It has been over a year, but finally the initial jobless claims figure is below that witnessed during the depths of the GFC. In aggregate, regular state unemployment and PUA claims came in at a combined 599,000 for the week ending 1 May. The peak during the GFC was around 660,000. The prior combined figures for around an entire year stood north of 900,000 on a weekly basis! Regular state claims came in at 498,000 and the prior week was revised upward by 37,000 to stand at 590,000. The Pandemic Unemployment Assistance claims came in at 101,000. In aggregate, amongst all forms of unemployment insurance, some 16.2 million Americans continued to file claims. This gives a de facto unemployment rate of 11.6 percent. The official unemployment rate is currently at 6 percent. The jobs report for the month of April will be released tomorrow by the BLS.
The Federal Reserve’s balance sheet stands at $7.81 trillion, which is a week-over-week increase of $30 billion, and is just shy of a new-all time high. The Fed remains committed to purchasing at least $120 billion of US Treasuries and mortgage-backed securities per month. This will take the balance sheet to around $8.5 trillion by the end of the year, and The Kapital News expects that number to be closer to $10 trillion. This policy of QE continues onward despite record high equity prices, record high housing prices, sky-rocketing commodity prices, rising food prices, et cetera. If the jobs report provides a strong number, then the Fed is going to find themselves to be trapped even more than what they currently are. How can they continue to justify their policies and interventions if everything is looking healthy? Of course things are not healthy. It is a smoke and mirror show provided to us via trillions in fiscal and monetary policies. But the Fed will never admit to this, so they will continue with some made up narrative to justify their reckless actions. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Protests #FoodPrices #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Gold #Silver #Commodities #Debt
More than several countries around the globe were protesting throughout 2019. In comes the pandemic and the subsequent lockdowns and the protests are tampered down. However, the reasons for the protests were never truly dealt with and due to the negative fallout from the pandemic, many of these issues have actually gotten worse. So here we are in 2021, and many of these protests are once again taking shape.
Whether it is income inequality, tax hikes or the mention of tax increases, a raise in bus or metro fares, a decrease in governmental benefits, or political abuses of power, one thing is certain, people around the world are sick and tired of being sick and tired. The cost of living is increasing by the day and more and more people are spending larger portions of their incomes on the basic necessities to live. This is why it becomes laughable if not disrespectful for those who argue about a deflationary environment. People around the world are not protesting and rioting because the cost of living is so affordable – they are protesting because they cannot afford to live!
Furthermore, these types of protests and movements can prove contagious as they may inspire other people around the world to take to the streets in their respective countries. Cost of living increases, tax hikes, and political corruption are not unique to only a few countries, but rather most, if not all of them. Depending on the outcomes, some may be resolved peacefully, while others may turn violent. In the latter scenario, the global economy should be watchful of further supply-chain disruptions. A country at war with itself will produce fewer items and thus less to be offered on the global stage. The global economy is continuing to contend with supply-chain issues, and social strife will only add to these pressures and bottlenecks, which ironically will only serve to further increase prices. There is no easy way out of this mess, but it is encouraging to see people stand up for themselves, their families, and their countries. Major changes are needed, and let us pray that they take the form of liberty and free-market capitalism. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #FoodPrices #Inflation #USA #Colombia #Peace #Gold #Silver #Commodities #Jobs #Housing #Fraud #Bubbles #Zombies #EndTheFed #bananarepublic #FireCongress #Liberty #Leadership
Only a few months ago the average new home build cost an extra $24,000 due to the price increase of lumber alone. Fast-forward to today and now that increase is $36,000! That is an increase of 50 percent in only a few short months. And of course we are told constantly by our policymakers that there is no inflation. Do not believe your lying eyes is supposedly their message. Further, this is placing upward pressure on rents as well, and according to the National Association of Home Builders (NAHB), monthly rent payments are likely to increase by $120 per month. So understand that Uncle Sam and company have been sending out stimulus checks over the last year. If your rent should increase by $120 per month, then that check simply went to covering this rent increase. However, it will not be able to cover all of the other price hikes that exist from A-Z.
As we continue to see upward pressure on prices, many major corporations have been issuing press releases to their customers indicating that they will be increasing their prices, if they have not done so already. It would also be prudent to not only pay attention to the price hikes, but also the volume of product. Is it the same weight or lesser? Is it the same count or fewer? With these prices increasing there are only a few things that can happen. For example, corporations can assume the price hikes, thus squeezing their margins; they can pass along the entire cost to their customers, thus increasing consumer prices yet also risk losing market share; or a combination of the two. However, whichever option is chosen by what company, one thing is certain and that is margins and savings will be squeezed. The markets are priced to perfection, as the saying goes and thus anything that strays from this narrative can have some serious negative consequences.
Some such negativity right now with the current state of housing is the likelihood of pricing out a generation of homebuyers. The demographic most negatively impacted right now is the Millennial generation. This cohort has to contend with purchasing record-high housing prices, equity prices, car prices, rents, student debt payments, and the lack of current and future opportunities. All while likely to be left with the responsibility of cleaning up this mess from a budgetary and governmental standpoint. This is the intersection of economics, politics, and social issues. The dam is about to burst globally because of these issues, and when it does, it will be epic! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Housing #Lumber #Jobs #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Inflation #Gold #Silver #Commodities
Evidently one does not need a job in order to receive a paycheck in the new America. As stated by President Biden yesterday evening, Americans should not have to choose between a job or a paycheck. So presumably, one can go to work and earn a paycheck, or one can simply decide that they would prefer to just receive a paycheck by doing nothing. It would have to be assumed that the government will be sending out the checks. This is beyond ridiculous, but this is what was said. As The Kapital News has been stating for the last couple of years and especially last year, with all of the stimulus checks that were sent out, was how the American people were being conditioned to accept money from the government. This is a trial run at universal basic income or UBI, which is part of modern monetary theory, or MMT. The overall belief is that money grows on trees, deficits and debts do not matter, and if inflation should ever be of concern, just raise taxes. A terribly flawed idea and it should not even be considered an idea – that is how bad it is. Nonetheless, many Americans have grown accustomed to and fond of these checks from the government, not realizing the true cost that awaits them on the other side. This will take the form of much higher prices, higher taxes, lower living standards, and the loss of opportunities.
Initial jobless claims came in at 553,000 for the week ending 24 April. The prior week was revised upward by 19,000 to now stand at 566,000. While the regular state unemployment number is now below the figures we saw during the depths of the GFC, when taken together with the federal program of Pandemic Unemployment Assistance, or PUA, which came in at 122k, in aggregate still keeps us above those GFC figures for over a year. While trending lower, there is still along way to go as prior to the pandemic and subsequent lockdowns, claims were between 200-300k. In aggregate, some 16.6 million Americans continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.9 percent, which is still about 2x as high as the official rate at 6.0 percent. Next Friday will be the release of the official jobs report for the month of April.
The Federal Reserve’s balance sheet retreated by $40 billion from last week’s all-time high and now stands at $7.78 trillion. The Fed remains committed to their QE policy of purchasing at least $120 billion per month of US Treasuries and mortgaged-backed securities. This will take their balance sheet to around $8.5 trillion by the end of the year and The Kapital News is projecting it may be closer to $10 trillion. For perspective, the balance sheet was just shy of $900 billion prior to the GFC. Monetary measures of M1 and M2 were also released. These figures used to be updated weekly, but are now refreshed on a monthly basis. M1 and M2 both hit new all-time highs, at $18.68 trillion and $19.89 trillion, respectively. These were month-over-month increases of $280 billion and $250 billion, respectively. The ultimate narrative that matters is this one that pertains to central bank actions and the injections of liquidity into the system. Should markets continue to buy into it, then markets likely continue grinding higher. But should they cease to buy into it, or the system hits exhaustion, or an endogenous or exogenous event occurs, they it is likely game, set, and match for this decade plus long bull market.
Lastly, several active military officials in France are warning of a civil war breaking out in the country. The rush of immigrants into the country over recent years is one such reason cited by the officials, along with other government policies that they believe are leading to the downfall of the country. The French government will be dealing with these individuals via military council, but their message has already been heard. With all of the actions and policies that have been implemented by governments and central banks around the world, the global system has been materially weakened. This type of rhetoric, along with the global protests, riots, revolutions, civil wars, conflicts, and coups will only pick up steam from here. The true costs of all of these policies have yet to be fully felt and once they are, global flare ups will be the norm in countries large and small, weak and powerful. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #FoodPrices #Debt #Spending #bananarepublic #EndTheFed #FireCongress #Liberty #USA #Leadership #Bailouts #Protests
Ep. 583 - Powell + Biden Speak, Trillion Dollar Giveaways
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Just when you thought multi-trillion dollar deficits for the past couple of years was bad enough, wait…there is more! The one-two punch from monetary and fiscal authorities keeps coming with no end in sight. The government, especially the Democrat party wants to continue with the massive spending spree and the Federal Reserve is more than happy to continue to finance such profligacy. Of course nothing is free and the results will be higher direct taxes at every level, federal, state, and local, higher inflation, lower living standards, and fewer opportunities. One cannot fix a global debt crisis with even more debt. Yet no policy maker regardless of political party or monetary institution wants to take responsibility or accountability for their years of reckless and criminal behavior. We do not have the right to steal from future generations, yet that is exactly what it means when we run these types of annual deficits and accumulate a national debt of over $28 trillion and growing!
Today was the conclusion of the FOMC meeting and as expected the Fed left the Federal Funds Rate unchanged at 0.00-0.25 percent. They also maintained their stance with respect to their QE program whereby they will continue to purchase at least $120 billion per month of US Treasuries and mortgage-backed securities. Last week their balance sheet hit a record high of over $7.8 trillion. Fed Chair, Jay Powell, continues to reiterate that inflation expectations will be transitory and will be a result of base effects, due to the low levels seen last year due to the lockdowns. In effect, he is stating that the Fed is just going to wait and see what happens next year, because the base effects will be in play through the remainder of this year. So a large print on inflation may very well occur and the Fed will just presumably shrug it off and say it is only due to base effects. We wonder if the people who have to pay higher prices will be so nonchalant about their currency being devalued?
Finally some tougher questions were asked of Jay Powell, but most likely simply due to the obvious absurdity of their policies and rhetoric. For instance, questions were asked with respect to the real estate market, which is currently hitting all-time highs with prices and other metrics. It was then asked with this as a backdrop, why then does the Fed continue to purchase $40 billion per month of MBS? It may be understood and even accepted that during the GFC, housing prices were collapsing and MBS were toxic assets and the Fed was attempting to inject liquidity into the system via these purchases. That was then and this is now. The GFC was an emergency and thus they justified their actions because of the falling house prices. Now, we have prices at all-time highs and the Fed also states that the economy is recovering – so where is the emergency to justify these purchases? A fair and basic question that received a terrible answer or better yet a non-answer, but at least the question was asked. On the other side, however, giving credit where credit is due, Jay Powell did admit that rising housing prices are pricing people out of the market, especially younger people, and that this is problematic. This is true. Yet does he not understand that much of this is a direct result of monetary policies that he is responsible for and fiscal policies of which his institution finances? This summarizes who and what we are dealing with.
This evening President Joe Biden gave an address to a joint-session of Congress. In his hour long speech he promised trillions of dollars in new spending on top of the trillions of dollars already passed to be spent during his short-time in office. There is completely no understanding of basic mathematics that exists within Congress, especially within the Democrat party. For instance, the Biden administration wants to increase taxes on the wealthiest of individuals and corporations. And presumably, with this extra tax revenue all of these new and old programs will be funded. Well not so fast. We are on track to spend nearly $8 trillion this year alone! This will give us an annual budget deficit of over $4 trillion. Our deficit will be larger than the entire amount of tax revenue that is brought in, which is around $3.5 trillion. Further, if you take $8 trillion and divide by 52 weeks in the year, you get around $154 billion of spending per week! And this is just the federal government. So, you can confiscate 100 percent of Jeff Bezos’ net worth, not just income, but everything the man owns, and it will only finance the US federal government for one full week! Yeah it does not add up and look who is in control of the education system – yep the government. These programs are outrageous, un-American, and unconstitutional. Yet none of that is going to stop them from trying to pass more legislation and spend trillions of dollars that we do not have – thus stealing it from future generations and robbing them of their prosperity and opportunities. This is all only going to get worse. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Inflation #Spending #Debt #Gold #Silver #EndTheFed #bananarepublic #FireCongress #Liberty #USA #Leadership #Revolution #Protests #Peace
Low interest rates are fueling much more than just housing and zombie corporations, but earlier today housing data came across the wires. The Case-Shiller 20-city composite home price index saw an 11.9 percent year-over-year increase in the month of February. This reading is the highest since 2014. With respect to the national home price index, the year-over-year increase was also at 12 percent. This is the highest reading since 2006. It is interesting to note that the time period of reference is just prior to the GFC when the housing market peaked.
The Kapital News has been mentioning how the current environment is likely going to have to contend with a triple whammy or trifecta of serious economic and financial issues. For one, the trade wars, supply disruptions, and fiscal policy measures are highly reminiscent of the causes of the Great Depression of the 1930s. Secondly, there is a fascination and outright obsession with big tech names, SPACS, and cryptocurrencies, where the crowd claims that these assets can only experience price appreciation. Thus mirroring the Dot-com era. And lastly, with residential real estate prices moving as they have been over the prior year and likely to continue in this manner for at least the remainder of this year, will generate data points not seen since the peak of the housing bubble in 2006, which led to the GFC. So, it should be highly evident that risks abound and that such price appreciation across the spectrum of asset classes is due in large part because of low interest rates, fiscal policies, and monetary policies. All of which cannot last forever, so it begs the question, when will it let up, and when it does, what will the fallout look like?
Not only are low interest rates fueling asset prices higher, they are also creating new zombie corporations, as well as continuing to prop up existing zombies. If market forces were allowed to prevail, as opposed to distortionary interventions via the government and central bank, then these firms would have gone out of business and/or restructured. This would have been a net-positive for the long-term health of the economy. Yet due to such monetary and fiscal policies, these poorly managed companies were given a life-line, and it came in the form of easy money and cheap credit via low interest rates. The existence of these firms will stunt future growth and prosperity because these firms will have to allocate a disproportionate amount of their cash flows to servicing debt as opposed to capital expenditures, investments, and hiring. This is at complete odds with one of the dual mandates of the Federal Reserve and that is achieving full employment. Well how can full employment be achieved if a significant portion of US firms are classified as zombies? This figure is now nearing 25 percent! This is a question that needs to be asked and answered.
Lastly, because the worlds of economics, politics, and social issues are always intertwined, there exists risks and opportunities within any environment. However, given the current climate, it is reasonable to assume, and recent geopolitical events would indicate that there are more risks than there are opportunities. It is simply not logical to believe that a global debt crisis can be managed or solved by increasing the amount of debt into the system. This faulty logic along with the subsequent policies that are implemented, give rise to a lot of social movements, and increase the likelihood of global conflict. This conflict can be internal to countries or it can be between and amongst nations that can turn into war. Revolutions are fought on empty stomachs. And when one accounts for increasing food prices, commodities, and security threats, coupled with pandemic lockdowns, lack of future opportunities, and many people being priced out of various markets, then it is rather easy to connect the dots. The global system is extremely fragile right now on many fronts, and thus it will only take the slightest of internal or external shock(s) to bring it all down. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #FoodPrices #Protests #Revolution #USA #Liberty #EndTheFed #Leadership #bananarepublic #FireCongress #Gold #Silver #Commodities #Peace
Global protests and riots were occurring throughout 2019, which must not be forgotten. These movements were emblematic of a weakening world economy prior to the pandemic. The subsequent lockdowns and restrictions only made things worse. Yet due to the restrictions, these protests were muted. However, given the responses by federal governments and central banks, The Kapital News believes that the setting is ripe once again for such protests to take shape.
The country of Chile was on the list of countries protesting in 2019 and given the current environment, copper miners in the country are on strike. The people want the ability to tap into their pensions to act as a bridge to help support themselves and their families financially until conditions improve. They have done this twice before already and were looking for the opportunity to do so for a third time. However, the President of the country declined – thus the strikes. Chile is a major copper producing country and world markets have already been contending with higher commodity prices and supply chain disruptions. This action will only serve to aggravate current conditions, which was witnessed earlier today with the price of copper reaching near $4.50 per pound. And despite one large price increase after the next in one commodity after the next, we are routinely told that there is no inflation. What a joke! And this is one of the many reasons as to why protests will gain momentum.
Another source for youth frustration is in the real estate market. Take South Korea for example where young people in their 20s and 30s are all but priced out of the market and rents keep climbing higher as well. In the capital city of Seoul, apartment prices have risen nearly 58 percent since President Moon has been in office. The young people have recently shown their frustration in political elections, which led to the government implementing a program to cap rent increases at 5 percent. The Kapital News is against rent controls as they tend to backfire, as the caps are usually below where market forces would naturally clear, thus generating shortages, which in turn leads to higher prices. Nonetheless, several politicians are suspected to have front-run the legislation with respect to their investment properties. Meaning that before the 5 percent cap increase went into effect, these politicians increased their rents by as much as 14 percent! So much for looking out for their constituents. It appears that politicians are politicians whichever country you may find yourself.
Such actions undertaken prior to the pandemic, currently, and what will likely transpire in the future, will all serve as fuel to the growing fire that is youth revolts. Young people know all too well that it is they who will be paying the bulk of the bill for all of these asinine and criminal policies. The price will be paid in a number of ways of such as, increased direct taxation, higher rates of inflation, lower living standards than previous generations, fewer opportunities, and less prosperity. All of the actions undertaken today are simply to give the false façade of economic strength and vitality. Printing and spending trillions of dollars will buy you time, and make things look good for a short period of time, but when the bill comes due as it always does, it will be extremely expensive. Younger generations will nearly be forced to demand major structural changes if they are to have a future for themselves and their families. This is just getting underway and will likely be a decades long phenomena before the dust settles. Let us pray that these movements are as peaceful as possible and that equal justice under law and free-market capitalism are adopted. If so, the best days may be ahead of us, if not, then more of the same under a different name. Youth revolts are coming. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Protests #Peace #Inflation #FoodPrices #Commodities #Gold #Silver #Liberty #Leadership #EndTheFed #bananarepublic #FireCongress #Revolution #USA
A discussion about the events that unfolded this week and a very busy week it was. The conclusion of the Derek Chauvin trial, the economic data that came across the wires, and the geopolitical tensions that are rising in all corners of the globe fill our time for today. The intersection of economics, politics, and social issues are coming to a boil globally and the end result is not likely going to be a pretty picture. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Justice #Truth #Inflation #Gold #Silver #Jobs #War #Peace #Liberty #Leadership #USA #bananarepublic #EndTheFed #FireCongress
For the second consecutive week, initial jobless claims came in under 600k to stand at 547,000 for the week ending 17 April. While this figure is below that which was witnessed during the depths of GFC, we cannot forget the Pandemic Unemployment Assistance program that was created by the Federal government. This figure came in at 133,319, which means in aggregate, weekly claims were 680,000 – still higher than the GFC, yet trending lower, and that is good news. The prior week was revised higher by 10k to now stand at 586,000. In aggregate, across all forms of unemployment insurance, some 17.4 million Americans continue to claim benefits. This gives us a de facto unemployment rate of 12.5 percent, which is more than double the official unemployment rate of 6.0 percent.
The Federal Reserve’s balance sheet hit another all-time high and now stands at $7.82 trillion, which was a week-over-week increase of $27 billion. The Fed remains committed to their QE program of purchasing at least $120 billion of US Treasuries and mortgage-backed securities per month. This will take their balance sheet to at least $8.5 trillion by the end of the year, and The Kapital News is projecting that it will be closer to $10 trillion! For context, their balance sheet was just shy of $900 billion during the GFC. This is nearly a 10x increase in just a little over a decade! And do recall that when QE was announced that it was going to be temporary. This program is a couple of years away from applying for a driver’s license – so much for short-lived. It is important to note this because current Fed members are stating that inflation will only be transitory. The same people who said QE would be temporary are saying the same about inflation – see where we are going with this?
As The Kapital News has been mentioning since we have been online starting in 2019, is to get ready for tax hikes. We were running trillion dollar deficits prior to the pandemic, the subsequent lockdowns, and massive spending programs. It is basic math at the end of the day. We are all for cutting taxes, in fact, we want to see the income tax abolished, along with the Federal Reserve. However, if policymakers are going to cut taxes, then they need to cut spending as well. Only solving for half of the equation is asking for trouble – i.e. large deficits. These deficits bring about the hidden tax of inflation, and now because of the size of our deficits, tax increases are coming. It was only a matter of time, but now the Biden Administration is discussing raising taxes. Their first target is capital gains taxes in a show to target the rich, but make no mistake that they will also be broad-based when the dust settles. We are dealing with a $28.2 trillion national debt. We are on the path to spend nearly $8 trillion this year alone, which gives us a deficit of over $4 trillion! Our deficit alone is higher than all of the tax revenue that is brought in annually, which is currently around $3.5 trillion! How sustainable do you think this is? And unfortunately, there is not much to show for it. So it is another double whammy as usual as we have to contend with the inflation tax and an increase to direct taxation. It should also be stressed that confiscating the entire net worth of the country’s wealthiest individuals would only cover expenses for several months. Point being, we are in a lot of trouble and attempting to tax and spend our way out of it, is not the solution. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Taxes #Debt #Spending #Gold #Silver #USA #Bailouts #Liberty #Leadership #Justice #Truth #EndTheFed #bananarepublic #FireCongress
Only a day after closing arguments in the case of Derek Chauvin, the jury rendered their verdict. Guilty on all three charges that were levied against Derek Chauvin. His sentencing hearing will be held about eight weeks from now. The Kapital News is an advocate for justice, peace, truth, and prosperity. If the jury made their decision based on the totality of the evidence, then their decision is to be respected. However, if their decision was rendered due to fear as to what may happen to themselves personally and/or to their city by mob actions should they have acquitted, then this would be a major problem. Of course, if the latter should be the case, we will likely never hear about it.
Nonetheless, The Kapital News is quite concerned with the growing trend of mob rule, media biases, and political grandstanding. True, these things are not new, but the 24/7 news cycle combined with the usage of social media, sets the stage for a lot of misinformation and disinformation. And none of this serves to promote and build a better Republic – quite the contrary. Our justice system is far from perfect and most definitely has many flaws. However, the pillars of our justice system are rooted in a trial by jury, due process, being innocent until proven guilty, right against self-incrimination, burden of proof lying with the State, and an appeals process. These are good things to have and are foundational to building a sound justice system. Yet if the media, politicians, and the general public are already rendering verdicts in the court of public opinion, and continuing to push their narrative despite the totality of evidence that is released throughout a trial, then this country is in a lot of trouble. We imagine many members of our audience would march peacefully to bring changes to the justice system to make it better. But if we should succumb to mob rule, then the foundation upon which our Republic was built, will experience further erosion. Stay diversified, stay vigilant, and stay with The Kapital News. #GeorgeFloyd #DerekChauvinTrial #Peace #NoJusticeNoPeace #Protests #Justice #Truth #USA #Liberty #Economy #FireCongress
