The next recession will sweep the Socialists into power

 

What I’m about to say may sound totally crazy at first. But keep reading, because I think you’ll agree that it’s dead-on accurate.

There’s a recession coming.

No, that’s not some Chicken Little “The Sky is Falling” statement. Far from it. It’s just a fact: economies and financial markets always go through boom and bust cycles.

There are good years and lean years, up years and down years.

The Size of Corporate Debt One Rung Above Junk Has Never Been Greater, Warns Louis Gave

 

Louis Gave at Gavekal Research says the greatest source of potential instability in the years ahead lies with the massive growth of the U.S. corporate debt market, particularly at the BBB-rated (near junk) level.

Venezuela Has 20 Tons of Gold Ready to Ship. Address Unknown

Venezuela Has 20 Tons of Gold Ready to Ship. Address Unknown (Yahoo!)

 

(Bloomberg) — Venezuelan lawmaker Jose Guerra dropped a bombshell on Twitter Tuesday: The Russian Boeing 777 that had landed in Caracas the day before was there to spirit away 20 tons of gold from the vaults of the country’s central bank.

The claim set off a welter of social media speculation and outrage. When asked how he knew this, Guerra provided no evidence.

John Williams: “The Fed Will Crash Markets & The Dollar”

 

Economist John Williams warns the Federal Reserve has painted itself into a very tight no-win corner.

No matter what the Fed does with rates it’s going to be a disaster. Williams explains, “You had some very heavy selling towards the end of the year and when you saw the big declines in the stock market you also saw that accompanied by a falling dollar and rising gold prices.”

In Unprecedented Speech, President Xi Warns Of “Serious Dangers” To Communist Party Rule

 

Since the days of Deng Xiaoping, the Chinese Communist Party has maintained its absolute authority over China’s roughly 1.4 billion people via an explicit social contract: the CCP would engineer an economic miracle that would lift hundreds of millions of people into the middle class, and in return, the Chinese people would accept the limitations on political freedoms demanded by the CCP.

But with China’s economy growing at its slowest pace in three decades and private sector businesses struggling with an unprecedented credit squeeze, President Xi Jinping must scramble to find a way to stabilize the country’s economy in the face of the US’s trade war escalation threats in order to ensure his legitimacy in the eyes of the public.

America Frozen Out of World Trade

 

Yet another trade agreement excludes the U.S.

A new trade agreement that covers more than 13 percent of the world economy, accounting for 15 percent of global trade, was ratified by its first six countries on December 30. The Progressive Agreement for Trans-Pacific Partnership (cptpp) will cover 500 million people.

Australia, Canada, Japan, Mexico, New Zealand and Singapore will be joined by another four countries that have already signed but not yet ratified the agreement. Vietnam joins on January 14, while Brunei, Chile, Malaysia and Peru will join the deal 60 days after completing the ratification process.

The Origin of the Next Financial Crisis

 

Today, additional evidence that recession — or worse — is in sight.

But first, it appears the “Powell put” may extend the countdown clock…

Since Jerome Powell’s dovish comments on Friday, the Dow Jones has been up and away… as an addict thrills to the promise of additional stimulant.

It leaped another 256 points today.

Is U.S. Geopolitical Strategy Experiencing a Monumental Shift?

 

The defining question about global order for this generation is whether China and the United States can escape Thucydides’s Trap. The Greek historian’s metaphor reminds us of the attendant dangers when a rising power rivals a ruling power—as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago. Most such contests have ended badly, often for both nations, a team of mine at the Harvard Belfer Center for Science and International Affairs has concluded after analyzing the historical record. In 12 of 16 cases over the past 500 years, the result was war. When the parties avoided war, it required huge, painful adjustments in attitudes and actions on the part not just of the challenger but also the challenged.

– From Graham Allison’s article: The Thucydides Trap: Are the U.S. and China Headed for War?

For the past two years, my geopolitical assumption has been that the Trump administration would more or less continue along with the reckless, shortsighted, and disastrous neocon/neoliberal interventionist foreign policy of the past two decades focused on undeclared regime change and proxy wars across the world, especially the Middle East. Given his strange obsession with Iran, I figured he’d start a conflict there and that this conflict would end up a bigger disaster than Iraq.

Hidden Amongst the Furore: Synchronised Warnings From the BIS and the IMF

It has become a disconcerting trend that as geopolitical events intensify and keep a majority of people engaged in the latest outbreak of political theatre, the words of central bankers fall on increasingly deaf ears.

At a seminar of the European Stability Mechanism this month, Bank for International Settlements General Manager Agustin Carstens delivered a speech called, ‘Shelter from the Storm‘.

Alan Greenspan: Investors should prepare for the worst

 

Alan Greenspan says the party’s over on Wall Street.

The former Federal Reserve chairman who famously warned more than two decades ago about “irrational exuberance” in the stock market doesn’t see equity prices going any higher than they are now.

“It would be very surprising to see it sort of stabilize here, and then take off,” Greenspan said in an interview with CNN anchor Julia Chatterley.

What Would The End Of OPEC Mean?

 

The Organization of the Petroleum Exporting Countries – the oil market institution that has exerted an unyielding power over the price of crude for nearly 60 years – is now in deep crisis. The latest OPEC meeting in Vienna offered new insights into the cartel’s raging civil war that is tearing it apart and threatens to ultimately make the cartel irrelevant.

In a two-year period since the group of 15 major oil producers formed an alliance with Russia, OPEC’s smaller members have been marginalized, their voices have been diminished and Saudi Arabia seems to prioritize its partnership with Moscow above all else. An unlikely partnership between Saudi Arabia and Russia is causing dissension within OPEC, with one of the oldest members announcing it would withdraw from the organization in January just days prior to the talks. With Russia tightening its grip over OPEC’s decisions and the United States officially reaching net oil exporting status in late November for the first time in decades, even if only briefly, the new world oil order is now dependent on three energy superpowers: Saudi Arabia, Russia and the United States.

Italy: A Brewing Storm Within the EU

 

Over the last couple of years, the main challenge to EU cohesion has been Brexit, with the media sharply focused on the negotiations and all relevant developments. Since the release of the draft withdrawal agreement, largely perceived as a victory for the EU, those who support the European project and believe in a strong leadership from Brussels have projected confidence and optimism for the future. According to these voices, the divisions caused by the rise of nationalism and populism in the past years are healing, the relationship between member states is normalizing, while a future of stability and harmony awaits.

However, such a vision might prove naive, as it discounts a much greater risk to the EU than Brexit ever was: the political and economic powder keg that is Italy.

The Eurozone Banks’ Trillion-Euro Timebomb

(Source: Bloomberg, Bologna, Miglietta, Segura)

 

Eurozone banks have fallen dramatically in the stock market despite the results of the stress tests carried out by the ECB, and the EU Banks Index is down 25% on the year despite year-long bullish recommendations from almost every broker. This should not surprise anyone because we have seen in the past that these tests are only a theoretical exercise. Moreover, stress tests’ results are widely challenged, and rightly so, because the exercise starts with the most ridiculous premise in economics: Ceteris Paribus, or “all else remaining equal”, which never happens. Every asset manager knows that risk builds slowly and happens fast.

60% Of Fortune 1000 Companies Will Be Out Of Business Within 10 Years

 

I had written about some observation from singularity university almost 18 months back and if you look around then it seems everything is falling in place.

The original article below:

Singularity University, based in NASA Campus in Silicon Valley is the world’s leading learning-cum-incubator university for innovation and technology set-up in collaboration with NASA, Stanford etc and we had leading Silicon Valley entrepreneurs presenting here including the guy behind Google Maps.

OBSERVATIONS OF VARIOUS SPEAKERS THERE:

We are witnessing more disruption in human history over next 10-20 years than what we have seen in the last 20,000 years. Their prediction is that 60% of Fortune 1000 companies will be out of business in just next 10 years.

Hedge-fund boss who predicted ‘87 crash says get ready for some ‘really scary moments’

Bloomberg

 

‘From a markets perspective, it’s going to be interesting. There probably will be some really scary moments in corporate credit.’

Paul Tudor Jones, a hedge-fund luminary, said he’s stress-testing his portfolio of corporate debt because he expects a tumultuous road ahead on the back of the Federal Reserve’s apparent commitment to normalizing interest rates and buttressed by corporate tax cuts from the Trump administration.