Nueva Democracia: SEP 3 20 ND SIT EC y POL

Much has been said in recent days about the death of the Phillips Curve, which was officially cast into the funeral pyre last week when the Fed unveiled its new approach to monetary policy, which puts more emphasis on shortfalls in employment and less weight on the fear that low unemployment could spark higher inflation.

"The real danger comes from encouraging or inadvertently tolerating rising inflation and its close cousin of extreme speculation and risk-taking, in effect standing by while bubbles and excesses threaten financial markets" -Paul Volcker

This may be the first time in years when the Fed has admitted that canonical models it had followed for decades were wrong, leading to catastrophic results (such as the ill-fated rate hikes of 2015-2018.

See Chart

Dollar Index

https://www.zerohedge.com/s3/files/inline-images/BBDXY%20surge%20curve%20dead_0.jpg?itok=GZghFTRl

Just over a year ago we asked the most obvious question - perhaps it was not the Phillips curve that was dead but "the way the government measures inflation is (purposefully) wrong."

Albert Edwards writes that "it is totally wrong to believe that the Phillips Curve is dead, dormant or even flattened" instead noting that "there was simply more slack in the labor market than the Fed’s estimates of NAIRU at 5% supposed" something we also said for much of the past decade when we pointed out the 100 million or so people out of the labor force after every single jobs report.

Indeed, as Edwards continues, if one simply measures unemployment correctly "and the relationship still fits perfectly (right-hand chart below)."

See Charts:

1-Employment rate and wage inflation

2-Employment rate (adjusted for participation ratio ) and wages

https://www.zerohedge.com/s3/files/inline-images/employment%20and%20wage%20inflation.jpg?itok=W6wpXhLg

"So", "for the Fed to consign NAIRU to the dustbin of economic history just because of its own failure to consider that discouraged workers were holding down wages seems a total nonsense”.

But even using the simple U3 unemployment rate and looking at the rate at which companies were increasing wages, I simply cannot see any breakdown in the normal Phillips Curve relationship (see chart below)."

See Chart:

Employment ratio (reverse of unemployment) business survey wage inflation

https://www.zerohedge.com/s3/files/inline-images/employment%20ratio%20socgen.jpg?itok=mq6xMRmc

Here, Albert and more recently Brainard said the Fed would not have launched the 2015-2018 tightening cycle at all. In any case and viewing its own actions as potentially resulting in the Trump presidency, Edwards writes that the Fed has responded "by putting the car into cruise control at top speed (see charts below). In the new Fed regime unemployment can be too high but never too low. What could possibly go wrong?"

See Charts:

1- FED has driven real rates way below equilibrium…

2- … implying massive stimulus

https://www.zerohedge.com/s3/files/inline-images/fed%20rates%20vs%20equ.jpg?itok=9jEW_WEw

And then, Edwards concludes, "when the next inevitable financial market bust comes, the necessary (again!) aggressive bailouts of Wall Street at the expense of Main Street will further stick in the craw of the very people who the Fed claim it is trying to help. The unintended consequences of the Fed’s new more aggressive policies seem destined to make inequality worse not better"

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SOURCE: https://www.zerohedge.com/markets/albert-edwards-furious-fed-resorts-virtue-signaling-which-will-crush-poor

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SPECULATION EMERGES OVER IDENTITY OF MYSTERY MARKET-WIDE

As Goldman pointed out this morning "each new high for the SPX has come with a higher VIX, and at 26.6 [ZH: make that 32 now] the VIX is now higher than it was at the SPX peaks of March 2000."

See Chart:

https://www.zerohedge.com/s3/files/inline-images/VIX%20range.jpg?itok=qSn7HXFQ

We are witnessing a battle of wills, high speculation where colossal call buyers are forcing the street to get long more and more stock to hedge their upside risk. It’s the March capitulation selling in reverse. Just the way the street had to BUY downside protection in late March (because put buyers outnumbered call buyers 10-1). Today, they are being forced to BUY upside protection in SIZE (call buyers outnumbered put buyers 10-1)

The FACT is that we saw last October: "SoftBank is the Bubble Era's "Short Of The Century." And if there is one thing that can salvage the Japanese VC titan's reputation it is a second tech bubble which blows out the valuation of his countless (otherwise worthless) investments which form the backbone of SoftBank's :"A REVOLUTION" whatever that means.

See CHART:

The soft Bank Revolution

https://www.zerohedge.com/s3/files/inline-images/softbank%20conductor_0.jpg?itok=9RtZUwag

[ In my view: Meaning of the soft REV = THE VICTORY OF SMALL BUSINESS. In other words: big Corp fall while small ‘speculator’ –with own banks- growth . How they got it: by dividing big Corp. ]

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SOURCE: https://www.zerohedge.com/markets/speculation-emerges-over-identity-mystery-marketwide-call-buyer

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STOCKS ARE CRASHING, VIX SPIKES AS OPTION-PLAYERS PANIC-BUY PROTECTION

...as the smell of liquidation is back.

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VIX is back above 30

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-09-03_8-25-16.jpg?itok=p-OZaTFY

The S&P is down over 3% and Nasdaq down 5%...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-09-03_8-23-25.jpg?itok=uqeA4v-A

As yields plunge back to 60bps (10Y)...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/bfm87E8_0.jpg?itok=coz9v5c7

Stocks catching down to bonds...

See Chart:

Nasdaq vs 10Y Yield

https://www.zerohedge.com/s3/files/inline-images/bfmF197.jpg?itok=PkKjgzjC

Gold is also dropping...

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-09-03_8-24-30.jpg?itok=3r8gk-qd

As the smell of liquidation is back.

….

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

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US DOMESTIC POLITICS

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

WHY SAN FRANCISCO IS IN TROUBLE: 19,000 HIGHLY COMPENSATED CITY EMPLOYEES EARNED OVER $150,000

We found truck drivers loaded up with $262,898; city painters making $270,190; firefighters earning $316,306; and plumbing supervisors cleaning up $348,291 every year. One deputy sheriff earned $574,595 last year – including $315,896 in overtime.

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WAPO CLAIMS ELECTION RESULT WILL "SPARK VIOLENCE" UNLESS IT'S A BIDEN LANDSLIDE

“Sounds an awful lot like a threat.”

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Not only ‘tax evasion’ they have in common . Both are PRO-WAR is the worse

AWKWARD! BIDEN TELLS KENOSHA VOTERS IF HE DETAILS HIS TAX POLICY, "THEY'LL SHOOT ME"

...quick, back in the basement!

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ROCHESTER MAYOR SUSPENDS 7 COPS INVOLVED IN KILLING OF DANIEL PRUDE

“You can not stand around and allow these types of things to happen, you have a duty..."

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BENEFITS is that we’re going to lose IF BIDEN win elections