Tag: BOE

Ep. 566 – Central Banks Taunt The Markets
The Kapital News
The Kapital News
Ep. 566 - Central Banks Taunt The Markets
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If the incompetence of central bankers was not enough to deal with, now we have to contend with their arrogance. European Central Bank, ECB, President Christine Lagarde, remarked in a recent interview that central banks remain steadfast in achieving their goals and dared the markets to test their resolve. What is she talking about? Is the ECB President openly admitting that central bank policy and natural market forces are at odds with each other? If this is the case, which The Kapital News believes to be true, then Lagarde has just declared that equity and bond prices would be quite lower compared to current levels.

Of course this is the open secret about global monetary policy, yet no one dares to say it, especially not a central banker. Quite the contrary, as central bankers attempt to attribute equity and bond price gains to fiscal support or a more resilient global economy. Rarely, if ever, do central bankers want to stand in the center of the stage and take all the credit nor do they ever openly taunt the markets. Global equity prices are at their outrageous valuations, especially in the United States, because of the monetary measures that were undertaken since the pandemic and even prior. So it is a simple thought experiment to ask oneself the following, if such measures and liquidity were removed from the system, would equity and bond prices be at their current levels? The answers is a resounding, NO! Prices would be much lower and interest rates much higher. This is what needs to occur in order for markets to find fair value, for zombie corporations to be liquidated or restructured, and for all other malinvestments to be liquidated or restructured as well.

This will be a lengthy and painful process, but it is one that is needed and required in order to establish a solid foundation on which to build a sustainable future economy and society. But we will never hear this from central bankers or politicians. Instead they give us their lethal combination of incompetence and arrogance. And while the top 1 and 10 percent of the population see trillions of dollars added to their net worth in the midst of a pandemic, these same central bankers inform of us a growing wealth inequality problem. Yet they never seem willing or capable of placing the blame at their own feet for such inequality. This type of rhetoric from Lagarde and other central bankers is concerning to say the least. This is now open warfare between free-market capitalism and central planning. Let us hope for the sake of freedom, sound economics, individualism, and posterity that free-markets win the day. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #CentralBanks #Inflation #Markets #Debt #Protests #Riots #Liberty #USA #Leadership #EndTheFed #bananarepublic #FireCongress #Pandemic #Gold #Silver #Commodities

Ep. 560 – Nature, Trillions, & Social Unrest
The Kapital News
The Kapital News
Ep. 560 - Nature, Trillions, & Social Unrest
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Volcanoes, floods, and printing presses, oh my! Just when you thought it was a relief to put 2020 in the rearview mirror, we now start to see that 2021 may end up in a similar fashion. Whether it is once in a millennia volcanic eruption (Iceland), or the worst flooding in 60 years (Australia), one thing is certain, nature is unpredictable and very powerful. It will not be a surprise to The Kapital News if nature should continue to throw us several curveballs throughout this year.

Onto the trillions! So you thought the Nobody CARES Act 3.0 that just passed with a price tag of $1.9 trillion was going to be the cherry on top, well guess again. The ink is barely dry on that spending bill and President Biden is allegedly about to propose further measures amounting to nearly $3 trillion. How many times have we said that they are just getting started? We know that we have lost count. It would be one thing to say that while it is reckless and irresponsible to spend like this, we could at least point to several major accomplishments that resulted from this spending – like infrastructure, better education results, improved health, less financial systemic risk, etc…However, we unfortunately cannot even do that. This continues to be one major bailout after the next with the taxpayer paying the bill. And the worst is yet to come in the form of higher inflation, lower living standards, and loss of opportunities. These trillions also have an impact on the housing market. The median US existing home price increased by 15.8 percent year-over-year and now stands at $313,000. People are simply being priced out of the market. The ensuing correction, just like its increase, will be epic.

Social unrest is unfortunately a near daily theme, but it is the reality of our time. The country of Turkey has been on our radar for months and has been discussed on occasion. Turkey is back in the news due to the recent firing of their central bank head. The nation is dealing with runaway inflation and recent actions undertaken by the central bank were attempting to contain it by increasing their benchmark interest rates. Apparently, President Erdogan was not too fond of this monetary maneuver and decided to oust the top banker. Markets did not like this action as Turkish stocks suffered their worst one day decline in eight years, as equities fell by nearly 10 percent. Furthermore, the Turkish Lira declined by over 9 percent. What makes Turkey an interesting situation is that they are a larger economy than say Lebanon or Venezuela, but that Turkey is also an important geopolitical player. Turkey is being wooed by both western and eastern nations, due to the size of their economy and geographical location. This is something to most definitely pay close attention to. As the economy weakens and is at the hands of a “strong man,” in President Erdogan, the environment is ripe for social unrest to occur. The weakest links of the global economy are breaking down and now those ripple effects are grabbing larger economies. This story and trend is likely to continue throughout this year and into 2022. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Protests #FoodPrices #USA #Turkey #China #Brazil #Liberty #Gold #Silver #Commodities #Revolution #Leadership #EndTheFed #bananarepublic #FireCongress

Ep. 558 – Market Losses + Job Losses
The Kapital News
The Kapital News
Ep. 558 - Market Losses + Job Losses
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One day after the Federal Reserve gave the markets a pot of gold, it appears that it was just as quickly taken away. The major US indexes all closed in the red, with the tech heavy Nasdaq leading the way. This is also on the continuation of rising yields, with a focus on the US 10 year note, which hit levels above 1.7 percent during the trading session. With equity prices at or near all-time high valuations, rising yields and interest rates could pull the rug out from under this massive bubble. Recent history suggests that it can happen, as we witnessed such an episode in Q4 of 2018. This is why so much attention is being paid to rising global bond yields, and the rhetoric and actions of central bankers are being closely monitored. This in and of itself indicates how centrally planned the financial markets and economy have been – as the world, and trillions of dollars of financial assets await the words of only a handful of people. This is dangerous and will end in destruction.

Initial jobless claims for the week ending 13 March were 770,000, which remains over 100k higher than the figures we witnessed during the depths of the GFC. And this has been the case for one full year! The numbers from the prior week were revised upward by 13k and now stand at 725,000. In aggregate, there still remains 18.2 million Americans collecting some form of unemployment insurance. This gives us a de facto unemployment rate of 13 percent as opposed to the official rate at 6.2 per cent. And lastly, the Fed’s balance sheet has hit a new all-time high and now stands at $7.69 trillion. New highs are to be expected on a near weekly basis as the Fed remains committed to purchasing $120 billion per month of US Treasuries and mortgage-backed-securities. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #FoodPrices #Protests #USA #Liberty #Leadership #Gold #Silver #EndTheFed #bananarepublic #FireCongress

Ep. 557 – Fed Gives Markets A Pot Of Gold
The Kapital News
The Kapital News
Ep. 557 - Fed Gives Markets A Pot Of Gold
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The knee-jerk reaction to the conclusion of the press conference by Federal Reserve Chair, Jay Powell, was positive for the equity markets, as they closed in the green after trading in the red for much of the day. So for the time being, a pot of gold was given to the markets. Now one day does not make a trend and this could easily reverse. However, when the Fed is seemingly committed to keeping interest rates low until at least 2023 and probably longer if they can, they are sending conflicting signals. On the one hand, they want to note how resilient the economy is and how it is likely to grow at a solid rate this year; and yet on the other hand, despite record high equity and real estate markets, an economy they claim is resilient and growing, still somehow needs the Fed to keep interest rates at record lows for the next few years at least?! Something does not add up. This is no surprise, as the Fed is always talking out of both sides of its mouth. They are also well aware that markets nor the economy like higher interest rates and yields on notes and bonds. Recall what occurred during Q4 of 2018 as the Fed attempted to reduce their balance sheet and raise the Federal Funds Rate. All it took was a Funds Rate of 2.4 percent and a 10-year Treasury note slightly above 3 percent to bring equity markets down 20 percent. Now, with the economy weaker, and trillions of dollars more in debt, even lower rates and yields will prick this bubble. However, such increases are exactly what is needed to help rid the markets of malinvestments and zombie corporations. There is no easy way out of this quagmire.

Since the GFC and the implementation of QE, the global economy has been living through the largest economic experiment ever conducted and it also happens to be the biggest wealth transfer in human history as well. Policymakers and central bankers are aware of the fragility in the system. This is evidenced by their actions of attempting to keep interest rates low and to put downward pressure on yields, should they begin to rise. They know the patient, the economy, is weak. But they cannot state this obvious truth because it is they who would be to blame for the mismanagement of the economy and financial markets. So instead of leadership and accountability, we shall have cowardice and more of the same implementation of one asinine policy after the next. How will this end – in blood and tears. When will this end is up for debate. But if yields and interest rates continue to climb higher, and one nation after the next continues to protest and riot because of the now brutal intersection of economic, political, and societal problems, then the end of this economic charade may be fast approaching. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Markets #EndTheFed #bananarepublic #FoodPrices #FireCongress #USA #Liberty #Leadership #Gold #Silver #Bonds #Debt #Commodities #Protests

Ep. 547 – Jobless Up + Yields Up
The Kapital News
The Kapital News
Ep. 547 - Jobless Up + Yields Up
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Initial jobless claims continue to remain stubbornly high, as 745,000 initial claims were filed for the week ending 27 February. Last week’s figure saw an upward revision of 6,000 filers, to now stand at 736,000. Since restrictions have been in place, claims have been well above those witnessed during the depths of the GFC, which were around 650,000 for a couple of weeks. We are now at the one year anniversary of lockdowns and this is the type of economic carnage that still exists. For all Americans that continue to claim some form of unemployment insurance, now rests at 18 million. Giving us a de facto unemployment rate of around 12.7 percent. This is double the official rate that stands at 6.3 percent. The official jobs report for February will be released tomorrow morning by the Bureau of Labor Statistics.

Other items discussed today were the Federal Reserve’s balance sheet and M1 and M2 money stock. All monetary measures are at or near all-time highs. This is expected to remain the trend on a weekly basis as the Fed remains committed to purchasing $120 billion worth of US Treasuries and mortgage-backed-securities on a monthly basis. This alone should elevate their balance sheet to north of $8.5 trillion, which is 10x higher than where it was prior to the GFC! The Kapital News projects that the balance sheet will be closer to, if not above, $10 trillion by the end of the year, as Congress continues to pass large-scale spending measures.

Earlier today the Chairman of the Fed, Jay Powell, made some remarks that apparently spooked the markets and caused a sell-off on the major indexes. The Chairman apparently believes that inflation will run hot for a short period of time, but will only be transitory, and that the Fed is monitoring closely, and has the tools to contain inflation. This led to yields on Treasuries moving higher, which was cause for concern last week and earlier this week, and has been placing downward pressure on global equities. The same upward effect was seen in the dollar index, as it now trades near levels not seen since last Nov/Dec. Commodities, however, is more of a mixed bag for the time being, with oil prices climbing higher, while precious metals continued their downward trend. In short, the markets are broken and heavily manipulated. All that is left are the narratives that central bankers can tell. The major question is, will markets continue to buy it? If yes, then equity and bond prices may continue higher. If no, then this may be the beginning of the end of central bank control over markets. If this is the case, then it could be a scenario of, look out below. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Debt #Spending #Gold #Silver #USA #Liberty #Commodities #EndTheFed #bananarepublic #FireCongress #Markets #Leadership

Ep. 546 – America’s Infrastructure, C-
The Kapital News
The Kapital News
Ep. 546 - America's Infrastructure, C-
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The American Society of Civil Engineers (ASCE), released their report card for the state of America’s infrastructure, and gave it a grade of C-. This is the best grade yet handed out by the ASCE since the report cards have been produced going back to 1998. However, despite the slight improvement from the last report card of 2017, there still remains much work ahead. Expected costs will differ between various groups, but needless to say, in order for the US to earn a grade of B+/A- will take trillions of dollars. It may be prudent for Congress to actually pass some significant legislation on this matter in order to take advantage of near record low interest rates.

The nation’s infrastructure has been neglected for too long and quite frankly is an embarrassment for a country of our wealth. If done properly, such legislation can prove advantageous and serve as a true investment in the future of this country. We are in the 21st century and we need coast to coast infrastructure that meets and exceeds our needs. If this is not done properly, or at all, then this will serve as further evidence that our country is in decline and decaying. There are 17 categories that the ASCE reviews and the best grades were that of a B and B- for rail and ports, respectively. The next report card will be released in 2025. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Infrastructure #Jobs #Debt #Liberty #USA #Inflation #Gold #Silver #Spending #Markets

Ep. 544 – Insanity x A Trillion
The Kapital News
The Kapital News
Ep. 544 - Insanity x A Trillion
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With the $1.9 trillion monstrosity set to be passed by Congress, just in time as the benefits are about to expire from the Nobody CARES Act 2.0 passed last December, we continue to witness the insanity of our politicians and the weakness of our economy. With several hundred thousand Americans continuing to file weekly initial jobless claims to the rising prices across commodities, one thing is certain – we are far from a real economic recovery. So in order to mask this reality, politicians are attempting to do what politicians do best, and that is spend money that we do not have and to kick the can down the road. These policies have proven and will continue to prove destructive. We are in the land of trillions and there is no end in sight as to how much more spending will be coming down the pike. This measure continues to pertain to the pandemic (or so we are told). What is next on the block is likely infrastructure spending, and measures dealing with the environment and healthcare. We are just getting started. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Inflation #Gold #Silver #Jobs #Bailouts #USA #Liberty #Spending #EndTheFed #bananarepublic #Markets #Leadership

Ep. 533 – Fake Unemployment!
The Kapital News
The Kapital News
Ep. 533 - Fake Unemployment!
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Jerome Powell, the Chairman of the Federal Reserve, made some comments this afternoon, and one in particular pertained to stating that the “real” unemployment rate is closer to 10 percent. The BLS just released the jobs report last Friday and informed us that the official unemployment rate is 6.3 percent. This is quite the discrepancy. So what gives? The Kapital News believes this is the first of many one-two punches to be thrown by Treasury Secretary, Janet “Dingbat” Yellen, and Jay Powell. Recall that Yellen was the former Chair of the Fed. This past weekend, Yellen made comments supporting the $1.9 trillion spending package being proposed by the Biden administration, arguing that its passage will help return the US economy to full employment. This is hogwash. Nevertheless, we now have Mr. Powell arguing with official government statistics, which is highly uncommon, and also arguing that monetary policy will remain accommodative until we once again reach full employment. Clearly, something is afoot. Especially when one considers how important the “independence” of the Fed is in the eyes of Fed officials. They always note how important it is for the government to stay out of the business of the Fed. So why is the Fed so concerned with the policies of the government? Wouldn’t this invite political interference into their decision-making?

The Kapital News believes that the Federal Reserve along with the Treasury Secretary, know that they are trapped. They know that their fiscal and monetary policies have run their course and are at their end. But they also do not want to take any responsibility for their actions since the GFC and so they would simply rather continue with the same policies as opposed to admit their mistakes and change course. This pride or perhaps complete ignorance and incompetence has proven to be and will continue to be extremely expensive and destructive to the economy. The inflation that has thus been generated will continue to make its way throughout the global economy. The first to be affected has been and remains financial assets, but inflation has also been hitting healthcare costs, commodities, and food. It is in these latter groups where the most destruction will occur. Most people do not own financial assets, but everyone needs food and energy. Even with respect to financial assets, as prices go higher for equities and housing, it prices much of the population out of these markets because they cannot afford them. It is one thing to be in a position where one cannot afford equities and/or housing. It is a completely different situation when they cannot afford their utilities, transportation, medical care, and food. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Fraud #FakeMarkets #Fake #Bailouts #FireCongress #bananarepublic #EndTheFed #Recession #Depression #Inflation #Gold #Silver #USA #Liberty

Ep. 532 – No Savings, No Problem?
The Kapital News
The Kapital News
Ep. 532 - No Savings, No Problem?
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The financial situation for many Americans and their families were in dire straits even prior to Covid-19 and all of the subsequent ill-effects. However, we must note that the broader economy was weakening before the pandemic arrived. So, with the reality of restrictions and lockdowns, this has placed further strains on household finances. Although, it must also be noted that in a typical recession or economic downturn, it is common for incomes to decline. Yet, due to the passage of the Nobody CARES Act and other fiscal and monetary measures, incomes in aggregate actually increased. It must be stressed that this was not the result of productive economic measures, but rather due to inflationary policies – printing money and throwing it into the system in various ways. This is not free and it will prove to be extremely expensive. It will come at the cost of suffering the affects of inflation and with it the loss of savings and purchasing power.

In today’s podcast we highlight a survey that was conducted in the late summer of 2020 that focused on savings in the US. This survey can serve as a timely benchmark as it was conducted during the ongoing pandemic restrictions, but also overlaps some of the fiscal and monetary policies that were implemented. We refer you to the link above to read the article that discusses the findings, yet we will mention a few key points. The median savings balance is $3,500 and the average is $26,619 according to the 2,000 survey respondents. The article also notes that 39 percent of Americans do not have enough money saved to cover a $400 emergency. Further, with respect to retirement, nearly 50 percent of families do not have anything saved for retirement. In what is supposed to be the wealthiest and most prosperous nation on Earth, it sure looks more like a tale of two cities.

It is such inequality that has driven us to economic, political, and social decay and decline. This reality exists due to the flawed and fraudulent fiscal and monetary policies that have been enacted for decades and continue to be implemented on an even larger scale. No proactive measures have been taken nor proper reactive measures. Therefore, the net result will be that the system continues onward on its faulty path until exhaustion. This will end in blood and tears around the globe. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Savings #Markets #Liberty #USA #Gold #Silver #Inflation #Recession #Depression #Recession #Depression #EndTheFed #bananarepublic #FireCongress

Ep. 498 – 2020, The Year That Will Live In Infamy
The Kapital News
The Kapital News
Ep. 498 - 2020, The Year That Will Live In Infamy
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Since it is the anniversary of the Pearl Harbor attacks, 7 December, 1941, we thought it prudent to title today’s podcast as such. Of course, this is a play on words to those spoken by President FDR, following this attack. We think it’s more than fair and reasonable to make such a statement.

During today’s show we discuss a number of items of which we were able to recall as happening throughout this year. Surely, topics were missed, but we ask the audience to share any items not mentioned. The events throughout this year are nothing short of Biblical – various natural disasters (fires, hurricanes, locusts, etc); trade wars, impeachment hearings and trial, negative oil prices, economic and/or country and government collapse, Presidential primaries and elections, Brexit, wars and conflicts, Covid-19, significant inflation and debt expansion, massive job loss and business closures, protests and riots, banking and financial market fraud, and what lies ahead for much of the world, may very well be a combination of civil wars, revolutions, and world war. We pray that we are wrong due to the destruction and devastation that will follow. However, this is an honest assessment given the moral, political, social, and economic decay and decline that has been experienced for generations and is picking up momentum. So while 2020 is a year for the record books – prepare yourselves, as 2021 and beyond are likely to be even worse. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #War #Recession #Debt #Bailouts #Inflation #Depression #Gold #Silver #EndTheFed #BananaRepublic #Liberty #Revolution