Tag: British Pound

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. 469 – Election Interference
The Kapital News
The Kapital News
Ep. 469 - Election Interference
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No one holds a candle to the type of election interference that the US engages in, but nevertheless, we heard from the Director of National Intelligence (DNI), and Director of the FBI this evening about interference campaigns being run by Iran and Russia. Apparently, Iran is sending out emails to Americans with threatening statements to vote for a certain candidate. The Kapital News is sure that there are many other attacks and attempts underway, but this is what we are being informed of as of this evening – with only two weeks to go until election day.

We have discussed in previous podcasts the dangers of social media platforms and their effectiveness with respect to spreading misinformation and disinformation. With some deep pockets and/or a very creative mind, individuals, teams, campaigns, political groups, and yes, foreign actors, can shape political opinions, and with it, potentially drive election outcomes. This social media Pandora’s box has been opened, and the contents are not going back in anytime soon – if ever. And don’t forget, this is all going on while President Trump claims that it’s a rigged election if he should lose, but evidently everything is fine if should he win – this is outrageous and only goes to further divide, confuse, and frustrate the American people.

In other news, President Obama was on the campaign trail this evening in Philadelphia, Pennsylvania – a battleground state. Attempting to be the “closer” for the Biden-Harris campaign. The Democrats are looking to regain Pennsylvania, Michigan, and Wisconsin, the “blue wall.” If this should happen, then odds have it that Joe Biden will become the next President. Current polling would indicate that Biden has a lead in all three states, but so did Clinton in 2016 – this race is far from over. We shall see if President Obama’s message was enough to turn PA blue once again for the Democrats. Early vote counts are currently north of 44 million, representing about 32 percent of 2016 total voter turnout. It’s nearly 3-to-1 in the breakdown between mail ballots and in-person votes at this juncture. With more votes taking place in these early rounds, it increases the likelihood that we’ll know the winner within a day or two of the election. However, should there be some tight races in key battleground states, then it could take weeks or months to determine the winner of the White House. And buckle up – tomorrow evening is the second and final debate between President Trump and VP Joe Biden – anything can happen. Stay diversified, stay vigilant, and stay with The Kapital News. #Elections2020 #Debates2020 #Economy #USA #Russia #Iran #China #Vote #Gold #Silver #Inflation #Debt #Bailouts #Jobs #Liberty #Revolution

Ep. 338 – The Great Unraveling
The Kapital News
The Kapital News
Ep. 338 - The Great Unraveling
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We don’t know what the historians will call this time in which we currently find ourselves, but if we may, we would suggest they call it “The Great Unraveling.” A recession in the United States as well as most of the globe is all but certain, especially on a technical level. However, given the fact that the global economy was already slowing prior to the onset of COVID19 and the oil price war, it is likely that the world is headed towards a depression. We do not say this lightly. This is a very serious and dire situation as this will hurt millions if not billions of people on a number of fronts. The world needs leadership. And the world needs the truth. And unfortunately, the world is in short supply of both.

Here in the United States it’s not a question of bailouts, fiscal and monetary stimulus, it’s simply a question of how much is all of this going to cost? One industry after the next is lining up in Washington, DC seeking “assistance.” On the fiscal side, every time it’s discussed, the price tag goes higher and higher. From $850 billion to $1.2 trillion to $1.3 trillion, and we don’t know if we’re finished. If you think this is a lot of money – it is. But it doesn’t hold a candle to what the central banks are doing. The Federal Reserve has been pumping hundred of billions into the repo market. They’ve cut rates by 150bps over the last two weeks. They’ve made tapping the discount window more accommodative. And they’ve reduced the reserve requirements for banks with respect to cash on hand against deposits. Oh, and they’re still not done. Why does this continue? Are these people completely unaware that the reason we’re in The Great Unraveling is because of these very programs and actions that have been at the helm for over a decade? Again, there is no leadership to say that enough is enough. Or that these policies are not the cure, but rather the disease.

The funding of all of this, especially the bailouts and fiscal measures will be financed through debt. This means that the US Treasury is going to have to issue US Treasuries across the curve. This additional supply coming to the market is likely to depress bond prices, thus increasing yields (or borrowing costs). In addition, given the wave of global debt coming due, many countries around the world, especially emerging markets are selling their US Treasury holdings because they need US Dollars to satisfy their dollar denominated debts. This is also occurring at a time in the Foreign Exchange markets, where many (virtually all) of these currencies have been greatly weakened against the US Dollar. This then puts additional pressure on these same countries because it now takes more of their domestic currencies to be swapped for dollars. This is also coupled during a time of a global slowdown where prices for commodities are at decade(s) if not all-time lows. Many of these emerging economies are highly dependent on commodities for the economic survival. So it’s easily evident that much of the world is facing single, double, triple, and even quadruple whammies. This is a vicious downward spiral that will not find a bottom for some time and it will likely not end until this bottom is found. Central authorities are rendered impotent in such an environment despite their intentions and actions. Markets must be allowed to clear.

The people in the United States of America should be ashamed of what we have allowed to happen in and to our country. This is not the Constitutional Republic of Washington, Jefferson, Adams, and Franklin. Nor is this a country of free-market capitalism – because clearly what exists in this country is NOT free-market capitalism. This is the time for leadership, this is the time for the truth, this is the time to restore our country to our founding principles, and this is the time to place our faith and confidence in each other. Otherwise, this country will truly cease to be a country of, by, and for the people. Stay safe. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #TheGreatUnraveling #Debt #USA #Gold #Bonds #Oil #Truth #Peace #Bailouts #EndTheFed #1776

Ep. 336 – Central Banks Panic!
The Kapital News
The Kapital News
Ep. 336 - Central Banks Panic!
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In a second emergency meeting in as little as two weeks, the Federal Reserve has met, and decided to cut interest rates by 100bps. This now takes the Federal Funds Rate down to a range of 0.0 – 0.25%. The last time rates were this low was during the depths of the Great Financial Crisis in 2008. Recall, it was just a couple of weeks ago that the Fed cut rates by 50bps during that emergency meeting. So in very short order, the Fed has cut rates by 150bps! The next leg down, by definition would take us into negative territory on a nominal basis. On a real basis, the US has been in negative territory for quite awhile.

On the back of this information, we believed their were only two outcomes for how markets would respond. First, this decision could be seen as a panic move because the FOMC was scheduled to meet this week and announce their decision on Wednesday. However, they instead held this meeting this weekend and announced their decision this afternoon. So, the question becomes, why couldn’t the Fed wait another 48-72 hours to announce their decision – panic perhaps? Or option two would be, the crack addicts got their fix from their dealer a few days earlier, thus setting the stage for stocks to rally. Well, it appears the former. At least for now as the US futures market has hit limit down once again – the 5th time in the last six sessions, which means the circuit breakers have kicked in because stock futures have fallen by 5% and thus trading has been halted. Despite the massive rally on Friday – should the futures market hold, then half of Friday’s gains will be eliminated if not more. But not much surprises us anymore.

On the COVID19 front as well as economic front, country after country is making the decision to close their borders and/or make stricter guidelines surrounding travel in and out of their respective countries. This is in effect a global quarantine. The economic shock from both the supply side and demand side cannot be remedied by monetary or fiscal stimulus. These efforts to be undertaken by monetary and governmental authorities will serve only as mere attempts at looking like they are in charge – as if there is some kind of leadership. After a decade of deranged and fraudulent monetary policies, coupled with asinine fiscal measures, out of control corporate debt, and over levered consumers, the debt and credit chickens are coming home to roost. What COVID19 did was that is served as the pin that pricked the out of control global debt bubble. On top of this, don’t forget about the oil price war and all of the other economic data that has been pointing to a global slowdown prior to both COVID19 and the oil price wars.

We are only witnessing the tip of the iceberg, which is why central authorities are panicking. We have yet to see any cascading effect with respect to bankruptcies, let alone any bankruptcy of a major corporation. This outcome is unfortunately likely because of the size and duration of this supply and demand shock, coupled with the massive amounts of debt. This is a double, triple, maybe even a quadruple whammy across various sectors the world over. This massive unraveling will not end well nor will it end quickly. People must understand the root cause of this if we are ever to put into place a solid foundation on which to build a lasting economy and society. Otherwise, we’ll continue with the same old antics, on the same old foundation of sand. We can and must do better. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #COVID19 #EndTheFed #Truth #Justice #Peace #Politics #USA #Coronavirus

Ep. 291 – Phase 1: Yes or No?
The Kapital News
The Kapital News
Ep. 291 - Phase 1: Yes or No?
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We could simply copy and paste the headlines that pertain to the US/China trade deal or lack thereof. This is like living in the Twilight Zone with this constant and continual occurrence of yes there is a deal, to no, we have to increase tariffs, and rinse and repeat. Well it appears today that President Trump is ready to roll back 50% of the tariffs and cancel the upcoming tariffs that were scheduled for 15 December. What does the US get in return? We really have no idea. Possibly the Chinese will buy more ag products like soybeans and pork bellies. But that really just takes us back to where we were when this whole thing started. So what really has been accomplished? We also have early reporting that a Phase 2 deal will not commence until after the 2020 elections. So is this the end of trade headline optimism? Meaning, what are the markets going to look to so that they can “justify” climbing higher? Perhaps the Federal Reserve will come to the rescue and just flush the markets with liquidity like they’ve already been doing – just in a larger order. Time will tell, but if there really is a deal, early reporting is also stating that it will not be released for public review and President Xi will not be signing it. So there’s that.

UK elections look to keep PM Boris Johnson and his Conservative party in power and by a wide margin. Labour leader Jeremy Corbyn is expected to step down as the leader following the election results. What does this mean for Brexit? Will it finally happen? It appears by the voice and vote of the British people that Brexit must occur. After all, it’s only been 3 1/2 years and counting.

Here in the US, the House Judiciary Committee is expected to vote on impeachment tomorrow morning following a marathon day of amendment issues, debates, and committee procedural votes. The vote in the affirmative for impeachment is likely, thus setting the stage for a full House vote on impeachment for next week. This will then move the trial to the US Senate where Senate majority leader, Mitch McConnell, is already working closely with the White House on how to proceed. Does this make sense? A juror is working closely with the defendant. What could possibly go wrong? Stay diversified, stay vigilant, and stay with The Kapital News. #Trade #Economy #Impeachment #EndTheFed #Recession #Politics #Congress #Republic #Truth #Justice #Peace

Ep. 129B – Brexit: When Will It All End?
The Kapital News
The Kapital News
Ep. 129B - Brexit: When Will It All End?
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Another day and another vote (or two) in the House of Commons. While UK PM Boris Johnson gets his first major victory during the first vote in today’s session – approving the Withdrawal Agreement, he was not so lucky on the second vote. The second vote pertained to an expedited schedule to get the Brexit deal through the legislative process and Parliament said no. MPs want more time to go through the agreement’s entirety and to have a thorough economic analysis conducted prior to giving their full blessing. Recall, the referendum was in June of 2016. Over three years and there is still bickering and much uncertainty around what a Brexit will actually look like. Now, given the outcome of today’s votes, it appears that the proverbial can is likely to get kicked further down the road. Despite the appearance of further dither and delay by Parliament, PM Johnson is still steadfast in his rhetoric that Brexit will take place on 31 October – only a handful of days away. Given other recent votes, this is now less and less likely and attention will now be paid to EU officials to see if they grant the UK yet another extension. There remains many moving parts when it comes to Brexit and should we be surprised that such high drama or dark comedy is unfolding in the land of Shakespeare? The only question is, in what act do we find ourselves?

In other news we discuss Q3 earning’s season, further news from Boeing, and the deal agreed to by President Erdogan and President Putin surrounding Syria. Stay diversified, stay vigilant, and stay with The Kapital News. #Brexit #UK #Democracy #USA #Turkey #Russia #Syria #Justice #Peace #Truth #Boeing #Economy #Politics

Ep. 6B – U.S./China Trade Talks, Brexit, + Currencies
The Kapital News
The Kapital News
Ep. 6B - U.S./China Trade Talks, Brexit, + Currencies
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US/China Trade talks continue and with it, so does the volatility seen in the global markets. Markets are more and more driven by headlines as opposed to the dismal economic readings, as many are hanging onto hope for something positive from these talks. Additionally, the Brexit drama continues, and global central banks become the dove.

Ep. 4A – Brexit: Deal or No Deal?
The Kapital News
The Kapital News
Ep. 4A - Brexit: Deal or No Deal?
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As the March 29th deadline edges closer, there’s still no sign of a deal from UK Prime Minster May’s government and EU leaders. Will this mean a no-Brexit is going to happen? Take a listen and hear our report.