Nueva Democracia: AUG 27 20 ND SIT EC y POL

AUG 27 20 ND SIT EC y 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

POWELL, PELOSI, & PENTAGON PUMMEL BIG-TECH, BONDS, & BULLION

Fed Chair Powell's initial comments spiked stocks:

*POWELL SAYS FED TO SEEK INFLATION THAT 'AVERAGES' 2% OVER TIME

...then 'moderation' sent them reeling:

*POWELL SAYS ANY INFLATION OVERSHOOTS WILL BEMODERATE

but he later reassured that they would let inflation run and things took off again...

*POWELL: SEEK TO RUN INFLATION ABOVE 2% AFTER PERIODS BELOW 2%

And in the end The Dow notably outperformed as Nasdaq swung around desperately trying to stay green but failed...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-08-27_13-00-10.jpg?itok=4euIkLUd

The Dow's big mission was get back to even on the year

But there's a growing chasm between winners and losers...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-08-27%20%281%29.png?itok=ECznrGbi

But Big-Tech stocks ended lower (after yesterday's meltup)!!

See Chart:

FANG Stocks

https://www.zerohedge.com/s3/files/inline-images/bfm2353.jpg?itok=CeIddWqh

Across the asset classes the volatility was similar (from the Powell headline drop)...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-08-27_12-47-38.jpg?itok=EUlr5I1J

Bonds definitely suffered most...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/bfmC4B9.jpg?itok=H5rKDcBJ

with 10Y Yields (which fell immediately after Powell spoke) soaring to 2-month highs...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/bfm9C60.jpg?itok=qyWjfVcA

And 30Y TSY yields hitting 1.50% for the first time since June...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/bfm4D2D.jpg?itok=YMaxBRgX

The B-dollar Index mirrored gold, dumping on Powell's initial comments but then rocketed higher...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/bfm4EC0.jpg?itok=jfQ0Y6yi

Oil prices fell, unable to scramble back above $43

Finally, some context for today's move in bonds...

See Chart:

Nasdaq vs 10Y Yield

https://www.zerohedge.com/s3/files/inline-images/bfm98A8.jpg?itok=xlfbGTyD

And one wonders what message VIX is sending? Everyone levered long calls or is this protection-overlays beginning?

See Chart:

S&P vs Vix

https://www.zerohedge.com/s3/files/inline-images/bfmABD5.jpg?itok=NZsJKVO8

….

SOURCE: https://www.zerohedge.com/markets/powell-pelosi-pentagon-pummel-stocks-bonds-bullion

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CAPITAL ONE CUTS CREDIT CARD BORROWING LIMITS AS US REDUCES SUPPORT FOR UNEMPLOYED AMERICANS

"We have been tightening credit at the margin as we have felt for some time that we are in late credit cycle."

As Bloomberg notes, suspense has been mounting in the credit card industry in recent weeks, as Congress and President Donald Trump’s administration deadlocked on extending $600 in additional weekly unemployment benefits. That assistance has helped millions of households keep up with debts as the pandemic sent unemployment soaring above 10%. As we showed recently, spending by unemployed people who claim ongoing unemployment assistance from regular state programs - which amounts to some 14.5 million people - has tumbled since the July 31 fiscal cliff.

See Chart:

The change in spending growth for UI recipients vs. all else

https://www.zerohedge.com/s3/files/inline-images/UI%20spending_1.jpg?itok=j4EkT-x8

Capital One is hardly unique: card issuers, learning from past downturns, often trim or close inactive credit lines to avoid becoming a borrower’s lender of last resort. This year, they have also been offering lower limits on new accounts.

"We have been tightening credit at the margin as we have felt for some time that we are in late credit cycle,” Discover Financial Services Chief Executive Officer Roger Hochschild said in April. “But given the present environment, we are adopting a significantly more cautious view."

But what is most paradoxical about this situation is that even as the Fed cut rates to all time lows, a boon to companies which have borrowed a record $1.4 trillion in the investment grade bond market, if hurting savers who once again receive no income on their savings accounts, credit card interest rates remain at all time highs, just around 17%.

See Chart:

Credit card interest rate at highest level in decades

https://www.zerohedge.com/s3/files/inline-images/credit%20cards%20rates_0.jpg?itok=ECMCraE4

Bizarrely, the fact that credit card rates remain stratospheric for millions of Americans even as corporate borrowing rates have never been lower, has not been address by either the Fed - which allegedly is so worried about inequality - nor US politicians. Meanwhile, the Fed continues to directly purchase bonds of some of the biggest companies in the world including Apple, Berkshire, cutting their cost of capital even lower.

Some have suggested that instead of the Fed buying AAA-rated corporate bonds from companies which can sell massively oversubscribed debt in the open market, a simple solution is to simply backstop Capital One's credit card receivables. That way Capital One would not have to cut its limits, and it would also be able to cut rates assuring more people can end up affording to pay down their interest. Unfortunately, since the tens of millions of subprime Capital One credit card holders can't afford to lobby Congress or have a direct line to the Marriner Eccles building, this will never happen.

….

SOURCE: https://www.zerohedge.com/markets/capital-one-cuts-credit-card-borrowing-limits-us-reduces-support-unemployed-americans

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ONE BANK FINALLY TELLS THE TRUTH: "THE FED POLICIES HAVE BECOME PART OF THE PROBLEM"

"The current crisis response has made it painfully clear again that the Fed’s policies benefit high income individuals and large corporations, while small businesses and low income individuals bear the burden."

Anyway, the Fed released a revised Statement on Longer-Run Goals and Monetary Policy Strategy with the main change reflected in the following sentence: “In order to anchor longer-term inflation expectations at this level, the Committee seeks to achieve inflation that averages 2 percent over time, and therefore judges that, following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.” However, Powell stressed that no exact formula will be used, so it will be ‘a flexible form of average inflation targeting.’

Does it matter?

One look at Figure 1 shows that the Fed certainly has not been able to steer PCE inflation symmetrically around the 2% target. In reality, inflation has been mostly below target.

See Chart:

PCE inflation and the FED ‘Symmetric’ target

Remember: Symmetric means on average

https://www.zerohedge.com/s3/files/inline-images/PCE%20summetric%20fed.jpg?itok=cJC99uFG

So does the explicit recognition of the symmetry of the inflation target really make a difference? In the short and medium run, definitely not. If we look at the FOMC’s own projections, they do not expect PCE inflation to get near the 2.0% target before 2023. Or do they expect inflation expectations to rise and cause inflation? This is very unlikely, with unemployment well above the NAIRU. Higher tolerance for inflation in itself does not cause inflation if slack is high or can’t be leveraged when it is low. While a higher inflation tolerance would allow for more wage growth, it will not create it.

See Table:

FOMC projections (media)

https://www.zerohedge.com/s3/files/inline-images/FOMC%20projections.jpg?itok=6RjNFj8V

In the long run it will allow the FOMC to take more time to start hiking when unemployment gets low and threatens to push up inflation. After all, the undershoot of recent years may be compensated by a moderate overshoot. This will spread employment to low-skilled people.

What really matters

It took the Fed six years to describe symmetry of the inflation target in the Statement on Longer-Run Goals. While not completely irrelevant, it is the wrong kind of symmetry to focus on. While the Fed’s step to make the inflation target ‘more’ symmetric may benefit the wages of the average American somewhere beyond 2022, it does not really address the deeper problem with the role the Fed is playing in the US economy. It could be argued that the Fed’s policies have become part of the problem, instead of the solution.

The much deeper problem for the US economy is the asymmetric impact of Fed policies on households and businesses. The Fed’s monetary and regulatory policies have contributed to a form of capitalism where the rewards are going to the 1% and the risks are borne by the 99%. The current crisis response has made it painfully clear again that the Fed’s policies benefit high income individuals and large corporations, while small businesses and low income individuals bear the burden. While the Fed likes to see itself as part of the solution to America’s economic problems, it should ask itself whether it is also part of these problems.

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SOURCE: https://www.zerohedge.com/markets/one-bank-finally-tells-truth-fed-policies-have-become-part-problem

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THE FED'S POLICY MISTAKE: "BUYING" MORE INFLATION WILL LEAD TO FINANCIAL INSTABILITY

The trade-off nowadays is between inflation and financial stability. Buying more inflation will eventually create, if it has not already, financial imbalances that will trigger an economic crash...

In the 4 of the past 5 years, core CPI has been running above the Fed’s 2% target. The only year of the past 5 when core CPI ran below 2% was 2017 when it ran 1.8%. That small shortfall is not statistically significant and surely does not warrant a fundamental change in policy.

Also, the argument the low reported inflation is undermining consumer inflation expectations are not supported by the facts. Consumer’s one-year inflation expectations from the University of Michigan consumer sentiment survey shows that people’s inflation expectations have consistently run above-reported inflation and the 2% target.

See Chart:

Inflation Expectations vs Core CPI

https://www.zerohedge.com/s3/files/inline-images/consumper%20CPI%20carson.jpg?itok=qZosJlmA

….

SOURCE: https://www.zerohedge.com/markets/feds-policy-mistake-buying-more-inflation-will-lead-financial-instability

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STOCKS ARE TANKING

...we're gonna need a higher inflation target!!

Powell's inflationista discussion just isn't doing it for stocks...

The weakness appears to have started right after Europe closed.

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-08-27_10-04-38.jpg?itok=oaxT3Vg4

For now, only the USD is holding gains since Powell spoke...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-08-27_10-06-18.jpg?itok=-LoihNoW

...we're gonna need a higher inflation target!!

….

SOURCE: https://www.zerohedge.com/markets/stocks-are-tanking

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BAD MONETARY THEORY ENABLES DISASTROUS GOVERNMENT POLICIES

...unsound money has been at the heart of disastrous government policies throughout history. This time is no different. The Fed “cure” for the COVID economic meltdown is really part of the problem...

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"NEVER-ENDING MONETARY ACCOMODATION": HERE IS THE FED WARNING ABOUT THE CONSEQUENCES OF WHAT THE FED JUST DID

"the central bank may face the risk of getting trapped in a never-ending monetary accommodation even when real economic activity is strong or when financial stability risks accumulate."

It's official: as Powell unveiled moments ago, the Fed is now operating under an explicit Average Inflation Targeting platform, with the Fed seeking inflation that averages 2% over time, a step that implies allowing for periods of overshoots, and assures no rate hikes for years to come (according to BofA simulations, a 2% AIT would mean no rate hikes for up to 42 years). At the same time, the Fed's shift on maximum employment will allow labor-market gains to run more broadly.

Regarding price pressures, the document says the committee will target “inflation that averages 2% over time” and will aim to bring inflation above the 2% target following periods when inflation runs below that level.

"The maximum level of employment is a broad-based and inclusive goal," Powell said in a speech delivered virtually for the central bank’s annual policy symposium traditionally held in Jackson Hole, Wyoming. "This change reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities."

To be sure, pragmatic Fed watchers will immediately admit that there is nothing new here: after all the Fed's implicit core PCE inflation target has already been 2% yet even with a record $7 trillion balance sheet, the Fed failed to hit it for years.

See Chart:

Missing the inflation target

https://www.zerohedge.com/s3/files/inline-images/inflation%20undershoot_0.jpg?itok=uOEwhfgc

Additionally, as we discussed on Tuesday, the Fed now needs to reveal the specific time period over which PCE inflation is required to average 2% before beginning a policy normalization (hiking) process. This is a problem, because in simulations conducted by the BofA rates team, it found this could in require the Fed to remain on hold for 42 years!

See Charts

1-Actual vs 2% core PCE Price level

2-Price level targets scenarios

https://www.zerohedge.com/s3/files/inline-images/AIT%20time%20to%20hike_0.jpg?itok=10HhZbqW

As events in the past decade have shown, the Fed is already trapped in "never-ending monetary accommodation" - the coronavirus pandemic which boosted the Fed's balance sheet by $3 trillion only made things worse. As for whether a 2% inflation target is too ambitious, well consider that we saw all of this 7 years ago with Bank of Japan in January 2013, when it adopted a higher inflation target in an effort to end chronic deflation. Nearly a decade later it has been an epic disappointment

….

SOURCE: https://www.zerohedge.com/markets/never-ending-monetary-accomodation-here-fed-warning-about-consequences-what-fed-just-did

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US DOMESTIC POLITICS

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

WHY AMERICANS ARE LOOKING FOR A SAFE HAVEN FROM THE DOLLAR

Freedom is the natural ability of people to control their own destiny. Sound money has the ability to help keep people free...

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AMERICA'S METASTASIZING CLASS WARS

Class wars are the inevitable result of an economic system in which "anything goes if you're rich enough and winners take most"...

Authored by Charles Hugh Smith via OfTwoMinds blog,

The traditional class war has been waged between wage-earners (who sell their labor) and their employers (owners of capital and the means of production).

What you own or don't own defines your class interests, but these have been fragmented into a multitude of sub-classes.

For the purposes of today's discussion, let's focus on the conflicts between four classes:

1. The Central State, which includes the elected government, the permanent Deep State, the Federal Reserve and and the managers/technocrats who run the State Nomenklatura.

2. The owners of Capital and political influence (The Oligarchs and New Nobility).

3. The Upper Caste, the top 10% of the private sector.

4. The lower classes of wage-earners and state dependents.

It comes as no surprise that there is no class conflict between the State and the Oligarchs / New Nobility

The conflicts between the Central State and the Upper Caste which pays the majority of income taxes is sharpening.

The Upper Caste resents the heavy taxes they pay as the state fails to provide even the basics of security and infrastructure.

The Upper Caste also resents the Oligarchs and New Nobility who pay a lower percentage of their income in taxes.

The wage-earning lower classes resent the Upper Caste and the Oligarchs for obvious reasons, but they also resent the State dependents, many of whom live better than those working one of America's tens of millions of low-paid, few-benefits jobs.

You might expect State dependents to love their servitude, but they have reasons to resent the State as well.

Meanwhile, the state managers/technocrats and politicos live in the same bubbles as the New Nobility.

In summary, class wars are the inevitable result of an economic system in which anything goes if you're rich enough and winners take most.

Social Mobility between classes has decayed, and people grasp this.

The winners in this system are protected by the State, while the losers are stripmined by crushing taxes or humiliated by their abject dependence on the state.

The danger to the state is not who rebels but who opts out.

Those trapped in the lower reaches of America's class system might decide to follow Johnny Paycheck and Take This Job And Shove It

Conflicts within the upper reaches of the Deep State are also deepening as those seeking to extend the status quo regardless of cost are meeting resistance from camps who recognize the impossibility of maintaining the current trajectory of soaring inequality and the infinite demands of the Imperial Project.

Here's a chart of the Oligarchy and New Nobility's skim of virtually all gains in the economy.

SEE CHART

The fruit of Financialization : Soaring Income Inequality

https://www.zerohedge.com/s3/files/inline-images/inequality-NYT8-17a%20%281%29_8.png?itok=8eEwwEeq

….

SOURCE: https://www.zerohedge.com/political/americas-metastasizing-class-wars

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OVER 100 FORMER JOHN MCCAIN STAFFERS ENDORSE BIDEN, EXPLICITLY BECAUSE HE'S WORSE ON WAR

McCain represented "Country First"... or was it "Which country to invade first?"

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ARE THE TABLES STARTING TO TURN?

Buoyed by blacks and independent voters, as well as urban dwellers shocked by the Black Lives Matter protest violence raging in some cities, President Trump’s approval rating has hit a new high...

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KENOSHA SHOOTER HIT WITH 6 CHARGES, INCLUDING FIRST-DEGREE MURDER

The same lawyer who represented Covington Catholic student Nick Sandmann has agreed to take on Rittenhouse's case...

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YES Autorit-fascism based on intern-violence & wars promotion : Trump weak points

BIDEN ACCUSES TRUMP OF "ENCOURAGING" VIOLENCE AS MAYHEM BEGINS TO AFFECT POLLS

Oh, and Biden will be a "fact-checker on the floor" while debating Trump.

….

Biden must make a list of accusations on Trump & proceed like in COURT

There won’t be a ‘debate’. There will be a type of Martial Court on Trump

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US-WORLD ISSUES (Geo Econ, Geo Pol & global Wars)