Tag: Coronavirus

Ep. 403 – Next Stop Insolvency
The Kapital News
The Kapital News
Ep. 403 - Next Stop Insolvency
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Despite all of the begging, borrowing, spending, and printing, by governments and central banks the world over, the next step of this process will be a wave of insolvencies.

The Kapital News has been saying for over a year and well before the onset of COVID-19 that another real estate downfall was in the works. We noted that it would likely be in the form of a top-down, bottom-up squeeze. Well it appears that this scenario may well be under way. The top-down takes the form of commercial and high-end residential real estate. We don’t have to look much further than the tragic number(s) of retail stores that are closing their doors for good to grasp this concept. We can also look at college towns that may suffer as well if students do not go back during the fall semester. How many businesses and homes/apartments are dependent on these students for income? These establishments have loans and mortgages that do not go away simply because the students don’t show up. So how are these loans to be repaid? And what if there is a rush out of big cities to the suburbs – same story. Starting to get the picture?

Now take this in aggregate and it starts to paint a very bleak picture. And unfortunately, this is the necessary process that has to unfold. There are too many zombie companies in existence being propped up by easy money and fiscal spending. These businesses need to restructure or liquidate and allow for new and better management to take the helm. In the end, this process is better for the economy and why it’s called a “correction.” So, whether it’s retail, food service, hotels and travel, construction, manufacturing, and so much more, downsizing in one form or another is coming – the question is when and to what degree? Stay diversified, stay vigilant, and stay with The Kapital News. #BananaRepublic #EndTheFed #Bailouts #Depression #Recession #USA #Gold #Silver #Liberty

Ep. 400 – Another Con-Jobs Report
The Kapital News
The Kapital News
Ep. 400 - Another Con-Jobs Report
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While the headlines and the White House will tell you that the June’s job report was a blockbuster, history in the making number, when you look further, you’ll realize that we are still far from out of the woods. The report survey period from June 7-13, does not take into consideration the recent “re-closing” of several states’ economies. And when looking at broader measures of unemployment, such as permanent job losers (gaining 588,000 for June for a new total of 2.9 million), and the employment-population ratio at 54.6%, and the U-6 rate at 18%, you begin to see that their remains structural issues at play. One must also take into consideration that these”created” jobs were actually more akin to recent lost jobs due to COVID-19, coming back as economies reopened. Another data point worth mentioning is the initial jobless claims number that showed slightly more than 1.4 million Americans filed for unemployment insurance during the prior week. And in an even broader view, over 31 million Americans continued receiving some sort of unemployment insurance during the prior week, which was an increase of over 900,000. This is not the trend that will support a “V” shaped recovery. Quite the contrary, and if permanent job losers continue to increase, and states continue to close and/or slow their re-openings, then these structural issues will only get worse before they get better. Stay diversified, stay vigilant, and stay with The Kapital News. #Jobs #Bailouts #Debt #Depression #USA #Liberty #Gold

Ep. 398 – Second Wave of Insanity
The Kapital News
The Kapital News
Ep. 398 - Second Wave of Insanity
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Some 46 Americans losing their jobs over the last few months, global protests, riots and protests here in the US, rising geopolitical tensions around the world, and stocks keep going up. However, let Apple, Inc., announce that they’ll be closing some stores across the country due to an increase in COVID-19 cases in several states, and bam! – markets sell-off midday. If that doesn’t tell you what’s going on, then nothing will. Let us not worry ourselves with the real structural issues that are truly affecting people – no, let us instead pay attention to what some materialistic company announces. This is just another example of the insanity that is now the globe and the United States of America. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #EndTheFed #Debt #USA #BananaRepublic #Gold #Silver

Ep. 395 – More Funny Money, Please
The Kapital News
The Kapital News
Ep. 395 - More Funny Money, Please
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Stocks were selling off this morning, but given all of the recent backstops and the de facto “law(s)” in place that forbid stocks from going down, they “miraculously” closed in the green today. Of course the reason for the major turnaround from deep red to light green, was because the Federal Reserve issued a statement indicating that they will be purchasing corporate bonds on the secondary market. This is no surprise as this facility was announced nearly three months ago during the depths of the massive market sell-off. The total could potentially hit $250 billion for this facility alone. This pertains to the secondary corporate debt market. There is also a facility that pertains to the primary market, meaning the Fed may/will purchase corporate bonds directly from selected corporations – of course at subsidized lower rates. Lower rates than what a true functioning market would demand. So-long free market capitalism and hello banana republic.

The US national debt has officially topped $26 trillion – so congratulations America – you’re broke. And to add insult to injury, the White House is now presumably on board for another major spending bill that may cost up to $2-3 trillion. More trillions that we do not have. At this juncture in the current fiscal year, we’ve already spent $7 trillion – this is more than double the amount of total tax receipts! And there’s more spending on the way. Rome is burning and nobody seems to care because stocks keep going up. Markets are lost and unfortunately, so is any semblance of morality. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Depression #Bailouts #Debt #USA #Liberty #Revolution #Protests #Recession #Peace #EndTheFed

Ep. 392 – Recession: It’s Official
The Kapital News
The Kapital News
Ep. 392 - Recession: It's Official
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Today, the National Bureau of Economic Research (NBER), announced that the United States economy has officially entered recession. The monthly peak occurred in February 2020, while the quarterly peak occurred in Q4 2019. They noted that this was the longest business cycle expansion in US history, lasting 128 months. It surpassed the previous record of 120 months that was set from March 1991 to March 2001. Records go back to 1854.

This should come as no surprise to this audience, or anyone paying attention to what has been going on – especially as it relates to the pandemic of COVID-19. However, as we have be saying here at The Kapital News for some time, the fundamentals of the economy were starting to crack throughout late 2018 and 2019. We posit that even without a global pandemic, 2020 was likely to be the year that a recession would be officially scored. Check out our videos on this topic.

It must also be understood that recessions are an opportunity for businesses and individuals to strengthen their balance sheets. To deleverage. To save. And to invest prudently for the longer-term. Also, during these times, weaker companies are to go through bankruptcy, potentially emerge leaner and stronger, or perhaps go out of business and liquidate. While this may be a painful experience for these respective companies and their employees and other stakeholders, it is nevertheless the right course of action – stronger companies need to survive and thrive, and weaker companies need to cease operations. This natural ebb and flow of the business cycle is a healthy process and should result with better outcomes for businesses, governments, employees, and consumers. Unfortunately, what we’re witnessing is an attempt by policymakers (government and central banks), to keep everything “afloat.” This will prove disastrous is due course.

Recessions and even depressions, are corrections – and corrections are healthy – despite how painful they might be. However, that pain can be quick or it can be prolonged. Given the policies thus far enacted and those likely to come are likely to turn this now official recession into another depression – perhaps the Greatest Depression. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Depression #NBER #USA #Gold #Peace #Debt #Bailouts #Protests #Jobs #EndTheFed

Ep. 391 – A Jobs Report Miracle? Ah, no…
The Kapital News
The Kapital News
Ep. 391 - A Jobs Report Miracle? Ah, no...
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Being the first Friday of the month, the jobs report was released. According to the official headline U-3 figure, unemployment fell to 13.3%. This was unexpected as unemployment was expected to go up for the month of May. Expectations were for job losses of some 8 million, but were shocked by a gain of 2.5 million jobs. Now, when one looks at the broader U-6 measure of unemployment, we are still north of 20%. Given the huge beat of market expectations, stocks rallied, and the NASDAQ made a new all-time high. Meanwhile, Americans are skipping meals and utilizing food banks, and protesting coast to coast – for some perspective.

However, if one actually reads the entire BLS jobs report, yes, you have to read to the end (or just scroll down), they note that there are calculation errors and had the numbers been accurately tallied, then the unemployment rate would have been 3% points higher – taking the unemployment rate above 16%. Makes sense? Also, it must be understood that the Payment Protection Plan, a Federal government plan to assist businesses, will turn loans into grants (meaning forgivable), if employers keep their employees on payroll and/or bring them back if they were already laid off. This may very well mean that people are “employed” on payroll, but actually not working – per the PPP. So, as we have been explaining for weeks, that these jobs numbers were going to be fishy and all over the place – well here we have it! Of course, this does not stop the President from coming out to proclaim this is the best report ever and blah blah blah – all hat and no cattle – he sales the sizzle and not the steak. We discuss many other data points and read the jobs report in its entirety during today’s podcast. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Depression #USA #Recession #Bailouts #Debt #Protests #Liberty #EndTheFed #Peace

Ep. 389 – $20 A Crime, $20 Trillion Ain’t
The Kapital News
The Kapital News
Ep. 389 - $20 A Crime, $20 Trillion Ain't
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What a country? Coast to coast protests and riots, 40 million Americans unemployed over the last 10 weeks alone, almost $26 trillion in national debt, headed towards a $4 trillion deficit for the FY 2020 alone, threats of placing the US military in cities across the country, lock-downs due to COVID-19, bailouts of major corporations and industries, trillions in money printing to benefit Wall Street and Corporate America, and despite all of this, markets are nearing all-time highs again. This is ridiculous. This is out of control. This is a banana republic. Our US Constitution has been shredded, free-market capitalism is just a notion of the past. The path this and many other countries are on, is headed towards collapse. Global protests prior to COVID-19 and more on the way. These protests are not transitory, they are history in the making.

George Floyd can lose his life needlessly because he was allegedly attempting to use a counterfeit $20 bill, and yet we can have trillions of US dollars printed out of thin air so those closest to the source, i.e. Wall Street and Corporate America, can go out and buy assets on the cheap and consolidate their power – and not so much a word of protest. How far we have fallen. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #Peace #Depression #Recession #USA #Gold #Debt #Bailouts #EndTheFed

Ep. 387 – Rome Is Burning!
The Kapital News
The Kapital News
Ep. 387 - Rome Is Burning!
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Protests coming to a theater near you is something that we have been saying here for months. They have unfortunately, finally arrived. While we thought the catalyst would be more from the economic side of the ledger as opposed to the social side of the ledger, it appears that the recent tragic death of George Floyd, in Minneapolis, at the hands of police officers, is the trigger. Nevertheless, given the combination of COVID-19 lock-downs, economic hardships, social inequities (perceived or real), political divisiveness, and this event in Minneapolis, the stage was set for massive riots and protests to take center stage. Let us pray for a peaceful solution and resolution, but we imagine there will be more storm before their is the calm. We also expect global protests to pick up as well.

The Federal Reserve Chairman, Jay Powell, today during an interview admitted that the Fed has crossed some red lines – but he used the pandemic to justify their recent, continuing, and future actions. It is no longer behind the scenes. It is no longer, “pay no attention to the man behind the curtain.” No! It is in your face! And nobody seems to notice and nobody seems to care. The Fed is buying up everything. The federal government sanctions such actions and bails out major industries as well. Meanwhile, 40 million Americans have been laid-off over the past 10 weeks, a countless number of businesses have closed for good or are on their way there, and yet the stock market is near all-time highs once again. These actions by the Fed and the government are all but guaranteeing a prolonged economic contraction that is likely going to push us into the Greatest Depression.

President Trump this afternoon made comments in the Rose Garden in response to a number of issues. However, the main focus was on China and their recent legislation that encroaches on the autonomy of Hong Kong. Of course, as reported earlier this week, the US no longer recognizes the autonomy of Hong Kong. This point was reiterated by the President, with very little else thrown into the mix. The President informed the world publicly that should China pass this bill, that it would be met with a strong response from the United States. This does not appear to be a strong response. And to no surprise, the markets rallied on this news because they were selling off earlier in the day expecting a “strong” response – but they got a weak one instead. Yes, the President added a few other items, such as withdrawing from the World Health Organization (WHO), and mentioning some restrictions of Chinese students to US universities, amongst a couple other minor points. Yet, given this weaker response now begs the question, how will China and other major global players react to the President’s remarks? Will they feel empowered and emboldened to do more? One can only bluff so many times at the table before the other players start picking up on it, especially once they know you’re bluffing. So either play the “strong-man” role and follow through, or don’t. Because the outcomes and the stakes are too great. Peoples’ lives and livelihoods are not a game. The President also did not make comments on the protests during his remarks, nor did he take questions from the press, as was expected. There is simply a lack or leadership and this is a global problem. This weekend is going to be quite interesting to say the least as are the coming months. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #USA #Riots #Depression #Recession #Debt #Bailouts #Gold #Silver #Peace

Ep. 386 – Trade Deal or Economic Warfare?
The Kapital News
The Kapital News
Ep. 386 - Trade Deal or Economic Warfare?
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When it comes to today’s title, if having to choose, then The Kapital News would side with economic warfare. Of course we’re discussing the rising tension between the US and China. Today, China passed legislation that pertained to Hong Kong where many say it is a power grab by China to take away the autonomy of Hong Kong. Just yesterday, the United States, through Secretary of State, Mike Pompeo, announced that the US does not recognize the autonomy of Hong Kong. This was major news in itself. However, President Trump had made comments prior to the passing of the Chinese legislation, threatening China that if they should pass this bill that the United States would act in kind with strong force. Well now, the line has been crossed and the next move goes to the President – he is expected to announce his decision tomorrow, 29 May, as to how the US will respond. This is a major geopolitical event with many possible outcomes – many of which could take years to play out. Should this escalate further and quickly, the fallout could cause major ripple effects throughout the global economy that is already reeling from the effects of COVID-19, too much debt, and other flawed policies. Pay attention to these developments.

On the domestic economic front, the 2nd revision for Q1 GDP came in at -5% from an initial reading of -4.8%. The major decline in economic output is expected to severely effect Q2, where many forecasts are below -40%! This would be the worst reading since the Great Depression. On the jobless front, an additional 2.1 million Americans filed for unemployment insurance for the prior week, taking the 10-week total to around 41 million Americans – truly devastating. With respect to continuing jobless claims, this data point ticked down to 21 million. This is not surprising since the economy is “re-opening” and thus employees are being called back to work. Further, the PPP loans may also be having an effect since a condition to making these loans forgivable is for employers to bring their employees back on the payroll. And lastly, the President is having a war of words with social media giants, Facebook and Twitter. These developments are also worth paying close attention to as these media platforms play a major role in today’s society. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #HongKong #Depression #Gold #Bailouts #Debt #Jobs

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