It’s Sunday evening, but as we watch the overnight futures markets, we are seeing some nice moves to the upside in the commodity space. This decade is likely to be a bull-market for precious metals and commodities. It’s back to the basics. It’s back to real tangible items that are needed for an economy to function and hedges against fiat currencies and weakening governments. All of the funny-money printing is going to end up somewhere, and precious metals and commodities is a place to pay close attention to.
During today’s podcast we discuss initial jobless claims for the week ending 26 December, which came in at 787,000; we also cover the Fed’s balance sheet, M1 and M2 money stock, and a few other data points of interest. We have been stating this for weeks, if not months, that economically speaking, 2021 is likely to be worse than 2020. Tomorrow begins the first trading day of the year, and while one day does not make a trend, it’ll be interesting to see how the markets navigate the oncoming turmoil, chaos, certainties, and uncertainties. Stay diversified, stay vigilant, and stay with The Kapital News. Happy Birthday Papou! #Economy #Debt #Gold #Silver #Inflation #Liberty #USA #Bailout #BananaRepublic #EndTheFed #Recession #Depression #Jobs
So after months and months of political infighting and election posturing, it appears that Congress will pass another major “stimulus” bill. With a price tag of $900 billion this will be one of the largest bills ever passed and it is even tied to another spending bill that comes in around $1.4 trillion. Congress has clearly taken out the country’s credit card during the holiday season. The $1.4 T will only keep the lights on in the country for a few months and then they’ll be right back to the drawing board.
Nonetheless, the $900 billion is already drawing some harsh criticisms as there are billions that are going to foreign countries. And while the bill is securing another round of “stimulus” checks, this time the amount will come to $600 as opposed to the $1,200 issued earlier in the year. Further extensions have also been put into place with respect to unemployment programs and eviction moratoriums. These are merely temporary adjustments to structural issues and as such, will not solve anything. 2021 is likely to prove even worse than 2020 with respect to the economy and these measures passed by Congress are further indication that this will likely prove correct. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #USA #Liberty #Revolution #EndTheFed #BananaRepublic #Inflation #Gold #Silver
It’s all about the story, the narrative, the headline. Global equities are all about weaving a nice bed time story to pump stocks higher and here in the US – to all-time highs and record valuations. This historically does not bode well at all for future positive returns. In fact, it’s usually a harbinger of a significant decline – a reversion to the mean. As we have been witnessing, markets, once they sell-off, have been doing so to a greater degree and with greater rapidity. Recall Q4 of 2018 where the major indexes lost around 20 percent. Then fast forward to earlier this year, where we witnessed a near 40 percent drop within 6 weeks. What might this portend for the next leg down? Perhaps 50 percent within a few weeks – could you imagine the carnage?
Nonetheless, like a good little addict, the market has been conditioned to take any negative news in stride, “knowing” that their dealer(s), the Federal Reserve and the Congress will have their backs and throw as much monetary and fiscal support (dope), into the system as they can. And if the actual liquidity isn’t enough – don’t worry. This is because there are a number of headlines that can be circulated to juice the markets. Take for example the US-China trade talks that we heard about endlessly throughout 2019 and only to come to a “Phase 1” agreement that was no where near the hype. Then onto Covid-19 and the “need” for monetary and fiscal support – this coming to the tune of trillions of dollars that we did not and do not have. Then calls for further actions from our policymakers and this has been making the headlines for several months now, but with no deal yet agreed upon and signed. Why actually do something, if the headline is good enough to pump the markets? Then there’s the vaccine headlines – with several major pharmaceutical companies working on this assignment, this means that there can be headlines galore promising a vaccine soon to enter the market. Over the last two weeks and even today we hear of more information on the effectiveness of some of these vaccines. And while there are others, we’ll leave with the rush of IPOs – reminiscent of the late 1990s and the dot-com bust, a myriad of companies, mainly tech, are rushing the markets to raise capital. Of course very few, if any, are actually profitable – but profits matter not. This is because we’re in the midst of the headline economy – fundamentals don’t matter – just a good story. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Jobs #Markets #Liberty #Revolution #EndTheFed #BananaRepublic #USA
According to estimates from Deutsche Bank, nearly 18 percent of US companies can be classified as “zombie” businesses. This is 50 percent higher than levels seen only two years ago. Zombies are generally defined as firms that can pay their operational expenses and make debt servicing payments, but are unable to pay off their debt(s). Their existence, especially at these levels, are extremely dangerous and destructive to the economy and society. Many, if not all, are “kept alive” by governmental and monetary policies. However, these actions in the long-run prove detrimental to the economy because the capital and/or liquidity injections into the system come at the expense of more debt, less investment, and fewer to no gains to productivity and innovation. Furthermore, it also hurts successful businesses more than otherwise would be the case in the event of an economic downturn. This situation arises, because in a well-functioning market economy, these zombies would go out of business or restructure, thus allowing the healthier firms to grab more market share. Well, if the zombies are kept alive, then it becomes harder for the well-run firms to acquire a bigger piece of the market. This essentially is policy making for the short-term at the expense of the long-term.
What becomes more disconcerting is that there is currently around $1.4 trillion of debt obligations on the books of these zombies. This is more than double the amount seen during the depths of the GFC. In fact, if about $1 trillion of this amount were paid down, we’d still be staring at GFC levels – just to provide some perspective. This is completely unsustainable and unhealthy. The federal government through the Nobody CARES Act, and Federal Reserve through several of their “emergency facilities,” have served to prop up these zombie firms. What should have happened is rates should have increased, poorly managed firms would have went bankrupt or insolvent, malinvestments would be flushed out throughout the economy, and well-managed firms would begin to gain market share. This is not an easy process and because of the size of this massive bubble, the correction would prove devastating to a lot of people. Nonetheless, this would have been a correction on which to build a solid foundation for future prosperity. But because politicians and central bankers do not want to be held to account, they take the “easy” way out and borrow, print, and spend money we do not have, in order to make it appear that the economy is in good shape – it is not. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Zombies #Bailouts #Recession #Liberty #Revolution #BananaRepublic #Debt #USA
Another Monday and another vaccine headline. This one from Moderna, where according to their press release, their vaccine is 94.5 percent effective. This bests last week’s vaccine headline from Pfizer, where theirs was “only” 90 percent effective. Yes, Pfizer’ press release also came out for the Monday trading session. There are still several other pharmaceutical companies attempting to create a vaccine, so we might see this every Monday from now until perhaps the end of the year. These companies appear to be on a rotation when it comes to their vaccine announcements. We shall see. Nonetheless, the news catapulted US equities to new all-time highs and carried global stocks up as well. So despite having tens of millions of Americans out of work, collecting unemployment, in line at food banks, and facing evictions, we also have a stock market that is making new all-time highs. This is clearly a first world banana republic. And serves as further evidence of our moral, political, social, and economic decay and decline as a nation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Vaccine #Bailouts #Debt #Recession #Depression #Gold #Silver #Liberty #Revolution
A lot of data came over the wires today – economic and political. In today’s podcast we discuss the common Thursday topics of initial and continuing jobless claims, the Federal Reserve’s balance sheet, and M2 money stock. Today was also the release of the initial reading for Q3 GDP, which came in at a record print of +33.1 percent. Such a large increase is no surprise to The Kapital News, and in fact, we have been discussing this for months. When you have the worst reading of GDP in Q2 at -31.4 percent, it’s not so difficult to come back with a big number in the subsequent quarter. This is especially more so the case when the federal government and Federal Reserve throw trillions of dollars (that we did not have), into the system. The question now is what happens moving forward? And also, do not forget that Q1 GDP contracted -5 percent. And the lockdowns and restrictions did not take hold until March on a large scale. So most of Q1 2020 was in the books prior to the COVID-19 actions. Again, this is something The Kapital News had been arguing throughout 2019 – that the economy was rolling over, and a recession was on the horizon – even before the onset of the pandemic. We also continue our coverage of early voting and the electoral college as analyzed by Real Clear Politics and Five Thirty Eight.
Initial jobless claims for the week ending 24 October were 751,000, maintaining a figure below that stubborn 800,000 mark for the second consecutive week. However, this is still a heartbreaking number, as before the pandemic, this statistic was in the low 200,000 range, week-to-week. So despite all the fiscal and monetary efforts, still seven/eight months into this downturn, we are still witnessing several hundred thousand layoffs per week. Continuing claims for the week ending 17 October are continuing lower and are now at 7.756 million, which is a week-over-week decline of 709,000. In aggregate, for all persons claiming a UI benefit, for the week ending, 10 October, 22.6 million Americans remained jobless.
The Fed’s balance sheet rolled over slightly from it’s all-time seen last week. The balance sheet gave back about $31 billion and now sits at $7.146 trillion. This roll off is part of the natural process of assets expiring that the Fed is holding – think the duration of a Treasury note, bill, or mortgage-backed security. Nonetheless, The Kapital News remains steadfast in our analysis that the Fed’s balance, along with other central banks, will continue to grind higher. The M2 money stock continues to make new all-time highs and now rests at $18.815 trillion. This is a year-over-year increase of over 24 percent. In the 40 years of data provided for this figure, there is only one time the year-over-year figure was higher, and that was two months ago in early September! The next closest figure was around 13 percent back in the early-to-mid 1980s. This is extremely worrisome and will prove detrimental to the system.
Early voting is now 81.3 million, with 52.9 million being mail ballots, and 28.4 million in-person. This continues to break records and is simply a staggering figure. This represents 59 percent of the total 2016 voter turnout, and if estimates for 2020 are correct, we’re likely at the 50 percent mark on the high range, should 160 million votes be cast in 2020. With a few more days to go and depending on the state, early voting can still take place tomorrow, and of course mail-in ballots will continue to make their way into election offices over the weekend and into election day. With such high turnout, we may very likely know who wins the election within a couple of days of 3 November. To the electoral college – should Biden win Florida, then it’s likely an early night, as this would greatly diminish the chances that Trump could win re-election. With more polls coming in across the wires, Real Clear Politics now gives Biden 356 electoral college votes to Trump’s 182. The biggest changes since yesterday were switching both Florida and Georgia into the Biden column. With respect to Five Thirty Eight, they are now giving Biden an 89 in 100 chance of winning to Trump’s 11 in 100. Their model is also awarding Biden the battleground states of PA, AZ, FL, NC, GA, OH, and even both single districts in ME and NE. Such a turn out gives Biden 347 electoral college votes to Trump’s 191. Yet despite this, it is still either man’s race and there are a few more days of campaigning to go. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #Vote #USA #Economy #Jobs #Bailouts #Gold #Silver #Liberty #Revolution
With only one week to go until 3 November, early voting continues to shatter through 2016 figures. Current early votes stand at 70.5 million with 47.2 million being mail ballots, and 23.3 million being in-person. This is now over 50 percent of the total turnout in 2016. It is estimated that this year will see anywhere between 150-160 million votes. Should the trajectory of early voting continue through this week, then it is highly possible that this will represent 50-70 percent of the total vote turnout of 2020. If this proves true, then it increases the likelihood that a winner will be announced on election night or within a day or two. However, if the race is shown to be close, especially in key battleground states, such as Pennsylvania and Florida, then we can expect a legal battle up to the US Supreme Court, and this could takes weeks, if not months to resolve. Despite the probability that the Biden/Harris ticket will prove victorious, it is still very much either man’s race. This is 2020 and a lot can happen in a week to put it mildly. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #Economy #Liberty #Revolution #USA #Trump #Biden #Vote
With one week to go until election day, it is still very much either man’s race. However, with the consistency in the polling, both nationally and across the states, the probability is that Joe Biden will win this election. When analyzing the electoral college map, there are several avenues to victory for the Biden ticket, as opposed to a few for the President. But recall, in 2016, there were only a few avenues for then candidate Trump – and he won – so it can happen again.
Early voting is simply on a roll as we are now standing at 64.2 million votes being cast! Mail ballots represent the largest block with 43.2 million votes, while in-person accounts for 21 million. This is shattering the numbers for early voting in 2016 and some analysts project as high as 100 million votes may be in prior to election day, 3 November. If this is the case, or even close to it, then it is likely that we will know the winner on election night or within a day or two. Of course, if it’s a close race, then this may drag on for weeks, if not months, as it makes its way through the courts. Another indicator of an early election night, would be if Joe Biden should win the state of Florida. Should this happen, Biden is nearly guaranteed a victory. However, should Trump win Florida, as he did in 2016, then it’ll likely be a long night, unless Biden sweeps across the board in other battleground states.
Election 2020 and Joe Biden are much different than election 2016 and Hillary Clinton. An outsider versus an insider, straight talk against political correctness, no political track record versus a lifetime in politics, and a few others. Now, in the midst of a global pandemic and the greatest depression, coupled with the President having a political record on the books, changes the dynamic. Lots of Democrats “crossed the line” to vote for Trump in 2016 as did many Independents. There was also a large contingency that didn’t vote due to the unpopularity of the two candidates. Also, many Democrats who wanted Bernie Sanders to be the nominee, did not like how the DNC treated Sanders, and so they either didn’t vote, or voted third party. A lot of this drama that helped Trump in 2016 appears to be non-existent or at least much smaller than before. Will those same Democrats be comfortable giving Trump another four years, now that they know how he governs? Same question for Independents and even Republicans who were hesitant last time, but are they now not going to vote for Trump in 2020?
With one week left to go, it’s anybody’s guess, but what is not a guess, is the fact that the structural issues are not being addressed, nor will they likely be regardless who wins. What’s also a near 100 percent certainty is the continuation of the political, social, and economic decline and decay – again, because the structural issues are not being dealt with and because of the lack of leadership. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #Economy #Liberty #Revolution #Trump #Biden #USA
Two separate townhalls took place this evening in lieu of what should have been the second debate between President Trump and former VP Joe Biden. Nonetheless, the American people had a chance to watch these townhall events and for the public to ask questions of these two men running for the Presidency. As has been the case in prior townhalls, neither man derailed his campaign. Although there were clear differences in style and temperament, which of course should be no surprise. President Trump tends to be more aggressive, combative, and loud, while Biden tends to be more laid back, reserved, and civil. It is very likely that these differences in style and personality will drive the election results. People either want another four years of President Trump and his behavior and antics or they do not. Nearly 20 million people have already cast their votes, and come election day, it’s possible that half the country may have already voted.
On the initial jobless claims front, another 898,000 Americans filed an initial claim. This runs counter to the argument that this is a super V-shaped recovery. This was well above market expectations, which were around 820,000-825,000 – which is still a high figure. The previous week’s number was also revised upward by 5,000. In total, for persons claiming unemployment benefits, 25.3 million Americans are still receiving some form of benefit. This is for the week ending 26 September and represents a decrease from the prior week of some 215,000 Americans. This is still a staggering and stubbornly high number. Further, we are still contending with the figures coming from the state of California being on pause as they make their way through their backlog of claims and implement a fraud prevention system. This is surely distortionary when attempting to gain a fuller picture of the jobs market – but we have been contending with distortions for months due to fiscal and monetary actions.
The increase in claims, however, is indicative of continuing stress in the economy and would be in agreement with what The Kapital News has been warning about for months. Mainly that fiscal and monetary policy will only get you so far, and that a printing press cannot print jobs. So when taking into consideration the insolvencies and bankruptcies, evictions, weakness in commercial and residential real estate markets, and subsequent layoffs that are waiting in the wings – it’s unfortunately not surprising that we continue to witness such job loss and future uncertainty. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debates #Jobs #Elections #USA #Trump #Biden #Liberty #Revolution #Inflation #Gold #Silver #Recession #Depression #Bailouts
It would appear that the US stock market is priced to perfection. Meaning any false moves and events that run counter to what the market is expected could cause a cascading decline and increase in volatility. Even though the volatility index, (VIX), that monitors the S&P 500 has remained somewhat elevated trading in the 20 for quite awhile, and the MOVE Index, the VIX of the bond market, has hit all-time lows – the stock market is shrugging all of this off. This in effect saying that there are no major risk events on the horizon, traders/investors are complacent, that volatility is under control due to global central bank policies, and thus there is nothing to worry about. Furthermore, even if something “negative” should occur, there’s no need to worry because central governments and central banks will continue to have the “backs” of the market(s), and will flood the system with further fiscal spending and monetary liquidity injections.
This is no longer a market as they are completely decoupled from reality and the real economy. Yes, printing and spending trillions of dollars around the globe will make things appear ok – but only for a while and with a huge price tag associated with such policies. In addition, US markets seem to be pricing in a clear victory for the Biden/Harris ticket and with it, the prospects of a “blue wave,” meaning the Democrats take control of the House and Senate as well. This means that Trump will not contest the election and take it to the courts – where if this did happen, would go to the US Supreme Court. This kind of “certainty” and complacency that is permeating throughout the markets gives The Kapital News both pause and concern – markets love to surprise. Further, with respect to the MOVE index, might this be the calm before the storm? And if it is, increased and sizable volatility in the bond market will cause volatility to increase amongst many other markets, thus throwing this perfectly priced market into a possible tailspin. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Markets #Debt #Bailouts #Inflation #Gold #Silver #Liberty #Revolution #USA
