viernes, 10 de julio de 2020

JUL 10 20 ND SIT EC y POL



JUL 10 20 ND SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social + Capit-compet in Eco

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ZERO HEDGE  ECONOMICS
Neoliberal globalization is over. Financiers know it, they documented with graphics


On the week, Nasdaq has soared higher once again, notably divergent from the rest of the markets with Small Caps actually down on the week...
See Chart:

Which has sent the ratio of Megacap-Tech to Small Caps back near a record high...
See Chart:
Nasdaq 100 /  Russell 2000

Nasdaq is up 8 of the last 9 days and 17 of the last 20 days - this is easy!!!
Median US stocks continue to diverge significantly from the handful of megatech stocks driving the Nasdaq ever higher...
See Chart:
Nasdaq  vs Median US stocks

Treasury yields touched a two month lows today...
See Chart:
UST 10 Y Yield

The B-Dollar Index ended lower on the week, chopping around in a tight range...
See Chart;

Spot Gold reached back to its highest since 2011...
See Chart:

Bonds ain't buying it...
See Chart:
Nasdaq vs 10Y Yield

Because fun-durr-mentals...
See Chart:
Nasdaq vs Nasdaq Conssensu 12m Fwd EPS
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With every passing day, the bizarre freakshow that was once known as the "market" gets even more bizarre.
And we use the term "market" only in its loosest, legacy sense, one where it represented more than just the centrally-planned intentions of a few central bankers and politicians. Why? Because as BofA's CIO Michael Hartnett reminds us in his latest Flow Show report, the disconnect between macro and markets has never been greater - i.e., they have never been more broken - but that is to be expected for the following three reasons:
  1. Markets rationally being "irrational": government and corporate bonds have been fixed ("nationalized") by central banks, so why would anyone expect markets to connect with macro, why should credit & stocks price rationally.
  2. Markets leading macro: policy makers (see China this week) know higher asset prices necessary condition for macro recovery (Wall St assets are 5.6x size of US GDP)...
See Chart:
US Financial Assets now 5.6 times GDP

..V-shape recovery on Wall St leading V-shape recovery on Main St (see PMI's & housing activity); gasoline demand good US mobility signal, up sharply to 9mn barrel/day from spring lows, watch to see if virus again negatively impacts economy.
3.       Markets rationally pricing-in Max Liquidity, Minimal Growth backdrop, as they have done for 10 years; of 3042 stocks in MSCI ACWI currently 2141 >20% below their all-time highs, i.e. in a bear market.
Also consider this: if the S&P500 (3230 on Jan 1st) was just "tech, health care, Amazon, Google" it would now be 4173 , and if the S&P were "everything else" it would be 2924. No secret here, but US tech outperformance over US banks past 6 months biggest since 1999 tech bubble & 2008 GFC.
See Chart:
Biggest outperformance of Techs vs  Banks since 1999 & 2008

So while markets may be broken - as one would expect in a world where central banks have taken over all price discovery - three key trends remain and are totally unchanged for 2020. Per BofA:
  • Central bank liquidity drives asset prices;
  • Credit prices drive equities;
  • Sellers' strike in credit & tech mirrored by buyers' strike in value stocks & banks.
Some other observations from BofA's CIO on what was once a "market":

Cash & gold the big inflow winners in 2020;
See Chart:
Cash & gold been blessed with largest inflows in 2020

Gold inflows on cumulative basis at all-time high:
See Chart:
Cumulative Gold inflows at all time high

Discounting all-time high in price; largest inflow to China funds ($6.1bn) since Jul'15 (and 2nd inflow largest ever):
See Chart:
Largest inflow into China ever

So with stocks now fully mandated and no longer discount the future or respond to fundamentals or news, does this mean that stocks will rise indefinitely until eventually the population burns down the Marriner Eccles building? According to Hartnett the answer is now, and while stocks see bullish drivers of Positioning & Policy into the summer, these will peak just as the autumn begins, at which point bulls will require profits to surprise to upside allowing rally in risk assets to broaden into HY, value stocks, small cap and so on; At the same time, bears will argue that big 2020 underperformance of banks a signal of no economic hope & sinister repeat of 1999 & 2008; According to Hartnett, these are the catalysts required to boost banks:
1. Vaccine: most likely catalyst for big GDP & EPS upward revisions H2 and flip from growth to value.

2. Fiscal: 2020 policy stimulus has been massive ($18.5tn of which $10.5tn in fiscal & $8.0tn in monetary = 21% global GDP) (Chart 5) and coordinated (1st time in years monetary & fiscal, like two wheels of a bicycle, moving quickly in same direction working together); banks the natural hedge for fiscal success (key barometer to watch = small business confidence surveys, e.g. NFIB) in stimulating animal spirits.
See Chart:
Fiscal bazooka in 2020 is huge in developing markets


3-Politics: rising probability of political "blue wave" i.e. Democrats winning White House, Senate, Congress (latest Oddschecker.com probabilities…Biden win 57%, Real Clear Politics probability…Dem Senate 62%); Table 2 shows annualized returns following 7 out of 21 "blue waves" since 1928...returns, more obviously in bonds, below historic averages after Dem "clean sweep" but outperformance of value over growth more pronounced; "Blue Deal" fiscal stimulus in 2021 via infrastructure, student debt forgiveness, health care spending positive value & banks.
See  Table:
“Blue Wave” Historical Average

4. Risk-taking: bank deposits up $2.2tn since end-Feb but bank loans up only $0.5tn vs cash/reserves up $1.3tn and UST+MBS holdings up $0.3tn (Chart 6); bank stocks tied-at-the-hip to interest rates (Chart 7).
See Charts:
1: Bank deposits have not translated into lending
2: while banks performance is tied to interest rates

If and when Fed/ECB/BoJ can ever raise interest rates global banks will become the instant leadership; ironically introduction by Fed of Yield Curve Control in Sept may in typical contrarian fashion trigger a rally in banks; but the other irony is that sustained bank performance first requires risk-taking to boost economic growth & interest rate expectations in 2021 & 2022; until then bank stock bulls will focus on China (has led virus, market & macro recovery) & Europe (start of fiscal stimulus).

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US  DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio

"This is a historic moment of change. We have to respect that..." 
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Meanwhile the Fed's buying of corporate bonds and ETFs has shrunk by about 50% to around $150MM per day.
See Chart:
FED Balance Sheet vs S&P500
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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

"The signal could not be clearer -- stocks have just become too hot for the regulators’ liking."
The Shanghai Composite closed down 2% and the SSE 50 Index of Shanghai’s largest stocks ended the day 2.6% lower. The index had closed Thursday within 2% of its intraday peak in 2015.
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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