A visual follow-up to our recent podcast entitled, The Oil Conundrum. We want to take a moment to review the price action of oil (WTI) and natural gas and to discuss what it means for the global economy at-large and for the energy sector more specifically. We also discuss the recent decision rendered by OPEC to cut nearly 10 million bpd from production. As well as to note the likely geopolitical fallout from a global economy that is and has been slowing down for quite awhile. #Oil #OPEC #Economy
We asked the question last week is, “Reality Sinking In?” And we noted that time will tell, but we have to look out for Monday and how the markets perform. Well Monday came and boy, was it manic. Global equities shed 3% and some even more than that on the major indexes. So is reality sinking in and which reality? The reality of a melt-up coming to an end? The realization of record-breaking valuations? The coming to terms with COVID-19? Or some combination thereof? It’s probably a combination, but the point of the matter is that the global economy and its markets are balancing on a blade of grass and it’s not going to make much to knock it off its perch. Too much debt and too much interventions from federal governments and central banks is coming home to roost. Will this all take place in a day’s time? No. It’s a process, but we may well be in the midst of this long overdue correction to fair value. But make no mistake, if history is any guide, this could simply be a pullback and then off to new highs. So long as the inmates are running the asylum, anything can happen. Yeah we have the COVID-19 spreading to some 36 countries, but don’t forget about the locusts too. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Coronavirus #Recession #COVID19 #EndTheFed #Gold #Silver #Oil #Bonds #Politics
Round II of the impeachment inquiry hearings and former Ukrainian Ambassador, Marie Yovanovitch, was in the hot seat. Amb. Yovanovitch came off as credible and was praised and thanked for her 33 years of service by both Democrats and Republicans. Despite this, President Donald Trump could seemingly not contain himself and had to send a tweet during the testimony, attacking the character and “results” of the ambassador. Even Republicans condemned the tweet. And now, this tweet opens the door to potential charges of witness tampering and/or intimidation. Not only for this witness, but for potential witnesses to come because this has been how President Trump has been behaving toward these witnesses. This is beneath the Office of the Presidency. There are a lot of questions that remain outstanding because Amb. Yovanovitch could have simply been removed because the President wanted her gone. Evidently, that wasn’t good enough because as we know from the 25 July phone call memo, Trump and Zelensky discuss the ambassador and say she’s “trouble” and that, “she’s going to go through some things.” Now it gives the appearance that Trump wanted the ambassador removed because she wasn’t playing the game with getting the Ukrainians to investigate the Bidens. So the appearance of wrongdoing is in the air.
Also, and central to all of this is the President’s personal attorney, Rudy Giuliani, and two of his associates. The associates by the way have been arrested by the FBI. These men wanted the ambassador removed and seemingly convinced Trump that she was bad news and had to go in order to get the Ukrainians to investigate the Bidens. Again, this does not look good.
In addition, there was another witness, David Holmes, a State Department official, who testified this evening behind closed doors. This is the man who claims to have overheard President Trump speaking with Ambassador Sondland in a Ukrainian restaurant on the progress being made to investigate the Bidens. This phone call took place on 26 July – one day after the phone call with Zelensky. This testimony can serve to further show the state of mind and the area of focus for the President and his inner circle.
Lastly, Roger Stone, long-time friend and associate of Donald Trump’s was found guilty of all charges today in a Washington, DC courthouse. He was convicted of lying to several authorities and witness intimidation and the like. He is to be sentenced in February. Stay diversified, stay vigilant, and stay with The Kapital News. #Impeachment #Truth #Justice #Peace #Economy #Politics #EndTheFed #Protests
Nothing can apparently stop these markets from reaching all-time highs, as the S+P 500 closed at a record high. The Nasdaq and the DJIA are not far behind. The markets continue to be bombarded with deteriorating economic numbers, but simply shrug it off in the hopes of further monetary stimulus and a trade deal between the US and China. In fact, the President of the United States continues with the market manipulation comments and claimed earlier today that the trade talks are ahead of schedule. We have no idea what this means. It’s been two years and we were never given a schedule. In fact, we have been told repeatedly that the USA is in no hurry – so how can there be a schedule? Further, this Phase 1 deal is supposed to be signed in Chile next month when Presidents Trump and Xi attend an economic summit. Is this the deadline? If so, then wouldn’t it reason that ahead of schedule would suggest that the signing ceremony will take place before the economic summit now? This is a continued example of the President losing the credibility of his Office. This is shameful. And it’s all so he can claim the markets have hit all-time highs. Again, another example of this country placing higher priorities on money and profit before principle.
This week will continue to see a long list of earnings releases and economic figures being published from housing data, to Q3 GDP, to the Federal Reserve’s decision regarding interest rates. How much of this has already been priced in? As we have witnessed over the past two rate cuts, the markets subsequently sold off. Will the third time be a charm and continue to push the major indexes well into the stratosphere? Time will tell. But one thing that gives us pause is if we do witness a melt-up and/or blow-off top, the subsequent correction is likely to be a crash and it will be significant. Allow 1929 and 2000 be your guide.
On the political front, Speaker Nancy Pelosi, is calling for a vote this Thursday for the House to agree to the rules and procedures that will dictate how the impeachment inquiry is to proceed. Given the statements made by the Speaker, the next round of hearings will be made public. This is the correct course of action as the entirety of the Congress as well as the American people have a right to hear what the Trump Administration has and/or has not done. In order for this Republic to survive, her citizens must be informed. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #Justice #Stocks #Invest #Debt #Politics #Impeachment #TradeWar #Peace #Truth #EndTheFed
This week is going to be filled with quite a bit of economic data being released globally including Q3 GDP figures for the US and the Eurozone. We’ll also see various global PMI prints, inflation figures, jobs reports, and consumer confidence numbers. All of this fundamental economic data, however, mat take a backseat to a couple of other events. Namely earnings reports from some major tech firms such as Apple, Facebook, and Alphabet, the parent company of Google. Recall, despite the fact that Amazon missed and gave poor forward guidance, the markets still made all-time highs last week with respect to the S+P 500 on an intraday basis and the Nasdaq100 as well. These tech giants have been the market leaders over the course of this 10+ year bull market. They are the darlings of Wall Street, so even if we should witness further deterioration on the economic front, these earnings reports could make the markets turn a temporary blind-eye.
Also, the markets will be waiting to hear from the Federal Reserve on Wednesday following the conclusion of the FOMC meeting where the Fed determines interest rates. The Kapital News is expecting that the Fed in the very least will cut rates by another 25bps. The markets are pricing in a 94% chance that the Fed will cut once again, and we are all but certain that the Fed does not want to disappoint the addicts on Wall Street. Also note that the Bank of Japan will be making a monetary decision this week as well and given their recent rhetoric, do not be surprised if they continue with further easing.
Lastly, we discuss the impeachment inquiry and how the investigation into the genesis of the Trump-Russia collusion/conspiracy case was opened. On the inquiry front, former National Security Advisor, John Bolton, is expected to agree to testify before House committees to discuss what he knows of the Ukrainian affair and perhaps other areas of concern surrounding the President of the United States and his administration. Be mindful that John Bolton may be a disgruntled former employee, but that does not give him the right to lie under oath, nor does that protect him from prosecution of perjury should he lie about his time in the White House and what he may have witnessed. His testimony could prove fatal to the President since John Bolton would have been aware of many of these issues in question.
On the Trump-Russia front, this investigation has turned into a criminal investigation. This is likely to imply that members of the Obama administration are likely involved and/or members of the DOJ, FBI, and/or other intelligence agencies who served in those agencies during President Obama’s tenure. Or, this could imply that there were details missed during the Mueller investigation and members of the Trump campaign and/or administration are once again in the crosshairs. Regardless we want the truth and we want justice no matter who is implicated. Also, the mainstream media is already saying the President is simply using his Office and the DOJ as a weapon to investigate his political opponents. This is exactly what we predicted would happen and the fact that there is a phone call and a quasi-transcription, which was released by the White House, whereby the President asks his counterpart in Ukraine to look into former VP Joe Biden and his son, Hunter, does not bode well for Mr. Trump. This week will be very interesting. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Impeachment #Justice #Truth #Economy #EndTheFed #Politics #Republic #Peace
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 +
With China celebrating their 70th birthday, the markets had to look elsewhere for its daily headline fix. Unfortunately for the market bulls, they were forced to look not at hope (of a trade deal), but at the reality of the economic fundamentals. And what did they see?… They saw the ISM Manufacturing PMI drop to the lowest level since June of 2009. The reading came in at 47.8 following the contraction of 49.1 in August, and missing market expectations of 50.1. They also saw US construction come in below market expectations. This is the late-stage of the business-cycle and it’s unlikely that this time around that $1 trillion deficits, zero interest rates, negative interest rates, and quantitative easing will be able to “rescue” the system. Why?…Because the world is awash and oversaturated in debt and the solution simply cannot be more debt! Nevertheless, this is what is going to be preached from central banks, federal governments, and the International Monetary Fund (IMF). Where we find ourselves today is similar, but different to the environment that led to the Great Recession – history may not repeat, but it does rhyme. The world of the mid-2000s found the consumer over saturated, along with a handful of corporations, and financial institutions that were highly-levered. This inevitable bubble-bursting operation lead to the Great Recession. So, last time it was the consumer and some corporations. This time, it’s the consumer, corporations, governments at all levels, and even central banks. There isn’t enough growth on this planet to mop up this amount of debt. So who is going to be bailed-out this time? Politically, there is not going to be an appetite from the general populace to “save” the banks or corporate America…again. This doesn’t mean that politicians won’t do so, but they’ll do so at their own peril. Therefore, the likely “solution” will be more deficit spending on various projects to appease the masses and central bank intervention of lower interest rates and quantitative easing – great, more of the problem to act as the solution! Twilight Zone, anyone? Despite monetary and fiscal stimulus measures around the world, we continue to witness fundamental economic deterioration. This business-cycle is peaking and the ensuing recession will likely make the Great Recession look like child’s play. This is not said lightly, but when you have more debt than ever, generally weak demographics globally, (especially in major economies), stimulus measures that are not stimulating, political uncertainties and instability, and continued validation that the global economy is slowing – what do you think will happen? Manufacturing down and volatility up. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Manufacturing #Economy #Debt #EndTheFed #Politics #Invest #Money
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
There has been much hype and discussion recently centered around the yield curve and the fact that it has been inverted. This rare signal from the market tends to foreshadow a recession. Kapital Economics is a proponent of an inverted yield curve serving as a recessionary signal. We take the time in this presentation to look at history and allow the data to tell the story. #Recession#YieldCurve#InterestRates#FederalReserve
As central bankers gather at their annual retreat in Jackson Hole, Wyoming, the global markets now await the statements from Fed Chairman, Jay Powell. Given a volatile month in global equities and further signs of a global slowdown, this leaves the Fed and other central bankers with a decision – to cut, or not to cut. Global central banks have already begun new easing cycles, but now the focus is on the most powerful of these institutions – namely the Fed and the ECB. Given the recent release of their meeting minutes, it’s highly likely that the ECB will be cutting interest rates next month and perhaps even begin another round of QE or at least signal as much. Meanwhile, the Fed appears to remain conflicted among its members as to their next decision. Fed Presidents from Kansas City and Boston are against cutting interest rates further, citing lower rates could cause more harm than good. Yet, there are still other members who are fine with slashing rates even deeper. US markets were relatively flat today as they await Jay Powell’s speech for further signs as to what the Fed is likely going to do in September. Therefore, tomorrow will see either a strong rally to the upside or a sizeable sell-off. This is not free-market capitalism when the world awaits tweets and statements from Presidents and central bankers. Nevertheless, we must be and remain prepared. Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #WakeUpAmerica #Economy #Investing #Politics #Stocks #Peace
