Nueva Democracia: DIC 13 2021 P-B ND SIT ECON y POL Part 1 & P 2

"This tapering episode will be different than the last one and is likely to leave the overall market lower than where we are trading today by the end of the first quarter if the Fed goes through with an expedited tapering schedule."

Until last week, the economic and market views of Goldman Sachs and Morgan Stanley couldn't be more opposite: the former, delightfully optimistic, expects the US economy to grow on all cylinders in 2022 and despite the Fed's tightening - two months ago Goldman flipped its Fed views by pulling forward its first rate hike forecast by one year to July, and followed it up over the weekend by predicting that liftoff will begin in May with two more rate hikes to follow in 2022...

See Chart:

We Expect the FOMC to double the pace of tapering to 30Bill per month ++

https://cms.zerohedge.com/s3/files/inline-images/FOMC%20double%20to%2030bn%20per%20month_0.jpg?itok=eZ6YKt8c

... said in its year-ahead market forecast last month that it expects the S&P to hit 5,100 by the end of 2022 even as the economy slows down modestly from its current feverish pace.

Meanwhile, far less optimistic than their Goldman peers, Morgan Stanley's economists expected - until late last week - the Fed to stand pat without hiking even once in 2022. That changed over the weekend, however, when the bank admitted "defeat" and now expects two rate hikes in 2022, even as the bank's chief market economist Michael Wilson sees the S&P closing 2022 at 4,400, some 5% below current levels.

So while there has been some convergence on the economy and Fed front, a gaping divergence remains when it comes to what the two most influential US banks think the market will do, a schism which only became more acute in the past 24 hours, when on one hand Goldman predicted that a massive year-end Santa Rally is imminent (as we discussed last night), while Morgan Stanley doubled down on its bearish view this morning when in Michael Wilson's latest strategy outlook piece (available to professional subscribers), he warns that "the Fed's pivot to a more aggressive tapering schedule poses a larger risk for asset prices than most investors believe."

Furthermore, the Morgan Stanley strategist believes that tapering is different than in 2014 for 3 reasons:

the Fed is exiting QE twice as fast this time,
asset prices are much richer today and
growth is decelerating rather than accelerating.

And as we joked earlier (but not really) with the Fed tapering and soon hiking, the outcome will be a recession and a market crash...

Meanwhile, Michael Wilson sees the S&P closing 2022 at 4,400, some 5% below current levels. So, while Morgan Stanley doubled down on its bearish view, this morning when in Michael Wilson's latest strategy outlook piece (available to professional subscribers), he warns that "the Fed's pivot to a more aggressive tapering schedule poses a larger risk for asset prices than most investors believe."

Confirming what we have been saying since 2010 when we first explained that it is not the stock but the flow that matters, and that tapering is tightening, Wilson echoes our decade-old conclusion and writes that "tapering is tightening for markets, if not the economy." And due to the much greater than expected rise in inflation - now that even Powell has killed and buried "team transitory" - the Fed is pivoting to a more aggressive removal of monetary accommodation

….Wilson again agrees and says that such an adverse market reaction "could be important for the economy, too, given how levered consumers are to stock prices today."

Taking a more nuanced look at Morgan Stanley's forecast, Wilson explains that when he was writing his (decidedly bearish) year ahead outlook, he was faced with "a wider than normal range of potential economic and policy outcomes." This higher " uncertainty" was one of the key inputs to the bank's conclusion that valuations for US equity markets were likely to come down over the next 3-6 months

[Sumarising..]

First, in 2014, it took the Fed 10 months to taper its QE program. This time they will do it in just 4 ½ months, or twice as fast. While M2 has been decelerating this year on a global basis, it's still running almost 8% y/y (Exhibit 1). In the US, M2 growth is running 13% and explains a lot of why nominal GDP growth is also running about 13% in the fourth quarter. After all, MV=PQ. If the Fed takes QE down to zero, its global M2 growth will slow severely and likely fall below 5% by the end of 1Q. This looks a lot like 2014 and 2018, but at a faster pace. Wilson's guess is that growth will take a hit at a time when it's already decelerating and increase the odds of our bear case playing out.

See Chart:

Global M2 growth picked in march & is about to decelerate rapidly with end of QE

https://cms.zerohedge.com/s3/files/inline-images/global%20m2%20growth%20MS.jpg?itok=hIHVOA8o

Second, US Equity markets are much richer today and therefore more vulnerable to a swift reduction of liquidity. Specifically, the equity risk premium is 350bps today and was close to 500bps when they started the taper talk in 2013. P/Es were 14.5x versus 20x today. To be sure, rates were higher then but that is why multiples had room to rise from there as rates reflected the more hawkish Fed and inflation that was much lower then. As a result, valuations were able to hold in and even increase during that tapering episode.

Third, growth is decelerating now while in 2013-14 it was accelerating. In addition to the PMI shown in the exhibit, earnings and economic growth were accelerating whereas both are likely to decelerate in 2021 and even outright decline for many companies, particularly in the first half of the year when the comparisons are most difficult. This, Wilson says, is what will really separate the winners from the losers and why he is so focused on earnings stability/achievability and valuation "because small beats will likely not be enough to drive stocks higher if they have a premium P/E."

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/global%20money%20supply%20m2%20MS.jpg?itok=y4SLN1a-

Morgan Stanley's bottom line: given that much of the market is expensive relative to history, rather than just a few sectors or names, it suggests to this tapering episode will be different than the last one and is likely to leave the overall market lower than where we are trading today by the end of the first quarter if the Fed goes through with an expedited tapering schedule.

In short, Powell - who was wrong about inflation being transitory for the past year and only two weeks ago admitted he was dead wrong - is about to trigger a nightmare scenario for market, and will scramble to snuff inflation just as it has already peaked, and just as the global economy is sliding into a fast slowdown.

* * *

But wait, there's more because as Wilson also correctly observes, asset markets have never been more important to consumer health. That's right: a market crash here and we spiral right into a deep recession, perhaps even worse than the Global Financial Crisis.

While Morgan Stanley's base case is that the economy should be able to handle the ending of QE and even some rate hikes next year, the big risk has always been that if asset markets correct more significantly it could have a greater than normal effect on the economy too given how levered the consumer is to the stock market and other asset prices like housing and crypto currencies. When just considering the stock market, it's easy to see that consumer net worth has increased dramatically as many key assets have risen inexorably over the past 18 months. And while this is a good thing for consumer demand if prices remain elevated, it also dramatically increases the odds that the inverse will be just as painful, and tapering will quickly become tightening for the economy, too, if it leads to a significant asset price deflation.

Here, Morgan Stanley thinks that "the risk of that is greatest over the next 3-4 months as the Fed exits QE on this faster time table."

See Charts:

https://cms.zerohedge.com/s3/files/inline-images/net%20worth%20higher%20tied%20in%20to%20stock%20market.jpg?itok=CWpYKc9K

The market has, naturally, been ignoring these risks and one place where this is especially obvious is the collapse in market breadth. Since September, breadth has rarely been this weak relative to the Index level price

See Charts:

Exht 5: Breath is weak relative to S&P 500; & Exht 6: Is eve worse for the Nasdaq

https://cms.zerohedge.com/s3/files/inline-images/breadth%20is%20weak.jpg?itok=5S0fdkLp

As Wilson concludes, "the rolling correction that began last spring continues under the surface, making the index a very bad gauge of the overall health of the stock market, or the economy, in our view." The good news here is that the average stock has already discounted a good chunk of the risks Morgan Stanley is forecasting "even if the index has not."

In this regard, the bank continues to stress that watching the S&P 500 is a bad idea for measuring what the market is really telling us about the fundamentals. It also explains why it's been so difficult for many active managers to keep up with the benchmark. And while the average stock may begin to outperform as the index catches down, Wilson warns that the absolute direction for most stocks will remain lower until the index has taken its turn on the de-rating process that began over 6 months ago. It's also why Wilson remains overweight large cap defensive quality for now.

One final point from the MS strategist: if there is one chart that depicts the risk off nature of the markets under the surface, it's the MSCI large/mid cap quality index versus the Russell 2000 small cap index.

See Chart:

Quality continues to dominate: we recommend a more defensive vs. growth bias

https://cms.zerohedge.com/s3/files/inline-images/quality%20continues%20to%20drop.jpg?itok=Mo8hJNJ3

As Wilson concludes, "making this very simple pivot in March as the rate of change on growth and policy peaked was the more important thing to do this year for performance... We continue to recommend this pair but with a more defensive bias on the quality side rather than growth due to valuation constraints as the Fed accelerates its taper this week."

….

SOURCE: https://www.zerohedge.com/markets/morgan-stanley-warns-feds-taper-will-trigger-market-chaos-over-next-3-4-months

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BONDS & THE DOLLAR JUMP AS STOCKS & CRYPTO DUMP

"Fear" is back...

Everything was awesome overnight. Equity futs were higher as traders anticipated yet another Santa Claus rally into year-end. And then UK PM BoJo fearmongered of a "tidal wave" of COVID cases coming and the first of someone who has the Omicron variant... and all hell broke loose in markets.

'Bubble' markets broke loose...

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_08-50-49_0.jpg?itok=AZvQ2OS_

All the major indices tanked at the US cash open, led by Small Caps. The selling pressure abated as Europe closed but the machines were unable to get back to even. The last 15 minutes saw selling pressure resume leaving Small Caps and Big-Tech down 1.5% on the day...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_13-00-02.jpg?itok=mq3TM3d4

Nasdaq and Russell 2000 both dropped into the red for December today

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-07-30.jpg?itok=BFAI6Qpg

Under the hood, the median US stock is notably lower over the last few days...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-53-17.jpg?itok=jUEbxL1z

Retail favorite stocks plunged...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_08-55-07_0.jpg?itok=QGb77Rf6

AAPL was unable to tag $182.86 which would have given it a $3 trillion market cap...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-28-32.jpg?itok=Ozqp6Io_

Interestingly, after the start of last week's massive short-squeeze, "Most Shorted" stocks have been clubbed like a baby seal...

See Chart:

“Most shorted” stocks

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-35-19.jpg?itok=XtnKCmP-

Treasuries were bid all day with the long-end significantly outperforming...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-31-15.jpg?itok=nXDs2s9Z

The yield curve flattened notably, erasing Friday's post-CPI steepening...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-21-18.jpg?itok=Bp9ie3lQ

Forward inflation swaps and Ethereum have recoupled...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-37-07.jpg?itok=P6U7J8ai

And finally, "Fear" is back. In stocks...

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/2021-12-13_12-15-45.jpg?itok=k1MkyCv-

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SOURCE: https://www.zerohedge.com/markets/bonds-dollar-jump-stocks-crypto-dump

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PETER SCHIFF: THE MAINSTREAM IS SUGAR-COATING INFLATION

"They want to point to the higher numbers of the 1970s to remind us that it’s really not that bad, because after all, it’s nothing like the 1970s. Except it’s exactly like the 1970s... only worse..."

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We the current global rain storm all ‘saints’ get wet

FORMER LEHMAN TRADER'S $4BN HEDGE FUND BOOKS FIRST LOSS IN A DECADE ON CHINA CARNAGE

Of course, one might expect a former Lehmanite to be somewhat more sensitive to ructions in overleveraged property markets.

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US DOMESTIC POLITICS

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

Perhaps we have to change the top bureaucracy of School System in CA.. asap

CALIFORNIA SCHOOLS PHASE-OUT 'D' & 'F' GRADES FOR HIGH SCHOOL STUDENTS

"...not reporting Ds and Fs is the equivalent

of lying about a student’s progress..."

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Who control the media control the world. Does this NAZI order is used in US?

VOX BUYS THRILLIST PUBLISHER GROUP NINE AS WAVE OF MEDIA CONSOLIDATION CONTINUES

The name of the game is scale.

….

The real name is ‘neoliberal fascism’: it kills democracy. The Mass Media should be controlled by the people of State-Nation organizations. This is one more task for the NEW US CONSTITUTION

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Soon they going to try to come to our house & kill our privacy. Put you gun in alert!

CALIFORNIA ORDERS STATEWIDE INDOOR MASK MANDATE

...almost 90% of at-risk Californians are vaccinated!

….

Is OK to use mask inside public places if Omicrom came to the city. However, one scientist in South Africa said that this virus is a common cold that from time to time visit them from years ago. This virus did not kill one single person. BUT the paid media distorted the case because money paid by Big Pharma agents. Check more INFO in GLOBAL RESEARCH in this Journal.

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HOSPITALS DROPPING VAX MANDATE DUE TO LABOR SHORTAGES, COURT ORDER

"As of September, 30% of workers at more than 2,000 hospitals across the country surveyed by the CDC were unvaccinated..."

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BIDEN turned a ‘dem summit’ into ‘fascist summit’ . That was very aggressive

WATCH: BIZARRE MOMENT WHITE HOUSE CUT TAIWANESE OFFICIAL'S VIDEO FEED OVER MAP

Aggressive censorship at Biden's "democracy summit"

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This is a REAL pandemic: DRUGS

SAN FRANCISCO DRUG OVERDOSE DEATHS NEARLY TRIPLE COVID

“Bad is an understatement. I would say it’s horrific, it is negligent, it is an epidemic in and of itself, and it was not always this way,”

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SUPREME COURT DECLINES TO BLOCK NEW YORK COVID VACCINE MANDATE FOR HEALTH CARE WORKERS

The latest decision suggests the high court lacks the appetite to wade into the matter of mandates...

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US-WORLD ISSUES (Geo Econ, Geo Pol & global Wars)

Global depression is on…China, RU, Iran search for State socialis, D rest in limbo

Some times: What he said is fine BUT what he does is the opposite

BIDEN ADMIN REJECTS ISRAEL'S URGING FOR JOINT PLAN TO ATTACK IRAN'S NUCLEAR FACILITIES

White House warned Israeli delegations against any unilateral military action against Iran...

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El ‘pacifista’ Biden teme que RU apoye Iran if ISR atack them.

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RUSSIA MAY DEPLOY INTERMEDIATE NUCLEAR MISSILES IN EUROPE IF NATO REFUSES DIALOGUE

Belarus still inviting Russia to do so on its soil..

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High Teck to assure the nasty dictatorship of BIG Pharma-Corp: owners of vaccines

SOUTH KOREA TO USE FACIAL RECOGNITION CAMERAS TO TRACK COVID CASES, ENSURE MASK COMPLIANCE

"The system also eliminates the problem of citizens who get infected with COVID but “who aren’t always truthful about their activities and whereabouts".

….

El retorno al fascism queda asegurado. Freedom & Democracy anulados.

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You are weaponizing our DNA, not CHINA

IS BEIJING WEAPONIZING YOUR DNA?

Why is a US DNA-processing firm sharing Americans’ DNA with China? The answer is staggering...

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SPUTNIK NEWS : https://sputniknews.com/

-Russia's Black Sea Fleet Monitoring French Frigate Auvergne

-Boris Johnson Faces Largest Tory Rebellion of His Prime Ministership as MPs Vote on New COVID Rules

-Danish Ex-Minister Gets Prison Sentence in Historic Impeachment Trial Over Separated Migrant Couples

-Norway Introduces Alcohol Ban, Remote Work Amid Raging Omicron Infection

-President Biden Approves Tennessee, Illinois Emergency Declarations After Deadly Tornadoes

-California Reinstates Indoor Mask Mandate Through January 15

-Jan. 6 Panel Votes to Hold Mark Meadows in Contempt Over Refusal to Comply With Subpoena

-'Summit for Democracy': How Biden is Losing Asia-Pacific to China Without Firing a Shot

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DIC 13 2021 PART 2 ND SIT EC y POL SPANISH ++

REBELION

US: DEMOCRACIA MADE IN USA Aram Aharonian

US: BIDEN Y LA VIOLACIÓN DE LA DEMOCRACIA Marc V

RU: EL MUNDO VISTO DESDE MOSCÚ Richard Sakwa

Alem: Nuevo Gob Aleman: esclavo d halcones neoliberales Ines S

Ecol S: Semillas para los pueblos, campaña glob contra privatiz UPOV

Guatem: ¡NO FUE CONSULTA, FUE UNA BURLA! Kajkoj Máximo

Perú CUBA, ¿UN PRETEXTO…? Gustavo Espinoza

Nicar: MANAGUA – PEKÍN, LA NUEVA RUTA Fabrizio Casari

ARG: EL MARTIRIO DE LA INFANCIA Silvana Melo

ARG: ENTRE LOS JUICIOS Y LA “MALDITA POLICÍA” Martín R

BOL: TRIUNFA LA CONSIGNA ¡¡VIVA LA PATRIA!! Edo Paz Rada

BRA: LEGALIZAR LO ILEGAL Eric Nepomuceno

Chile: El desafío: superar restos tóxicos de la dictadura Cecilia V

Chile: DERECHA: DESPRECIO HISTÓRICO DEL PUEBLO (II) Felipe P

FEM: MUJERES EN LA HISTORIA DEL PENSAMIENTO ECONÓMICO

Opin: EL DIFÍCIL ARTE DE SER CIUDADANO Carolina Vásquez

Cuba: COMO REVENIR VIOLENCIA SEXUAL INFANTIL EN CUBA

Ecuad: Economia: Otra vez el monopolio bancario R Rosero

España: El éxito en la Transición fue la unidad del Ejército CM

España: Ferrocarril, eficiencia y cambio climático PL Angost

US: ESTADOS DESUNIDOS DE AMÉRICA Luis Britto García

US: “El presente está lleno de mercenarios” Yolanda Delgado

África: UN CONTINENTE OLVIDADO Y EXPOLIADO F Luengo

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RT EN ESPAÑOL

- OMS: el mundo enfrentará "desafíos aún mayores" al finalizar la pandemia https://actualidad.rt.com/actualidad/413583-oms-advierte-pandemia-desafios-mayores

….

Pentá no impondrá castigos a militares q mataron 10 civiles + niños en Afganistan https://actualidad.rt.com/actualidad/413552-pentagono-no-imponer-castigos-militares-ataque-afganistan

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Bloomberg enumera riesgos económicos para 2022 , luego de peste Omicron https://actualidad.rt.com/actualidad/413561-bloomberg-enumera-riesgos-econ%C3%B3micos-2022

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Kamala Harris anuncia inversiones en Centroamérica para abordar la Migra https://actualidad.rt.com/actualidad/413556-harris-anunciar-inversiones-centroamerica-migracion

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CROSS TALK https://www.rt.com/shows/crosstalk/

Keiser Report

HONG KONG IN A BOX (E1788)

Max and Stacy look back to 2014, when Max and a guest, Tuur Demeester, predicted a small, nimble nation-state would be the first to adopt bitcoin as legal tender. In the second half, Max chats to James Turk about his new book, ‘Money and Liberty’.

SOURCE: https://www.rt.com/shows/keiser-report/543022-first-country-adopt-bitcoin-prediction/

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GLOBAL RESEARCH

Geopolitics & Econ-Pol crisis that leads to more business-wars from US-NATO allies

- UK Claims China Is About to Use Its Digital Yuan for Surveillance By Lucas Leiroz