Nueva Democracia: JAN 4 21 ND SIT EC y POL

JAN 4 21 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

WORLD OUT OF WHACK: GLOBAL MARKET COMMENTARY AND OUTLOOK

Submitted by Ritesh Jain of World Out Of Whack

Today, much like in the past, it is not the best idea that wins, but the narrative which captures the most mindshare. Nothing rings true than this quote of 1933 made by the Propaganda Minister of Nazi Germany

"It is the absolute right of the state to supervise the formation of public opinion." - Joseph Goebbels

As Coronavirus cases continue to increase in many parts of the world and lockdowns are put in place, the story should look grim; but there is also light at the end of the tunnel because of vaccines.

The vast liquidity we have today is emanating from the balance sheets of central banks. As more electronically printed dollars are pumped into financial markets, the cost of financing goes down, thereby pushing asset valuations higher. This view is further reinforced by a weakening dollar, and even by the fact that Jerome Powell has called out the explicit link between low interest rates and the high valuations in markets.

See Chart:

Global Liquidity vs MSCI World

https://cms.zerohedge.com/s3/files/inline-images/rj2.png?itok=EfT1QKVd

Vast amounts of liquidity can also create a lot of fragility in markets. Even if central banks continue injecting liquidity into the system, at some point markets will fully price it in. Once that happens, it can become the bigger driving force that may set up markets for a taper tantrum 2.0 of sorts as the system demands not just a continuation of liquidity provision but increasing amounts of it. Investors should no longer continue to think about how much central bank balance sheets have increased, but rather the rate at which the balance sheets are growing. The exhibit below by Morgan Stanley points to a deceleration in the rate of growth of G-4 central bank balance sheets as we approach the end of 2022.

See Chart:

G-4 Central Banks Balance Sheet forecast

https://cms.zerohedge.com/s3/files/inline-images/central%20bank%20BS_10.jpg?itok=glg291My

As most readers will already know, financial markets are complex systems, which means they are highly interlinked and have feedback loops. These feedback loops lead to nonlinear effects, which means small shocks can transform into large ones due to each node in the system being interlinked to other nodes. For comparison, when too much snow accumulates, the probability that even a small snowflake can trigger an avalanche goes up significantly.

We have had quantitative easing programs since 2008, but we have not seen inflation in goods and services because banks were not lending money. This meant that an increase in the money supply did not make it into the real economy. Today, however, after experiencing an economic shock caused by COVID-19, the government response has led to money reaching the real economy.

The pandemic has taught governments that they can now – through MMT-lite programs – lend directly to the economy through the commercial banking channel.

See Chart:

21% of all USD were printed in 2020

https://cms.zerohedge.com/s3/files/inline-images/rj5.png?itok=Wl6ngFFh

“You can lead a horse to water, but you can’t make him drink” is an apt quote for liquidity (M2) sloshing around in the system but refusing to multiply (M3). The M3 velocity has been stubbornly falling since March 2020 but as per Gavekal’s Velocity Indicator this money is finally looking to multiply. Said differently, the horse has finally decided to drink water.

But before you start admiring the below chart you should keep in mind that

What is good for the economy is bad for the markets and what is bad for the economy is good for the markets.

Let me explain. Liquidity is fungible. It can either go to the Financial markets or it can go the real economy. If vaccines work and business closures and layoffs subside then the money hiding in financial assets will spill over to the real economy and force Monetary policy to tighten financial conditions.

So, rising Money velocity is not good for Financial markets and on the contrary will lead to elevated volatility in financial assets.

See Chart:

Gavekal velocity Indicator vs Economic velocity

https://cms.zerohedge.com/s3/files/inline-images/rj6.png?itok=VdnC0agc

The increase in velocity is bad for US dollar and US Dollar should continue to fall but not in a straight line. This liquidity is currently lifting all boats, but I think we will see some assets doing better than others in 2021

Central Bank digital currency.

A lot has been written in the media about central bank digital currencies (CBDC), and we might see the dawn of CBDCs with China increasingly looking like the first one to launch its version, known as CBEP.

As per a MicroStrategy paper titled “The cost of Money being nothing”:

If money supply is created centrally, it must also be used, or directed, centrally as indeed we are seeing at the moment with the lockdowns and the enormous surge in budget deficits. Under a CBDC scheme, the central bank would become arbiter of who should and shouldn’t be granted credit. By determining the price of money, it determines what is “value” and thereby what is produced and consumed, and how it is produced. It determines what the real return on capital is and how much capital is destroyed. By printing money to buy Treasuries, it has reshaped the entire economy around greater government spending and control. Under a central bank digital currency, monetary policy will become completely political.

Continue reading and see interesting charts at;

SOURCE: https://www.zerohedge.com/markets/world-out-whack-global-market-commentary-and-outlook

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IN SURPRISE TO MARKETS, BOJ BUYS SMALLEST AMOUNT OF ETFS IN FOUR YEARS

The Bank of Japan bought just 50.1BN yen of ETFs on Monday - the first day of 2021 - the smallest amount it has bought in more th an four years on a day when it has made a purchase as part of its ETF buying program.

See Chart:

BOJ ETF and JREIT Puchases

https://cms.zerohedge.com/s3/files/inline-images/BOJ%20ETF%20purchases%201.4.jpg?itok=W3aLJi_o

The reason this is notable is two-fold: i) it made headlines on Bloomberg, demonstrating that in this centrally-planned "normal" what really matters is how much risk assets central banks buy (and at least the BOJ is sincere about its intentions to prop up the stock market no matter the optics, unlike its "shy" peers at the Fed), and ii) the central bank buying "only" 50bn yen in stocks is a newsworthy event.

As a reminder, in August 2016, after increasing its annual purchase target to 6 trillion yen, the BOJ more than doubled its daily purchase amount to over 70BN yen.

….

SOURCE: https://www.zerohedge.com/markets/surprise-markets-boj-buys-smallest-amount-etfs-four-years

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WHAT'S BEHIND TODAY'S SUDDEN SELLOFF: THE ANSWER LIES IN GEORGIA

by Tyler Durden

A Democratic "blue sweep" in Georgia "is an outcome for which investors aren’t positioned, so it could cause a market mess."

There has been some confusion about the catalyst behind this morning's sudden market selloff which followed promptly after the S&P hit a fresh all time high.

While there has been no single, definitive news catalyst, the answer for the risk weakness is to be found in Georgia, which goes to the polls in special run-off elections for its U.S. Senate seats. As a reminder, if Democrats win both, then the Senate will be split 50-50, and they will control it thanks to the vice president’s casting vote

See Chart:

Small Caps, S&P, Dow and Nasdaq

https://cms.zerohedge.com/s3/files/inline-images/2021-01-04%20(2).jpg?itok=cR3PNBFr

As Bloomberg's John Authers explains overnight, while there have been few polls over the last two months, and with so much depending on getting people out to vote in the middle of winter during a pandemic, much must be left to conjecture, "but the prices on the Predictit prediction market show it is close."

First, this is the race between the Democrats’ Raphael Warnock and Republican Kelly Loeffler:

See Chart:

PREDICTIT

https://cms.zerohedge.com/s3/files/inline-images/pr1.png?itok=2mUeFpZC

So why is Georgia suddenly a concern?

The same trend is at work in the contest between the Democrats’ Jon Ossoff and Republican David Perdue, who is still hanging on to a lead:

See Chart:

PREDICTIT

https://cms.zerohedge.com/s3/files/inline-images/pr2.png?itok=fLYNXJb_

Strikingly, while online betting markets priced in a relatively modest 25-30% probability of a blue sweep (i.e., Democrats winning both GA runoffs tomorrow), the Predictit odds for a "blue wave" have soared in the past few days, surging just shy of 50%.

See Chart:

“BLUE WAVE”

https://cms.zerohedge.com/s3/files/inline-images/2021-01-04%20(3).jpg?itok=vyOr1QjD

The sudden realization that a blue wave appears likely has also inverted the VIX term structure, with the one-week volatility rising in addition to spot as the tenor includes the Georgia race.

See Chart:

VIX Term Structure

https://cms.zerohedge.com/s3/files/inline-images/VIX%20inverts.jpg?itok=BO_qQYr3

As a reminder, should Democrats win in GA and regain control of the Senate agenda, that would be a huge deal as "obstructionist tactics would become almost impossible for the Republicans" while the chances of more fiscal spending to alleviate the coronavirus, or a bigger push on infrastructure, would look much stronger. This, needless to say, "would boost the reflation trade" while more aggressive fiscal policy would also mean higher interest rates, while reducing the pressure on the Federal Reserve to keep them low.

It's also why 10 Year breakevens just hit 2.01% earlier today...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-01-04%20(4).jpg?itok=2SRYWait

... the highest level since 2018.

See Chart:

10 Y Breakevens

https://cms.zerohedge.com/s3/files/inline-images/2021-01-04%20(5).jpg?itok=i8l4_pD1

This, as Authers concludes "is an outcome for which investors aren’t positioned, so it could cause a market mess."

Morgan Stanley's Michael Wilson agrees, and this morning repeats his recent recurring warning that a notable market correction is imminent, writing that "the "risk-reward" of the US equity market has deteriorated materially and the market is ripe for a drawdown" and he lists the Georgia Senate seat run-off election as a potential downside trigger.

To be sure, while one can't find much fear about a spike in inflation in the otherwise somnolent 10Ys nominals, Wilson writes that "the big surprise of 2021 could be higher inflation than many, including the Fed, expect. Currently, the consensus is expecting a gradual and orderly increase in prices as the economy continues to recover. However, the move in asset prices like Bitcoin suggest markets are starting to think this adjustment may not be so gradual or orderly.

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/MS%20bitcoin.jpg?itok=HxDsW1S_

The Morgan Stanley strategist concurs and adds that "with global GDP output already back to pre-pandemic levels and the economy not yet even close to fully reopened, we think the risk for more acute price spikes is greater than appreciated. That risk is likely to be in areas of the economy where supply may have been destroyed and ill prepared for what could be a surge in demand later this year—e.g. restaurants, travel and other consumer/business related services."

Finally, while the best inflation hedges are stocks and commodities in the intermediate term, "inflation can be kryptonite for longer duration bonds which would have a short term negative impact on valuations for all stocks should that adjustment happen abruptly."

We may be seeing the start of that adjustment this morning.

….

SOURCE: https://www.zerohedge.com/markets/whats-behind-todays-sudden-selloff-answer-lies-georgia

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US DOMESTIC POLITICS

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

SNYDER: THE UNITED STATES HAS BECOME A BANANA REPUBLIC MUST READ!

If we continue destroying the U.S. dollar at our current pace, toilet paper will eventually be more valuable than U.S. dollars.

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TRUMP PRESENTS 'THE REAL NUMBERS' AT GEORGIA ELECTION EVE RALLY

"How can you certify an election when the numbers being certified are verifiably WRONG..."

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THE AMERICAN SYSTEM IS ONE BIG GRIFT

Authored by Peter van Buren via TheAmericanConservative.com,

The Bidens, and even the Clintons, are small-time players... The real corruption is much bigger, much higher, and entirely unpunished...

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FDA ADMITS PCR TESTS GIVE FALSE RESULTS, PREPARES GROUND FOR BIDEN TO "CRUSH" CASEDEMIC

"Some hack at the CDC or FDA will issue new guidance lowering the Ct the labs use, and cases will magically start to fall. In reality, the change will only eliminate false positives, but most Americans won’t know that."

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US NAVY PREPARING LARGEST UNDERWATER DRONE FOR DEPLOYMENT

"Snakehead is a long-endurance, multi-mission..."

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CRUZ: GOOGLE IS THE "MOST DANGEROUS COMPANY ON THE FACE OF THE PLANET"

describes big tech as the “single greatest threat” to “free and fair elections"

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IS THIS ONE MORE BIG LIE?:

OVER 432,000 VOTES REMOVED FROM TRUMP IN PENNSYLVANIA, DATA SCIENTISTS SAY

"There were vote movements across all candidates. However, we did not see the same type of negative decrements to any of the [other] candidates that we saw with President Trump’s tallies..."

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WE WILL SEE IT SOON

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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

PUTIN PUSHES PLAN TO ROLL OUT COVID "IMMUNITY PASSPORTS" IN RUSSIA

...the Russian government is considering the development and distribution of documents verifying whether individuals have been vaccinated...

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IN BIZARRE FLIPFLOP, NYSE IGNORES TRUMP EXECUTIVE ORDER, REFUSES TO DELIST CHINA TELCOS

Five words... "affiliated with the Chinese military"?

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THE GREAT RESET, PART III: CAPITALISM WITH CHINESE CHARACTERISTICS

It’s as if the Western oligarchy looked to the “socialism” on display in China, and said, “yes, we want it.”

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IRAN STARTS 20% URANIUM ENRICHMENT JUST AS US CARRIER ORDERED BACK TO GULF REGION

"Due to the recent threats issued by Iranian leaders against President Trump and other US government officials, I have ordered the USS Nimitz to halt its routine redeployment," announced Miller.

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BACK TO WW3 INITIAL PLAN? That could create big popular hate on him

TRUMP 'ABRUPTLY' OVERRULED PENTAGON CHIEF ON CARRIER PULLOUT FROM MIDDLE EAST

US officials told Politico: After public threats from Iranian leaders over the weekend, Trump abruptly ordered Miller to turn the carrier around and keep it in the Middle East...

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TRAIN CARRYING 165 NEW VOLKSWAGEN CARS SABOTAGED IN MEXICO

A train carrying more than 160 Volkswagen cars was derailed in Mexico last Wednesday by armed thieves, according to Mexican authorities

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BORIS JOHNSON IMPOSES NEW NATIONAL LOCKDOWN ACROSS ENGLAND: LIVE UPDATES

Johnson says he hopes the

UK will emerge from the lockdown in mid-February.

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SAUDI ARABIA LIFTS ITS 3.5 YEAR ECONOMIC BLOCKADE OF QATAR IN US-BROKERED DEAL

Land, air, and sea borders had been closed by neighboring GCC states since economic & diplomatic war initiated in mid-2017...

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SPUTNIK and RT SHOWS