Tag: consumption

Ep. 492 – Turkey Or Jobs On The Chopping Block?
The Kapital News
The Kapital News
Ep. 492 - Turkey Or Jobs On The Chopping Block?
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Happy Thanksgiving from The Kapital News! Hopefully everyone was able to get together with some friends and family – even if via remotely. Social interactions and traditions are important, especially during these trying times.

Being that it’s Thanksgiving, we know the turkeys were on the chopping block. However, we received some unfortunate news the other day out of the Labor Department, telling us that initial jobless claims were higher than the previous week. This is two consecutive weeks where jobless claims have been trending higher. Given recent “lockdown” orders across various states and cities, it’s no surprise to see these figures increase. Yet, it’s our analysis that the economy remains extremely weak and vulnerable to various shocks and to time itself, and thus this may be signaling something more than just job losses due to restrictions. Printing, begging, borrowing, and spending money that we do not have will only take us so far. We may very well be reaching those limits.

For the week ending 21 November, 778,000 Americans filed an initial jobless claim. This is 30,000 more than the previous week’s figure of 748,000 – which was revised higher by 6,000. In aggregate of all persons claiming unemployment insurance, for the week ending 7 November, totals 20.45 million. This is a week-over-week increase of over 135,000. Using this number would give us a rough figure of about 14 percent as the unemployment rate. Notice that this is twice the percentage as what the jobs report tells us is the official unemployment figure – which currently stands at 6.9 percent. So while there is of course much to be thankful for during this holiday season, there is also much to be concerned about in the coming weeks, months, and even years. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #Debt #Inflation #Recession #Depression #Gold #Silver #USA #Liberty #Revolution #BananaRepublic #EndTheFed

Ep. 470 – Debates Done, 12 Days to Go!
The Kapital News
The Kapital News
Ep. 470 - Debates Done, 12 Days to Go!
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The second and final debate between President Trump and former VP Joe Biden has concluded. This was a much more civil debate than the first – not a difficult proposition due to the nature of the prior engagement. Nevertheless, both candidates landed jabs and some power punches, but neither landed a knock out blow. With respect to certain issues, each side can declare victory as to how they conveyed their message to their respective political base, yet on some topics, also appealing to the broader electorate. With twelve days left to go until election day, it is still either man’s race. However, there are fewer paths to victory for the Trump campaign as opposed to the Biden campaign. Hitting the campaign trail hard over the next two weeks will likely be the plan for both men, as well as getting out as many surrogates as possible, and more importantly yet, getting as many people to vote early if possible, or on election day.

The current early vote tally stands at 47.7 million, with 34.2 being mail ballots, and about 14.5 million in-person. This is smashing the numbers witnessed in 2016, and current vote totals as a percentage of all votes in 2016 is already at 35 percent! In 2016 there were about 137 million votes. Political analysts are expecting 2020 results to come in the 150 to 160 million range. This is a staggering increase and will be interesting to see where the momentum lies. We know this is at the very least a referendum on President Trump – especially with respect to his character, rhetoric, and divisive tendencies. Still, the President has a highly motivated and enthusiastic base of support – but will it be enough to get him over the finish line for re-election? This is not 2016 and Joe Biden is not Hillary Clinton. Despite this fact, President Trump and his surrogates are using the 2016 playbook attacks for Hillary Clinton, on Joe Biden. This will likely work for the Trump base of support, but it’s effectiveness on Democrats and Independents is most likely nil. Less than two weeks to go and anything can happen and either man can win. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #USA #Economy #Trump #Biden #Vote #Jobs #Bailouts #Liberty #Revolution

Ep. 384 – As History Repeats
The Kapital News
The Kapital News
Ep. 384 - As History Repeats
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We continue our analysis of the Great Depression and the striking similarities between the rhetoric and policies adopted then and the rhetoric and policies we are witnessing today. The government’s heavy-hand in attempting to “save” the economy and to “do something,” created the Great Depression. It is therefore, of great concern to The Kapital News that another Great Depression, if not the Greatest Depression, is now underway. History, in our opinion, is to be studied and taken seriously. Why? Because as the saying goes, those who do not understand history, are doomed to repeat its mistakes. And if we analyze what the government and the Federal Reserve have been doing over the last few months, and will continue to do for the foreseeable future, then we are repeating these mistakes of the 1920s and 1930s, to the Nth degree. Perhaps, “this time will be different,” but we think not. The only difference is likely to be that this time will unfortunately be worse. However, when a nation lives well beyond its means for generations, then what would one expect on the other side whence the pendulum comes swinging back? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Depression #USA #Bailouts #Debt #Gold #Congress #EndTheFed

Ep. 381 – The DC Power Play
The Kapital News
The Kapital News
Ep. 381 - The DC Power Play
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A power play in DC appears to be taking shape regarding the economic response from the Fed and the government in relation to COVID-19. Over the last couple of weeks, the argument between a liquidity crisis and a solvency crisis has been and continues to be discussed. This is likely to be at the crux of this particular DC power play. Because after all, no politician or policymaker wants to be the one holding the bag when all of this comes crumbling down – so, they’re setting the stage for the blame game.

On the one hand, we have the Federal Reserve, where Jay Powell accurately notes that there is a difference between a liquidity and solvency crisis. It is on the liquidity side of the ledger where the Fed can be most “effective.” They can print money and expand the money supply at-will. They can flood the financial system by utilizing a number of lending facilities – and they have. However, this does not solve the solvency crisis that surely awaits us. Here, the Fed Chairman has been stating that he believes Congress and the Administration should take a bigger role through fiscal measures as opposed to relying solely on monetary ones. Here is where the power play or blame game starts to form. The Fed can show via various statistics, such as their balance, that they have thrown trillions of dollars into the system to keep the financial plumbing moving along – in conjunction with other measures. Now, while they claim they still have ammunition, it would be prudent for the government to step in even further, is their argument – the Fed is passing the baton of responsibility. “Hey, we here at the Fed have done our part, look at exhibit, A, B, C, etc… now it’s your turn Uncle Sam.” So now the ball is in the hands of Congress and the Administration – a huge and slow moving political machine – what could possibly go wrong? So, if the solvency crisis does unfold, meaning a considerable amount of businesses, (of all sizes), file bankruptcy and/or liquidate, then a lot of this blame will fall squarely on the shoulders of the government – at least this is what the Fed is trying to position for. Will the Congress and/or Administration allow this to happen?

No one wants to step up and be the leader. No one wants to step up and admit to our many faults as a country, as a society, as individuals. No one wants to speak the harsh truths of the matter with respect to so many subjects. No, no. But what we can do without hesitation, is burden future generations who have nothing to do with this, and have them pay for it with lower living standards, higher costs, and lack of opportunities. All for the purpose of returning things back to “normal.” Normal by the way is insanity personified, and completely unsustainable, but as our podcast highlighted yesterday, Nobody CARES. It will thus be interesting to see how the government handles the solvency crisis and who they seek to blame. It’s a power struggle, it’s a money struggle, it’s a reputation struggle, and it’s a legacy struggle. And on top of it all, it’s a Presidential election year. We told you 2020 was going to be interesting and it’s only May! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Bailouts #USA #EndTheFed #Congress #Liberty #Revolution #Gold #Depression

Ep. 372 – Depression Level Unemployment
The Kapital News
The Kapital News
Ep. 372 - Depression Level Unemployment
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Another week and another dreadful initial claims number. For the week ending 2 May 2020, another 3.169 million Americans have filed for unemployment insurance. This takes the previous seven weeks to a total of 33.5 million Americans. Furthermore, it must be understood that given some of the “stimulus” programs implemented by the government, that many American remain on payroll, while some of these very businesses may be shut down or limited in their capacity. So the numbers are somewhat skewed for this reason – meaning there are actually even more Americans not currently working. We must also take into consideration those who were unemployed prior to COVID19 and these health and economic restrictions. And then lastly, there are also those who are designated as “discouraged workers” who have given up looking for work altogether and if they have been discouraged for over one year, then the government does not even include them in the official unemployment statistics. So, for all intents and purposes as the jobs report comes out tomorrow, the headline, U-3, unemployment rate could well be near 20% +/- a couple points. This would take us well into depression level numbers, which have not been seen since the 1930’s when unemployment peaked around 24.9%. And despite these numbers, the stock market continues its rally. Do we even have a market? Or is this all now just a perpetual money-making machine? Remember, banana republics love the printing press.

On another historic note, the US national debt has eclipsed $25T and has a current national deficit of around $2.6T. Per various estimates, for the FY2020, the deficit is set to hit $4T, thus implying that the national debt will be around $27T by the end of September of 2020. And this number could also be well eclipsed if Washington, DC continues with further bailouts and “stimulus” packages. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Depression #Inflation #Deflation #Recession #USA #Gold

Ep. 362 – A Total Collapse
The Kapital News
The Kapital News
Ep. 362 - A Total Collapse
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Another week and an additional 4.4 million Americans have filed for unemployment insurance. This take the five week total to nearly 26.5 million. These last five weeks of job losses have entirely outstripped the job gains since the end of the Great Financial Crisis (GFC).

PMI figures have also been published globally and we are witnessing levels in both manufacturing and services that are nearing levels not seen since the GFC. In some cases, they are even worse.

The Federal Reserve has updated its balance sheet, which now stands at nearly $6.6T and counting. This represents an increase of around $200 from the week prior. If this rate of increase remains, then we are talking about an increase of $10T on an annualized basis. If this happens, the Fed’s balance sheet would be around $14T. This would then represent about 70% of US GDP. Most of the gains on the balance sheet were from purchases of US Treasuries and mortgage-backed securities. Of course, there is little outside demand for US Treasuries, which is even why a recent analysis by Goldman Sachs suggested that nearly 70% of new Treasury issuance will be purchased by the Federal Reserve. This is virtually debt monetization and more reminiscent of a banana republic as opposed to a Constitutional Republic. There is no free lunch and per a previous podcast, “Free Was Never So Expensive.”

We lastly discuss some recent surveys that highlight the economic and behavioral changes that we’re likely to see once the economy is “opened” up for business. When asked about receiving government spending money directly and what would you do with it, the largest responses were the following – savings, everyday expenses, and payoff debt(s). A handful of other options, primarily centered around spending, all received a response around 5%. Then there was another survey that asked if stay-at-home orders were lifted, how comfortable would you be going to bars and restaurants, getting on an airplane, and going to a large event – by factors of 3 to 1, people would not feel comfortable with those options. This simply confirms what we have been discussing here for weeks – and that is how people will be changing their spending habits and behavioral “norms” for the foreseeable future, which will translate negatively with respect to the economy on a short and mid-term basis. On a longer-term basis, this kind of deleveraging is healthy for an economy and is part of the broader correction. This is a process and will take time. And the more the government tries to “help” the worse the outcomes will be and the longer it will take to recover. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Recession #Debt #Gold #Depression #USA #EndTheFed #Congress #Bailouts #Oil

Ep. 337 – Bailout Nation + Black Monday Jr
The Kapital News
The Kapital News
Ep. 337 - Bailout Nation + Black Monday Jr
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Another day and another historic day in the markets. A sell-off the likes which has not been seen since Black Monday of October 1987. This of course was also on the heels of the Federal Reserve’s emergency meeting and subsequent 100bps rate cut, expansion of QE, lowering the rates for the discount window, and the basic removal of the reserve requirement. So despite all of this, the major indexes were all down 12-14%! Can anyone say that the Fed is out of ammo? This has been the biggest risk that we have been warning about here at The Kapital News since we’ve been online – once the markets no longer believe in the efficacy of monetary policy then what tools remain to boost the markets? And we’ve always cautioned that if and when this day came to pass, that this would be the end of the bull market and the start of something we may have never witnessed before. Well, behold, a massive 20-30% sell-off in only a few weeks’ time. And remember and be warned that we have still yet to see credit/bond downgrades and/or bankruptcies – both of which are virtually inevitable given the COVID19 situation, the oil price war, and the massive amounts of debt in existence.

In addition, we now have the airline industry lining up at the government trough requesting a bailout of at least $50 billion. Are you kidding us here?! Tax cuts, deregulation, billions of people now taking to air travel, etc, etc… and they need bailed out? Where did all of their cashflows go? Oh, that’s right, it went to share buybacks so they could financially and artificially engineer their stock prices higher – which happened – which then led to handsome compensation packages for the executives. Now we, the US taxpayer have to bail them out?! Today during a COVID19 press conference, the President commented on how the virus is not the fault of the airlines and thus the government needs to assist the industry. While the President is correct that the airlines are not responsible for the virus, they are responsible for their cashflow management! So again, why does the taxpayer need to bail them out? Let them file bankruptcy, restructure, etc… Let them sell their assets for pennies on the dollar to someone who knows how to manage an airline. No more bailouts! And we’re just getting started. Boeing is lining up. As is the cruise line industry. What about the hotel, casino, restaurant, entertainment, energy sectors, and others? Bailouts for all?! This is beyond ridiculous and I hope the American people wake up to this fraud.

When and where will this market find its bottom? We have no idea. But if history, math, economics, financial analysis, and human behavior have anything to say, then we likely have another leg or two lower to go. And the subsequent economic recovery is also likely to take years to find its footing. Therefore, we hope during this massive transition that the correct and prudent policies are adopted and implemented. This of course would be the restoration of our Constitutional Republic and a return to free-market capitalism. We already have the blueprints. We just need the will power, work ethic, and leadership to build our economy on a solid foundation. We can do this and we must do this, if our future is to be brighter than our past. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Invest #Bonds #Gold #Debt #Bailouts #Stocks #Politics #USA #Oil #EndTheFed

Recession: The Economic Puzzle Pieces – GDP

Link to video:

Recession: The Economic Puzzle Pieces – GDP

In today’s presentation we continue our analysis of the business cycle by looking at US real GDP and its components. Said components consist of consumption, domestic investment, government spending, and net exports. What is telling throughout this presentation is that it appears that these macro data points are indicating that we are at or nearing the peak of this current expansion. The longest such expansion in US history. The question remains, when will we officially find ourselves in recession and how severe will this recession be? Because afterall, recessions have not been outlawed and in fact are a healthy process to rid the market of malinvestment and other inefficiencies. #Economy #Recession #GDP