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:
- 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.
- 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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