Nueva Democracia: 0CT 9 20 ND SIT EC y POL

0CT 9 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

This is the best explanation of our fake economy so far

THE GUIDING PRINCIPLE OF OUR TIME - CYA!

Authored by Louis-Vincent Gave via Gavekal Research,

What is the dominant guiding principle of western societies today?

At the risk of sounding crass, let me suggest that it is the “cover your ass” or CYA principle. This principle has always been fairly prominent in participative democracies. But now it has gone into hyper-drive - so much so, that the CYA principle is also now an important driving force even in financial markets.

SO: CYA "Cover Your Ass"

Unfortunately, we still seem stuck in this mindset, even as the weekly death tolls across western countries have dipped to generational lows, almost regardless of the Covid policies they adopted

See Chart:

After peaking in the spring, total weekly death rate have slumped

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-16-56.jpg?itok=HZLx9tbN

CYA and the fiscal and monetary policy mix

Moving on to the far less controversial fiscal and monetary policy responses to the recession, can there be any doubt—again—that policy is being driven above all by the CYA principle? What policymaker wants to espouse the Hippocratic principle of “first, do no harm,” and let markets and prices find their own footing? None. As Anatole has argued, policymakers are scrambling always to do more, with ever-bigger budget deficits funded by ever-more money printing (see Will A Keynesian Phoenix Arise From Covid?).

Can this new enthusiasm for budget deficits and money printing guarantee prosperity?

When US governments keep spending under control, as Bill Clinton’s did in the 1990s or the Tea-Party-led Congress did after 2011, the broad equity market goes through long phases of “rerating” against gold (see the chart below).

See Chart:

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-25-50.jpg?itok=G0c8WgDu

And when the government embraces expanding budget deficits funded by the Federal Reserve, as with George W Bush’s “guns and butter” policies or Donald Trump’s rapid deficit expansion, gold massively outperforms the broad equity market. Where does this leave us today? Since 2014, the equal-weighted S&P 500 has delivered the same returns as a pet rock—gold. This is because the index has lost a third of its value since making a high in September 2018, and has basically been flat-lining since late April (see the chart below).

See Chart:

Equities has lost a third of their value in the last 2 years

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-26-15.jpg?itok=KmFCStvp

This may help to put the current debate on US stimulus into context.

First, does anyone doubt that the US government will release a tsunami of new spending after the election? Because of the CYA principle, what policymaker will want to be seen to be blocking recovery?

Secondly, will this increase in budget deficits, funded by the printing press, trigger stronger economic growth? If so, why weren’t we doing it before? Will it lead to higher asset prices? If so, why are we so far off the 2018 high? Or will it mean further currency debasement? Looking at the ratio between the equal-weighted S&P 500 and the gold price, will a new round of stimulus mean a return to the February 2020 high? Or will it see the March 2020 low taken out?

Another way to look at this problem is through the prism of the US dollar. Will another round of fiscal stimulus be dollar-bullish? Or will it be dollar-bearish? The answer matters greatly to all those foreign investors currently seeking shelter in US equities. For them, the return on US equities has been flat since late May - and going further back, flat since mid-2019.

See Chart:

Foreing investor in US equities have been trading water since May

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-27-13.jpg?itok=-j9j-101

So, if another round of stimulus weakens the US dollar, as seems likely if the stimulus is funded by the Fed, then foreign investors will have to hope that increased equity values will more than compensate for their foreign exchange losses.

CYA and indexing

This brings me to what is likely the most important element of all this for readers: the CYA principle and investing. Gavekal has written at length about the dangers of indexing (see, for example, Exponential Optimization). We have also argued that indexing is the new in-vogue form of socialism. Capital is not allocated according to its marginal return—the foundation on which capitalism rests. Instead, capital is allocated according to the size of companies. Just as in the days of the old Soviet Union or Maoist China, the bigger you are, the more capital you get. It is hard to think of a stupider way to allocate one of the key resources on which future growth relies. So why is indexing so popular? Simple: it is the ultimate CYA strategy.

As Charlie Munger likes to say: “Show me the incentives, and I will show you the outcome.” In a world where every money manager is told his or her target is to achieve a performance close to that of the index, it is hardly surprising that ever-more money ends up getting indexed (see Indexation = Parasitism). As a consequence, over the years the dispersion of results among money managers has become smaller and smaller.

Now, the Holy Grail of money management is to achieve decent long term returns combined with low volatility in those returns. However, in a world where ever-more capital is directed into investments that outperform— playing momentum rather than mean reversion—you inherently end up with greater volatility all round. Take the past few years as an example: since January 2018, the S&P 500 equal-weighted index has suffered six corrections of -10% or greater, including one -20% drop and one -40% drop. In contrast, in the preceding two years—January 2016 to January 2018—the S&P 500 did not see a single -10% drop, while the July 2016 to January 2018 period didn’t even see a -5% drop. Clearly, something in the environment has changed.

See Chart:

The market has become a lot of more volatile in the last few years

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-36-33.jpg?itok=r49FsWHc

And should we really be surprised if the growth rates of our economies continue to slip? Why should we expect a positive growth outcome from an epic misallocation of capital? Take the current Big Tech craze as an example: everything is organized for investors to sink ever more capital into those very companies that need it least, and whose best use for this gusher of money is typically to buy back their own shares.

See Chart:

For big tech, the best use of capital is typically to bay back shares

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-40-09.jpg?itok=Gze7auAu

This CYA investment-decision-making process appears to be one of the key drivers behind the recent divergence between the S&P 500 market-capitalization-weighted index, and the S&P 500 equal-weighted index.

See Chart:

Indexation is contributing to the market’s anomalous divergence

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-40-52.jpg?itok=MUpnQ4nJ

S&P 500 Market- Cup- Weighed vs S&P 500 equal weighed

But it may also explain an interesting point raised by my friend Vincent Deluard, strategist at StoneX. In a recent tweet (he’s well worth following) he noted that each of the last four major market corrections bottomed out in the last week of the quarter, just after the index futures expired. Now, this could be a remarkable coincidence. On the other hand, it might say a great deal about how capital is allocated today.

See Chart:

Market corrections tend to bottom in the last week of the quarter

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-42-13.jpg?itok=FYLO17Mg

Conclusion

In A Study Of History, Arnold Toynbee reviewed the rise and fall of the world’s major civilizations. He showed that throughout history, when any civilization was confronted with a challenge, one of two things could occur. The elite could step up and tackle the problem, allowing the civilization to continue to thrive. Alternatively, the elite could fail to deal with the problem. In this case, as the problem grew, their failure led to one of three outcomes.

1) A change of elite. An example is the clear-out of the French political class at the time of decolonization. As the old Fourth Republic stalwarts struggled to meet the challenges of Asian and African independence movements, they were replaced by Charles de Gaulle who brought in new personnel and established the institutions of the Fifth Republic.

2) A revolution. Obvious examples include the French revolution, with the bourgeoisie taking over from the aristocracy, and the American revolution, with the local elite taking power from the British king.

3) A civilizational collapse. Examples include the collapse of the Aztec, Mayan and Inca civilizations following the arrival of the conquistadores. Another is the disappearance of the Visigoths in Spain and North Africa following the Arab-Muslim invasions at the start of the eighth century.

With this framework in mind, how does CYA as an organizational policy approach help in dealing with challenges? The obvious answer is that if CYA is your guiding principle, the problems you chose to tackle will be those where there is little controversy within the elite about the required solutions.

This explains the constant hectoring about tackling climate change. Here, policymakers can promise to spend lots of money, without leaving their backsides too exposed. This accounts for the dramatic divergence between the performance of green energy producers .

See Chart:

Green Energy producer have broken ranks with conventional producers

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-44-06.jpg?itok=1_5vzEZt

This brings me back to Karl Popper’s theory that at any one time, there is a set amount of risk in the system. Any attempt to contain this risk either displaces it to somewhere else, or stores it up for later. If Popper was right, then the extreme aversion of our policymakers to taking risks means that the risk must appear elsewhere. But where? Perhaps in financial markets? It does seem not only that spikes in the Vix have been getting sharper lately, but that the Vix is also staying more elevated than you would expect in the middle of a roaring bull market.

See Chart:

The VIX is remarkably elevated for the middle of a bull market

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-50-39.jpg?itok=ErePWMVF

Or, to put it another way, over the past few years, it does seem that the “downside gaps” in markets have started to become more vicious.

See Chart:

The downside gaps in the market has been get it more vicious

https://www.zerohedge.com/s3/files/inline-images/2020-10-09_6-51-04.jpg?itok=OvoYTWrg

So perhaps CYA makes sense in today’s financial markets. The challenge, of course, has become finding the instruments that allow you to cover your posterior. In March 2020, as equity markets tanked, government bonds did not diversify portfolios adequately. And in September, as equities fell -10% from peak to trough, bonds also failed to deliver offsetting positive returns.

This new development—that US treasuries no longer offer CYA protection for equity investors in difficult times—is an important one. It makes allocating capital to either equities or bonds a lot more challenging. Or at least it becomes a lot more challenging if you are compelled to follow contemporary western society’s all-important guiding principle: CYA.

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SOURCE: https://www.zerohedge.com/markets/guiding-principle-our-time-cya

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US DOMESTIC POLITICS

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

DEMOCRATS OUTPACE REPUBLICANS IN EARLY VOTING

"We’ve never seen this many people voting so far ahead of an election."

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Here a Pro-TRUMP view

POLL WHICH CORRECTLY CALLED 2016 ELECTION SEES ANOTHER "SHOCKING" OUTCOME IN NOVEMBER

Currently, the major polls give former Vice President Biden more than a 9-point lead nationally against President Trump – according to RealClearPolitics National Average.

See Table + Chart:

https://www.zerohedge.com/s3/files/inline-images/polling%20RCP.jpg?itok=_ciW35Ib

And the Predictit markets imply a 67% probability of Biden winning on November 3rd. Additionally, those markets suggest that Democrats will win both the Senate and House (66% and 88% probabilities, respectively). Quite simply, it appears that a Blue Wave is fast approaching, something which the market has not only priced in, but has successfully digested as a favorable narrative for risk assets.

It’s very possible that Trump will win Florida, North Carolina and Arizona. If so, a win in Pennsylvania or Michigan will likely put him over the top in the electoral college. And speaking of "shocking", Camelot notes that as far as the Senate and House are concerned, it also appears that Republicans will keep control of the Senate, especially if Trump has a strong night. On the other hand, the House is highly likely to remain in Democratic control.

First, a few quick notes, on what happened over the past four years, and a look at the "Market Narrative" of Trump's presidency prior to Covid-19:

See Chart:

https://www.zerohedge.com/s3/files/inline-images/SPX%20narrative.jpg?itok=JdagCVey

Fast forward to today, when according to online betting site PredictIt.org, the probability of Democrats winning White House 63%, win Senate 66%, win House 88% (here, a question should be asked: since the contracts are relatively illiquid, is there one or more major players who have "cornered" the PredictIt market and are swaying public opinion with relatively low sums of cash).

See Chart:

https://www.zerohedge.com/s3/files/inline-images/implied%20odds.png?itok=Y-Kko7bE

Next, we look at the Electoral College Map after the 2016 election:

See Map:

Election 2016

https://www.zerohedge.com/s3/files/inline-images/election%202016_0.png?itok=KCtBwSxq

Trafalgar Group was named best polling firm of 2016 presidential race. It was one of few pollsters to predict Trump would win PA and MI (sources: Trafalgar Group and RealClearPolitics) and also Trump's victory. This is what Politico wrote in its post-election mea culpa about the Trafalgar Group:

The signs of a polling disaster were all there, but almost no one besides Donald Trump was paying attention.

There were surveys showing Trump winning, but they were ignored by most news outlets, dismissed as partisan polls conducted using automated phone technology that eschews calling cell-phone users.

The secret to Trafalgar's success is that it best adjusted its polling to include ‘shy Trump voters’ and the votes missed in other polls. Democracy Institute also correctly predicted Trump’s victory in 2016, as well as Brexit.

Which brings us to today, and what Camelot Portfolios sees as the likely firewall states for Trump and Biden:

See Chart:

https://www.zerohedge.com/s3/files/inline-images/firewall%20states.png?itok=G7U16yqK

There's more shocks, because according to Camelot, Republicans are also likely to retain their control of the Senate.

Current Senate makeup is 53 Republicans and 47 Democrats and Independents.
35 Senate seats up for grabs.
23 seats are held by Republicans; 12 held by Democrats.
Republicans at disadvantage; need to protect more seats.
Most vulnerable incumbents are in: Alabama (Jones-D), Colorado (Gardner-R), Maine (Collins-R), Michigan (Peters-D).
Assuming Trump polling in these four states will determine the Senate race: Republicans likely to pick up AL, Democrats likely to pick up CO and Maine – for net gain of one seat in Senate.
Outlier Scenarios: Trafalgar polling shows Republican in Michigan (John James) with slight lead; and Democrat in North Carolina with slight lead.
Likely November: Republicans keep Senate control with 52 seats.

Finally, in what may be the worst possible news for markets which are now convinced a blue sweep is inevitable, Camelot says that Democrats will continue their dominance in the House, where they have a clear advantage:

2016: RealClearPolitics Average had Democrats +0.6 near Election Day -> Final was Republicans +1.1 -> GOP lost 6 seats; maintained majority 241-194
2018: RealClearPolitics Average had Democrats +7.3 near Election Day -> Final was Democrats +8.4 -> Democrats gained 41 seats; retook majority 235-199
2020: RealClearPolitics Average has Democrats +6.0 during the last week.

Readers curious for more can register for the next Camelot call, which will take place next Tuesday, Oct 13 at the following link

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SOURCE: https://www.zerohedge.com/political/poll-which-correctly-called-2016-election-sees-another-shocking-outcome-november

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Possible anti-Trump voters

59 MILLION AMERICANS EXPECT INCOME LOSSES AHEAD OF PRESIDENTIAL ELECTION

The working poor, but more specifically, minority households continue to struggle the most economically from the coronavirus pandemic.

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HAS OUR LUCK FINALLY RUN OUT?

We are woefully unprepared for a long run of bad luck...

Authored by Charles Hugh Smith via OfTwoMinds blog ,

Actions have consequences, and after 30 years of waste, fraud and corruption being normalized by the parasitic elites while the purchasing power of labor decayed, the karmic consequences can no longer be delayed by doing more of what's hollowed out the economy and society.

Which brings us to luck. As a general rule, historians seek explanations which leave luck out of the equation. This gives us a false confidence in the predictability and power of human will and action and cycles. Yes, cycles and human action influence outcomes, but we do a great disservice by shunting luck into the shadows as a non-factor.

The global economy has been extraordinarily lucky for 75 years. Food and energy have been cheap and abundant. (If you think food and energy are expensive now, think about prices doubling or tripling, and then doubling again.)

The next five years might have us singing this line with feeling.

https://www.zerohedge.com/s3/files/inline-images/turchin1-17_4.png?itok=LqdtIGcA

….

SOURCE: https://www.zerohedge.com/markets/has-our-luck-finally-run-out

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ORGANIZERS CANCEL NEXT WEEK'S TRUMP-BIDEN DEBATE

Instead, the CPD will shift its focus to the third presidential debate, set for Oct. 22 in Nashville at Belmont University. That debate will be divided into six 15-minute segments.

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THE STAGE HAS BEEN SET FOR A HISTORIC NATIONAL MELTDOWN...

Authored by Michael Snyder via TheMostImportantNews.com,

Everything that our forefathers worked so hard to build is at risk, and we are getting very, very close to crossing the point of no return...

Everything that has happened in 2020 so far has set us up for a grand finale that none of us will ever forget.

Our country is literally falling apart all around us, and nobody seems to have a way to stop it from happening.

In essence, about half the country believes that this election may not be legitimate.

Continue reading at:

SOURCE: https://www.zerohedge.com/political/stage-has-been-set-historic-national-meltdown

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The fact is that Trump has divide our Nation to levels never seen before

DOES TRUMP WILL KEEP AMERICA TOGETHER?