*IEA WARNS WORLD ISN’T INVESTING ENOUGH FOR FUTURE ENERGY NEEDS - Bloomberg
Here is a look at the 2021-2041 “Demand”Picture:
+One billion human beings in China without an automobile.
+One billion human beings in India without air conditioning.
Last 30 years we have taken 7 million manufacturing jobs out of the US.
Bad News: Ghost towns litter the rust belt, Michigan, Wisconsin, Pennsylvania have been decimated. Opioid deaths up 1000%.
Good News: We lifted 500m people globally out of extreme poverty. Davos smiles.
Unintended Consequences - Energy Consumption
In India, China those moving into the middle class from poverty, urbanization trends - consume 100x more electricity annually than the impoverished back in the country. Real GDP per capita trends are surging. .@Go_Rozen has the data.
The easy answer nearly EVERYONE falls back on is the aging population, retirement - demographics. It is an important piece of the puzzle but hides a dark picture. In June 122,000 persons, 25 to 34 years of age left the labor force.
Nomura is a small prime broker, CS is a big one, MS / GS as well, CS must have the biggest hit relative to Nomura at $2B - we have to assume $8B to $12B hit across them all?
CDS was telling us something Friday.. Credit leads equities..
1. No one knows how big he was or how levered. 2. Have to assume goldman went first and protected itself. MS not far behind.— but with bigger exposure could have a loss. Those that acted slower (nomura, cs) probably left holding the bag???
- relative value rates, sell-off in 5s vs rest of the curve, US treasuries.
*in both cases too much capital was hiding out in crowded venues.
When central banks do NOT allow the business cycle to function over longer and longer periods of time - the good news is wealth creation becomes colossal. Bad news is Capital moves into crowded venues, poised for disruption.
In rates, as the bond market sold-off. Originally, the long end 30s was deemed at risk, capital moved into 10s, 7s, a “safe” place. As selling pressure moved into the middle part of the curve, trillions moved into the front-end looking for duration risk shelter.
Froth Impact: Market Trigger’s the Policy Response
SEC: “We are aware of and actively monitoring the on-going market volatility in the options and equities markets and, consistent with our mission to protect investors and maintain fair, orderly, and efficient markets.”
One of the problems with sell side banks is a classic silo-ization. Splintered fiefdoms litter the field often times with little top down coordination between the views of equity analysts, economists, high yield bond traders, fixed income strategists, rates trading etc.
Each group is a power center with their own p/l, their own Senior MD leadership - with the highly profitable silos carrying the most weight, influence over high level decision making across the firm. In periods of significant market dislocations
Indoor dining restrictions, weather seasonal impact. Leisure & Hospitality Sector, a colossal 498k jobs were lost in December, 372k of those L&H layoffs were at restaurants and bars. Fiscal relief is NOT focused here, should be.
In the first week of '21, Wall St. strategists already have to revise their growth forecasts and average missed on jobs numbers. Reprint the 500-page new yr outlook, a good kindling recourse for the fireplace.
Why does @stoolpresidente have more focus here than Congress? House and Senate are shotgunning billions of dollars around the planet. More targeted U.S. focused assistance to those in need is in order, asap.
BIG Problem Looking forward: At 61.4%, the lowest labor force participation, going back to 1976.
Lots of American families on the outside, looking in. These people MUST be brought back into the labor force soon. Every day that does by, re-entry is harder. Colossal political demand for UBI* / long term unemployment benefits, Colossal election impact.
*Universal basic income
Sustainability??? The colossal political impact here, speaks to people in the streets, NOT at work, not participating. Solutions needed asap.
We are talking about a borderline scam here? It’s a mathematical fact - this beast is NOT long for this world. Sustainability is the question. A high stakes game of musical chairs, DON’T get caught holding the bag.
% Return Since 2010
% Return Since the Feb 2020 Top
Since Sept 2
Wait… what??? An $8B problem - Leverage, 3 things you need to know:
Forward Guidance; very dovish on the NO rate hikes front, NOT so much on the sustainability future QE. I think they want to see what happens with Cares 2.0, prior to longer run QE promises.
Parsing the future policy paths of asset purchases and rate hikes is NOT “Very Powerful Forward Guidance.” Offering clarity and certainty on one and not the other, doesn’t qualify as dovish relative to expectations. The beast inside the mkt wants more I suspect.
The serpent inside the market wants more love from the Fed and Congress... Lots of fails at the 20, now the 50...