 'normalizing'.
According to Standard Chartered's Steven Englander, dropping the top and bottom 10% of payrolls forecasts still
leaves a central range of 1.65-5.00mn jobs, an extremely wide band that
reflects the multiplicity of shocks hitting US labor markets.
SEE CHART:
….
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Decomposition inside the
duopoly system (Dems & Reps) . WE NEED A 3rd
OPTION
"...the
MSM, the Dems and the Washington ruling class are literally rabid with Orange Mad Bad..."
….
The 3rd
option can be seen in 2 ways A- as pacific
transition to Democratic Socialism and B- as
building the middle point inside a duopoly system deemed to collapse into
anarchical chaos. In both cases A-B the
3rd option deal with a real political issue
in our time: the continuity vs discontinuity of an obsolete system (the
duopoly one). W Pareto & G Mosca
were the first one who reflect on the issue transition from one elite to
another. The objective
is to create a middle point or point equilibrium (or homeostasis) between
antagonistic political forces before
they ruin the whole nation with anarchic chaos Pareto design a process with 3 stages in it (Circulation of elites, he called.1921) with one
single aim: National equilibrium. First we have to create the alternative
(ALTERNANCIA, he named) that implies to
create a PEOPLE’ FRONT with middle entrepreneurs
+ labor + professionael in it. Second: COOPTATION, look for or create new leaders inside the
front. Cooptation implies also to select
the most honest people from the duopoly system to incorporate into the FRONT. The
3rd stage is the REPLACEMENT of old political power for a new one. It could take
the BOTTOM-UP assault to power via REFERENDUMS
, and organized coops at local & regional levels. Or TOP-DOWN assault of power by PEOPLE
FRONT +TOP ARMED FORCES. . Key actions: change the rules of the
game (new adds to the Constitution & re-org all key Economic &
Political Institution) toward a best Democracy, Freedom & human right for
all Nation.
Later on, in 1999, the German Niklas Luhmann & his team
added the quality of AUTOPOIESIS or self-reproduction (plus other qualities) to
achieve Homeostasis or equilibrium. Luhmann never called himself a Socialist, but
the Chilians in his team YES. These Chilean were the real creators of
“autopoiesis”.
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Xenophobia is common weakness
of Dems & Reps. They are both in favor of WW3
"The law is a brutal, sweeping
crackdown against the people of Hong Kong, intended to destroy the freedoms
they were promised."
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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
“If I
had to say something I knew was false..., I would do it,”
====
Many UN
States are against ISRAEL intention to expropriate more Palestinian land.
In reality Washington has not
yet fully approved the controversial move sure to trigger bloodshed.
====
SPUTNIK
and RT SHOWS
GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars
& danger of WW3
-Beijing Urges India to 'Immediately' Correct
Its 'Discriminatory Actions' Against Chinese Companies
-Mockery
and Disappointment Over Empty Vows: Israeli Tweeps React to 'Annexation' That
Never Happened
-US
Armed Service Committee Approves Legislation to Make Pentagon Strip Confederate
Names From Bases
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NOTICIAS
IN SPANISH
Lat Am search f alternatives to
neo-fascist regimes & terrorist imperial chaos
REBELION
====
ALAI NET
ORG
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RT EN
ESPAÑOL
VEN incautan armas de guerra provenientes de
EE.UU. por vía marítima https://actualidad.rt.com/actualidad/358496-autoridades-venezuela-incautan-armas-provenientes-eeuu
La mayoría
de los rusos apoya las enmiendas a la Constitución https://actualidad.rt.com/actualidad/358469-primeros-resultados-votacion-enmiendas-constitucion
US registra
cifra récord de infecciones diarias con CV con 50.203 nuevos casos en 1 dia https://actualidad.rt.com/actualidad/358529-eeuu-registrar-cifra-record-50203-coronavirus
Trump
permitiría a refugios públicos negar el acceso a personas transgénero https://actualidad.rt.com/video/358517-trump-dejara-refugios-publicos-negar-acceso-personas-trans
Cuba reabre
sus fronteras al turismo internacional https://actualidad.rt.com/video/358515-cuba-reabre-fronteras-turismo-internacional
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INFORMATION
CLEARING HOUSE
Deep on the US political
crisis: neofascism & internal conflicts that favor WW3
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VOLTAIRE
NET ORG https://www.voltairenet.org/en
On 30 June 2020 during a
videoconference devoted to the reconstruction of Syria, Lebanese Prime Minister
Hassan Diab appealed to the United Nations and the European Union for their
help in respect to the Caesar bill.
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Max and Stacy discuss the canceling
of Woodrow Wilson, former president of the United States and founder of the
League of Nations, for his racist ideas. Wilson also created the Federal
Reserve, an institution racist due to the nature of the Cantillon Effect. In
the second half, Max talks to Aleks Svetski of Amber App about the rise of the
individual and the fall of the state.
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GLOBAL
RESEARCH
Geopolitics & Econ-Pol
crisis that leads to more business-wars from US-NATO allies
Israeli
Police Brutality: Unnoticed Murder of Palestinian Autistic Man Eyad Hallaq By Robert Fantina,
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DEMOCRACY
NOW
Amy Goodman’ team
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