0CT 12 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
NASDAQ WHALE SPARKS MEGA-TECH STOCKS' BEST DAY IN 6 MONTHS
No Deal (as Pelosi shunned The White House offer), the bond market closed for Columbus Day, Washington quietly focused on ACB's hearing and not making algo-driving headlines, and nothing from The Fed... which all explains the market's best day since April!
Today's massive melt-up squeeze in Nasdaq enabled the best day for the tech-heavy index in six months (and on what?) as Small Caps underperformed...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/2020-10-12_13-00-03.jpg?itok=cy6hkCbh
We do note that the Nasdaq/Small Caps ratio reversed modestly in the last hour...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/2020-10-12_12-47-26.jpg?itok=OFi9c4j1
UST 10Y YIELD Amid all this excitement, Treasury futures (cash market was closed) barely budged (implied around a 1bps drop in 10Y Yield)..
See Chart:
https://www.zerohedge.com/s3/files/inline-images/bfm8A56.jpg?itok=yYtF-MBF
The B-dollar index also ended the day practically unch...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/bfm8112.jpg?itok=Eia3DnHN
Finally, greed is really good again...
See Charts:
https://www.zerohedge.com/s3/files/inline-images/2020-10-12_12-27-22.jpg?itok=nAoSR4iB
As Guggenheim's Scott Minerd told Bloomberg, "many stock investors are not being rational... we're entering the mania phase... adding that he expects Treasury rates to turn negative."
It wasn't a bottom-up short-squeeze...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/bfm8FAB.jpg?itok=E3MZxG9a
But a gamma-squeeze-driven face-ripper for the record speculative shorts in Nasdaq futures...
See Chart:
No change to Nasdaq short this week
The Nasdaq Whale reappeared...
Nasdaq vol soared today (despite the gains) as Call-buying dominated...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/bfm829_0.jpg?itok=s7rB-p7A
Growth stocks massively outperformed value for the second day in a row...
See Chart:
https://www.zerohedge.com/s3/files/inline-images/bfm5202.jpg?itok=0dg76rVA
FANG stocks surged most since August (up 5 of the last 6 days), despite being put on Europe's "hit list" over monopoly power
And amid all this meltup 'hope', election uncertainty rose...
See Chart:
Election Uncertainty
https://www.zerohedge.com/s3/files/inline-images/2020-10-12%20%284%29.jpg?itok=XFy7iMsZ
Additionally a modest unwind of the recent reflation trade which traders agreed had gone too far by Friday, exaggerated the relative outperformance of mega-tech vs small-caps
See Chart:
Nasdaq 100 / Russell 2000
https://www.zerohedge.com/s3/files/inline-images/2020-10-12%20%283%29.jpg?itok=GcC7Rryx
….
SOURCE: https://www.zerohedge.com/markets/mega-tech-melt-sparks-stocks-best-day-6-months
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NO STIMULUS, NO PROBLEM: ONE BANK SEES "NO ARMAGEDDON" WITHOUT A NEW STIMULUS DEAL
The odds of Trump being that president may rise if he refuses to concede to Democrat demands for a giga stimulus, and merely holds firm until after the election.
In recent weeks, many have opined - this website included - that with the US economy careening into a double dip recession (or perhaps depression), it is imperative that Congress and the White House cast aside their differences and pass a substantial, $1.5-$2 trillion stimulus bill or else the US middle class will be hammered as the spending and consumption tailwind from the previous covid rescue bills fades away.
Furthermore as reported previously, there already has been a sharp slowdown in spending among groups who were recipients of expanded Unemployment Insurance benefits - which faded away on July 31 - as the chart from Bank of America shows:
See Chart:
The change in spending growth for UI recipients vs all else by major sector
https://www.zerohedge.com/s3/files/inline-images/UI%20spending_6.jpg?itok=Xuk2FMU8
And while there are various other nuances, we concluded several weeks ago that absent a new stimulus, not only will the delayed aftereffects of the existing stimulus come back to haunt the economy...
Fiscal Impact (4q moving average)
https://www.zerohedge.com/s3/files/inline-images/fiscal%20impact%20brookings_0.jpg?itok=Hr2D29bH
but the lack of new spending will result in a massive double whammy crashing the economy in 2021, which averted a full blown meltdown in Q2, but will find itself scrambling in the coming quarters as the mother of all double dips emerges, and which incidentally is also why the market has been sliding for the past two weeks as the reality of an indefinite stimulus-free future looms all too real.
The question, of course, is when will the trapdoor below the US economy open up, resulting in another collapse in output?
In a subsequent post following the latest personal income and spending data, we noted that in August - the month when the fiscal cliff hit - US consumer spending actually rose even as personal income contracted largely due to the end of the $600/week supplemental unemployment insurance benefits. As a result of this pick-up in spending coupled with shrinking incomes, US personal savings tumbled by an annualized personal savings hit in April.
See Chart:
Personal saving vs. monthly change
https://www.zerohedge.com/s3/files/inline-images/monthly%20change%20savings_1.jpg?itok=AWIcLJIy
And while this meant that the personal savings rate declined sharply once again to 14.1% from a high of record 33% in the immediate aftermath of the covid crash, meaning that a whopping 60% of the personal savings built up in the aftermath of the covid fiscal stimulus tide have now been used up, it meant that Americans still have several months of accumulated savings to last them for the next several months.
See Chart:
Personal savings rate
https://www.zerohedge.com/s3/files/inline-images/2020-10-01%20%281%29_3.png?itok=japQpsyC
We then said that as Congress continues to debate and pretend that a new fiscal stimulus bill is just over the corner, the massive savings buffer that was built up in the aftermath of the covid crisis, and which funded much of personal consumer spending in the past two months is now shrinking fast and at this rate personal savings will be back to pre-covid levels in 2-3 month. At that point we concluded that "it is safe to say that unless a new fiscal deal is in place, US consumption will crater unless somehow the millions of unemployed workers who still desperately rely on government stimulus find a job."
And yet, not everyone agrees that lack of a stimulus would be dire (at least in the immediate term).
Morgan Stanley wrote on Sunday that "it's possible that a stimulus delay wouldn’t fully develop into the economic challenge it has the potential to be" and adds that the bank's economists "now see evidence that US consumption can carry on for longer without fiscal support, given built-up excess household savings."
Yet in the face of fading fiscal support, "the savings cushion built up from April-July should help smooth consumption, putting real PCE on track to reach pre-Covid levels in 2Q21. We estimate from April through July the US consumer built up a cumulative $12.5tr (annualized) in excess savings (savings above the monthly pre-Covid average)." That said, "the willingness of consumers to draw upon these savings in the coming months is yet to be known, but we believe it will provide an important stop-gap to the loss of government transfers."
Continue reading at:
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MONETARY DISTORTIONS OF GDP IN 2021
Whether monetary planners are aware of it or not, additional money in circulation only adds to the GDP number while destroying the personal wealth upon which an economy thrives...
Introduction
It is extremely rare to find any commentary on the relationship between monetary expansion and GDP. Yet since last March, when the Fed announced it would unleash unlimited quantities of dollars, it should have become the most important topic for economists and the financial press. Not a peep has been heard.
A healthy economy is not one that “grows”, but one that does not have its production and consumption interfered with. If the money is sound and its quantity unchanged there would be no change in GDP year after year. As producers, we would continue to anticipate and respond to the demands and desires of the consumer. We are all consumers as well. Those that are disabled from work are subsidised by their families and social groups. Those who become unemployed, always the consequence of misjudgement, have to think again and move on to gainful employment. This is Schumpeter’s creative destruction — a rolling process that is fundamental to satisfying demand where ultimately the consumer is king. It is fundamental to a healthy economy.
The relationship between money — the temporary storage of our labour to be spent — and economic activity is now undeniably corrupted.
Figure 1 illustrates the relationship between GDP and the money supply by comparing the increase in GDP from its base level in 1980 to end-2019 with the increase in broad money, M2, and by deriving the difference between them. And it can be seen that over the long run the difference between the two, the third line which wobbles about zero, is insignificant.
See Chart:
Increase in GDP is due to money supply
The reason is simple: “growth” in nominal GDP is only growth in the quantity of money, and has nothing to do with economic progress, which is what free markets deliver. And it leads to a simple but devastating conclusion: adjusted for increases in the money quantity, the US economy today measured by GDP is about the same size as it was in 1980, even allowing for changes in population“
It proves you cannot measure economic progress, only the amount of money used in transactions. How will the GDP numbers be affected by massive money-printing? Given the destabilisation of covid-19 lockdowns, trade tariffs, and the desire of banks to reduce their over-geared balance sheets, the global economy is in a deep slump. The screenshot below, taken from America’s Bureau of Economic Analysis website shows the position in America.
See Table:
It is worth noting that the true deflator of GDP should be the broad measure of money supply, not some fabricated CPI-related figure, as discussed above. Putting that issue to one side, we note that GDP collapsed by an annualised rate of over 31% in the second quarter of 2020, while at the same time M2 increased by 9.4%, an annualised rate of 37.6%. Given that we have shown how over the long run changes in nominal GDP are solely reflective of changes in the quantity of broad money, we can confidently state that the fall in last quarter’s GDP is despite the increase in the quantity of money, showing it does not appear to have been spent by producers and consumers. The question arises as to why.
One answer put forward is that the savings rate has jumped, as illustrated in the chart from the St Louis Fed’s FRED service.
See Chart:
The chart reflects the collapse in spending when people locked down, as well as the $1,200 stimulus checks distributed to households at end-April, which marked the peak in the chart. It is assumed to be money saved, which will be spent when normality returns. Since April, there has been a downward adjustment, partly because some spending has returned. Being derived as the percentage of personal disposable income that is not spent and given the high levels of personal debt throughout the population, much of these so-called savings will have already disappeared into credit card and debt repayments — a credit contraction. It is also likely that with rising unemployment and roughly 80% of the American salaried population living from paycheque to paycheque before the virus, that far from there being a higher savings rate, personal finances have deteriorated so much that money is being withdrawn from savings on a net basis, just to acquire life’s essentials.
We know that monetary planners simply think that extra money should stimulate GDP. For them, the solution is always to increase the quantity of money more aggressively, assuming they can retain control over the price inflation statistics and interest rates. But it is like trying to start a damp fire with the last and equally damp match. Whether monetary planners are aware of it or not, additional money in circulation only adds to the GDP number while destroying the personal wealth upon which an economy thrives.
Applying money debasement to gross output
The scale of the task of rescuing the economy from a deepening slump is far larger than suggested by GDP alone. That which applies to the relationship between changes in the quantity of money and the GDP total also applies to gross output. Gross output includes the intermediate steps of production that make up the final products bought by consumers.
See Chart:
Gross output by Industry
Fighting the deflationary forces
Not only will the Fed need to support supply chains, but it will have to make up for any contraction of bank credit, so it is not just a matter of filling a monetary gap. Loans to businesses are already contracting as the screenshot below shows.
See Chart:
Other fixes
A further addition to GDP would come from the abandonment of the cash economy, a process well underway and accelerated by the coronavirus. Watch out for government medical propaganda about how long the virus survives on banknotes and coins.
Summary and conclusion
The corruption of GDP numbers through accelerated monetary inflation is underappreciated and needs to be understood. When today’s inevitable and continuing debasement of the fiat currency is taken into account the economic destruction that has resulted is not only far greater than the headline figures for GDP suggest, but a continuation of inflationary policies only serves to bolster the statistic while the underlying economic condition worsens considerably.
This will not stop policy planners from pursuing inflationism. They may not realise it, but with such a dramatic contraction in their economies so far this year, the task of making nominal GDP appear to be robust by issuing limitless currency is a policy that cannot ultimately succeed. A second wave of the coronavirus is putting paid to hopes of a rapid economic recovery, which means that businesses have to face the reality of being overextended in a contracting business environment while their input prices rise due to monetary debasement.
The Fed has effectively committed itself to supporting all economic and financial activities with newly issued money. These include financing record budget deficits, underwriting supply chains, replacing contracting bank credit and supporting insolvent banks. Furthermore, it must ensure financial markets, particularly for government debt, remain strong, so that the interest cost of the US Treasury’s debt is contained close to the zero bound.
And finally, the Fed’s only real tool is the expansion of M1 money supply, which currently stands at $5.577 trillion. How many multiples of this figure will be required? Five, ten times, or even more?
….
SOURCE: https://www.zerohedge.com/economics/monetary-distortions-gdp-2021
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio
HOW WE INSTITUTIONALIZED INCOMPETENCE
And so we face the ultimate irony: 'bailing-out-everything' destroys the entire rotten system.
Authored by Charles Hugh Smith via OfTwoMinds blog,
You've probably noticed things no longer work as well as they once did.
You've probably noticed services cost a lot more now, but the quality has eroded
You've probably noticed massive cost overruns in public projects.
You've probably noticed that enormous investments in infrastructure, education, reducing homelessness, etc. don't actually improve the situation or fix what's broken.
You've probably noticed that all the highly paid analysts, academics, think-tank gurus, private-sector hotshots, etc. are either clueless, incoherent or delusional.
Keep the feeding trough filled to the brim, no matter how many hogs are gorging themselves.
Incompetence is now so ubiquitous, so embedded, so obvious and so intractable that we finally have to recognize that America has institutionalized incompetence.
Broadly speaking, self-interest is all that matters.
Institutions protect insiders because every insider must mask their self-interest and the general failure of the institution.
Risk is to be avoided at all costs because any failure might reveal the systemic failure of the entire organization.
AMERICA'S CORE BUSINESSES ARE MONOPOLY AND CORRUPTION.
THEN THEY ARE THE INCOMPETENT ELITES AT THE TOP.
SOURCE: https://www.zerohedge.com/bailout/how-we-institutionalized-incompetence
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JOHNSON & JOHNSON LATEST TO HALT COVID-19 VACCINE TRIAL OVER UNSPECIFIED ILLNESS
Yet another high-profile Phase 3 vaccine trial has been temporarily halted after one of the participants developed a suspicious illness.
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DR. FAUCI SAYS TRUMP CAMPAIGN "HARASSING ME" BY USING CLIPS IN ADS WITHOUT CONSENT: LIVE UPDATES
Meanwhile, Brussels is pushing unified standards for travel restrictions across EU members...
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HILLARY AUDITIONS FOR SECDEF IN SPRAWLING PRO-BIDEN OP-ED ADMITTING MASSIVE DEFENSE JOBS CUTS PLAN
... both Clinton and Biden represent an old, tired, globalist worldview at odds with a “progressive” or even populist Democrat trajectory... And Clinton appears to know this, too...
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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
AZERBAIJANI MILITARY DESTROYS ARMENIAN S-300S AS HUMANITARIAN CEASEFIRE NEARS COLLAPSE
Almost immediately after the start of the ceasefire regime, the sides simultaneously accused each other of violating the ceasefire and of shelling civilian and military targets, and repeated these claims on October 11 and October 12.
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars & danger of WW3
-Trump Expects Iran to Call Him First if He Wins November Election
- Trump Mocks Biden at Florida Rally as Former Vice President Makes New Gaffes
- California Attorney Gral Demands Republicans Remove Non-Official Ballot Boxes
- Johnson & Johnson Pauses COVID19 Vaccine Trials as One Patient Gets Ill
- Trump Now Immune to Coronavirus, But Not Permanently, Anthony Fauci Say
- Germany Interest in Good Relat With RU Despite Navalny Case, F Minister Maas Say
- Over 20 Arrested During Demonstrat Held Amid Barrett's Confirmation Hearings
- Brussels Set to Put 20 of the World’s Biggest Tech Comp Onto Regulatory 'Hit List
- Militants Conduct 15 Attacks in Syria's Idlib De-Escalat Zone, Russian Military Says
- Netizens Clash Online as Senate Confirmation Hearings for Barrett Go On
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