Economic pressures

[Danny B]

https://www.stlouisfed.org/open-vault/2019/january/fed-inflation-target-2-percent

ALL BS.
FED chair Paul Volkler, " Volcker is no stranger to presidential pressure on the Fed. ... Volcker writes that the Fed's adoption of a 2 percent inflation target in ... to achieve both full employment and stable prices, saying it causes more harm than good."
So, the bankers force prices up to maintain stable prices.

Smith, "Financial crises come in two flavors: fraud and credit-valuation over-reach. Fraud-based financial crises may differ in particulars, but they share many traits: perverse incentives are institutionalized; the perverse incentives reward figuring out how to evade oversight via fraud, embezzlement, masking risk, etc. which are soon commoditized; regulations are gutted by insider-funded lobbying; regulators fail to do their job in hopes of getting lucrative positions in the industry they're supposed to be regulating; reports of systemic, commoditized fraud are ignored because everyone's getting rich, and so on."

"The resolution has to 1) eliminate the perverse incentives that fueled the crisis; 2) institutionalize oversight that actually functions to limit dangerous excesses and 3) all the malinvestment / bad debt must be liquidated and the losses taken / distributed."
Rather than clean house, politicos bailed out the banks and regulators added new regulations that left the system essentially unchanged.
Interestingly, modern financial crises seem to oscillate between fraud and over-reach:
The dot-com meltdown arose from unprecedented extremes of overvaluation for tech companies profitable and unprofitable alike.

The brewing financial crisis will be different: the twin sins of extreme levels of debt and extreme overvaluation of assets now characterize corporate bonds, many sovereign bonds, stocks and real estate. Pretty much the only traditional assets that aren't at nosebleed levels are precious metals and bat guano. (
Extreme levels of debt and overvaluation characterize the entire global economy, and are not limited to any one nation or sector. When this crisis gathers steam, there will be few avenues of escape. Adding regulations won't stop it, adding liquidity won't stop it, waving chicken entrails and dancing won't stop it"
This graph shows the size of the pile of fuel waiting to be torched.

https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/TCMDO2-19a_1.png?itok=-6T60UAn

https://www.zerohedge.com/news/2019-04-18/next-financial-crisis-wont-be-caused-fraud-time-will-be-different

The joys of regulatory capture.

https://www.zerohedge.com/news/2019-04-18/joy-earning-billionsand-pay-no-taxes

"60 profitable Fortune 500 companies managed to avoid all Federal Income Taxes in 2018. omputer maker International Business Machines (IBM) which earned $500 million in U.S. income and received a federal income tax rebate of $342 million. The retail giant Amazon reported $11 billion of U.S. income and claimed a federal income tax rebate of $129 million. The streaming service Netflix paid no federal income tax on $856 million of U.S. income. Beer maker Molson Coors enjoyed $1.3 billion of U.S. income in 2018 and received a federal income tax rebate of $22.9 million. Automaker General Motors reported a negative tax rate on $4.3 billion of income."
Corporate welfare for the rich.


I'm hitting a LOT more potholes lately.

AND
" pump in more liquidity before the election"

[Danny B]

Chinese credit meltdown,,, chain reaction in the West,,, rigging the confidence game.

I'll skip MMT. The BS is knee deep.
China is a different story. Same amount of BS.
"Nor is it clear what can be achieved with more credit. The IMF said in its Fiscal Monitor that the country now needs 4.1 yuan of extra credit to generate one yuan of GDP growth, compared to 3.5 in 2015, and 2.5 in 2009. '
"Let us concede that Beijing has opened its fiscal floodgates to some degree over recent weeks. Broad credit grew by $US430 billion ($601 billion) in March alone. Business tax cuts were another $US300 billion. Bond issuance by local governments was pulled forward for extra impact. "
Signifying extra desperation.

https://www.dollarcollapse.com/chinas-fake-numbers-risk/

You can see where Chinese liquidity is important to the West.

"The 2019 growth rate would be the weakest since 2009, when the world economy shrank. It's the third time the IMF has downgraded its outlook in six months."

https://www.smh.com.au/business/the-economy/a-delicate-moment-imf-cuts-global-growth-outlook-to-lowest-pace-since-the-gfc-20190410-p51cl3.html

The U.K. is worried about credit card debt, https://www.dailymail.co.uk/news/art...ble-burst.html

The world is in the later stages of the confidence game. The Chinese are well known for being gamblers in everything.
The Chinese report that they are pumping in mega tons of liquidity.
The Japanese report that the BOJ has bought up half of the markets.
The ECB reports that it is going to resume QE

Meanwhile, the FED reports that it is shrinking it's balance sheet. Halted for the moment. There are NO reports of U.S. GOV pumping up everything in sight. The U.S. military reports that $21 trillion is unaccounted for. 10 years ago, the U.S. comptroller David Walker refused to certify that the U.S. books were accurate and honest. Where do you think that $21 trillion went? The military spent it into the economy.
The treasury gets the bills and just sends out a check. Before the spread of GOV plastic money, SS, etc, U.S. GOV was writing 80 million checks a month.
MMT would have the Treasury just write checks for all State expenses.
IF U.S. GOV was spending more than was approved in the appropriations and budget, who would know?

Exclusive: The Pentagon's Massive Accounting Fraud Exposed | The ...

https://www.thenation.com/article/pentagon-audit-budget-fraud/

Alexandria Ocasio-Cortez and the $21 trillion Pentagon accounting ...

https://www.vox.com/policy-and.../12/.../pentagon-accounting-error-medicare-for-all

https://www.armstrongeconomics.com/world-news/taxes/can-raising-taxes-save-government/

292,864

[Danny B]

Credit Bubble Bulletin : Weekly Commentary: Full Capitulation

https://www.peakprosperity.com/blog/114975/its-2016-all-over-again

In Part 2: Why This Better Work, we look closely at just how awful the fast-deteriorating macroeconomic situation is. It's very bad. GDP is falling in nearly every region of the globe,

https://www.unz.com/mwhitney/brzezinskis-warning-to-america/

[Danny B]

https://moneyandmarkets.com/luongo-act-ii-of-the-most-important-political-event-of-the-21st-century-begins-in-may/

"I could expand on the subject, but I trust everyone gets a sense of the mismatch in fantastical narratives, the price action in markets and the reality on the ground. If the economy is as great as markets indicate the Fed should have no problems raising rates. If the signals parts of markets send is false and the rally construct is simply based on cheap money, buybacks and a dovish Fed, then the Fed itself may have ignited the final bubble run. Out of sheer desperation no less."
"As markets are now close to all time human history highs on the heels of a dovish Fed new highs seem a lay up to embrace the bubble in full, "
The article is essentially about the mismatch between the lower loop and the bubble for the bankers.

https://www.dlacalle.com/en/the-eurozone-slowdown-is-worse-than-the-global-one/

[Danny B]

Reportedly, stimulus actually precedes a meltdown

Fracking lost over $200 billion. Reportedly, Wall St is getting tired of this.
SHALE STOCK LOSES 99% OF ITS VALUE: Investor Warning For The Future Of The Industry?

https://srsroccoreport.com/shale-stock-losses-99-of-its-value-investor-warning-for-the-future-of-the-industry/

The FED is pumping in so much money from so many avenues that it is very difficult to get a real feel for capital flows.
Here is a very interesting article showing that the FED pumped in money priorI suspect that they are reading the official figures for M2.https://www.crescat.net/crescat-capi...etter-q1-2019/

The French GOV is in a hurry to get a European army formed. Apparently, the French police can't be depended on to murder French people.

https://www.armstrongeconomics.com/world-news/civil-unrest/suicide-rate-doubles-in-france-among-police/

[Danny B]

Stopping the bankers from creating the final crash

The world is full of stupid people and many of them are drawn to politics. Besides being stupid, they always seem to have agendas to increase their own personal power and wealth. Merkel won the Kalergi prize for her destruction of Germany. May seems to be on track to do as much damage to Britain as possible. Both of them stooges to the corporatocracy that wants to destroy the States of Europe for greater profits.
So, who could arise up and galvanize the people to throw out the criminals.
Information-bandwidth limitations have made it near impossible to have a clear idea of what is going on for the average voter. The corporatocracy has worked hard to get the voters OUT of the control loop.

King Solomon is in his grave. Who could be wise enough and informed enough to come up with a viable alternative to the corporatocracy? Armstrong and his computer program, Socrates spent quite a long time doing exactly that. He is giving a presentation in Rome in May. Here is the index for his presentation. It appears to be all-encompassing.

https://www.armstrongeconomics.com/international-news/europes-current-economy/the-fate-of-europe/

https://www.zerohedge.com/news/2019-04-22/jim-quinn-their-plan-fk-you

So, you would be charged interest on your cash.

"Discussion might be further enriched by the Obama administration's 2015 Economic Report of the President, which highlights the growth in middle-class incomes during the Bretton Woods system of fixed exchange rates. The report describes the period from 1948 to 1973 as the "Age of Shared Growth." The period was characterized by accelerating labor productivity, falling income inequality, and increased workforce participation. What if post-1973 productivity growth had continued at its pace from the previous 25 years? The report posits that "incomes would have been 58 percent higher in 2013" and "the median household would have had an additional $30,000 in income."

"2011 paper "Reform of the International Monetary and Financial System," published by the Bank of England, which analyzed the performance of the gold standard (1870-1913) and the Bretton Woods gold-exchange system (1948-72) relative to current monetary practices. The report concludes that today's system has performed poorly relative to prior monetary regimes,"
"The increasing financialization of gross domestic product is unhealthy because the growing size and profitability of the finance sector come at the expense of the rest of the economy and increase income inequality. When the value of money is fixed, as under a gold standard, economic growth reflects higher levels of productive output."
Judy Shelton: The case for monetary regime change | Gold Anti-Trust Action Committee
"system has performed poorly" NOT for the bankers.

[Danny B]

https://wirepoints.org/chicagos-pension-funds-looking-more-like-a-collapsing-ponzi-scheme/

"Some New Trier Township residents were stunned to see the assessed value of their homes jump by as much as 40, 60 or even 100 percent this year."
So, if you can't legally raise tax rates, just raise assessed valuations.


Various governments everywhere plan to finance their growing horde of State employees by imposing negative interest rates. This won't work if people go to cash. That is why there is a war on cash. Now, there is pushback to the war on cash.

https://www.nestmann.com/is-cash-winning-the-war-on-cash?inf_contact_key=0f24b4ed921ca75c490a545b09ed1ae0680f8914173f9191b1c0223e68310bb1

[Danny B]

The next big thing, euthanasia

I needed to do a second post because of recent info from Armstrong. There is quite a conspiracy going on.
"If governments can no longer borrow from the private sector thanks to this quantitative easing and negative interest rates, then there will be nothing that remains familiar as we forge ahead.. Armstrong.
"This is why the capital flows are going crazy pouring out of Europe into US Equities. I do not think people comprehend that we are staring a crisis in the eyes that is so fundamentally changing with regard to how the world monetary system functions, "

https://www.armstrongeconomics.com/world-news/sovereign-debt-crisis/the-dawn-of-the-great-financial-unknown/

https://www.armstrongeconomics.com/world-news/central-banks/naghi-of-nomura-confirms-japan-destroyed-the-bond-market/

Why am I the only one who makes the connection. MMT bursts out on the scene. The CBs have destroyed the sovereign bond market. The crash is assured. What solution will be demanded?
Keynes wrote about this LONG ago. If interest drain is killing the economy, get rid of interest drain.
Keynes long ago proposed Euthanasia of the rentier.

https://medium.com/@DuncanWeldon/negative-yields-the-euthanasia-of-the-rentier-political-economy-dc3131d8d85e

Never let a good crisis go to waste.
Everybody complains about boom & bust. So, just create a steady-state economy.

https://www.sciencedirect.com/science/article/pii/S0921800911004873

Regulatory capture by the banks has been very hard on the rest of the economic body. They were allowed to grab everything in sight. We get a crash. By popular demand, the banks get squeezed out of financial markets.

[Danny B]

Loose cannons on the economic ship

The bankers of the world wanted instant capital transfer so that they could speculate in anything around the world. The corporatocracy wanted one-world GOV so they could dictate labor rates and, never lose a dime in the bond markets. Evidently, they weren't smart enough to see what the final result would be. Globalism has only benefited SIX nations. This just isn't good for business,,, especially if you aren't one of the six.
Trump, by his actions, has emboldened other States to try to break away. The Eurocrats want a European army to squash down any potential escapees.
They claimed, We need a European army to counter an invasion by Russia. Nigel Farage got up in the European Parliament and asked them. WHO DO YOU THINK YOU'RE KIDDING?

Another sticking point; private capital is a very large part of global liquidity. Since capital flows are mostly unrestricted, they tend to flow into jurisdictions that are undeveloped nations with LOW wages and no environmental restrictions. Capital flows out of States with high wages and expensive government.
This has hit Europe especially hard.
Armstrong, "This is why the capital flows are going crazy pouring out of Europe into US Equities."
Repost, https://www.armstrongeconomics.com/w...ncial-unknown/

So, where does this capital flow? Net inflows into the U.S.

https://cfrd8-files.cfr.org/sites/default/files/styles/large_xl/public/image/2018/02/cumul-net-inflows-into-us-bop-category.png

https://www.bloomberg.com/news/articles/2019-04-23/-extreme-stock-valuation-gap-looms-over-gravity-defying-rally?srnd=markets-vp

Sure seems like it. $SPX and $NDX closing at all time highs, a vertical move out of the gate today and people throwing all caution to the wind chasing stocks with 80+ RSI readings. Risk assets? What are risk assets? These are risk free assets.

https://northmantrader.com/2019/04/23/blowoff-2/

Post Great Depression One, the legislature heard testimony about great pools of "dark liquidity" Flowing hither and yon, destabilizing EVERYTHING. Well, the world is even more interconnected now. There is about 200 times as much hot money flowing around as during the late '20s The current great pools are the hedge funds.

The State makes the laws that govern the banks. Regulatory capture has negated much of this power. When everything blows up, the state will use it's powers for self-preservation. Remember, the FED has no army.
I believe that the CBs are soon to go into kamikaze mode. Globalism just hasn't worked out as planned.

[Danny B]

https://www.armstrongeconomics.com/markets-by-sector/interest-rates/economic-iliad-odyssey/

The ONE thing that would stimulate large sectors of the economy would be PRICE .DEFLATION. This is the one thing that bankers fear most. They tear their hair out if they can't cause price inflation. They use our savings AND, free money to speculate and cause price inflation. We, necessarily cut back on consumption because we are income constrained. The State hopes to inflate away the pain of paying back the debt. Historically, they have inflated away 50% of the burden over time. BUT, it requires a wage-price spiral. Since China & India have used containerized shipping to take over markets, there has been no wage inflation.... NO spiral.
True price inflation is running about 10 % but, that number must be hidden so that bond buyers don't realize just how negative ZIRP really is.

The bankers have a different arrangement. The FED gave them $trillions of pixel dollars. Then, the FED said,,, leave them with us,,,, We'll pay you 2.4% interest on them. We can't have you going broke, You're too important.

https://www.truthdig.com/articles/why-is-the-fed-paying-so-much-interest-to-banks/

claims that it spends about 24% of the economy. But, it also has 23$? trillion that appeared but, is unaccounted for. If all confidence is lost in public debt, I seriously doubt that the stock market will be un-affected.

Armstrong, "We are now on the threshold of the most PROFOUND economic event which has never before in history ever taken place."
I doubt that he can make any accurate predictions in anything but the short term.
"This is where opinion becomes worthless. All we can do is approach this on a collective basis internationally and without bias."
He's talking about international cooperation. Currently, the Central Banks are loading up on gold. They have no intention of cooperating. There will be NO running trade deficits. International trade accounts will be closely monitored and settled monthly by physical gold exchange. The U.S. trade deficit is a leftover artefact of the Bretton Woods agreement.


A very big deal. I guess that the White Knight didn't want to get poop on his armour.

Growth, what growth?

Well shoot, let's just block Iran and Venezuela and see just how fast this puppy will go down.
[B]
Yes, a whole squadron of Kamikazes

4/25 U.S. dollar index hits 22-month high;
And

Yep, it is getting expensive to service dollar-denominated debt.

[Danny B]

Everyone sees it coming

Here is a good article from John Mauldin. He lays out the numbers very well. He shows what would happen if they tried to pay the deficit with additional taxes. His conclusion.
"I predict an unprecedented crisis that will lead to the biggest wipeout of wealth in history."

https://www.forbes.com/sites/johnmauldin/2019/04/24/the-us-economy-is-reaching-a-dead-end/#1164984635a0

A good article on youth employment.

https://econimica.blogspot.com/2019/04/young-adults-employment-is-canary-in.html

At best, GDP is just a measure of how much money is floating around in the country. At worst, it is useless.



Thatcher managed to keep GB out of the common currency. As more Brits see the ECB crashing, they want more distance.
"Both the ECB and the BoJ are completely trapped. They have destroyed their respective bond markets meaning they can no longer even tolerate a free market with respect to interest rates. They cannot stop buying government debt for there is no bid at these rates. We are far beyond every economic theory ever contemplated. How we deal with this government-created financial crisis will be extremely interesting."

https://www.armstrongeconomics.com/world-news/central-banks/bank-of-japan-the-bond-crisis/

Illinois has famously high taxes. There is a way around this.


Burke, "War is the health of the State"
Keynes,"'we need perpetual warfare to stimulate the economy"
Iron Mountain, "peace must be avoided at all costs"
Well, something has to give.

Note on global warming. If the cooling trend lasts through the rest of this year, we have definitely turned into global cooling.

https://www.armstrongeconomics.com/world-news/climate/still-snowing-in-the-heart-of-america-the-longer-winter-shorter-summer-cycle/

[Danny B]

Oil spike, broken CBs,,, broken everything

"The last five economic recessions all were preceded by a spike in crude oil prices."
Trump has taken a big gamble with his sanctions on Iran and Venezuela.
"This time OPEC is going to wait until Mr Trump is irreversibly committed and the market is as tight as a drum. The fiscal break-even price of oil for the Saudi regime is $US88. That is the target.
"Westbeck's Mr Le Mee says global spare capacity will fall to 1.2m barrels a day by the third quarter. This will not be enough to cover demand even if nothing goes wrong, and a great deal is likely to go wrong.
Mr Trump has taken the biggest economic gamble of his presidency. He has set in motion a potential oil crunch."

https://www.smh.com.au/business/markets/trump-has-just-taken-the-biggest-economic-gamble-of-his-presidency-20190426-p51hdi.html

Good article.

We all hear the claim that capitalism is broken.
Central Banks Have Broken Capitalism

https://www.bloomberg.com/opinion/articles/2019-04-26/capitalism-is-broken-because-of-central-banks?srnd=premium-asia

It's an interesting read but, the 3 ideas just won't work. It would mean everybody in power would voluntarily give up power.

Nearly 102 Million Americans Do Not Have Jobs In Trump's 'Booming Economy'
America's crippling debt: Every man, woman & child owes Uncle Sam $220,000
" The spiralling US government debt is apparently much higher than the official figure of $22 trillion. The indebtedness of the American financial system has now reached $72 trillion, according to the numbers compiled by the US Fed.

The higher debt estimate includes corporate borrowings, consumer loans along with debts being added by state and local governments."
"The current US population stands at 328,675,066 according to the World Population Review. Simple calculations show that an average American owes some $220,000, while the share of a family of four is fluctuating around $880,000.'

https://www.rt.com/business/457603-us-soaring-debt-per-head/

[Danny B]

Gold,,, the confidence battle,,, insolvency ratio

World Gold Council: central banks buy most gold since 1967
https://www.cnbc.com/2019/.../world-...most-gold-sinc...

Jan 31, 2019
World's Central Banks Want More Gold as India Joins Spree ...
https://www.bloomberg.com/.../2019.....oost-as-india-

https://kingworldnews.com/andrew-maguire-one-central-bank-is-exploiting-a-new-gold-window-that-will-crush-the-naked-gold-shorts/

Control-P[i]

https://www.zerohedge.com/news/2019-04-26/us-government-ensnared-debt-trap-and-theres-no-escape

Production and imports of goods fell for the first 3 months.
AND
"According to the government, $32 billion of goods were added to inventories this quarter, "

https://www.marketwatch.com/story/the-big-mystery-in-the-gdp-report-where-did-the-inventories-come-from-2019-04-26

http://creditbubblebulletin.blogspot.com/2019/04/weekly-commentary-officially-on.html

Police do a night raid and kick down the door because the family had a kid who was not vaccinated.

https://www.armstrongeconomics.com/international-news/police/police-bust-down-doors-guns-drawn-to-take-a-toddler-because-of-a-fever/

BUT
Marking tires of parked cars is unconstitutional.

https://www.newsmax.com/newsfront/court-parking-chalking-unconstitutional/2019/04/25/id/913260/

[Danny B]

So, who funds the State?

About 250 years ago, the sovereign States started borrowing large amounts of money from the private bankers. This process was formalized as the Sovereign bond market.
The Central Banks were first created to handle the finances of the State, primarily war finance. Various European States regularly defaulted on these bonds. Greece has spent 50% of their modern history in default. As we move forward in time, we see that, wars got more expensive and, the State needed even more money. All democracies eventually fail because the electorate discovers that they can vote for themselves the whole pie.
As more and more leaders bought votes with promises, State expenses went ever higher.
The burden of financing the welfare-warfare State was shifted to the private taxpayer.
Regulatory capture allowed corporations to avoid taxes for the most part.

This year, Americans had to work until April 15th (ironically) to pay the State's bills. These bills are just too expensive. Price inflation has gone way up but, wage inflation is lagging far behind. Wages and purchasing power have gone way down. This left very little extra money to save. The banks previously depended on savings to advance money for loans.
They were controlled by the FED requiring a reserve to be maintained to cover bank runs or bad loans. At one time, gold was the prime reserve. When banks were allowed to hold derivatives and each other's paper, there was no reserve requirement hat meant anything. Several years ago, the FED gave the banks about $2.6 trillion to hold as excess reserves. Then, they paid them interest on these reserves. The upper loop of the economy is running heavy on instruments and, LIGHT on liquidity / money. Apparently, the banks are running out of money.

https://www.zerohedge.com/news/2019-04-27/jpmorgan-we-are-approaching-point-again-where-us-banks-run-out-liquidity

A paper dollar is a bearer bond with zero maturity that, effectively, has no counterparty risk. Everything else besides precious metals is an instrument of varying fungibility. Nobody knows just what an instrument is worth if you try to trade it for cash.

Regulatory capture allowed the corporations to starve the State at the same time that State expenses have gone way up. The State hates the idea of having to work to get money from private investors. The solution; print up hundreds of $trillions so that the sovereign bond markets are destroyed.
Armstrong, "PROFOUND economic event which has never before in history ever taken place."
The State needs a money spigot that is not under the control of any private interest. It is in the State's best interests to break the current arrangement. You can bet that the State is going to look out for itself.
Jim Willie proposes that America have 2 separate dollars, A stable gold-convertible dollar for imports and, a domestic dollar that floats or sinks.
The nature of automation added to regulatory capture means that the current arrangement will come to an end.

The U.S. government has the pedal to the metal when it comes to borrowing. Ron paul wanted to audit the FED. Trump wants to annihilate it.

https://www.zerohedge.com/news/2019-04-26/us-government-ensnared-debt-trap-and-theres-no-escape

There is going to be a house cleaning.

Corbyn has a PLAN.

[Danny B]

Social Security Is Facing a $42.1 Trillion Shortfall, Trustees Report Says

https://www.rethinkingthedollar.com/social-security-is-facing-a-42-1-trillion-shortfall-trustees-report-says/

NOPE, no can do. If retirement money was held in private accounts, it would NOT be available to the State to use for countless wars. Pox Americana faces a huge funding gap in the future. 51% of Americans receive a check from GOV. FED GOV will dump the FED and emit money from the Treasury. It's trying to smooth the transition by talking up MMT to give people the idea of State emitted money for their pensions.

Armstrong, "We are facing a very interesting financial crisis that has never before been witnessed because this is how the Socialist Utopian Society will crash and burn. We are beyond all economic theories for nobody from Keynes back to Adam Smith ever contemplated what would happen with the deadly theory of Quantitative Easing constructed upon the Quantity Theory of Money.
We are simply off the charts, as they say, in terms of markets and economics. We are entering one of the most challenging periods perhaps in the history of financial and economic forecasting"
The Geat unknown ---The Bond Contagion

OK, that is straightforward enough. Armstrong has long predicted a collapse of the sovereign bond market and, a rotation into private stock & bonds.
At the moment, that is NOT what is happening.
Here is a mind-numbing technical article that has a few good points.
"One need look no further than market action in 2019 where despite fresh record highs in the S&P - mostly the product of the Fed's sudden tightening bias reversal and subsequent easing by both the US central bank and its global peers - equity outflows have hit an unprecedented pace, with continued stock upside attributable almost exclusively to stock buybacks, forced short squeezes and delta and gamma-imbalanced dealer books, where the higher equities rise, the greater the "forced chase" by dealer to keep bidding stocks even higher. Meanwhile, both institutional and retail investors have continued to flee global equities as the chart below from EPFR"

https://zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com/s3fs-public/styles/inline_image_desktop/public/inline-images/equity%20outflows%20april%2026.jpg?itok=s8gW4vis

US GDP Not All it was Cracked up to be - The Great Recession Blog
"Here is something to bear in mind: Regardless of what stock averages are doing, the major corporations that are likely to be harbingers of what is coming for the general economy are foreshadowing, as I reported in my last article, darker times ahead.

Exxon, which broadly reflects the critical central role energy plays throughout our economy, just pulled a 3M face plant. These are some major downbeats. Exxon reported a MASSIVE 50% drop in profit, and that fell far short of lowered expectations. (60% drop quarter on quarter.)"
Investors are aware of the crash in fracking. They are aware that buybacks and FED money are the only things holding up equities. They are fleeing.
"Although stabilizing, in the existing paradigm, this appears to stifle growth -- by preventing bad behavior, in the economy which is dependent on financialization, the system is deprived of one of the main engines of growth."
This "growth" has nothing to do with productivity.

"boost the credit impulse that could possibly stimulate investment and in turn lead to higher productivity growth."
"However, a problem emerges, as the demand-side has to be addressed at the same time. Indeed, the new technologies that would attract investment now destroy more jobs than they create as "the old paradigm does not seem to be capable of achieving these goals"
NO KIDDING
"To Kocic, this is also the most negatively convex sector which is sensitive to spread wideners in steepening sell off. In other words, a possible wholesale downgrade to BB or lower would result in disorderly unwind of positions of the IG money managers which would be capable of raising volatility significantly. From there it would promptly spread to the rest of the market, and global economy, and lead to the next financial crisis. What happens to vol then should be clear to anyone."
The whole article is about creating volatility to return to profitability for speculators.
BUT, it glosses over the true effect of a wholesale downgrade of bbb to bb
" disorderly unwind of positions"
The junk bond market is something like 42% of the total.

"That said, to Kocic the worst case scenario, as note above, is a bear-steepener, which "is seen as tail risk that would cause the most violent repricing in credit." Which incidentally is precisely what we said one month ago, if with far fewer words in"

https://www.zerohedge.com/news/2019-03-26/curve-inversion-bad-its-steepening-after-kills

"violent repricing in credit"
Translation; a popping of the credit bubble.