Tag: Global Economy

Ep. 553 – Markets Rally, $1.9T Signed, & Jobless Up
The Kapital News
The Kapital News
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

Ep. 552 – Inflation for February
The Kapital News
The Kapital News
Ep. 552 - Inflation for February
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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

Ep. 551 – Stock Market Rotation
The Kapital News
The Kapital News
Ep. 551 - Stock Market Rotation
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All the recent talk in the financial media has been about the rotation out of growth and tech stocks into value stocks. While this narrative may have worked yesterday as the Nasdaq sold off and the DJIA gained, this story did a complete 180 as the Nasdaq and big tech names rallied today. That is quite a short rotation! Even Tesla (TSLA) rallied about 20 percent today alone! This happened off of no major or minor news event, and this type of movement is more akin to a penny stock as opposed to one of the largest corporations in the world by market cap. Of course this is all a bunch of nonsense at the end of the day. It is not the narrative that really matters, but rather how much liquidity is being thrown into the system and whether or not the markets continue to buy it and grind higher.

This is why The Kapital News has been stressing the importance by policy makers and media outlets to promote various narratives, in the hopes that it will distract investors from the underlying economy, reckless policy decisions, and cause them to bid up equity, bond, and real estate prices. So far, this has been working, which is why they continue to jump from one narrative to the next. However, story time can only last for so long. And as we have been witnessing in recent weeks, global bond markets may be waking up from their years of central bank manipulation, as yields begin to rise. Even more recently would be Chinese authorities entering into their equity markets in order to bid prices higher, but failing to do so. It is crucial to understand that while central governments and central banks are powerful institutions, they are not bigger than nor more powerful than the markets. The day will come, when market forces overwhelm central planning policies, and it will not end well. Some of the signs as to when the markets have or are about to hit levels of exhaustion, are when yields rise, and financial asset prices fall, despite the best efforts of policymakers. If current events are any indicator, then we may be nearing these limitations. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Stocks #Markets #Debt #Jobs #EndTheFed #Liberty #USA #bananarepublic #FireCongress #Bonds #Inflation #Gold #Silver #Commodities

Ep. 550 – $1.9 Trillion Mayhem
The Kapital News
The Kapital News
Ep. 550 - $1.9 Trillion Mayhem
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With the $1.9 trillion spending bill all but certain to pass through Congress this week and make it to President Biden’s desk, we wanted to take a moment to provide some context. It was only a little over a decade ago when we were in the midst of the Great Financial Crisis or GFC. It was here that Congress decided to pass the Troubled Asset Relief Program or TARP. It had a price tag of $700 billion. According to those who drafted the legislation and came up with the number, apparently this was large enough to save the US financial system, and thus the US economy. Fast-forward to where we are today, and just looking at a handful of spending measures that Congress has passed in one year’s time – it takes us to roughly $6.4 trillion! This is nearly 10x the amount of the TARP funds during the GFC, which was the worst financial and economic crisis since the Great Depression.

The $6.4 trillion figure comes from the Nobody CARES Act 1.0, which was around $2.2 trillion. The Nobody CARES Act 2.0, which was passed last December as the spending from 1.0 was coming to an end, cost another $900 billion. This was accompanied by a $1.4 trillion spending measure just to “keep the lights on,” as this was for ordinary government expenditures. And now finally, at least for now, we have the $1.9 trillion monstrosity. This gives us a total of $6.4 trillion. This is nearly two full years of federal government revenues! It is thus easy to understand why the country is running multi-trillion dollar deficits. And to place this into further perspective, any one of those aforementioned spending measures would be one of the top 20 economies in the world by GDP. The total of $6.4 trillion would be the third largest behind the US and China. And more than $1 trillion above the GDP of Japan!

To add insult to injury, the $1.4 trillion spending bill was only good for through Q1 2021, which means another round will have to be passed or the government may have to shut down. This also does not take into consideration any further spending with respect to infrastructure, which is needed, healthcare policies, environmental policies, or the like, which are likely to be brought up with Democrats in control of the White House and Congress. So one of the saddest things about all of this is that all of this money is being borrowed and printed into existence and then spent, but with very little to show for it. All of this spending could have rebuilt this country’s infrastructure 2x or 3x over. And you can use your imagination on all the other items that may have been improved with that kind of money…Of course none of this is free. The inflation that has thus been created and unleashed is now underway and the costs will be historic and devastating. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Debt #Markets #Spending #EndTheFed #bananarepublic #FireCongress #Jobs #Bailouts #Liberty #USA #Gold #Silver

Ep. 549 – Markets Overnight
The Kapital News
The Kapital News
Ep. 549 - Markets Overnight
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A focus on the overnight trading session on Sunday evening as markets around the globe begin to open. What is of particular interest, is the price increase in WTI and Brent crude oil. Where WTI is trading at over $67 per barrel, levels not seen since 2018, and Brent is trading near $71 per barrel, levels not seen since 2019. Of course, the global economy was quite different only 18-24 months ago. There was no pandemic and there were greater numbers of people employed globally. Now, we are living in a pandemic world with lockdowns, restrictions, and millions unemployed. It would make sense in an environment of full or near full employment to see energy prices increasing. However, with so many people still without work, it becomes a little more of a head-scratcher. That is, when analyzing the energy market from a demand perspective. However, if looking through the lens of inflation and inflationary pressures, then it makes complete sense to see prices rising across the commodity spectrum – from energy, to industrial metals, to agricultural goods.

You see, there is no free lunch and there are consequences to printing trillions of dollars, euros, yen, yuan, et cetera globally. Now, once economies begin to re-open and restrictions are lifted, there is likely going to be a rush of people who want to go out and attempt to live as they were prior to the pandemic. This is understandable, yet this will contribute to the price increases, as inflationary pressures are met with demand for goods and services. And on the other side of the equation is supply. There remains supply chain disruptions, geopolitical risks, and production levels of OPEC+ that will likely contribute to energy prices remaining at elevated levels for the foreseeable future. This will squeeze corporate profit margins for small, mid, and large firms, and also squeeze the consumers’ balance sheet as well due to higher prices. As we stated last year, free was never so expensive! And we are about to find that out the hard way. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Inflation #Gold #Silver #USA #Liberty #EndTheFed #bananarepublic #FireCongress #Leadership

Ep. 548 – February Jobs Report
The Kapital News
The Kapital News
Ep. 548 - February Jobs Report
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For the month of February, employment rose by 379,000 well higher than market expectations. The official unemployment rate now stands at 6.2 percent, little changed from January. Most of these gains were in the leisure and hospitality sectors. In fact, nearly 3/4 of the gains came from restaurant and bar workers. Of course it is tough to classify these jobs as “gains,” as they are more realistically just call backs from being laid off due to the pandemic restrictions. Such gains are likely unsustainable in this area because so many small businesses have closed for good. Therefore, the places of employment are no longer available to readily employ the millions that remain out of work. Furthermore, those bars and restaurants that remain open will gain some market share. However, they will likely remain hesitant to expand their operations due to the uncertainties that exist, as well as limited access to capital to finance such expansions. Also, as commodity prices continue to rise, it is likely that dining out will become more expensive as well. There is no free lunch, even with all of the money printing. Especially because of the money printing. Revisions for the months of December and January combined, result in an additional 38,000 jobs than was previously reported.

In some other news, Q4 2020 data for productivity shows a decline of 4.2 percent, and unit labor costs increased by 6 percent (annual rates). This is the exact opposite of what we want to witness. However, with people not working, then how is productivity to truly increase? This becomes a double whammy of lower productivity and higher costs. If we had higher levels of productivity, then this would likely result in costs dropping. The US trade deficit widened in January. And net exports of goods and services hit a near record low of -$804 billion. The only reading worse than this was prior to the GFC, which stood at -$805 billion. The US has to contend with a very serious problem with respect to its dual deficits of fiscal and trade. Both measures are further evidence of a weakening economy, not a strengthening one. This need not be the case, but when such policies are enacted, this is the result. Stay diversified, stay vigilant, and stay with The Kapital News. Happy Birthday YiaYia! #Economy #Debt #Jobs #Inflation #Markets #Bonds #Gold #Silver #Commodities #Oil #EndTheFed #Liberty #USA #bananarepublic #FireCongress #Bailouts #Protests #Leadership

Ep. 547 – Jobless Up + Yields Up
The Kapital News
The Kapital News
Ep. 547 - Jobless Up + Yields Up
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Initial jobless claims continue to remain stubbornly high, as 745,000 initial claims were filed for the week ending 27 February. Last week’s figure saw an upward revision of 6,000 filers, to now stand at 736,000. Since restrictions have been in place, claims have been well above those witnessed during the depths of the GFC, which were around 650,000 for a couple of weeks. We are now at the one year anniversary of lockdowns and this is the type of economic carnage that still exists. For all Americans that continue to claim some form of unemployment insurance, now rests at 18 million. Giving us a de facto unemployment rate of around 12.7 percent. This is double the official rate that stands at 6.3 percent. The official jobs report for February will be released tomorrow morning by the Bureau of Labor Statistics.

Other items discussed today were the Federal Reserve’s balance sheet and M1 and M2 money stock. All monetary measures are at or near all-time highs. This is expected to remain the trend on a weekly basis as the Fed remains committed to purchasing $120 billion worth of US Treasuries and mortgage-backed-securities on a monthly basis. This alone should elevate their balance sheet to north of $8.5 trillion, which is 10x higher than where it was prior to the GFC! The Kapital News projects that the balance sheet will be closer to, if not above, $10 trillion by the end of the year, as Congress continues to pass large-scale spending measures.

Earlier today the Chairman of the Fed, Jay Powell, made some remarks that apparently spooked the markets and caused a sell-off on the major indexes. The Chairman apparently believes that inflation will run hot for a short period of time, but will only be transitory, and that the Fed is monitoring closely, and has the tools to contain inflation. This led to yields on Treasuries moving higher, which was cause for concern last week and earlier this week, and has been placing downward pressure on global equities. The same upward effect was seen in the dollar index, as it now trades near levels not seen since last Nov/Dec. Commodities, however, is more of a mixed bag for the time being, with oil prices climbing higher, while precious metals continued their downward trend. In short, the markets are broken and heavily manipulated. All that is left are the narratives that central bankers can tell. The major question is, will markets continue to buy it? If yes, then equity and bond prices may continue higher. If no, then this may be the beginning of the end of central bank control over markets. If this is the case, then it could be a scenario of, look out below. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Debt #Spending #Gold #Silver #USA #Liberty #Commodities #EndTheFed #bananarepublic #FireCongress #Markets #Leadership

Ep. 546 – America’s Infrastructure, C-
The Kapital News
The Kapital News
Ep. 546 - America's Infrastructure, C-
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The American Society of Civil Engineers (ASCE), released their report card for the state of America’s infrastructure, and gave it a grade of C-. This is the best grade yet handed out by the ASCE since the report cards have been produced going back to 1998. However, despite the slight improvement from the last report card of 2017, there still remains much work ahead. Expected costs will differ between various groups, but needless to say, in order for the US to earn a grade of B+/A- will take trillions of dollars. It may be prudent for Congress to actually pass some significant legislation on this matter in order to take advantage of near record low interest rates.

The nation’s infrastructure has been neglected for too long and quite frankly is an embarrassment for a country of our wealth. If done properly, such legislation can prove advantageous and serve as a true investment in the future of this country. We are in the 21st century and we need coast to coast infrastructure that meets and exceeds our needs. If this is not done properly, or at all, then this will serve as further evidence that our country is in decline and decaying. There are 17 categories that the ASCE reviews and the best grades were that of a B and B- for rail and ports, respectively. The next report card will be released in 2025. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Infrastructure #Jobs #Debt #Liberty #USA #Inflation #Gold #Silver #Spending #Markets

Ep. 545 – Market Bubble Blame Game
The Kapital News
The Kapital News
Ep. 545 - Market Bubble Blame Game
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Top Chinese financial regulators are sounding the alarm bells with financial bubbles that exist globally. The focus of the statement was on the disconnect between the underlying economies in the USA and throughout Europe and their respective financial markets. This is of course true, as we are observing equity prices at or near all-time highs on a price basis and across virtually all valuation metrics. The only comparable points would take us to 1929, 1937, 2000, and 2007/8 – and things did not end well. The Chinese regulators nonetheless did look internally to their real estate markets and mentioned the frothiness is of concern. Noting how many people are buying real estate and homes not for the purpose of living, but rather as a form of speculation. Has the global economy not learned anything from the housing crisis that is only a decade old?

What further makes these statements interesting, is how the regulators warned of potential spillover effects from the US and European bubbles impacting the Chinese economy. The Kapital News believes this is the first shot across the bow and the start of a narrative that the Chinese want to begin building so that they can blame others for their own missteps and failures, if and when their economy and financial markets turn downward. There is no question that many financial markets are greatly disconnected from their respective economies, and China is guilty of this as well. Now, it will be interesting to see how other regulators and central bankers in the US and Europe respond to these statements. True to form, no policymaker wants to be held responsible for their actions and policies, and it is always easier to play the blame game and say it is the irresponsibility of another country.

These policymakers know that time is running out and they are low on ammunition. And there is no question that due to the interconnectedness of the global economy that there will be spillover effects from one country to the next. This is already being experienced in weaker economies around the world. It is always the weakest links that break first. And a couple or few countries experiencing difficulty may not be of significant concern for the rest of the world, but as these weaknesses persist and travel to other countries, then momentum starts to build. It is this momentum and its size and scope that can begin to negatively impact larger economies. When this takes root, coupled with market forces moving global debt yields higher, is when we will know that we are in the final chapters of this massive central bank economic money printing experiment. We are there. And it will not end well. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #Debt #Liberty #EndTheFed #Infrstaructure #Inflation #Gold #Silver #Bonds #Markets #bananarepublic #Leadership

Ep. 544 – Insanity x A Trillion
The Kapital News
The Kapital News
Ep. 544 - Insanity x A Trillion
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With the $1.9 trillion monstrosity set to be passed by Congress, just in time as the benefits are about to expire from the Nobody CARES Act 2.0 passed last December, we continue to witness the insanity of our politicians and the weakness of our economy. With several hundred thousand Americans continuing to file weekly initial jobless claims to the rising prices across commodities, one thing is certain – we are far from a real economic recovery. So in order to mask this reality, politicians are attempting to do what politicians do best, and that is spend money that we do not have and to kick the can down the road. These policies have proven and will continue to prove destructive. We are in the land of trillions and there is no end in sight as to how much more spending will be coming down the pike. This measure continues to pertain to the pandemic (or so we are told). What is next on the block is likely infrastructure spending, and measures dealing with the environment and healthcare. We are just getting started. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Inflation #Gold #Silver #Jobs #Bailouts #USA #Liberty #Spending #EndTheFed #bananarepublic #Markets #Leadership