Martes 14/04/15 inventarios de negocios

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12:00 "La mayor preocuación ahora en los mercados es la falta de liquidez"
Afirma presidente ejecutivo de Prudential
David Hunt, presidente ejecutivo de Prudential, afirma que la preocupación número uno de los compradores globales de bonos es la rápida desaparición de la liquidez. Añade:

- Si sucediera algún acontecimiento político u otra causa que provocara una brusca subida de tipos y los inversores necesitaran salirse de sus posiciones actuales, habría un montón de gente que le resultaría bastante difícil hacer eso.

- El tamaño del mercado de bonos de EE.UU. ha aumentado un 23% desde finales de 2007 a finales del año pasado, mientras que el volumen de operaciones ha caído un 28% en ese período.

- Los reguladores, buscando reducir el riesgo, han hecho que sea menos atractivo para los bancos que mantengan un inventario de bonos negociables.

Jamie Dimon de JP Morgan advirtió la semana pasada que la próxima crisis financiera podría verse agravada por la escasez de los bonos del Tesoro.

12:30 S&P 500: Dentro de un movimiento lateral
BNP Paribas
Escenario Principal: En el corto plazo, el índice se mantiene dentro de un movimiento lateral entre niveles de 2120-2040. Al mismo tiempo, dicho movimiento seguiría encajando dentro de un proceso de distribución menor, cuyo desenlace esperamos sea una corrección de tipo intermedio con objetivo en @ 1820.

Marcamos en círculo rojo varios ejemplos del pasado más reciente (años 2000-2007-2011). La divergencia que se está formando en RSI semanal es una primera señal de advertencia. La confirmación vendrá dada a modo estructural, y eso a día de hoy pasa por perder la zona 1980-1970. Al mismo tiempo, consideramos más probable algo parecido al 2011, que un cambio en tendencia.

Escenario Alternativo: La superación de 2120 podría permitir una extensión en precio hacia @ 2140 138,2% Fibo tramo 2094-1970.

Resistencia: 2140
Soporte: 2040 / 1970

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Elecciones en el Reino Unido

Martes, 14 de Abril del 2015 - 13:10:00

Responsabilidad fiscal frente a la anti-austeridad. Y esto es lo que aparentemente ha anunciado el líder laboralista: dar credibilidad económica a su Programa, dejando fuera de potenciales recortes a la educación y sanidad. El resto de las partidas de gasto estará condicionado a la necesaria reducción del déficit público y la evolución macro.

¿Y el Partido Conservador? Deja en el aire la posibilidad de mayor gasto público. Desde una perspectiva fiscal, parece estrecharse la diferencia entre ambos programas.

¿Qué dicen los nuevos sondeos? En los dos gráficos siguientes podemos ver la evolución de la intención de voto promedio de los 10 últimos sondeos. Y ahora dan una ventaja de un 1.5 % a laboralistas sobre conservadores. Al final, 280/285 escaños sobre 270/275 respectivamente de laboristas y conservadores para un Parlamento de 650 escaños. ¿Un Gobierno en minoría? Dependerá al final de la posibilidad de pactos con los tres partidos restantes que aspiran a representación. Sí, el Partido laborista parece tener más margen para un acuerdo con liberales y/o el Partido Nacionalista Escocés (SNP).

Por último, la mejora de las encuestas a favor del Euro reducen el riesgo de Brexit. Veremos.

José Luis Martínez Campuzano
Estratega de Citi en España


La imaginación es más importante que el conocimiento

Carlos Montero
Martes, 14 de Abril del 2015 - 13:45:00

Einstein decía: “la imaginación es más importante que el conocimiento”. El prestigioso economista Germán Fermo de MacroFinance añade: “Y en trading, la imaginación es precisamente lo que le da al trader ese olfato forward, un insumo indispensable para generar retornos a mediano plazo mucho más contundente que el conocimiento actual.

El trabajo de un administrador de carteras es uno basado todo el tiempo en “t+1”. Siempre que doy clases en la UTDT le cuento a los chicos: en especulación es necesario basar la toma de decisiones en tres etapas: a) diagnóstico, b) forward imagination y c) posicionamiento.

Y en este contexto me pregunto: a pesar de la soberana paliza que le propinaron al euro desde mediados del año pasado, ¿tiene sentido apostar a una mayor depreciación que knockee al euro debajo de paridad frente al dólar americano en los próximos meses? Yo creo que sí, en especial después del selloff de casi 400 pips que la moneda europea sufrió en estos últimos días, después de la reacción tan bullish euro post NFT, el mercado no hizo más que shortearlo indicando lo que vengo diciendo desde hace semanas: todo rally del euro es oportunidad de short. “

En resumen, Germán Fermo cree que el euro seguirá depreciándose y disiente de los argumentos de aquellos que creen que la moneda única europea está cerca de alcanzar un suelo por tres razones:

- Rebote cíclico en Europa llevará al euro/dólar a niveles más altos.
- El euro/dólar ha sobrepasado los diferenciales de tasas nominales.
- La cuenta corriente de la euro zona coloca un suelo en la divisa única.

Los traders de Goldman Sachs de hecho dan argumentos para contradecir que los tres factores anteriores sean positivos para el euro.


1. Rebote cíclico en Europa: No es positivo para el euro porque la QE del BCE está taponando las tasas de interés nominales, previniendo la habitual transmisión de un repunte del crecimiento a una divisa más fuerte. De hecho, en presencia de la QE es posible que el crecimiento más fuerte pudiera ser en realidad negativo para el euro, si parte de ese crecimiento se deriva a una recuperación del consumo en la periferia y un sobrecalentamiento en Alemania. En tal escenario la cuenta corriente de la zona euro podría caer, afectando al euro/dólar.

2. La QQE de Japón nos enseñó que los diferenciales de tasas nominales dejan de funcionar en el período previo a la flexibilización cuantitativa. Esto se debe a que las tasas de interés convergen hacia cero, por lo que hay espacio limitado para que se muevan los diferenciales de tasas nominales. En lugar de ello, el foco cambia a las expectativas de inflación y a los diferenciales de tipos reales. Esto tendrá efectos negativos sobre el euro/dólar. Nos sorprende que las lecciones de Japón se hayan olvidado tan rápidamente.

3. Con respecto a la cuenta corriente, los tipos de cambio cotiza a futuro por lo que incorporan la presencia de un superávit o déficit de la cuenta corriente. ¿Qué va a impulsar al euro/dólar si la cuenta corriente de la zona euro termina siendo mayor de la esperada?

Goldman Sachs, cuyo departamento de divisas es uno de los más prestigiosos del mundo, prevé que el euro/dólar alcance los 1,02 en septiembre y los 0,95 en marzo.

Por tanto, como escribimos recientemente, hay margen para que el euro siga cayendo, y para que el dólar, frente a la moneda única europea y otras divisas siga subiendo.

Lacartadelabolsa

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14:07 General Electric: mayor avance
CMC Markets

[ GENERAL ELECTRIC ]
Punto pivote (nivel de invalidación): 26

Preferencia: Posiciones largas encima de 26 con objetivos en 29 y 30,5 en extensión.

Escenario alternativo: Debajo de 26 buscar mayor indicación de baja (o de caída) con 24,5 y 23,4 como objetivos.

Comentario técnico: La tendencia inmediata se mantiene al alza y el momentum es fuerte.


La Fed no ahoga pero puede apretar

Santander Private Banking
Martes, 14 de Abril del 2015 - 14:58:00

De las últimas actas de la Reserva Federal se desprende que existe más división entre los componentes de la autoridad monetaria de lo que inicialmente se podría inferir tras el comunicado de la última reunión (marzo).

A pesar de una mayor divergencia de opiniones en el seno de la Fed, la mayor parte de los miembros de la misma continúa considerando la parte central del ejercicio (junio–septiembre) como el periodo más probable para iniciar un nuevo ciclo monetario. Así, varios miembros abogan por que la subida de tipos tenga lugar por primera vez en junio, mientras que otros eran partidarios de esperar a la segunda parte del ejercicio. Tras el contenido de estas actas y la decepción experimentada en marzo por el mercado laboral, se incrementa la probabilidad de que la Fed retrase hasta septiembre (la siguiente reunión, tras la de junio, que viene acompañada de una rueda de prensa) el inicio del ciclo de tensionamiento monetario. No obstante, todavía es pronto para poder descartar que la primera subida se realice en junio y, de hecho, mantenemos esta fecha como nuestra principal referencia. Los condicionantes que harían a la Fed decantarse por una u otra reunión seguirían siendo estrictamente macro: mercado laboral, y en especial la evolución de los salarios, así como de las expectativas de inflación. En la medida en que esperamos un perfil de crecimiento de la economía estadounidense similar al del ejercicio 2014 (debilidad en el primer trimestre seguida de una fuerte recuperación en la parte central del ejercicio), pensamos que todavía hay argumentos significativos en la esfera de la actividad para que la Fed no posponga en exceso la primera subida de tipos de interés.

En cualquier caso, ante las dudas existentes en torno al timing del banco central, el mercado estará pendiente de los registros que se vayan publicando de aquí a los próximos meses, interpretándolos en clave monetaria. Por tanto, puede darse la paradoja de que datos positivos desemboquen en caídas en el precio de los activos financieros y viceversa.

En definitiva, un entorno propenso a brotes de volatilidad que podría prolongarse hasta que la Fed defina con más claridad su calendario.

Renta Variable

Semana de ganancias generalizadas en la renta variable global. Tanto las bolsas emergentes (+2,3%) como las desarrolladas (2,1%) continúan la senda alcista. Y todo ello a pesar del tono menos acomodaticio de las actas del último FOMC de la Fed. En la zona Euro, la confirmación de que los indicadores de confianza económica continúan apuntando a una recuperación más sólida, permitió a los principales índices revalidar máximos de los últimos años.


Recomendamos... SOBREPONDERAR. Mantenemos una visión positiva respecto a la renta variable, en un contexto de mejora gradual de la actividad a nivel global. Sin embargo, en el más corto plazo, a la espera de una mayor definición del calendario monetario de la Fed y menor incertidumbre en torno a Grecia, hemos reducido la sobreponderación de la clase de activo en carteras. A nivel geográfico, nos decantamos por la renta variable europea y japonesa frente a la estadounidense, en un contexto de mayor tracción cíclica de la zona Euro y avances salariales en Japón, así como un momentum de resultados empresariales más positivo.

Renta Fija

Estabilidad en la deuda soberana europea a lo largo de la semana, tanto en tipos como en los diferenciales núcleo-periferia. La deuda española a 10 años se mantiene en el entorno del 1,2% y el diferencial frente a Alemania al plazo alrededor de los 100 pb. En crédito, mejor comportamiento de los diferenciales de mayor riesgo: la deuda High Yield estrechó más de 15 pb y la deuda subordinada financiera 10 pb. En cambio, la curva Tesoro estadounidense experimentó un tensionamiento moderado (la TIR del bono a 10 años se sitúa en noveles de 1,96%) a raíz de la debilidad de la subasta a 30 años, que se saldó con una ratio de cobertura baja (2,18 veces).

Recomendamos... INFRAPONDERAR TESORO EUR/ INFRAPONDERAR TESORO USD. El programa de compra de deuda pública del BCE está tenido un impacto considerable en la cotización de los títulos soberanos de la zona Euro, en forma de reducción de tipos generalizada y aplanamiento de pendientes. En este contexto, no vemos valor en deuda soberana núcleo (EEUU, Alemania, Reino Unido, Japón). Durante los próximos 1-2 meses, la deuda a medio/largo plazo de España, Portugal o Italia todavía puede tener algo de recorrido, aunque ya muy limitado. De manera táctica, seguimos viendo valor en High Yield global. En Europa, la deuda subordinada ofrece todavía potencial de revalorización. Es preferible que la deuda emergente pase el examen de la Fed antes de cambiar nuestro posicionamiento de infraponderación.

Divisas

La ampliación del diferencial de tipos de interés entre EEUU y la zona Euro propició que el cruce EUR/USD volviera a la cotas cercanas al 1,06 (desde el 1,10 de la semana pasada).

Recomendamos… NEUTRALIZAR DÓLAR EEUU. Consideramos que en el más corto plazo será el inicio de las subidas de tipos de la Reserva Federal el factor determinante para la evolución del cruce. Con estas mimbres, no hay que descartar que el tipo de cambio EUR/USD pueda aproximarse al entorno de 1,00 durante los próximos meses. Sin embargo, en la segunda mitad del ejercicio prevemos que el cruce pivote en torno a la referencia de 1,10. En la esfera emergente, si bien las divisas más castigadas han recuperado algo de momentum a raíz de la última reunión de la Fed (RUB o BRL, por ejemplo), no descartamos nuevas caídas en el caso de que la autoridad monetaria endurezca su discurso.

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15:26 Bono EEUU junio. ¿Corrección completa?
Si el movimiento bajista desde el techo de principios de abril ha sido una corrección de corto plazo, es probable que ayer viéramos el mínimo correctivo. Para confirmar un nuevo tramo alcista es necesario que se superen los 129-17+.

Resistencias129-17+ 130-01 130-04 130-20
Soportes 129+ 128-26 128-18+ 128-05+


Reformas, reformas... reformas

Martes, 14 de Abril del 2015 - 15:52:00

¿Más impulso? ¿desde la demanda? Considerando las medidas extremas tomadas por el ECB y la política fiscal ligeramente expansiva este año, ¿qué resta por hacer que no sean medidas de oferta?

A partir de aquí, deja de escribir José Luis Martínez y lo hace el propio ECB. Los siguientes párrafos han sido extraídos de su último Boletín económico....

Las reformas estructurales pueden impulsar considerablemente la productividad y el empleo, reactivar el crecimiento de la zona del euro y al mismo tiempo mejorar la capacidad de los países para ajustarse a perturbaciones, reasignar recursos y reestructurar sus economías con rapidez.

Hay señales de que las reformas emprendidas desde que comenzó la crisis ya han tenido un impacto positivo. El grado de flexibilidad de los salarios y los precios parece haber aumentado, lo que ha contribuido al proceso de ajuste, mientras que la evolución de las exportaciones también parece haber mejorado en los países que han aplicado reformas. Aunque algunos países de la zona del euro han logrado avances significativos, los indicadores muestran que todavía hay un amplio margen para emprender nuevas reformas en todos los países de la zona. Estas reformas son necesarias para favorecer un crecimiento sostenible a largo plazo, incrementar la capacidad de ajuste de los países de la zona y contribuir al correcto funcionamiento de la Unión Monetaria.

Las reformas estructurales pueden reactivar el crecimiento de la zona del euro a corto y a largo plazo. Si se planifican adecuadamente y se aplican de manera creíble y rigurosa, las reformas pueden reducir al mínimo o eliminar la posibilidad de una evolución negativa a corto plazo de algunos componentes del PIB y maximizar los efectos positivos a más largo plazo. La credibilidad de las reformas y de su aplicación desempeña un papel fundamental para fortalecer los canales de confianza y adelantar los efectos positivos de las reformas al anticipar un aumento de las rentas y respuestas positivas en los mercados financieros.


Es necesario que los países emprendan más reformas para reforzar y estimular el potencial de crecimiento de la Unión Monetaria. Aunque en los últimos años se han realizado avances significativos, todavía existe un margen considerable y una necesidad urgente de emprender más reformas estructurales en la zona del euro. Los países que comparativamente presenten más rigideces serán los más beneficiados de las reformas estructurales. Si bien las reformas deben aplicarse, ante todo, en interés del país de la zona del euro en cuestión, también contribuyen al correcto funcionamiento de la Unión Monetaria en su conjunto, aumentando la flexibilidad y la capacidad de resistencia de la zona frente a perturbaciones macroeconómicas y facilitando asimismo la reestructuración de la economía.

Pero, lamentablemente, este tipo de reformas tienen a corto plazo un coste social y político difícil de asumir. Y mucho menos cuando la recuperación económica favorece su aplazamiento. Siempre se encontrará un tiempo mejor futuro para emprenderlas. El problema es que el tiempo pasa y la recuperación cíclica da lugar a una desaceleración también cíclica. Los problemas vuelven a aflorar, cuando las dudas que considerábamos ya aclaradas retornan.

Las Crisis nunca son iguales, especialmente si se suceden muy rápido y seguidas en el tiempo. Pero, dejando al margen su detonante, siempre subyace la debilidad estructural de la economía.

José Luis Martínez Campuzano
Estratega de Citi en España

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Submitted by Mohssen Massarat

With last fall’s U.S. Congressional elections, the Barack Obama ‘era’ has entered its final phase. Shortly before coming to power, the new U.S. president had sparked a massive uproar when he proclaimed a new ‘Pacific century.’ Since then, roughly two years before the end of his term in office, we can see more clearly. First and foremost, the proclamation of an allegedly new orientation towards the Pacific served the purpose to put Europe, and particularly Germany, under pressure so that they fill the allegedly emerging security gap. In reality, however, it is not the Pacific that forms the epicenter of U.S. geostrategic interests, neither – despite the Crimea crisis – is it the ‘old (European) world,’ but it is still the Middle East. For the latter’s fate defines whether American hegemony stands or falls.

America’s interest in this region is as old as the discovery of enormous Mideast oil reserves – albeit not at the moment, as is generally but falsely suggested, because of her own domestic oil supply. Thanks to its immense domestic energy resources, historically the U.S. has since the dawn of the last century been independent from importing oil. And with the current widespread use of fracking technology, it is once again about to become self-sufficient. As the new hegemonic power in the wake of the Second World War, the U.S. quickly realized that it could make rivaling world powers dependent on it by way of controlling the Middle East with its tremendous reserves of oil – the global economy’s fuel. Originally, the U.S., together with Saudi Arabia – its main ally in the region – established a global oil supply regime that could provide the West, China, and all BRICS countries with energy security. In this regime, Saudi Arabia arranged for constant overproduction. Thanks to this system that was politically controlled by the U.S., both its Western allies and its rivals enjoyed unimpeded oil supply at low prices – and all this despite great political turbulence raging during the entire second half of the last century. At the same time, the U.S. dollar, pegged to the oil price, acted as the global reserve currency.

However, when at the beginning of the 21st century the new economic giants China and India, with their almost inexhaustible hunger for energy, started organizing their own supply, the U.S.-dominated oil regime collapsed. The oil markets henceforth followed the pricing laws for exhaustible goods; oil prices therefore rose drastically and have subsequently been guided by market mechanisms.

The irony of history: Albeit the U.S. has lost the ability to steer the oil price – one of its central political leverages –, it has in another way been able to drastically strengthen its hegemony via the new prices set by the global market. For the high oil prices have multiplied the percentage share of oil trade within global trade, which caused massively higher demand for dollars and U.S. government bonds. As a result, for the foreseeable future the U.S. dollar will thereby remain the indisputable reserve currency.

It is precisely here that we can identify the actual basis for U.S. dominance: By way of an unlimited creation of the dollar as the globe’s reserve currency, the U.S. constitutes the only economy in the world that can finance several mega-projects at once – such as the bailing-out of banks and gigantic defense spending – through public debt and the issuing of government bonds. After the 2008 crash, no other national economy could have managed the banking crisis on its own without suffering any severe consequences. The Federal Deposit Insurance Corporation (FDIC), whose financial basis is essentially formed by the U.S Treasury’s government bonds, provided the U.S. with the required capital. The FDIC is an institution specifically created by the U.S. Congress to promote “stability and public confidence in the nation’s financial system.” Thereby, in fact, in 2009 the United States successfully nationalized all ailing banks in order to dispose its debt, and subsequently privatized them again. Meanwhile, in the European Union the banking crisis turned into a sovereign debt crisis.

Nonetheless, the global economic figures for the U.S. are anything but rosy: Its trade balance has witnessed deficits uninterruptedly since 1987, which until 2013 had led to an accumulated deficit of $9,627 billion. This is caused by the fact that the U.S. economy in parts, for a long time now, is no longer competitive vis-à-vis its main competitors – the EU, China, and Japan. Moreover, the fiscal deficit has chronically been on the rise, as result of from drastically growing defense spending. For decades, various U.S. administrations have ‘solved’ both problems – the trade deficit and concomitantly the constantly rising fiscal deficit – by allocating government bonds and engaging in money creation.

Technically, both objectives are being realized as follows: In order to conduct current government expenditures, the U.S. Treasury swaps government bonds with the FED in exchange for the latter’s freshly printed dollars – in 2013 alone, $1,100 billion were thus brought into circulation. The FED in turn places those government bonds on the world market and thereby continuously channels new capital into the U.S. economy, which provides for the balancing of the trade deficit. The price for this policy of money creation is the gigantic U.S. public debt, which climbed from $6,731 billion in 2003 to $17,556 billion in 2013. In the same time period, the public spending ratio rose from 60% to 108% (in comparison that of the EU ‘only’ rose from 60% to 87%).

No surprise then that such an economy suffering from trade as well as budgetary balance deficits has transformed into a consumptive surplus economy – amassing the largest national debt of all time. Between 2001 and 2013 only, these consumption surpluses accounted for a total of $11,550 billion. To put it plainly, per year an average $962.5 billion – capital corresponding with real economic performance – flowed from the rest of the world to the United States, while the latter confined itself to printing new money and bringing it into circulation.

To make it even more clear: In 2012, the $1,250 billion that flowed into the U.S. made up 7.9% of the country’s gross domestic product (GDP). This additional capital stock flowing into the economy also explains why the saving rate in the U.S. had drastically sunk during that period. Americans consumed nearly the totality of the goods and services they produced, while the rest of the world paid for investments allowing the U.S. economy to keep going.

Essentially, the U.S. has become to resemble Arab rentier states. Instead of oil, the U.S. uses the dollar – the international reserve currency – as leverage for appropriating its global purchasing power. While Saudi Arabia at least exports oil in exchange for other countries’ goods and services, the U.S. merely pumps paper into the global cash cycle.

The dollar as leverage

Here is the reason why: The significantly largest part of world trade is still being processed in dollars. This is why international demand for dollars is enormous, and is rising in proportion to world trade. Therefore, with the assistance of FED, the U.S. can continuously inject dollars into circulation, thereby financing its trade balance and budgetary deficits (and ultimately its constantly growing government debt). Hence, Nobel economics laureate Roger B. Myerson does not bother too much about U.S. debt: “U.S. debts are in dollars and the U.S. can print dollars. […] We may have inflation. But we are sure we can pay back the debt.”

Yet, contrary to Myerson’s contention, in reality the U.S. will never pay back its debt, which has already been clear in the 1970s to U.S. economist Michael Hudson: “To the extent that these Treasury IOUs are being built into the world’s monetary base they will not have to be repaid, but are to be rolled over indefinitely. This feature is the essence of America’s free financial ride, a tax imposed at the entire globe’s expense.”

In truth, the U.S. can simply absorb the excess purchasing power that is created all over the world. All of this, however, only works as long as oil is being traded in dollars and the status of the U.S. currency is not being jeopardized by other potential reserve currencies, such as the euro or China’s renminbi. After the collapse of the Bretton Woods system in 1973, almost without anyone noticing, the gold standard got replaced by oil henceforth backing the dollar: oil was increasingly in demand by all countries – except for oil exporters; it is a homogeneous and scarce commodity with rising prices. As such, oil trade as a proportion of world trade continuously rose from 1.7% in 1970 to 6% in 2001, and to 12% in 2011 – resulting in a massively rising demand for dollars. Moreover, the ‘oil standard’ freed the U.S. from all shackles of the Bretton Woods agreement; it could henceforth accumulate new debt even more uninhibitedly than before.

The military as instrument

Yet, ensuring that the global oil trade will be carried out in dollars for decades to come requires a Middle East controlled by the U.S. as complete as possible. This can be done through regime changes wherever necessary in order to nip possible anti-dollar alliances in the bud. In this vein, the neoconservative Project for the New American Century (PNAC) was from the very start targeted towards such a direction, with its willingness to create a ‘Greater Middle East’ that ought to be subordinated to the U.S. to the greatest possible extent. In PNAC documents there is no mention of creating conditions for peace but instead for wars, for expanding military bases all around the world, for military superiority on land, in water and in the air, for nuclear defense shields in the earth’s atmosphere, and above all for further increases in defense spending.

Over the last decade, the U.S. with its annual defense budget of $500 billion to $800 billion has spent as much on armaments as the rest of the world combined. Any other national economy would have collapsed long ago under such tremendous unproductive spending. Indeed, the arms race during the Cold War did lead to the demise of the Soviet Union. In contrast, after the end of the bloc confrontation U.S. arms spending rose exponentially from $150 billion in 1990 to the astronomic sum of $739 billion in 2011. The share of military expenditure as a proportion of GDP is currently 4% in the U.S., more than twice that of other Western industrialized nations. The opposition, otherwise loudly opposing administration policies of increasing other budget items, refrains from criticizing military spending as a matter of principle, the exception being when an increase in military spending is deemed too low. Nor is this massive military spending subject to any substantial debate in the media or in society at large. But how can these enormous arms expenditures be explained and how are they justified to the people? Ultimately, this is done by the fact that the U.S. also covers its military spending by government debt and printing money. Instead, financing the costs of war via direct taxes would mobilize people against any war. Both World Wars were financed by public debt, not only by European but also all U.S. administrations. Through the continuity of wars, especially since the First World War, the U.S. public debt has continued to grow.

The de facto monopoly over world money explains how a national economy like that of the U.S., which in many areas is simply not competitive and shows chronic trade balance deficits, can finance not only such mega-projects as the military-industrial complex and various quite expensive wars, but also has a relatively stable financial sector and a currency that attracts magnet-like surplus capital from all over the world.

A world without order and chaos as opportunity – for the U.S.

To maintain its hegemony, the U.S. must by all means prevent the emergence of rival powers and impede possible current as well as future threats that could emanate from oil states. The ideal condition for enforcing its own goals at a low cost would be the fragmentation of antagonistic power centers through ethnic and religious strife, civil wars, chaos and deep-seated mistrust in the Middle East – always following the well-known premise of ‘divide and rule.’ In this way, for decades to come no other power would be able to even consider trading oil in a currency other than dollars. In addition, as all the opponents need petrodollars to purchase weapons, the oil wells gush merrily on – as they currently do in Iraq despite daily acts of terror and chaos paralyzing the country.

In fact, we are currently experiencing tremendous changes towards such a chaotic state of affairs. Meanwhile, there have been regime changes in Afghanistan, Iraq, and Libya. In all these countries, discord and distrust, tribal conflicts, territorial separations among ethnic lines and mutual terror have been raging – particularly from Sunnis against Shi’ites. However, the regime change project has not ended here. Now, Syria and Iran have been put in crosshairs: U.S. neo-cons have spared no efforts to torpedo the nuclear negotiations with Iran. And Al-Qaeda – officially the main reason for the U.S. ‘war on terror’ – has in the meanwhile attained unprecedented strength. This prowess provides, in turn, the best basis of legitimacy for the U.S. military-industrial complex.

The old military-industrial complex

This way all the strands of ‘dollar imperialism’ come together: oil, dollars, and the military. The military-industrial complex is the main beneficiary of the ‘new American century’ of New Wars. Especially in the Middle East both a nuclear and a conventional arms race is taking place, which is increasingly putting the arms race of the 1970s that had led to three Gulf Wars in the shade. While the recycling of petrodollars for weapons has resulted in a dangerous vicious circle which could at any time trigger a conflagration across the whole region, the U.S. defense sector can remain confident: All U.S. administrations, regardless of their political persuasion, will continue with impunity the policy of public debt and thus keep on financing the military budget. Thanks to the rising demand for dollars and the FED’s continued money printing (also under the new Board of Governors Chair, Janet Yellen), the U.S. banking system has such extensive money reserves that the politically dangerous U.S. military industry can be easily financed.

However, ‘dollar imperialism’ is fundamentally a highly unstable construction, producing absurdities difficult to imagine. On the one hand, it keeps alive a gigantic apparatus of violence in the U.S. – at the expense of (and ultimately financed by) the whole of humanity. On the other, this construction is based on chaos, violence, and civil wars, particularly in the oil-rich regions that may therefore collapse at any time, plunging the world into serious crises. In short, what could be more absurd than the fact that money belonging to all of us helps finance an industrial sector whose ultimate survival depends on there never being peace on the planet? Even the NSA scandal – revealed thanks to Edward Snowden – appears in a new, very particular light when seen against the background of the prevailing dollar imperialism. For, of course, this highly unstable construction generates a seemingly limitless greed for the widest possible control of all communication channels, including spying on the heads of all foreign administrations, even those of friendly states. Despite worldwide outrage, in his January 2014 speech, Barack Obama emphasized that “[o]ur intelligence agencies will continue to gather information about the intentions of governments [...] around the world.”

The massive U.S. security apparatus is being legitimized – today as in the past – exclusively on the grounds of national interests. When the NSA was founded in 1952, there was no talk of Al-Qaeda and ‘9/11,’ rather of the benefits and interests of a then aspiring hegemonic power. Today, the NSA is above all concerned with recognizing in due time all the steps and movements in the world that could endanger the current status of the U.S. currency, and nipping them in the bud by any means necessary. It thus functions in the interest of the influential alliance between the military-industrial complex and the U.S. financial sector, which is dependent on such knowledge for its own survival.

On the other hand, it has become clear that the NSA poses the biggest threat to democracy in the U.S. and in the West as a whole – and in a way in which President Dwight Eisenhower could not even imagine when he warned about the military-industrial complex in his farewell address on January 17, 1961: “This conjunction of an immense military establishment and a large arms industry is new in the American experience. […] In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes.”

Roughly 50 years after Eisenhower’s warning, the U.S. has taken a major step ‘forward.’ This powerful complex has been struggling for its continued existence since the end of the bloc confrontation and has done everything possible to permanently consolidate American hegemony. It is indeed not the case, as was eagerly anticipated, that the world has become safer and more peaceful since 1989. On the contrary, it has become more insecure and warlike – as was the case at the dawn of the last century. This makes it even more urgent that the international community finally – and still perhaps just in time – defends itself against this highly dangerous development.

The alternative: The global energy transition and the diversification of reserve currencies

The question of democratizing the global economy by abolishing the U.S. monopoly over world money must definitely be placed on the global political agenda. In the long term, this goal can be most effectively attained by a global energy revolution – away from fossils and towards extensively expanding renewable energies. In the short term, a range of reserve currencies can and ought to be established, which would finally account for the real economic balance of forces.

One such alternative would also serve the long-term interests of American citizens and would contribute to the U.S. finally offloading the parasitic and ultimately unproductive parts of its economy – namely, the alliance between finance and the military. On the other hand, the example of Barack Obama, who had to move away from nearly all his positive reform initiatives, shows that America on her own and using her own abilities is barely capable of pushing back this all-powerful alliance including the political forces sustaining it.

This leads to Europe and Asia assuming responsibility: Only a new reserve currency – pushed forward by the EU and China – can help the U.S. leave its previous path of increasing prosperity through imperialist methods, to the benefit of its own immeasurable productive potentials. The BRICS countries’ establishment in Brazil in July 2014 of an international development bank and a monetary fund could evolve into a serious competitor to the Bretton Woods system. You could imagine the dollar being no longer the only world currency, and necessarily losing its stability in a lively international competition involving the euro and renminbi. International excess capital would then be withdrawn, to a considerable extent, from the U.S. and invested in the euro or renminbi zone. The previous U.S. policy of public debt by issuing government bonds would stall, and the bipartisan taboo on tackling military spending would lose its validity. In order to reduce chronic budget deficits, U.S. administrations would then have no other choice but to drastically cut the disproportionately high military budget.

How would such a new situation impact American hegemony? Inside the U.S. there would – finally – emerge a fierce debate over the sense and non-sense of military spending as well as its global military capacities (including over 800 bases) – with the prospect of the U.S. demilitarizing to a level corresponding to its actual economic weight. As such, the U.S. would no longer be the ‘only remaining superpower,’ but merely one among several world powers. Wholly new global power structures and balances of power would then become conceivable: Asia but also the Middle East, South America, Africa, and even Europe would have real opportunities to come together in cooperative and common-security regional architectures. At the same time, nationalistic and racist resentments and conflicts would strongly lose traction. Perhaps international cooperation would also finally shrink the financial sector to a reasonable level – in so doing also significantly increasing the possibility of an equitable distribution of income.

In short, we would finally have the prospect of a world with more justice and less financial speculation – a more democratic and peaceful world. Yet, the losers of such a scenario would be the military-industrial complex, the financial sector and its beneficiaries, and above all the neoconservatives. This is why we must expect fierce resistance. However, in the interest of a more just and peaceful world, this fight is nothing less than inevitable.

[Fenix]

"Biggest Worry" Is "Dramatic Decline" In Bond Market Liquidity, Prudential Says
Tyler D.
04/14/2015 19:00

It has now become fashionable in the world of high finance to express extreme consternation about reduced liquidity in the bond market. Last week, Jamie Dimon spelled out the problem as follows:

The likely explanation for the lower depth in almost all bond markets is that inventories of market-makers’ positions are dramatically lower than in the past. For instance, the total inventory of Treasuries readily available to market-makers today is $1.7 trillion, down from $2.7 trillion at its peak in 2007. Meanwhile, the Treasury market is $12.5 trillion; it was $4.4 trillion in 2007. The trend in dealer positions of corporate bonds is similar. Dealer positions in corporate securities are down by about 75% from their 2007 peak, while the amount of corporate bonds outstanding has grown by 50% since then.

Meanwhile, complacency in credit markets is building as the central bank-driven rally has left few opportunities in its wake, prompting DoubleLine to note that US corporate credit currently offers the most unpalatable risk/return proposition in history and leading some bond traders to turn Monday into “the new Friday.” Couple all of this with the fact that one “malfunction” by a “liquidity providing” algo could, at any given time, trigger a repeat of October’s Treasury flash crash sending ripples through credit markets at a time when nobody is home on the sell side (both figuratively in the form of dealer inventories and literally on “new Friday Mondays”) and you’ve got yourself a perfect storm.

Given all of this it’s not surprising that yet another executive is out raising the liquidity red alert. Here’s Bloomberg:

Prudential Investment Management Chief Executive Officer David Hunt says the No. 1 concern among bond buyers globally is liquidity and its rapid disappearance.



“The biggest worry of the buy side around the world is that there has been a dramatic decline in liquidity from the sell side for many fixed income products,” said Hunt, 53, who heads Prudential Financial Inc.’s investment management unit, which had $934 billion in assets at the end of 2014. “I think it’s a big risk and is one of the unintended consequences” of regulators trying to prevent another financial crisis, he said.

Note the irony: the biggest risk to the global financial system stems from regulatory efforts to head off risks to the global financial system.

While the size of the U.S. bond market has swelled 23 percent since the end of 2007 through the end of last year, trading has fallen 28 percent in the period, Securities Industry & Financial Markets Association data show, as regulators, seeking to reduce risk, have made it less attractive for banks to hold an inventory of tradable bonds. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon warned in a report last week the next financial crisis could be exacerbated by a shortage of U.S. Treasuries.



“If we had a major political event or something that caused rates to spike and traders needed to get out of the current position they have, and there was a lot of people that wanted to do that, I think it would be quite difficult,” Hunt, in Tokyo last week for various management meetings, said. He declined to comment on what measures Prudential is taking to lower liquidity risk, saying that information was sensitive from a competitive perspective.

Once again, the writing is on the wall and as (another) reminder here is the problem: 1) demand for corporate credit is high thanks to the global hunt for yield occasioned by central bank easing, 2) corporates are thus issuing a lot of debt to tap into voracious demand before the Fed embarks on a rate hike cycle, 3) dealer books are shrinking thanks to regulations designed to limit prop trading, 4) and so the primary market is booming while no one is home in the secondary market. We’ll close with what we said on Monday in “Human Bond Traders Barely Show Up To Work As Machines Take Control”:

Meanwhile, the new regulatory regime has done an admirable job of making the system “safer” by encouraging dealers to shrink their inventories, meaning that while we’re all safe from evil prop traders (because we’re sure prop trading is dead and the Goldmans of the world didn’t find a way around Volcker the very instant it was proposed), secondary market liquidity has evaporated, meaning the door to the proverbial crowded theater is getting smaller even as the number of yield seekers inside is getting larger so when someone finally yells fire, well, let’s mix our metaphors here and say we’re all up a creek.

[Fenix]

"We're Living In A Gambling Society" BlackRock's Larry Fink Urges CEOs To Stop "Short-Termist" Thinking
Tyler D.
04/14/2015 17:00

As the ongoing collapse in economic productivity continues in America, and Alan Greenspan's concerns grow, the call for an end to the diversion of corporate spending to instantly shareholder-friendly actions comes from an unusual source. Larry Fink - CEO of the largest asset manager in the world - has unleashed a letter to 500 CEOs around the world - telling them that "the effects of the short-termist phenomenon are troubling both to those seeking to save for long-term goals such as retirement and for our broader economy,” bucking the dividend/buyback trend that investors are demanding. As NYTimes notes, the shortsightedness that pervades corporate America is just a symptom of a larger issue. "This is not just a corporate problem," Fink explains, "It's a societal problem, we’re currently living in a "gambling society."


Larry Fink's Letter... encouraging a focus on long-term growth strategies...

Dear Chairman or CEO,


As a fiduciary investor, one of BlackRock’s primary objectives is to secure better financial futures for our clients and the people they serve. This responsibility requires that we be good stewards of their capital, addressing short-term challenges but always with a focus on the longer term.


To meet our clients’ needs, we believe the companies we invest in should similarly be focused on achieving sustainable returns over the longer term. Good corporate governance is critical to that goal. That is why, two years ago, I wrote to the CEOs of the companies in which BlackRock held significant investments on behalf of our clients urging them to engage with us on issues of corporate governance. While important work remains to be done, good progress has been made on company-shareholder engagement. I write today re-iterating our call for engagement with a particular focus on companies’ strategies to drive longer term growth.


Many commentators lament the short-term demands of the capital markets. We share those concerns, and believe it is part of our collective role as actors in the global capital markets to challenge that trend. Corporate leaders can play their part by persuasively communicating their company’s long-term strategy for growth. They must set the stage to attract the patient capital they seek: explaining to investors what drives real value, how and when far-sighted investments will deliver returns, and, perhaps most importantly, what metrics shareholders should use to assess their management team’s success over time.



It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies. Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when done for the wrong reasons and at the expense of capital investment, it can jeopardize a company’s ability to generate sustainable long-term returns. We do recognize the balance that must be achieved to drive near-term performance while simultaneously making those investments – in innovation and product enhancements, capital and plant equipment, employee development, and internal controls and technology – that will sustain growth.



BlackRock’s mission is to earn the trust of our clients by helping them meet their long-term investment goals. We see this mission as indistinguishable from also aiming to be a trusted, responsible shareholder with a longer term horizon. Much progress has been made on company-shareholder engagement and we will continue to play our part as a provider of patient capital in ensuring robust dialogue. We ask that you help us, and other shareholders, to understand the investments you are making to deliver the sustainable, long-term returns on which our clients depend and in which we seek to support you.

With Economic Productivity on the decline...

as corporate spending is diverted to Buybacks...

And corporate executives are selling their own stock in record amounts...

Maybe what Fink should have said is - stop abusing stakeholders for the sake of your own enrichment.

[admin]

China crece solo 7%