Well we now have them both! As the Trump Administration readies yet another bailout package, Phase 4, they’re also openly discussing bailing out energy corporations. However, with respect to “assisting” the energy sector, a potential condition of extending any type of “capital” will come with strings attached – the government will take an equity stake. This is completely un-American and should not be tolerated nor considered. The government does not have the authority to lend money – it does have the ability to borrow money. It also does not have the authority to take equity stakes in companies. Well, US Constitution be damned as the government is preparing for exactly that. Furthermore, the US government is broke! We have a $24.5T national debt with a deficit that is likely to be north of $4T for FY2020. And the only way this can be financed is through the printing press. This is now a banana republic. Can you say hyperinflation?
On the negative rates side – we already have them and have had them for some time now on a real basis. However, when we consider the Fed’s own research in noting how balance sheet expansion and contraction also serves as a de facto rate cut or hike, respectively, now begs the question – do we now have nominal negative rates? Given their research and their past decisions, The Kapital News is of the mindset that the US now has de facto negative nominal interest rates. Look no further than the Fed’s balance sheet that now stands near $6.6T and counting. With over $2T added just over the last month. We would think that this would amount to a sizable rate cut. Understand that rates are already back to the zero bound at 0.00 – 0.25 bps. With this recent and continuing balance sheet expansion, it can be reasonably assumed that we are well into negative territory. This is detrimental to financial systems – look no further than to Japan and Europe for a case study.
The United States has failed and the only thing that can save it is a return to free-market capitalism, our Constitutional Republic, and liberty-loving men and women across this country that demand their country back! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Recession #Debt #Deficits #USA #Congress #Depression #Gold #Oil #EndTheFed #Revolution
Another week and an additional 4.4 million Americans have filed for unemployment insurance. This take the five week total to nearly 26.5 million. These last five weeks of job losses have entirely outstripped the job gains since the end of the Great Financial Crisis (GFC).
PMI figures have also been published globally and we are witnessing levels in both manufacturing and services that are nearing levels not seen since the GFC. In some cases, they are even worse.
The Federal Reserve has updated its balance sheet, which now stands at nearly $6.6T and counting. This represents an increase of around $200 from the week prior. If this rate of increase remains, then we are talking about an increase of $10T on an annualized basis. If this happens, the Fed’s balance sheet would be around $14T. This would then represent about 70% of US GDP. Most of the gains on the balance sheet were from purchases of US Treasuries and mortgage-backed securities. Of course, there is little outside demand for US Treasuries, which is even why a recent analysis by Goldman Sachs suggested that nearly 70% of new Treasury issuance will be purchased by the Federal Reserve. This is virtually debt monetization and more reminiscent of a banana republic as opposed to a Constitutional Republic. There is no free lunch and per a previous podcast, “Free Was Never So Expensive.”
We lastly discuss some recent surveys that highlight the economic and behavioral changes that we’re likely to see once the economy is “opened” up for business. When asked about receiving government spending money directly and what would you do with it, the largest responses were the following – savings, everyday expenses, and payoff debt(s). A handful of other options, primarily centered around spending, all received a response around 5%. Then there was another survey that asked if stay-at-home orders were lifted, how comfortable would you be going to bars and restaurants, getting on an airplane, and going to a large event – by factors of 3 to 1, people would not feel comfortable with those options. This simply confirms what we have been discussing here for weeks – and that is how people will be changing their spending habits and behavioral “norms” for the foreseeable future, which will translate negatively with respect to the economy on a short and mid-term basis. On a longer-term basis, this kind of deleveraging is healthy for an economy and is part of the broader correction. This is a process and will take time. And the more the government tries to “help” the worse the outcomes will be and the longer it will take to recover. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Recession #Debt #Gold #Depression #USA #EndTheFed #Congress #Bailouts #Oil
Ep. 361 - State Bailouts Next + Market Manipulation?
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We have been talking about it for weeks and now there appears to be an appetite from President Trump and the Democrats to work on another bailout program that incorporates the States and cities. Yet, now, after various spending programs in the trillions of dollars, Mitch McConnell, Senate Majority Leader, is now drawing a line in the sand when it comes to assisting the States. May it be known that The Kapital News is against all forms of bailouts. But isn’t it interesting that Wall Street and Corporate America can receive trillions of dollars within the blink of an eye from Senator McConnell, yet when the States ask for assistance, now hes’ all of a sudden concerned about debt levels and future generations paying for it. This is exactly what is wrong with our political system – amongst many other issues. Perhaps the States do not contribute to the Senator’s campaign fund(s) and is therefore of little significance to him? We digress. Some numbers that have been noted when it comes to “assisting” the States may amount to $500B and if including cities, this can be another $250B. So, just for the States and cities, we could be talking a near $1T spending program. Also note, as far as we know as of today, these figures are to make up for tax revenue shortfalls, pension plan assistance, and other responsibilities of State and local governments. Therefore, these figures are absent any major type of infrastructure spending, which has already been rumored to amount to nearly $2T! Where is all of this money coming from? Because Uncle Sam is as broke as a joke – which makes it ironic that broke States are asking a broke Federal government for assistance. So who comes to the “rescue?” That’s right, the Federal Reserve will have to continue its counterfeiting, oops, we mean, money printing operations. Just for a FYI – US national debt is $24.5T and the deficit as of now is $2.3T and expected to double – at least, by end of FY2020. Ain’t you proud to be an American?
We also continue our discussion of the oil markets, since history was made earlier this week when WTI went negative and settled at nearly -$38 per barrel. Well, this of course raises a lot of questions, and now Continental Resources, is asking the Chicago Mercantile Exchange (CME), to look into market manipulation. In their request, they provide a timeline of events which they argue gives the appearance of market manipulation and/or a flaw in a new computer model. Either way, these are legitimate questions and they require thoughtful and truthful answers. We will keep you posted as updates become available. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Bailouts #Gold #USA #Recession #Debt #Depression #Congress #War #Peace
A follow-up discussion on the oil and gas markets as well as how the exact opposite scenario may unfold with respect to gold and silver. These markets are crazy to say the least – a direct result of a decades plus asinine economic experiment that is in the process of unraveling. Congress is ready to pass another spending bill of nearly $500B and we expect that more will be coming in due time. Most of this will be an extension of the forgivable loans program to small and mid-sized companies to assist during the COVID19 lock-downs. However, we anticipate several states around the country are getting ready to line-up, if they haven’t already, to seek assistance from the Federal government. This is laughable as the Federal government is out of money as well – but hey, at least they have access to a printing press via the Fed. In addition, or perhaps in tandem with a states’ spending bill, that of infrastructure spending will also be a part of the “assistance.” The US deficit for FY2020 is already projected to hit nearly $4T and we expect this to be surpassed as even more government and Federal Reserve packages and facilities are announced.
We provide a brief update to the President’s recent call to suspend temporarily, immigration into the USA. We also note how the CDC Director is mentioning that a second wave of COVID19 is likely and that it may be worse than the first wave – since a second wave is likely to strike in tandem with the seasonal flu season this coming winter. As we have been predicting, the IMF (International Monetary Fund), is now seriously contemplating debt forgiveness, especially for third-world countries. They are also considering a near $1T loan package to assist several countries – this will not be enough funding to stave off what is coming. On a central bank note, global money printing just over the past few months has totaled nearly $23T. To put this into context, the GDP of the United States is just over $20T.
And lastly, but definitely not the least or final of problems, is that of a potential “hunger pandemic.” This is what the United Nations is now discussing and preparing for as COVID19 continues to make its way around the world and the health and economic damage that it is leaving in its wake. Given the economic downturn, especially regarding commodities prices, which many third-world and emerging economies are heavily dependent, is now dealing another blow that may lead to the starvation of millions around the world. Again, as The Kapital News has been discussing for months, many of these same countries were protesting prior to COVID19. Now that the environment on multiple fronts is even worse, what do you think these people are going to do now? These protests are not transitory – they are history in the making. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Gold #USA #Debt #Recession #Bailouts #Depression #Business #Russia #SaudiArabia #China #Protests #War #Peace
This is a day for the history books as WTI (West Texas Intermediate) entered negative territory for the 1st time ever! Settling around -$38.00/bbl, the negative price sent shock-waves around the world. Now, it must be stressed that this is for the May futures contracts that will be expiring tomorrow. But nevertheless, for prices to go negative, is a major historic event. From the demand side – there basically is none. From the supply side – the globe is awash in both oil and gas, and storage facilities are nearing max capacity. Great attention will be paid to the June futures contracts for WTI and make no mistake about it – these contracts could hit negative prices as well. If they do, then there is unquestionably something structural underneath the oil markets that is broken. Also, understand that free-markets is about price discovery and this may simply be an attempt by markets to clear. However, we think that this is something much more structural. This could be hedge fund(s) failing, energy corps failing, etc… or some combination, amongst other issues.
The geopolitics of the matter can also not be forgotten or downplayed. OPEC + just agreed to cut nearly 10 million b/d from production and despite this – prices continued their descent – which we argued would happen. This calls into question the petro-dollar system and we discuss this during our podcast. We also note the continued stress this places on energy firms that were already struggling to begin with, due to the supply and demand dynamics of the markets, in conjunction with their massive debt loads. This is far from over. Also, note that many countries protesting prior to COVID19 are heavily dependent on oil for their government revenues. This downward trend will only exacerbate any and all issues that already existed in these countries. Be prepared for more global protests – these are not transitory – they are history in the making.
Lastly, we discuss some brief articles centered around the health and life or death situation of North Korean leader, Kim Jong Un. As well as President Trump’s recent decision and Executive Order to temporarily suspend immigration. We also mention Iranian criticisms of the USA with respect to the economic sanctions that continue to cripple the country, especially in light of COVID19, from which Iran is suffering severely. And then announced earlier, there was the formation of an “emergency” government in Israel as the two sides have been unable to successfully form a government despite multiple attempts. Something tells us all of these stories are connected, but time will tell all. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Recession #Protests #War #Peace #USA #Iran #Russia #Venezuela #China #SaudiArabia #Debt #Gold #Depression
Perhaps it’s the final chapter (singular) as opposed to plural or even worse, perhaps it’s already over? And sad to say, there are many out there who study the social and moral decay of this country who could articulately and eloquently argue that the United States of America has already ended for all intents and purposes. In today’s discussion we highlight the continued expansion of the Federal Reserves balance sheet, which now stands at over $6.3 trillion and growing rapidly – mainly for the benefit of Wall Street and Corporate America. And of course with very little to no oversight. We also discuss the $25 billion airline bailout and some of the terms of this agreement between the government and the airline industry. Of course the airlines weren’t too thrilled with some of the conditions – further showing their shamelessness and making it appear as if these bailouts are simply a part of the process and that they’re well deserving.
Other mentions pertained to Boeing opening up production next week. This is despite the fact that airlines remain grounded and Boeing losing some 300 orders for new jets. Raises the question, what then are they producing? Perhaps war planes, drones, or other aircraft for defense/war purposes? We hope not, but remember, when all else fails, they take us to war. And lastly, we note some of this increased language about the lack of transparency from China with respect to COVID19. This is likely to continue and may very well start some sort of conflict and/or war – whether that’s bio, cyber, economic, or kinetic. It’s also quite possible that there may be a proxy-war that could likely erupt in Iran and/or Venezuela, as we have been noting here for months. It’s not a pretty picture and conditions are likely to get much worse before they get better. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Bailouts #EndTheFed #Debt #USA #Depression #Oil #Gold #COVID19
As we enter corporate earning’s season, we’re already beginning to see the effects of an ailing economy coupled with COVID19. Many of the banks are reporting numbers that are through the floor – this is no surprise. They are also readying themselves for a wave of defaults across the spectrum of financial products. Whether that’s mortgages, autos, credit cards, you name it. Another interesting data point to note is that nearly 17% of S&P 1500 companies can now be classified as a “zombie” company. This means that their interest expenses exceed their cash flows. Now perhaps you understand the title of today’s podcast? This is especially true against the backdrop of one of the largest rallies in market history over the last few weeks. So strong, you have many in the media and Wall Street, already declaring that the bear market is over and that everything is fine and off to to the races we go. This is pure lunacy. But this is also a reflection of the market mentality and of the times. So many have been conditioned over the last decade that easy money, printed at will, can solve any problem. Well, we believe that Junior is about to find out the hard way that money printing is not a panacea. As such, we expect the markets to sell off significantly over the coming years that will be reminiscent of the NASDAQ in 1999-2001 and the DOW in 1929 through the early 1930’s. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Bailouts #Debt #USA #Oil #Gold #Liberty
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
Day III of the impeachment trial of President Trump concluded today with the House Managers concluding their opening arguments. The floor will now be turned over to the Counsel of the President. It is highly likely that their “defense” will be based off of attack, deny, and repeat. There will be little defense if any of the President’s actions themselves. Why? Because there is little to defend if anything and they know it. This is why they are likely to attack and distract. It remains unknown as to how many days and hours they will use, but we do know that the President via twitter claims that arguing on Saturday is bad for TV ratings. Of course, let us not focus on the facts of the case and seek the truth. No, no. Let us simply worry about TV ratings. Should we be surprised?
The House Managers did a thorough job over the last few days making their argument. Given the evidence of the case as of today – the President is guilty as charged on both counts: an abuse of power and obstruction of Congress. However, since so many documents have yet to be released by the Executive Branch, there remains room for questions. However, if this information is not released, then the President is showing his guilt once again on the charge of obstruction of Congress. If acquitted with the facts and evidence we have thus far, a dangerous precedent will have been established. And this President and those to come will be able to go unchecked by Congress. This in itself is a travesty. At the very least, the Senate must vote for further witnesses and documents. The whole truth must be known. Justice deserves it and so do the American people. May the truth be known and justice served. Impeachment is not simply about conviction and removal or acquittal. It’s also about prevention. Will the President engage in this type of action again, is a serious question to ask oneself. We will soon find if the Senate places the truth, justice, their oaths, our country, and our Constitution above party and politics. If they do not, then the Republic and the Senate has failed. Stay diversified, stay vigilant, and stay with The Kapital News. #Impeachment #Truth #Justice #Peace #War #Congress #Constitution #USA #Republic #Economy #Politics
Day II of the House Managers’ argument took place today in the US Senate. Much of the argument was repetitive, but effective in laying out in further detail the facts of the case and how President Trump abused his powers. Tomorrow, they are likely going to lay out the case for the second charge of obstruction of Congress. The heart of this matter is what kind of precedent does this send if further, first-hand witnesses and other documents are not allowed into the record? And what kind of precedent will be set, if the Senate acquits from an argument of, “an abuse of power is not an impeachable offense?” The US Constitution as we know it will cease to exist. There will be virtually no remedy to keep a President in check. This country was founded on the idea that the individual is sovereign and that a monarchy is to be detested and rejected as a proper form of government. This is why there are three branches of government with the duty of each to keep the others in check. With what we know today, if the Senate acquits, their ability to check this President and future Presidents will have been greatly diminished. Stay diversified, stay vigilant, and stay with The Kapital News. #Impeachment #Truth #Justice #Congress #Constitution #Politics #Economy #Peace #Republic
