Potential pandemics, economic disconnects on a global scale, recent natural disasters, wars and potential wars on multiple continents – it makes no difference. Global stock markets “must” keep moving higher. Does this sound like price discovery and free-market capitalism? It’s not even close! Now we have several central banks discussing the coronavirus – Covid19, as a cause for concern and something that needs to be monitored. This is correct, but what are central bankers to do? Are they virologists, microbiologists, or epidemiologists? NO! So what is money printing going to accomplish? Oh, that’s right – higher equity prices. Until of course that no longer does the trick and then they’re out of bullets. The day of reckoning will come – it always does. Yet, the further they kick this can down the road, the bigger the problem and subsequent crisis will be. So many people will be affected and most will never see it coming and they will have little if anything to protect themselves. This podcast talks about finance and economics, but there are more important things out there than money, and when the music stops, so many people are going to be hurt in so many ways – it will be a true travesty of the human experiment. We must do better than this. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #EndTheFed #Politics #Stocks #Invest #Oil #Bonds #USDollar
Again, The Kapital News is ahead of the curve when only a couple of weeks ago, we issued a warning around Boeing. The podcast, titled, “GE/GM: Trouble at the Plant?,” also covered a discussion of Boeing. At the time, the concern in question pertained to airline pilots with Southwest Airlines filing suit against Boeing for lost wages. The 737 model is the only model employed by Southwest Airlines and the model that has been grounded globally for months is the Boeing 737 MAX 8 airline. The reason for the plane’s grounding is directly in relation to the two flights that crashed last year within six months of each other – killing all on board. What has been described as a flaw in the computer software on the MAX, may now be turning into something a little more nefarious.
It is now understood in part, that the pilots of these two crashed airlines experienced difficulties with the new computer software and were either unable to override the software or were too late in doing so. What is now being reported, is that Boeing personnel from a few years ago were discussing concerns centered around the software and sensor system on the MAX.
The MAX came into existence following a move by Boeing’s main competitor, Airbus, to increase the size of the engine on the Airbus model A320 – a similar plane to Boeing’s 737. The larger engine was supposed to translate into better fuel-efficiency, thus saving airlines millions of dollars. Not to be outdone, Boeing also made the decision to incorporate larger engines on the 737 and thus the 737 MAX 8 was born. A key difference between the A320 and the 737 is that the elevation clearance from the ground to wing on the A320 is greater than that of the 737. Therefore, the larger engine was easier to install on the A320 as opposed to the 737. This led Boeing to have to move the engine forward, causing part of the engine to actually sit higher than the wing of the 737. This change made it possible for the pitch or the trajectory of the nose of the MAX to steepen to such a degree that the plane could enter a stall and potentially crash. This is what happened on both of the downed airplanes. This change in trajectory is most likely to occur during take-off, which is what transpired on the Lion Air and Ethiopian Airline flights – crashing shortly after take-off. In order to account for this steepening, Boeing updated their software in conjunction with sensors, to detect such a dangerous steepening and then correct the aircraft to a safer position. This unfortunately did not occur during these flights and the pilots were unaware as to how to correct for this error.
What now appears to be the case, is that Boeing may have been driven by revenue, profits, and delivering an aircraft in a “timely” fashion to compete with Airbus. We hope that profits and speed were not prioritized at the expense of safety. If this happens to be the case – the damage this will do to Boeing and the greater economy could prove to be immeasurable. Boeing is the largest US exporter and the industries that they depend and likewise the industries that depend on Boeing on will be heavily hit. These include, steel, aluminum, carbon-composite materials, computers, electronics, glass, rubber, paint, and several others. This could be an industrial/manufacturing contagion comparable to the collapse of Lehman Brothers that truly kick-started the collapse of the 2008-2009 financial crisis and subsequent Great Recession.
This issue is being investigated by the FAA, the Department of Transportation, Congress, the DOJ, the FBI, and other global regulators. There will be much more to come. Stay diversified, stay vigilant, and stay with The Kapital News. #Boeing #Recession #Justice #Truth #Peace #USA #Airbus #EU #Europe #Airlines #Congress #DOJ #Economy #Politics
A handful of breaking news stories crossed the wires today, but the one that caught a good deal of attention pertained to the alleged cease-fire between Turkey and Syria. This was a deal that was brokered by VP Mike Pence and Secretary of State Mike Pompeo with their counterparts in Turkey. Shortly after the US claims that a 120 hour cease-fire has been agreed, Turkish officials come out and state that this is not a cease-fire, but rather a pause in the action. What we do know is that the US is supposed to move the Kurdish forces further south into Syria and further away from the Turkish border – exactly what Turkey wants. In essence, this is a quasi-deal to surrender the position of the Kurds – an American ally. The Kapital News is for peace and prosperity and wants to see an end to the endless wars. However, this cannot be done by shooting from the hip. This needs to be done in a prudent and well thought out manner in order to prevent the kind of scenario in which we find ourselves. Following the “cease-fire” announcement, President Donald Trump made claims that he was the only one who could get this done and that this cease-fire will prevent millions of lives from being lost. This is a ridiculous notion on a few fronts, but primarily because this was not a problem until President Trump made his quick decision to remove US forces from Syria. This then led to the immediate advance of the Turkish military into Syria. This is akin to breaking something and then claiming how great you are when you fix it or attempt to fix it. In addition to this, within the next five days, President Erdogan of Turkey will be visiting with President Putin in Russia – just a coincidence we imagine. Other stories discussed pertain to a “miscommunication” from Mick Mulvaney, acting Chief of Staff to the President, and Director of the Office of Management and Budget, regarding the “quid pro quo” on the President’s phone call with his Ukrainian counterpart. We briefly discuss the Brexit deal, but we’re not holding our breath that this deal will be passed by Parliament in the coming days. Also, an article in Vanity Fair calls into question some irregular trading activity that may have proven quite profitable surrounding trades in the US futures markets that may have paid-off big by timing correctly President Trump’s tweets surrounding the US/China trade talks. Finally, someone in the mainstream in calling this into question. This is an abuse of power and in the very least, it needs to be investigated by the proper authorities. Stay diversified, stay vigilant, and stay with The Kapital News. #Truth #Justice #Peace #War #USA #Syria #Turkey #Russia #Politics #Economy #Recession #Impeachment +
This week is surely setting up to be one for the front pages. There will undoubtedly be further remarks and tweets from President Trump regarding an interim “Phase 1” trade deal with China. Short on specifics and reminiscent of this summer’s trade truce, we here at The Kapital News are highly skeptical of any deal of worth. Even if there is substance, this would simply take us back to where we were prior to the trade war in regards to the amount of agricultural products being purchased by the Chinese. Nevertheless, The White House will continue its jawboning and market manipulation tactics. Other market rallying headlines were the rumors of a Brexit deal in the works only to have conflicting stories come out this weekend claiming that there is still much work to do. The Queen’s Speech is also set to take place on Monday and if Parliament shoots down the vote on the Queen’s Speech then there is going to be much pressure on PM Boris Johnson to resign. This would only serve to throw another curveball in the Brexit saga. The Federal Reserve has started another round of QE. Welcome to QE4, but don’t you dare call it that – at least the Fed doesn’t want you calling it QE. Why? Because the Fed also claims that the US economy is strong and is in a good place, so then why would they need to engage in an emergency monetary policy? A rose by any other name is still as beautiful. #EndTheFed The Fed is also expanding their involvement in the overnight repo market. Recall it was initially just a one-off, then extended to 10 October, then extended to 4 November, now it’s going to last until at least January of 2020 (and it’s not likely going to be enough). There is also continuing escalation between Syria and the Turks. It is likely that if the Turkish military continues deeper into Syria that Syria will declare war against Turkey. Also, since President Trump has ordered the removal of US forces from Syria, the Kurds have now formed an alliance with the Syrian government in order to fight-off the Turkish military. This story has drawn the ire of Republicans and Democrats alike and are pressuring the President to hit Turkey with harsh sanctions to crumble their economy. It is unknown at this time as to what sanctions if any the White House will impose. President Trump is calling an end to these endless wars by withdrawing US forces from Syria, only to deploy thousands more to Saudi Arabia and surrounding countries to fend off Iranian aggression. Does this make any sense? Stay diversified, stay vigilant, and stay with The Kapital News. #Brexit #War #Peace #Economy #TradeWar #Politics #Impeachment #Whistleblower #Justice #Truth #Recession #Stocks
Awash with Purchasing Manager Index (PMI), figures coming out over the last couple of days continues to highlight what we have been describing for months – a global economic slowdown. Much of the focus is on Germany, the US, and Japan, but also to the broader Eurozone area, Australia, and other periphery nations. All-in-all the net position is in the negative, either in contraction, a reading below 50, or a continuation of slower expansion, readings above 50. Perhaps the biggest declines were experienced in Germany, which is getting hit from all sides. Whether it’s the ongoing trade dispute between the US and China, the uncertainties around Brexit, the slowdown in China, the weakness of Europe’s financial system, or other ripple effects the world over, one thing is certain – it’s not good for Germany and it’s likely they are in or are nearing a recession. This will not bode well for the rest of Europe or the world, especially given the size of the German economy. Furthermore, there have been more aggressive calls by central bankers “suggesting” that governments also step up to the plate to “stimulate” their economies via fiscal policies, since monetary policy can only do so much. Well it’s going to be quite the move for the Germans to decide to take on more debt at the exact same time that their economy is slowing down. The Germans are quite fiscally prudent and not likely to turn on the debt spigot anytime soon. Further developments out of Europe over the weekend witnessed the failure of Thomas Cook, a UK hospitality and travel agency service, as they filed for bankruptcy. This company has been around since the 1850s and had to file for bankruptcy protection due to their outstanding debt load. Are they a canary in the coal mine? Their bankruptcy leaves thousands of people on holiday/vacation stranded, however, efforts are underway to ensure that proper arrangements are made. This also places up to 9,000 UK jobs in the crosshairs and will only add to the economic and political uncertainties that exist regarding Brexit. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #Debt #Politics #EndTheFed #TradeWar #Peace #WakeUpAmerica
Yesterday was the US Constitution day and today is Fed day. And the Fed did not disappoint. The markets were expecting a rate cut of 25 basis points and that’s exactly what the Fed did. There has been some chatter about the overnight lending market and how the Fed has had to intervene and inject tens of billions of dollars to ensure that markets were properly funded. This is basically QE, but by a different mechanism. QE was injecting around $50 billion a month into the system – this recent action was at least $54 billion on an overnight basis! When asked during his press conference about this, Jay Powell, the Chairman of the Fed, stated that it was due to corporate taxes being due as well as US Treasuries maturing. He also noted, perhaps ironically, or ominously, that this is “contained.” Former Fed Chairman, Ben Bernanke, said that sub-prime was “contained,” and we all know what happened next. The Kapital News continues to believe that the Fed will continue with its easing cycle. This does not mean that every meeting will result in a rate cut, but this will be the direction in both subsequent action and communication. The Fed was not the only central bank to cut rates today. The lineup includes: Hong Kong, Jordan, Brazil, Saudi Arabia, and UAE to name a few. In addition, the BOJ held steady, but signaled that more easing is likely in October. Further, we have higher unemployment in Australia, which is likely to lead to lower rates down-under as well. The Reserve Bank of Australia has made it explicitly clear that a lot of their rate decision making process will be predicated on unemployment – and we also know from recent meeting minutes that rates will be lower for longer. So, what we have here is a race to the bottom. And a thinly-veiled acknowledgement that lower interest rates, zero interest rates, negative interest rates, and QE are not working. Especially not to the extent that they “worked” a decade ago when these were “new” and “experimental” and “temporary” policies. Now they appear to be etched in stone and signed in blood with no end in sight. This is diminishing marginal returns at its best and this is a flawed and fraudulent monetary policy at its worse. There is much more to come and this simply pushes people, corporations, governments, and even central bankers, further out onto the risk curve. Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #Recession #Economy #Invest #InterestRates #Politics #Stocks #Peace #WakeUpAmerica
While the oil markets continued their ascent in today’s trading session on the back of the attacks in Saudi Arabia – we now have to ask, is the shock over? While many nations are pointing the finger at Iran, despite the fact that the Yemeni Houthi’s have claimed responsibility, President Trump appears to be pulling back from the hostile language. In a tweet yesterday, the President said the US was “locked and loaded” waiting on confirmation that it was Iran. Today, President Trump claims that this is not a big deal and that there are plenty of avenues to make up for the loss in oil. The President needs to be commended for not escalating this further – at least in rhetoric. This is oil and metal that was affected at the processing facility – not American lives. So, will prices stabilize or will this escalate further? It’s anybody’s guess, but let’s pray for de-escalation and peace. Starting tomorrow, the Federal Reserve will begin their two-day FOMC meeting where they are likely going to conclude that further interest rate cuts are warranted. With this recent oil geopolitical risk, the Fed now has cover to go in other direction – to cut or not to cut? Higher oil may translate into higher inflation – don’t cut and perhaps exude their independence because the President and Wall Street want cuts. Or, cut by 25-50bps because this is a geopolitical risk that may escalate and would cause a deepening of the current global economic slowdown – thus cuts are warranted to fend off the downward pressures. This too is anyone’s guess, but the Fed is going to do what the Fed wants to do either way. We still anticipate a cut of 25 basis points. For certain, all eyes will be on the Fed. Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #Recession #Oil #Politics #Invest #Peace #WakeUpAmerica
What a weekend folks! Where do we even begin? The attacks on Saudi Arabian oil processing facilities has halved their production capabilities – sending ripples across global markets. At the time of this podcast, oil prices are up 10%. Secretary of State, Mike Pompeo, has already officially stated that he is blaming the Iranians. The Iranians deny the allegations, but have stated that if all US sanctions are lifted, that they’ll adopt a policy of “maximum production” to make up for the loss in output from Saudi Arabia. Meanwhile, President Trump claimed on twitter that we are “locked and loaded” should it be proven that Iran is the culprit. So there is a slight disconnect between the President and his Secretary of State. New sexual assault allegations levied against Supreme Court Justice Brett Kavanaugh are sure to bring even more divisiveness to Washington DC. Purdue Pharma, the maker of OxyContin, the powerful pain-killer, has filed for bankruptcy – could this begin a wave of more bankruptcies? However, their decline has been on the back of recent lawsuits that have awarded billions of dollars to victims. Economic data out of China has come in weaker across the board – industrial production, retail sales, and fixed asset investment. Also, their might be a strike in the works between the UAW and General Motors. This would be the first strike in 12 years – shortly before the onset of the Great Recession. Major central banks are scheduled to meet this week – the Fed, BOJ, BOE, and PBOC to determine monetary policy or provide guidance as to their future decisions. With the recent attacks in the Middle East coupled with higher oil prices, might central banks become concerned with inflation? Or will they use the attacks as another excuse to cite geopolitical risk(s) as a reason to continue cutting interest rates? Lastly, and perhaps a positive note – North Korean leader, Kim Jong-Un has sent a letter to President Trump inviting him to Pyongyang. As long as talks are continuing, then it’s less likely that both nations will be at war – this is a good thing and let us pray for peace and prosperity. These stories will continue for several weeks. Stay diversified, stay vigilant, and stay with The Kapital News. #Peace #NoWar #Recession #Economy #Politics #Oil #Invest
So the 3rd Democratic debate took place this evening in Houston, Texas. As we make our way further into the 2020 Presidential campaign, we are starting to see the Democratic field dwindle. It was only a few weeks ago that there were over two dozen candidates – now we’re down to about a dozen. While there were only 10 candidates on the stage this evening given the guidelines as established by the DNC, there are still a couple other candidates on the sidelines. During the 3-hour debate there was much discussion centered around healthcare policy. Jabs and uppercuts were thrown at the frontrunners – Joe Biden, Bernie Sanders, and Elizabeth Warren. All held their own and continue to drive policies that resonate with a sizeable portion of the electorate. We anticipate the attacks will increase in volume and will become rhetorically sharper as we make our way through the process. Other topics discussed were focused on gun control, climate change, and immigration. It’s pretty much the same old talking points and ideas from the Democratic party, which will not solve the issues facing this nation. Unfortunately, the policies from the Republican side are not solving them either. In other news, the US deficit has officially hit $1 trillion. The first time since 2012 when the nation was still making its way out of the Great recession. And there’s still another month to go in the current government fiscal year, which ends at the end of September. In addition, we have inflation figures at an 11-year high. Don’t forget that the Federal Reserve meets next week to determine interest rates. We have 50-year low unemployment at 3.7% and inflation around goal, and stock market indexes about to hit all-time highs – so why should the Federal Reserve cut rates? Perhaps they just want to follow the ECB, which did cut rates further into negative territory. Also, the central bank has agreed to another round of QE, with 20 billion Euros a month of bond-buying starting 1 November. It was only nine months ago that the ECB ended their last QE program. Clearly, it is not working and the central bank lowered both their forecasts for inflation and growth. Perhaps an admission of sorts that their “stimulus” measures have not worked – so why will they work this time? Stay diversified, stay vigilant, and stay with The Kapital News. #DemsDebate #Recession #Politics #Economics #EndTheFed #WakeUpAmerica #Peace #2020
It’s breaking news by tweet on a near daily basis. Well today and this evening we came across two newsworthy stories. First, President Trump is now calling for the Federal Reserve to cut interest rates to 0 or perhaps even lower. This of course would mean bringing negative interest rates to the US. The very monetary policy that is destroying the financial system in Europe and Japan is now being called for by the commander-in-chief of the US. This is in addition to repeated calls for not only lower rates, but also further rounds of QE. These are emergency monetary measures that were implemented during the depths of the Great Recession – why then would the President call for such measures? We have a multi-decade low unemployment figure at 3.7%, inflation nearing the Fed’s target of 2%, and the major stock market indexes nearing all-time highs. In addition, the President repeatedly claims that this is the greatest economy in US history – so why call for emergency monetary measures, Mr. President? The second round of tweets sent out this evening was in regards to the US-China trade war. The increase from 25% to 30% that was set to go into effect on 1 October will now be delayed, in the name of “good will,” until 15 October. Just the other day, the Chinese added a handful of US products to their tariff exemption list and so this is the US reciprocating to some degree. The 1 October date is also the 70th anniversary of China. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #NegativeRates #USChinaTrade #TradeWar #Economics #EndTheFed #WakeUpAmerica #Politics #2020 #Peace #FireNavarro
