Despite being one full year into lockdowns and restrictions, initial jobless claims remains higher than even during the depths of the GFC. For the week ending 20 March, initial claims came in at 684,000, which happens to be the lowest reading since last year. Last week’s figure was revised upward by 11,000 to stand at 770,000. In aggregate, amongst all unemployment insurance programs, some 18.9 million Americans continue to file claims. This gives a de facto unemployment rate of 13.3 percent, which is more than double the official rate at 6.2 percent.
The Federal Reserve’s balance sheet hit another all-time high to now stand at $7.719 trillion. The Fed remains committed to its policy of QE, by purchasing $120 billion per month of US Treasuries and mortgage-backed-securities. This will likely take the balance sheet above $8.5 trillion by year end, which would be a 10x fold increase to the balance sheet since the GFC! Other monetary measures such as M1 and M2 also hit all-time highs. And lastly, the Suez Canal traffic jam continues into the weekend. Some estimates state that this blockage is costing the global economy $400 million per hour! A staggering figure no doubt and highlights the vulnerabilities that exist within some of these trading routes and the sizes of some of these vessels. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #SuezCanal #FoodPrices #Protests #Inflation #Leadership #USA #EndTheFed #bananarepublic #FireCongress #Taxes #Gold #Silver #Liberty
If it is not a pandemic or a social justice cause, then it shall be a climate crisis. This will very likely be the next emergency that is sprung around the globe and assuredly, urgency will be stressed. We are not so concerned in today’s podcast to discuss the actual environment, but rather how policymakers act and respond.
Today the House Financial Services Committee heard testimony from Federal Reserve Chair, Jay Powell, and Treasury Secretary, Janet Yellen. A topic that was discussed by both was of course the climate. So let us understand something, these two supposed economic experts cannot even handle the economy and now they are going to help manage the climate? We are sure in their twisted world that this makes perfect sense to them, but in the real world it does not. However, the narrative cannot be destroyed. The narrative is rooted in panic, uncertainty, urgency, and crisis. This serves to provide policymakers with an environment to always do something – regardless as to what that something may or may not be. As we have clearly witnessed over the past year and continue to observe to this day, central banks stand at the ready to flood the system with liquidity and federal governments continue with their ludicrously expensive fiscal policies. These will prove destructive in time and are already having negative consequences that are being felt the world over. Protests, riots, coups, civil wars, and conflicts are not all of a sudden just happening out of nowhere. On the contrary, this is a highly predictable result from reckless and irresponsible monetary and fiscal policies.
Furthermore, we discuss the wealth inequality that exists within the United States and how a significant disproportionate amount is being accumulated by the top 10 percent. Meanwhile the middle class continues to shrink and the bottom 50 percent, while seeing an increase, continues to suffer as well. This is a direct result of a centrally planned economy, with politicians, bureaucrats, and central bankers picking winners and losers. The top 1 percent added $4 trillion to their net worth over the last year. Let that number sink in for a moment within the context of a pandemic and one of the worst global economies ever seen. Yet this should come as no surprise as the whole purpose of QE, is to inflate financial asset prices – and that is exactly what has been happening. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #ClimateCrisis #Inflation #FoodPrices #USA #Protests #Gold #Silver #Commodities #Leadership #Liberty #EndTheFed #bananarepublic #FireCongress
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
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
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
As we discussed global food prices hitting a six-year high during yesterday’s podcast, it proved good timing as a couple news articles were published today highlighting this situation in Nigeria and Lebanon. Both of these countries have been discussed at length for a while on the podcast, and these articles serve as further evidence as to what we have been monitoring.
It is a part of the larger narrative that The Kapital News is attempting to weave. One that links together economics, politics, and society. In this instance, we are analyzing how past and current policies are leading to social unrest, political instability, and economic weakness. Highlighting the protests and riots that were sweeping the globe during 2019, The Kapital News stressed the importance of paying attention to these events, analyzing their causes, and warning that such events would likely take place in developed markets, and even the United States. In time, we were proven correct. Now, with the pandemic seemingly making its way to the rear-view mirror, and no sound solutions being implemented during 2020, has caused many people around the world to once again take to the streets against their governments. This will be a common theme throughout 2021 and beyond until there are true structural changes.
Some countries may be able to traverse these rough waters without much chaos or violence. However, such countries will likely prove the exception and not the rule. This means that a lot of geopolitical risks have not been fully discounted into the markets, which are trading at or near all-time record high valuations. The pandemic has already caused severe supply chain disruptions that will likely continue throughout this year and into the next. However, should more countries take to the streets, then this will put further pressure on global supply chains and result in higher prices for major commodities, which will further strain the economic situation. This will be a vicious cycle until the system has been exhausted, which will leave millions if not billions of people negatively impacted. The globe is awash in trillions of dollars of new debt and with little to show for it. As inflationary effects start to make their way into real goods, these problems will no longer be able to be avoided. The monetary cat-and-mouse game will be over and market forces will take charge and lead the correction. There is no easy solution to what plagues us and these market forces will be brutal – even though they are what is needed.
Other items discussed today were economic data releases for US retail sales and industrial production. Also, the daily market performance wrap-up and a brief mention of the Federal Reserve concluding their FOMC policy meeting tomorrow. Global markets will be anxiously awaiting to hear what Chairman Jay Powell has to say – because we are a centrally controlled global economy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Stagflation #Debt #Markets #Jobs #Protests #USA #Liberty #Gold #Silver #Revolution #EndTheFed #bananarepublic #FireCongress #Bonds #FoodPrices
Revolutions are fought on empty stomachs and with global food prices hitting a six-year high, only serves to increase the likelihood of further protests, riots, wars, and revolutions. This is especially true for the poorest of nations as food is so crucially important, scarce, and insecure to begin with. From supply-chain disruptions due to the pandemic, to volatile weather that has harmed production, to inflationary policies from governments and central bankers, a triple-whammy has been released and spares no one in its path.
The Kapital News has been discussing the interconnectedness of economics, politics, and society since we have been online – in fact, this is the purpose and mission of The Kapital News – to educate our audience on these connections by using the news of the day as real-world case studies. It is the weakest link of the chain that breaks first and such is the case with countries. We have unfortunately been seeing these poorer nations crumble one after the next due to external and internal pressures. However, there are common traits amongst them, such as, high levels of debt, political corruption, and high levels of inflation. All of these forces combined, in addition to several others, is a recipe for instability at best, and disaster at worst.
Some countries may be able to withstand some of these pressures and find solutions – we hope this happens. However, if history is any guide, chances are that the majority of nations will resort to protests, riots, wars, and revolutions. If such actions do occur, then we can hope that things are made better once the dust settles. But hope is not a strategy and time is of the essence. The globe was awash in protests and riots prior to the pandemic and it already appears in early 2021 that they are reigniting and gaining momentum. A political sea change is underway and the months and years ahead will try our institutions, constitutions, and humanity like never before. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #FoodPrices #Inflation #Protests #Riots #USA #Gold #Silver #Commodities #Oil #Debt #Yields #EndTheFed #bananarepublic #FireCongress #Liberty
Another crazy week is nearly in the books and so we wanted to do a weekly wrap up. Yes, we cover some market performance, central bank antics, and the passage of the $1.9 trillion spending bill, but we focus mainly on the stories that are getting all the attention. You know what we mean, those most important topics ever, of cancelling Dr. Seuss and the drama of the British Royal Family and Piers Morgan. Of course we are being sarcastic, but nonetheless we do discuss these stories. Reason being is because these are cultural stories and political stories that are capturing the attention of people (mainly because they are being blasted across the airwaves), but our focus is to highlight the dangers about them.
From all of a sudden having to stop the publishing of several Dr. Seuss books because they are apparently racist to having a British talk show host fired because he dared to question the story of Prince Harry and his wife Meghan in a recent interview with Oprah, something is amiss. This is why we discuss these topics today. We are supposed to be for free speech and should come to the defense of those who are under attack. Not because we agree or are endorsing what they are saying, but because we believe in their right to speak their minds. Many people, especially those on the Left, claim to be tolerant. Hogwash. They are tolerant of opinions and speech so long as it is in agreement with their own thinking. One deviation outside of the safe-space of group think and it is time to burn you at the stake. This utterly insane way of thinking and acting is beyond dangerous to our Republic and body politic, and it is getting worse. And it only serves as another data point that we, as a nation, are crumbling. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #DrSeuss #RoyalFamily #Jobs #Debt #Inflation #Gold #Silver #USA #Liberty #Leadership #EndTheFed #bananarepublic #FireCongress #Protest
Ep. 553 - Markets Rally, $1.9T Signed, & Jobless Up
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The $1.9 trillion spending bill was signed today by President Biden, even though it was expected to be signed on Friday. The White House claims that checks/direct deposits may begin to go out as early as this weekend. Meanwhile on Wall Street, the major indexes made all-time highs, apparently happy to see another $2 trillion that we do not have being borrowed, printed, and thrown into the system. However, this sort rally of calls into question the recent narrative of investors and traders rotating out of tech names and growth stocks and into value plays, because tech stocks rallied big during the trading session. Again, we note how this is one of the shortest rotations ever. Of course we also argue that this is and was a bogus narrative to begin with. The real narrative is all about liquidity. So long as this relationship remains positive, meaning more liquidity equals higher equity prices, then this will continue. However, nothing lasts forever and once this relationship breaks, and it will, it will be utterly devastating.
In other news, the initial jobless claims report was released today, and another 712,000 Americans filed an initial claim for the week ending 6 March. The prior week’s figure was revised higher by 9,000 to now stand at 754,000. These numbers still remain well above the numbers seen during the GFC, which saw 650,000 for a couple of weeks. As we are now in the second week of March, this means we have been experiencing initial jobless claims worse than the depths of the GFC for one full year! All persons claiming some form of unemployment insurance for the week ending 20 February, stands at 20.1 million. This represents a week-over-week increase of nearly 2.1 million and gives us a de facto unemployment rate of 14 percent. This is more than double the official unemployment rate at 6.2 percent and 40 percent higher than what the Federal Reserve claims is the real unemployment rate, which is closer to 10 percent. Any way you want to look at it, this is not a good picture. All of this structural unemployment and underemployment is occurring while the country spends and has spent several trillions of dollars. So it begs the question, where is all the money going? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Debt #Spending #USA #Liberty #Inflation #Gold #Silver #Commodities #Oil #Leadership #EndTheFed #bananarepublic #FireCongress
The Bureau of Labor Statistics, BLS, released their consumer price index summary for the month of February this morning. In today’s podcast we take the time to read through some of the material. It is not so much the official numbers that were reported that we are focused on, but rather using this report as a benchmark. The month of February takes us to around the one year anniversary of lockdowns and restrictions. This also means that this is near the one year anniversary of the Nobody CARES Act, and several months into other spending measures that were passed last year. It also designates the last full month prior to the passage of the $1.9 trillion spending bill that made its way through Congress earlier this afternoon. The bill is expected to be signed by President Biden on Friday. However, the President is supposed to give remarks tomorrow on the next phase of the pandemic recovery. The Kapital News has been saying for months that these spending measures are just getting started. Nonetheless, the February inflation report is discussed today so we can use this report to perhaps provide us with some context and perspective as we make our way through 2021 and into 2022. All of this spending, borrowing, and printing is inflationary by definition. The follow through questions to ask is where will these inflationary pressures be experienced, do what degree, and its duration. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Debt #USA #Liberty #EndTheFed #bananarepublic #FireCongress #Gold #Silver #Commodities #Oil #Protests #Leadership
