0CT 3 20 ND SIT EC y POL
ND denounce Global-neoliberal debacle y propone State-Social + Capit-compet in Eco
White House Physician Says Trump 'Made Substantial Progress', Team Cautiously Optimistic
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ZERO HEDGE ECONOMICS
Neoliberal globalization is over. Financiers know it, they documented with graphics
"SKINNY" OR "SUPERSIZED": WHAT HAPPENS TO THE TREASURY MARKET WHEN THE NEXT STIMULUS BILL PASSES
Unlike Goldman which expects a sharp spike in yields should Democrats sweep, BofA says that a "striking" takeaway from its stimulus scenario simulations is the relatively limited impact stimulus has on Treasury’s expected near-term debt issuance.
While Congress remains gridlocked over the fifth covid stimulus bill (demanded by 90% of all Americans), recent headlines suggested on-going discussions for a stimulus breakthrough between Democrats and Senate Republicans prior to the election. And while chances for a deal finalized prior to the November election are slim to nil, Bank of America acknowledges that the chances have improved from near zero at the start of the week. To be sure, timing is critical since the Congressional recess through the election starts on Oct 2 for the House & Oct 9 for the Senate (while Congress can always be called back for a vote but a pre-election deal seems most likely to happen in the next few days if it happens at all).
In a recent analysis of just this issue, Bank of America concludes that most scenarios will see little change to coupon or bill sizes unless there is a “supersized” stimulus plan following a Democratic sweep, the same scenario that prompted Goldman to expect a surge in yields.
See Chart:
10y US Yield outcomes in various US election scenarios. All else being equal.
https://www.zerohedge.com/s3/files/inline-images/Goldman%20yields%20summary_1.jpg?itok=a08oXYwW
As BofA's Mark Cabana writes, "the limited supply impact is due to the very large existing UST cash balance and recent coupon supply increases that generate sizeable net cash raises each month ($200bn / month thru end ‘21)."
Before we get into the specifics, we fast forward to the bank's conclusions which, similar to Goldman's recent thoughts on the matter, find that "any sizeable stimulus would support higher back end UST rates & a steeper curve due to improved growth expectations & higher longer-run deficits." At the same time, front end rates will continue grinding lower in most scenarios since bill supply will be limited and Treasury is sitting on $1.65+tn of cash which will likely be used to fund new stimulus: "A paydown of this cash results in more money in the banking system which will offset bill supply."
IF the stimulus is delayed until after the election, there are 3 most likely sizes as shown in the table below; the BofA base case is a $1.5tn stimulus package after the election but there is a great deal of uncertainty over the size, timing and makeup of any bill.
See Table
Post election stimulus scenarios
- "Supersized" ($3.5tn): This scenario assumes the Democrats sweep the November elections and pass a bill that closely resembles the $3.4tn Heroes act passed by the House Democrats in May. The bill would include a second round of stimulus checks, $1tn in State and Local aid paid out in two installments and an extension of the $600/week additional unemployment. Even under a Democratic sweep, the likelihood of a bill of this magnitude passing is low given that the economic recovery has been much faster than what was anticipated in May.
- “Baseline” ($1.5tn): This is our current assumption and assumes that Biden wins the presidential election and Congress control remains split. Similar to the extreme scenario, the bill is expected to include another round of stimulus checks, $500bn in aid for state and local governments and an extension of the additional unemployment benefits but at a lower rate. Expect a similar sized bill if Trump were to be reelected and Congress control remains split.
- “Skinny” ($0.5tn): This scenario assumes a Republican sweep of the elections, Under this scenario, the Republicans would move forward quickly with a skinny deal targeted primarily at money for the PPP program and unemployment insurance. Expect an earlier passage than the other two scenarios even though Democrats would still hold the House until January.
What about the stimulus bill impact on rates markets and financing needs? In Table 2, BofA outlines the impact of these stimulus scenarios on Treasury financing needs.
Coupons: As noted above, the Treasury has already increased coupon sizes substantially this year to all time highs and most scenarios should see little change to coupon sizes unless there is a “supersized” stimulus plan following a Democratic sweep.
Bills: there is a range of bill supply outcomes between now & 1H ’21 as shown in Table 2. Much of the bill supply impact will be a function of the Treasury cash balance level, which remains near record levels.
See Table 2:
Financing need in different stimulus scenarios
When considering Treasury supply scenarios, one must also consider 2 wildcards: (1) Treasury cash balance (2) PPP forgiveness options. A few details on each:
Treasury cash balance: As we have shown previously, the Treasury currently sits on $1.65trillion of cash, well above historical norms and near a record high.
See chart:
Treasury Cash Balance
https://www.zerohedge.com/s3/files/inline-images/treasury%20cash%20balance%2010.3.jpg?itok=Lp7ehg9P
These funds will likely be used to pay for a large portion of any fiscal stimulus plan and the Treasury will ultimately target a $400bn cash balance after stimulus needs are met & PPP loan forgiveness is complete, suggesting a $1 2 trillion drawdown from current levels. Treasury will face material pressure to get their cash balance down by the summer of next year. Specifically, as BofA notes, Treasury will need to lower their cash balance to $133bn by end July ’21 to be in compliance with the existing debt limit law
Continue reading at:
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JAMES GRANT: WHY MARKET RISK IS NEAR THE HIGHEST IN HISTORY
Authored by Adam Taggart via PeakProsperity.com,
Distortion in the cost of credit is the not-so-remote cause of the raging fires at which the Fed continues to train its gushing liquidity hoses. But the firemen are also the arsonists... It was the Fed’s suppression of borrowing costs, and its predictable willingness to cut short Wall Street’s occasional selling squalls, that compromised the U.S. economy’s financial integrity.
Jim sees the degree of speculation, overvaluation and malinvestment in today’s markets as about as bad as it’s ever been.
He lays much of the blame at the feet of the Fed and its global central bank brethren, who collectively through their intervention have suppressed interest rates to their lowest levels in all of recorded history:
SEE CHART:
Still the lowest interest rate in 5000 years!
https://www.zerohedge.com/s3/files/inline-images/5763fc8791058423008c9ad1.jpg?itok=7TwD5dYZ
This has resulted in all sorts of unnatural distortions and deformations that are hollowing out our economy and social structure.
As Jim recently wrote:
Needing income, investors will take imprudent risks to get it. And if 2% invites trouble, zero percent almost demands it.
Not only do 0% interest rates act as “molasses” on growth by gumming the system up with zombie institutions and toxic malinvestment, but it imperils the social good.
Savers and investors, increasingly desperate for yield, are forced to accept worse and worse choices in attempt to stay afloat.
Under this regime, the rich benefit disproportionately at the expense of everyone else AND it creates a “hyperinflation in the cost of retirement”. This accelerating war on the 99% can not stand for much longer without serious consequences and repercussions.
So when an expert like him warns that today’s markets are at one of the most dangerous levels of speculation in history, we all better be paying close attention:
LISTEN: MARKET RISK NEAR HIGHEST IN HISTORY
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SOURCE: https://www.zerohedge.com/markets/james-grant-why-market-risk-near-highest-history
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CAN THE STOCK MARKET PROTECT WEALTH BETTER THAN GOLD AND SILVER?
Authored by Doug French via The Mises Institute,
Trying to stay ahead of the government printing press is the modern citizen’s constant worry. There are no hard money central bankers, let alone politicians. Central bankers have stood the idea of present value on its head in attempts to stimulate dead economies and zombie enterprises while providing interest bills to governments with the possibility, although remote, of actually being serviced.
While stock trading is the craze in the US, in Turkey, where the currency (the lira) is under great duress, Turks are doing what they’ve always done, trading the paper their government relentlessly depreciates for gold.
“Turks are piling into gold, long their favorite investment, as the country’s financial system unravels,” write David Gauthier-Villars and Caitlin Ostroff for the Wall Street Journal.
When Istanbul’s Grand Bazaar reopened in June, long lines of people waited outside the its many gold shops to buy gold coins (favored by older Turks) or mini-ingots (favored by the young).
Gold has outperformed domestic stocks, bonds, and real estate over the past ten years. Safe-box maker and seller Mustafa Tuzcuoglu has seen a 50 percent increase in demand. His customers “keep half of their savings at the bank and half at home. That’s what I’m doing too.”
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SOURCE:
https://www.zerohedge.com/markets/can-stock-market-protect-wealth-better-gold-and-silver
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US DOMESTIC POLITICS
Seudo democ duopolico in US is obsolete; it’s full of frauds & corruption. Urge cambio
"The Senate's floor schedule will not interrupt the thorough, fair, andhistorically supported confirmation process laid out by Chairman Graham."
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THE ABSURDITY OF COVID "CASES"
We have had nearly eight months of life and liberty stolen from us by politicians and their hysteria-promoting accomplices in media. How much more will we accept?
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EL CORONEL TIENE QUIEN LE ESCRIVA
READ THIS DEFENSE ON TRUMP’ TAX EVASION
DOUG CASEY DEBUNKS FOUR MYTHS ABOUT TRUMP, TAXES, & THE ECONOMY
"Trump should be proud of himself for cutting his taxes. It's your patriotic duty as an American citizen to deny revenue to the State and the kind of people that are drawn to it and populate it..."
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MICROCHIP'D? DARPA BIOCHIP TO "SAVE" US FROM COVID CAN CONTROL HUMAN DNA
...as totalitarian states and governments the world over attempt to require proof of negative tests before travel, a new tool in the shed of government surveillance and control is revealing itself.
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FREE SPEECH CRISIS ON CAMPUS: 60% OF STUDENTS KEEP QUIET DUE TO FEAR HOW OTHERS WOULD RESPOND
Colleges have become perilous places to express unpopular ideas. Professors and students fear being shouted down, shunned, or, in some cases, fired or expelled. This has a chilling effect on the classroom.
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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
IRANIAN FUEL SEIZED BY US FOR VENEZUELA 'SANCTIONS-BUSTING' DISCHARGES IN NEW YORK
Maduro's Venezuela still claiming "victory" after two other Iranian vessels made it through...
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ARMENIA "READY" TO ESTABLISH CEASEFIRE WITH AZERBAIJAN, CITES 'PROOF' OF TURKISH JET ATTACKS
Armenian PM blasts Turkey as “once again advancing on a genocidal path.”
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SPUTNIK and RT SHOWS
GEO-POL n GEO-ECO ..Focus on neoliberal expansion via wars & danger of WW3
-Pompeo Cuts His Asia Trip Short, Planning Only Tokyo Meetings
-COVID-19 Live Updates: Germany Reports 2,200 New Cases
-Mass Anti-Government Protests Held in Israel in Wake of New COVID19 Restrictions
-Man Opens Fire at Pro-Trump Car Parade in Ohio - Reports
-Belarus's Security Forces Detain 11 People During Saturday's Unauthorised Protests
-Moscow Won a ‘Reliable Partner’ in Europe Thanks to German Reunification
-Conspiracy Theories About Hitler's Survival & WWI 'Stab in the Back'
-‘Enough is Enough’: Iran’s Zarif Calls on World Commu to Force ISR to Destroy Its Nuke
-Armed to the Teeth: Chinese Military Boasts New Combat Drone During Drills
-YouTuber Tana Mongeau Offers Nudes to Those Who'd Vote Trump Out
-CNN Leads Media Reporting Donald Trump's COVID Condition as 'Serious'
-Trump's COVID-19 Diagnosis: How Can it Affect POTUS' Reelection Campaign?
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