Nueva Democracia

Mar 14 2022 Part B SIT ECON y POL

ND denounce- debacle y propone State-Social + Capit-compet in Eco

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Una pena que me hayan bloqueado el grafico sobre Ray Dalio que envie hace minu

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ZERO HEDGE ECONOMICS

Neoliberal globalization is over. Financiers know it, they documented with graphics

THE BOND MARKET IS SCREAMING STAGFLATION

By DataTrek Research

Very wide gaps between Treasury yields and inflation occur when geopolitical events such as the 1973 Saudi oil embargo or the 1979 Iranian Revolution cause both a spike in energy prices/inflation and a sharp decline in investor confidence.

Topic #1: Market-based expectations for future US inflation have broken out to new highs in the last 10 days. Using data from the TIPS (Treasury Inflation Protected Securities) market back to its start in 2003:

At present, TIPS are pricing 3.52 percent annual inflation for the next 5 years and 2.94 percent for the next 10 years.
Before 2021, the highs for expected inflation were back in March 2005, at 2.94 percent (5 year) and 2.76 pct (10-year).
In November 2021, expectations spiked to 3.17 percent (new record for 5 years) and 2.76 (tying the 2005 record for 10 years).

The chart below shows this history/recent breakout and also compares the 2003 – present timeseries to the Federal Reserve’s 2 percent inflation target. In the middle of the chart, we have highlighted the 2011 – mid 2014 period. Recall the crude oil prices were high back then, as they are now, ranging around $100/barrel for over 3 years. Even still, inflation expectations remained around 2 percent because the US economy was recovering only slowly from the Great Recession.

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/tips-3-13-21-1024x425.png?itok=4kNc1uNQ

Takeaway: the TIPS market’s inflation expectations are no longer as well anchored around the Fed’s 2 percent level as they have been since 2003.

Topic #2: The latest revisions to Wall Street analysts’ Q1 and Q2 2022 earnings expectations. The data here is courtesy of FactSet’s weekly Earnings Insight report (link below).

Good news (1): Street estimates for Q1 2022 rose last week for the first time in 5 weeks:

The aggregate S&P 500 earnings per share estimate, based on consensus analyst forecasts for the companies in the index, rose to $51.79/share from $51.64/share last week.
Estimates had been declining for Q1 since February 4th, when they peaked at $52.06.
That may only be a 0.3 percent increase over the last week, but it comes with US stocks under pressure and growing macroeconomic uncertainty. Against that backdrop, seeing estimates rise is reassuring.

Good news (2): Q2 estimates rose last week and are now at their highs for 2022:

Analysts’ estimates for Q2 rose to $55.59/share from $55.44 last week.
Q2 estimates are up 0.7 percent since the start of Q4 2021’s earnings reporting season, when they were $55.18/share.

Bad news (1): both Q1 and Q2 2022 Wall Street earnings estimates imply the companies of the S&P 500 are close to peak earnings power or (perhaps) already past their peak.

The S&P earned an actual $55.44/share in Q4 2021.
The Street’s current Q1 estimate of $51.79/share is 6.6 percent below that most recent quarter actual.
The Q2 2022 estimate of $55.59 within a rounding error (0.3 percent) of Q4 2021.

Takeaway: without a clear path to sequential earnings growth, which we’ve had since Q3 2020, markets are left to wonder if Q4 2021 really was the peak for US corporate cash flows.

Topic #3: A history of 10-year US Treasury yields and Consumer Price Index inflation. 10-years yield 2.0 percent today. Thursday’s CPI report showed 7.9 percent inflation. That 5.9-point difference between long-term risk-free rates and inflation got us to wondering if such a gap has every occurred before and, if so, when.

This chart of 10-year yields minus CPI inflation from 1962 to the present gives the answer. The highlights:

The only precedents for very wide differences in contemporaneous 10-year yields and inflation readings were after the 1973 and 1979 oil shocks. December 1974 showed a 4.7-point gap (Treasuries at 7.4 percent, CPI +12.1 pct), and June 1980 a 4.5-point gap (Treasuries at 10.0 percent, CPI at 14.5).
There were smaller but still noticeable negative readings in July 2008 (-1.5 points) and September 2011 (-1.8 points).
The current 5.9-point difference is wider than even those of the 1970s/early 1980s.

See Chart:

FRED

https://cms.zerohedge.com/s3/files/inline-images/10-yr-3-13-21-1024x415.png?itok=BK11M4b_

Takeaway: very wide gaps between Treasury yields and inflation occur when geopolitical events such as the 1973 Saudi oil embargo or the 1979 Iranian Revolution cause both a spike in energy prices/inflation and a sharp decline in investor confidence. That pushes capital into Treasuries, regardless of their inability to keep pace with potentially high inflation for years into the future. The same situation is occurring now, of course, and in a manner broadly consistent with the 1974/1980 periods.

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Meanwhile, here is Goldman looking at the risk that stagflation brings to "balances" or 60/40 portfolios. The outlook is not good.

The risk of a ‘lost decade’ for 60/40 portfolios, i.e., a prolonged period of poor real returns, increases with stagflation. Markets have further repriced risk of stagflation, boosted by the commodities rally due to the Russia/Ukraine crisis – US 10-year breakeven inflation has reached the highest level since the 1990s, while real yields remain near all-time lows, resulting in a similar gap to that in the 1970s (Exhibit 1). This points to little optimism on LT real growth and material concerns on inflation risk

See Chart:

Exhibit 1: Markets are pricing higher risk of stagflation

https://cms.zerohedge.com/s3/files/inline-images/stagflation%20pricing.jpg?itok=Kq9rPqDR

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SOURCE: https://www.zerohedge.com/markets/bond-market-screaming-stagflation

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HEDGE FUNDS LIQUIDATE OIL POSITIONS AT A NEAR-RECORD PACE AMID EXTREME VOLATILITY

By John Kemp, Senior Energy Market Analyst at Reuters

Last week’s sales were the 11th largest out of 469 weeks since March 2013.

Last week’s sales were the 11th largest out of 469 weeks since March 2013 - a 98 %-ile move - according to records published by ICE Futures Europe and the Commodity Futures Trading Commission.

See Chart:

https://cms.zerohedge.com/s3/files/inline-images/net%20brent.png?itok=KzW19vzG

See more charts at:

SOURCE: https://www.zerohedge.com/markets/hedge-funds-liquidate-oil-positions-near-record-pace-amid-extreme-volatility

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THE HYPER-BITCOINIZED WORLD TO COME

We stand today at a crossroads between two divergent movements defined by conflicting visions for the future: Malthusianism and Prometheanism.

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US DOMESTIC POLITICS

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

US STARTED WW3:

US RUSHES MANPADS TO UKRAINE, DOWNPLAYS RISKS

Senior officials say its a "risk worth taking"..

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RU forced to bomb Poland’nuke side & destroy NATO while using planes and drones to counter attack US uses of bazookas.

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"THIS COULD LEAD TO THE START OF WWIII" - TRUMP SLAMS BIDEN OVER UKRAINE CONFLICT

"Nobody has ever been tougher on Putin than me..."

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THE BULL VS THE BEAR

as we await Fed…

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10 SIGNS THE WAR IN UKRAINE IS PART OF THE GREAT RESET

Welcome to the second phase of the Great Reset: war...

ALMOST 40% OF AMERICANS WOULD RATHER FLEE THAN DEFEND THE US; NEW POLL FINDS

It appears that this country is facing an existential crisis of faith

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WHITE HOUSE WARNS CHINA OVER 'DEEP CONCERNS' ABOUT ASSISTANCE TO RUSSIA IN 7-HOUR ROME MEETING

China's foreign ministry cites "right" to "safeguard" its legitimate interests...

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Manufacturing WAR instead of working for peace & nuclear dismantle world wide

USAF ISSUES SOLICITATION FOR DEVELOPMENT OF "MAYHEM" HYPERSONIC MISSILE

"The Mayhem Program is focused on delivering a larger class air-breathing hypersonic system capable..."

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SHELLENBERGER: WHY WE WILL SAVE CALIFORNIA (AND WHY NEWSOM DOESN'T CARE)

...and why we must have the courage to care..

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

JUST AS ALL HOPE SEEMED LOST, CHINA REPORTS MIRACULOUSLY GOOD ECONOMIC DATA

When all else fails, China's "data" saves the bulls.

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CHINA, OIL, & THE UKRAINE WAR

There is a persistent question – and at times, assumption – that Beijing will step in to buy up whatever crude Russia can’t sell elsewhere... Not so fast.

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ARGENTINA HALTS SOY EXPORTS AS FOOD PROTECTIONISM SOARS

"It adds greatly to the inflationary concerns."

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SPUTNIK NEWS : https://sputniknews.com/

- Saudi Media Group Makes Multibillion-Dollar Offer to Buy Chelsea FC

- Russian Ambassador Hopes US Media Outlets Stop Inciting Russophobia, Become Impartial

- Trump Denies Spending Campaign Contribution Cash for New Personal Jet

- Idaho Lawmakers Send 'Texas Copycat' Anti-Abortion Bill to Governor’s Desk

- 'People's Convoy' Truckers Finally Arrive in Washington DC, Prompt Major Traffic Delays

- Majority of US Republican Senators Vow to Not Back New Nuclear Deal With Iran

- Peace Treaty With Russia Could Be Reached by May, Zelensky Adviser Believes