Tag: Business

Ep. 622 – Empty Stomachs Bring Revolutions

The Kapital News
The Kapital News
Ep. 622 - Empty Stomachs Bring Revolutions
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The FAO Food Price Index report for February 2022 was recently released and it has hit a new all-time high. The previous high was back in February of 2011 – which was also the beginning of the Arab Spring. Coincidentally, oil prices are back to 2011 levels as well. The cause of increase in world food prices is multi-faceted. There is of course the major fiscal and monetary policies that were implemented over the past two years and continue to this day – their very actions are inflationary by definition. Global supply chain disruptions persist adding chokepoints and contributing to upward price pressures. Growing conditions and crop production is also of concern – the FAO cites issues with corn production in Argentina and Brazil. Corn is not just used for human consumption, but also for livestock and ethanol – thus contributing to further downstream price increases. Lastly, the uncertainties that exist due to the Russia-Ukraine conflict. These two nations account for 25 percent of global wheat production and 20 percent of global corn production. Ukraine exports the bulk of their exports to Asian and Middle Eastern nations – as such, the stage is set for a redux of the Arab Spring – as bread is a main staple of the diet in the region. The conflict is also leading to some countries beginning to hoard their food production and limit or halt entirely the export of foodstuffs – Hungary just halted all grain exports. Other countries may very well follow suit and others, such as China, may go on a buying binge to obtain and store as much as possible in fear of continued rising prices – which if happens, such buying will continue to put upward price pressure on agricultural commodities. Further, in retaliation to economic and financial sanctions that have been placed on Russia, President Putin is retaliating by telling Russian fertilizer firms to stop exporting their products. This will have huge ramifications as Russia and Belarus, an ally of Russia, are two of the world’s top producers and exporters of fertilizers. In addition to this, natural gas prices have been rising, which is an input good and thus a cost to manufacturing fertilizers. It is easy to connect the dots and realize that higher food prices are likely the norm for the foreseeable future.

US gasoline prices are now averaging over $4 per gallon, a level not seen since 2008. The price increase is also the largest increase over a 10-day period, where the prior 10-day record high occurred following Hurricane Katrina in 2005. Transportation costs have already been on the move higher through the pandemic and rising fuel prices will only exacerbate the concerns. Stay diversified, stay vigilant, and stay with The Kapital News. #Inflation #FoodPrices #Revolution #USA #Russia #Ukraine #Gold #Silver #Wheat #Corn #Oil #Commodities #Protests #Liberty #Peace #Stagflation

Ep. 621 – Weekly Wrap Up

The Kapital News
The Kapital News
Ep. 621 - Weekly Wrap Up
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Global markets continue to be rattled by the ongoing conflict between Russia and Ukraine. However, this is the easy scapegoat for what truly ails the markets – easy money. Governments and central banks injected trillions of dollars into the world economy. Their excuse then, and justification for such actions was the pandemic. Now as the pandemic is seemingly coming to an end, they have a boogeyman to blame for supply chain disruptions, higher prices, etc – Russia. It is almost too coincidental, don’t you think? Several major global stock markets have given back all of their pandemic gains. It only takes a few short months, sometimes even weeks, to erase a year or years of gains. This is a direct result of markets having been juiced by cheap money. It wasn’t real. It was a bubble. As such, it can collapse easily and that is what is unfolding now. However, governments, central bankers, and other policymakers are not going to take responsibility for their actions. Thus, they will look for any and all excuses possible. Now, it’s the pandemic and Russia. What will be next?

As is highlighted in today’s podcast, global trade is discussed and how countries the world over will likely engage in hoarding their goods that are typically exported. This past week, Hungary announced that they are stopping the exports of grain products. Russia and Ukraine account for nearly 25 percent of the world’s wheat production and 20 percent of global corn production. Also this week, President Putin of Russia, reached out to fertilizer companies, basically instructing them to slow or stop the export of fertilizers. Russia and Belarus, an ally of Russia, are two of the largest fertilizer producers in the world. If they were to stop exporting, global food prices, which are already at or near all-time highs, will get even higher. Revolutions are fought on empty stomachs. We witnessed the Arab Spring only a decade ago. Rising global food prices were a major factor in that movement. Now with even more debt, higher food prices, a pandemic, and energy prices at levels also not seen for several years, sets the stage for a lot to go wrong in short order. Such protests, riots, strikes, revolutions, should they occur, will only exacerbate the current situation. Further disruptions to supply chains, less production of goods, fewer exports due to restrictions and/or lack of production – all of which translates into higher prices for the basic necessities. Stay diversified, stay vigilant, and stay with The Kapital News. #Commodities #Gold #Silver #Recession #Peace #FoodPrices #Revolution #Protests #Russia #Ukraine #USA #Liberty #Stagflation #Inflation

Ep. 619 – End the Pandemic, Start the War

The Kapital News
The Kapital News
Ep. 619 - End the Pandemic, Start the War
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Out of the frying pan and into the fire. Just when you thought two weeks to end the spread was bad because it turned into two years – now we find ourselves on the doorstep of war. And not war with a small country that we typically after, but one with nukes. Yes, I mean Russia. Today, Russia decided to invade Ukraine and they did so on all fronts. The Russian stock market crashed over 30 percent, the Ruble hit an all-time low against the US dollar, and western nations set into place further sanctions against Russia. The blame game can wait. What we need to know is if this has staying power and if it’s a distraction. A distraction from the pandemic and all the draconian measures that followed. A distraction from a weakening economy being destroyed by inflation. A distraction from financial markets that appear to be ready to buckle under the weight from a decades long artificial intervention. There are many questions to ask, but the most important one may simply be to ask, why? Is this really the best we can do as the human race? Be prepared for the ensuing economic fallout and the political instability that will follow. Stay diversified, stay vigilant, and stay with The Kapital News. #War #Peace #Russia #Ukraine #Gold #Silver #Economy #FoodPrices #Recession #Protests #Revolution

Ep. 618 – The Fed’s Trapped, Here’s Why

The Kapital News
The Kapital News
Ep. 618 - The Fed's Trapped, Here's Why
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Tame inflation or keep the markets up – what to do, what to do? This is the position the Federal Reserve, along with some other major central banks, are contending with. It’s been an open secret for years that the Fed is beholden to the credit and stock market. However, the Fed now finds the economy in an inflationary environment. One way to combat inflation would be to raise interest rates significantly to match or exceed the current rate of inflation, which is at 7.5 percent. Doing so, however, will surely bring down the credit markets and with it the stock market. Yet, not contending with inflation, will only make the inflation that much worse and will last that much longer. Inflation is a regressive and hidden tax that impacts the most economically vulnerable among us the worst. This also ties into massive wealth inequality that is one for the record books. So coupled together with persistent and high inflation along with massive wealth inequality sets the stage for massive political instability, protests, and revolutions, which will be experienced the world over. This is not just a problem for the USA, but for the world. Stay diversified, stay vigilant, and stay with The Kapital News. #Inflation #Stagflation #Recession #Depression #Protests #Revolution #FoodPrices #InterestRates #Liberty #Freedom #Oil #Gold #Silver

Ep. 617 – Inflation Nation

The Kapital News
The Kapital News
Ep. 617 - Inflation Nation
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I step aside for a few months and all hell breaks loose – exactly how I told you it would. Inflation has proven not to be transitory and the solutions that exist to combat inflation are not popular and will bring the entire economy to a screeching halt. Those trillions upon trillions of dollars in fiscal and monetary stimulus came with a price tag – and everyone is now paying that price – inflation! Stay diversified, stay vigilant, and stay with The Kapital News. #Inflation #Stagflation #Recession #Depression #FoodPrices #Oil #Gold #Silver #Liberty #Freedom #Protests #Revolution

Ep. 596 – Bitcoin or Bitcon?

The Kapital News
The Kapital News
Ep. 596 - Bitcoin or Bitcon?
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The price of Bitcoin is known to be volatile with large swings to the upside and the downside. Currently, it is swinging to the downside where it is trading at $39,300 per coin. Not long ago it was trading around $65,000 per coin, which translates into a loss of over 40 percent in a very short timespan. This type of volatility does not lend itself well for those who advocate that Bitcoin is a store of value. In fact, with such volatility it is quite the opposite. It is a speculative play whereby people are hoping to catch their lottery ticket that is going to give them eternal financial freedom. Markets just simply do not work this way. Some of the recent downside volatility has been a direct result of comments made by Tesla CEO, Elon Musk, and statements from several Chinese regulatory agencies.

Mr. Musk, through Tesla, purchased around $1.5 billion worth of Bitcoin earlier this year. As one would imagine, it caught the attention of the media and the markets and Bitcoin would eventually go on to make new all-time highs. Yet after only a few shorts months of being on the balance sheet of Tesla, Musk tweets out the flaws that pertain to Bitcoin, namely the energy consumption that is used to mine Bitcoin and to use it for transactions. This was a rather shocking statement, only because these facts have been well-known for years and Musk is supposed to be all about the “green” economy. Yet here he was supporting Bitcoin, at least temporarily, despite the inefficient nature of Bitcoin and the energy usage associated with it. Was this a pump and dump scheme? Because it is virtually impossible that Musk did not know those facts prior to adding it to Tesla’s financials.

Another issue to contend with are the Chinese regulators that are prohibiting institutions and their citizens of engaging with cryptocurrencies. Now it is interesting to note that China, along with many other countries and their respective central banks are planning, building, or testing their own versions of central bank digital currencies (CBDCs). So it should come as no surprise that governments want to be the only game in town. After all, they can tax, fine, and imprison you if you do not comply with their orders. Bitcoin and other cryptos, or any private institution or individual lacks that power. It is therefore likely that more governments will start to come out and limit, restrict, or outright ban the use of cryptos other than their own. This speculative mania will without question be remembered in the history books, especially after it all comes tumbling down. Stay diversified, stay vigilant, and stay with The Kapital News. #Bitcoin #Inflation #Gold #Silver #Protests #Liberty #USA #Leadership #Economy #bananarepublic #EndTheFed #Revolution #FireCongress #Debt

Ep. 593 – Jobless Claims Down, Producer Prices Up

The Kapital News
The Kapital News
Ep. 593 - Jobless Claims Down, Producer Prices Up
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The initial jobless claims figure for the week ending 8 May, came in at 473,000. The lowest figure in over a year and continuing its downward trend as the economy reopens. Data from the prior week was revised upward by 9,000 to now stand at 507,000. The Pandemic Unemployment Assistance program saw 104,000 Americans file for the first time, also during in the week ending 8 May. In aggregate, across all forms of unemployment insurance, some 16.9 million Americans continue to file claims. This is for the week ending 24 April and gives us a de facto unemployment rate of 12.8 percent, which is more than 2x the official rate. The official unemployment rate is now 6.1 percent.

Also released today was the Producer Price Index Summary, which showed that producer prices for the final demand index rose by 6.2 percent in April on a year-over-year basis. This is the highest figure since records were kept on a yearly basis going back to November of 2010. Stripping out food, energy, and trade services, the index stands at 4.6 percent, which is also a record-high going back to August of 2014. As we witnessed yesterday in the CPI report, these figures released today were higher than market expectations. The question becomes just how long these price increases will continue. Will they be transitory as the Federal Reserve claims, or will they be longer-lasting and more structural for a few years or more to come? This is a crucial question, as markets, economies, political processes, and societies will all be greatly impacted.

The Federal Reserve’s balance sheet has hit a new all-time high and now stands at $7.83 trillion. This is a week-over-week increase of $20 billion. The Fed remains committed to their QE program of purchasing at least $120 billion per month of US Treasuries and mortgage-backed securities. So far, the Fed has brushed off the recent higher than expected inflation figures, as they continue with their transitory remarks. They also appear to want to wait and see what future data points suggest is underway throughout the economy. Chances are they will be too late to respond to any structural problem and thus their efforts will likely prove futile. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #FoodPrices #Bitcoin #Bitcon #EndTheFed #bananarepublic #FireCongress #Gold #Silver #Commodities #Liberty #USA #Leadership #Jobs #Bailouts #Protests #Riots #Revolution #Peace

Ep. 591 – The Ever-Changing Narrative

The Kapital News
The Kapital News
Ep. 591 - The Ever-Changing Narrative
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In the 24/7 news cycle, there is always a moving target. So it is not uncommon for there to be a new narrative from week to week or even day to day to hold the attention of their viewers. The Kapital News does not play this game and has called out most, if not all of these narratives as of late for being what they are – phony. The main narrative to focus on with respect to markets is the liquidity injections by central banks into the system. It is the funny money that is conjured up out of thin air that continues to prop up these markets. Simply ask yourself where would bond prices, bond yields, interest rates, and equity prices be if it were not for these actions undertaken by central banks? The answer is quite simple, yields and interest rates would be higher, and bond and equity prices lower. This is a house of mirrors and one which is built upon a foundation of sand. Nonetheless, the markets continue to buy into this narrative and policy and so they march onward and upward to new highs. Yes, there have been some minor pullbacks here and there, but they then go on to make new highs. As long as this is the case, then markets move higher. But once this relationship breaks down, and The Kapital News believes that it is only a matter of time, then these liquidity injections will no longer matter and will be impotent in propping up the markets. This will likely result in a great unraveling, whose force cannot be stopped by any kind of monetary or fiscal intervention. At this juncture, market forces are in complete control and they will rid the system of malinvestments and fraudulent businesses. Look out below.

Other news discussed pertained to updates on the Colonial pipeline situation, the Israeli and Palestinian conflict that has been intensifying, and an update on the tensions between Russia and Ukraine. Much of these geopolitical events are not receiving the news coverage they deserve and furthermore, the equity markets do not seem to be pricing in the types of risks that can rapidly develop if any of these global issues escalate more seriously than where they currently stand. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Fraud #FoodPrices #Debt #Spending #EndTheFed #bananarepublic #FireCongress #USA #Israel #Palestine #Russia #Ukraine #Protests #Riots #Peace #War #Gold #Silver #Commodities #Liberty #Leadership

Ep. 590 – Nation Against Nation

The Kapital News
The Kapital News
Ep. 590 - Nation Against Nation
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The Kapital News has been talking at length since 2019 about the protests that were taking place globally. While there is always something that triggers such movements, it is rarely ever just that one issue making the headlines. Typically, it is a series of structural flaws and failures that have been tolerated for far too long, and now the people are making a stand. Due to the pandemic and the subsequent lockdowns, many of these protests and movements were paused. Now, with vaccines being rolled out and people anxious to get back to their lives, these protests are once again taking place and gaining international momentum. Furthermore, much of the problems from 2019 and prior were not contended with in 2020, and in fact, many of these issues were made worse. And due to the pandemic and all of the fallout, many new issues now exist.

Revolutions are fought on empty stomachs and The Kapital News is projecting a structural, long-lasting inflation. Of course inflation means an increase in the money supply, which has and is occurring in spades, but the effects of inflation, higher prices, will be here to stay for some time. The focus on the price increases are on items that people need to live and survive, such as food, energy, medical products/services, shelter, and other commodities. We are not so concerned with items that people do not need to live. It is actually quite simple to see – are all of these people protesting and rioting because the cost of living is so affordable, or otherwise? And yet this is only the beginning of these price increases. We saw what happened in the Middle East only a decade ago with the Arab Spring. Much of this was caused by inflation and high food prices. This happened only a couple years after major central banks began their monetary experiment of QE following the GFC. An inflationary policy that had ripple effects around the world and later contributed to such a movement. The actions undertaken by central banks and governments around the world today dwarf the efforts during and shortly following the GFC – so what can one reasonably conclude? That the fallout from these policies will be even worse and far more reaching. Throw in wealth inequality, tax increases, and political corruption with these higher prices and you have one dangerous and volatile cocktail.

News stories discussed today pertain to the escalation between Israel and Gaza. Actions between these two have not been this bad since 2014. This comes on the heels of rising tensions between Israel and Syria, where Syria is playing middleman for Iran. Another common story now seems to be run-ins at sea between Iranian naval forces and US naval forces. Just last month, US forces fired warning shots at Iranian speedboats for conducting dangerous maneuvers and getting too close to US vessels. Well the same thing just occurred whereby US forces fired 30 warning shots at Iranian speedboats. The frequency of such actions is setting itself up for something to go wrong – let us pray that it does not. In the US, the Colonial pipeline was hacked over the weekend. According to the FBI, it was at the hands of a Russian hacker group. The pipeline is one of the most crucial in the states, especially for the east coast as it supplies a major portion of gasoline. Gas prices were already anticipated to be higher in the spring and summer months, and this setback only adds to those price pressures. Restoration of the pipeline has yet to be fully restored at this time. The longer it takes, the worse the outcome. Other items mentioned, were the tensions between Russia and Ukraine, Australia and China, China, Taiwan, and the Philippines, Scotland and the UK, and civil war mentions in France, amongst others. It is nation against nation. Pray for peace, yet be prepared for war. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Protests #FoodPrices #Commodities #Revolution #USA #Liberty #Leadership #War #Peace #FireCongress #EndTheFed #bananarepublic #Gold #Silver #Debt

Ep. 589 – April Fools Jobs Report

The Kapital News
The Kapital News
Ep. 589 - April Fools Jobs Report
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The market consensus was looking for a gain of one million jobs in the month of April. Instead, the figure came in at +266,000. This was quite the miss. However, it certainly gives at least another month of cover for fiscal and monetary authorities to continue with their narrative that more policy intervention is needed. From the White House, both the President and Treasury Secretary were stating how there is still a long road ahead. They also mentioned how the extension of unemployment benefits has no impact on this dismal jobs number. Instead, they cite the effects of the pandemic and the costs and lack of availability of child care. Interesting to note, however, is that members of the Federal Reserve did mention that the extension to unemployment benefits likely did impact the jobs number for April. As many people are getting paid just as much to stay home as compared to actually working. This belief by some Fed members was stated because, first of all, it is true, and then secondly, those extensions are a fiscal measure, not a monetary one. So the Fed is more than happy to throw a fiscal policy under the bus and shift the blame from themselves onto Congress and the White House, even though they are the ones financing such fiscal policy nonsense.

Clearly, both fiscal and monetary policy authorities want the “gravy-train” to continue as do the markets. And despite this dismal number, markets rallied and made new highs on the DJIA and the S&P500. This is a function of central bank liquidity, which continued to march higher this week and with it equity prices. This is the true narrative to monitor. If markets continue to buy into the rising liquidity injections, then they climb higher, if they cease to buy these actions, then it is game over, as this is the only thing that is propping these markets up. And it is not just the equity markets, but the bond market, and others as well.

The fiscal and monetary policies introduced last year and this year will continue to drag future economic growth downward, while also leading to increased costs across the board in commodities, and items needed to live. Housing and rents continue climbing higher, as do construction and building materials, as do commodities, from base metals, to agricultural products. These price increases will translate into great economic, political, and social strife in the coming months and years and this will be a global phenomena. Some of this fallout is already being witnessed in smaller countries, where they are near collapse or are already there. This trend will continue to make its way up the chain impacting larger economies and countries. This funny money coming from Uncle Sam is anything but a gift from the government, and it is anything but free. The costs of which will be some of the most expensive in human history in terms of price increases, social and political impact, lower living standards, and lost opportunities. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #USA #Liberty #Protests #FoodPrices #EndTheFed #bananarepublic #FireCongress #Bailouts #Debt #Spending #Revolution #Leadership