BC ECONOMY
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A thread on an interesting report by Goldman Sachs' Peter Oppenheimer, the bank's chief global equity strategist. He points out that Goldman's "Bear Market Risk Indicator" is looking ominous.

 There are three factors that suggest that the recent stability could evaporate and that equities are "about to enter a sustained bear market", Oppenheimer says.
First is the fact that growth, inflation and interest rate outlook is unfriendly for equities.
Second is that greater volatility, such as multiple corrections and new peaks (which we've seen in 2018) tend to presage a full bear market.
Here is Goldman's data showing how falls and bounces tend to come ahead of "the dramatic final fall".
Oppenheimer: "The risk, therefore, is that from these levels the market enjoys a short-term rally but this becomes a signal to sell rather than buy the market."
Oppenheimer's third reason to worry is Goldman's own bear market risk indicator (made from a mix of jobs data, inflation, yield curve and valuations). When it rises above 60% it has historically been a good time to turn cautious, and its currently at 73%.
However, on balance Goldman's Oppenheimer says a prolonged period of more subdued returns is more likely than an outright crash, mostly because valuations are now actually pretty modest after October's slump.
Goldman also reckons growth will slow but stay positive, points out the multi-decade trend towards less economic volatility. and doesn't see any major financial imbalances.
Against that, Goldman can see three causes for concern. 1. A lack of fiscal and monetary policy flexibility in the US, with budget deficit ballooning and interest rates still low compared to history.
Secondly, (and a subject dear to my heart), the seismic shift towards more machine-driven markets, which seems to have lifted the volatility of market volatility, even as economic volatility has drooped lower.
Thirdly, Oppenheimer highlights concentrated flows, ETF explosion, positioning and crowding, which could lead to more exaggerated market moves in a downturn.
The report ends by examining the anatomy of different types of bear markets, categorizing them into the classic cyclical downturn, event-driven ones triggered by an external shock, and structural ones, driven by financial bubbles and imbalances.
Here is a list of every US bear market since the 1800s, categorised according to type, and with how long they lasted and how long the recovery took.
FIN.

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The aim of the global ruling class is to refashion global capitalism into what we can call neo-feudalist technocratic bio-fascism-or ‘global fascism’ for short.

The aim is for remaining liberal democratic rights and freedoms that have been in place at least formally in the ‘west’ for the last few hundred years to be eroded and withdrawn.

There’s lots of different terminology and branding, for example: Great Reset, Fourth Industrial Revolution, Technocracy. The main aim of this plan is the concentration of power over capital, wealth, people and nature in the hands of a the very largest corporations and monopolies.

This plan for a new phase of global capitalism is enabled by national states and governments, international organisations & quangos (EU, UN, NATO, IMF, WTO, WHO, Gates, GAVI). With no clear lines between state and non-state actors, this is also a form of global corporatism.
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@Gus_802 Ultimately we need to stop having arguments about “capitalism vs socialism” because they are both loaded words and imprecise descriptors of how our economy functions. Capitalism and socialism describe systems which, in their purist forms, don’t exist anywhere in the world

@Gus_802 The developed world and even most of the developing world have mixed economies where elements of what is regarded as socialism and capitalism exist. But the real ISM the drives our economy is consumerism as 2/3 of all economic activity is based on consumer/demand side spending

@Gus_802 When we couch these forces as “socialism” or “capitalism”, we automatically created a conflict and a polarizing zero sum argument which often derails honest discussions about our economic system which stifles discussions on ways to improve it

@Gus_802 We should instead call these forces “public funding” and “private funding” as they are more precise and less heated descriptors. We then make the cogent argument that, to support a consumer based economy, we need both public and private funding to do so effectively
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1/ In @RayDalio's perspective, we are at the very late stages of the long term debt cycle. These long term debt cycles typically take 50-75 years to play out. This cycle began in 1945 when World War II ended and we began the US dollar-dominated world order.


2/ In the words of @RayDalio, "Right now, the world’s major central banks have the least fuel in their tanks since the late 1930s so are now in the later stages of the long-term debt cycle. Because they come along about once in a lifetime most people aren’t aware of them."


3/ Central banks have spent the last decade in a race to see who could devalue their currency the fastest. Near 0% interest rates have meant increased printing of the dollar, euro, and yen. Central banks no longer have the ability to tighten credit so they print money.


4/ Being towards the later stages of the long-term debt cycle there is a global sovereign debt bubble similar to what we saw in the 20's & 30's. In 2019, global debt-to-gdp hit 322% with total debt reaching a new all-time high of $253 Trillion.


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@kelleydawg
Wait … so … how much worse could the pandemic response and unprecedented death rate get?

How much farther shall our economy crater?

I wonder what it will feel like to get better.

I wonder what it will be like for things to get better after being arguably as bad as they have ever been.

Wait … sooo … were things this bad in 2016?

Wait … things were good? After eight years under a democratic administration?

Huh.

I wonder how all those falsehoods will play after things start to get better.

I wonder how many full fledged COVID deniers will finally encounter this deadly pandemic.

I wonder if red states will continue to suffer needlessly under Trumpian COVID policies.

I wonder what the recovering blue states will look like from those red states.

I wonder how much aid these red states will require from said blue states.

And I wonder what it will feel like to those red state constituents when the aid forced upon them makes things a bit better?
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On Jan 6, 2021, the always stellar Mr @deepakshenoy tweeted, this:

https://t.co/fa3GX9VnW0

Innocuous 1 sentence, but its a full economic theory at play.
Let me break it down for you. (1/n)


On September 30, 2020, I wrote an article for @CFASocietyIndia where I explained that RBI is all set to lose its ability to set interest rates if it continues to fiddle with the exchange rate (2/n)

What do I mean, "fiddle with the exchange rate"?

In essence, if RBI opts and continues to manage exchange rate, then that is "fiddling with the exchange rate"

RBI has done that in the past and has restarted it in 2020 - very explicitly. (3/n)

First in March 2020, it opened a Dollar/INR swap of $2B with far leg to be unwound in September 2020.

Implying INR will be bought from the open markets in order to prevent INR from falling vis a vis USD (4/n)

The Second aspect is now, that dollar inflow is happening, and the forex reserves swelled -> implying the rupee is appreciating, RBI again intervened from September, by selling INR in spot markets. (5/n)
https://t.co/9kpWP7ovyM
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