Tag: PBOC

Ep. 611 – Food Prices, Hunger, & Jobless Claims

The Kapital News
The Kapital News
Ep. 611 - Food Prices, Hunger, & Jobless Claims
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#FoodPrices #Inflation #Stagflation #Protests #Revolutions #Commodities #Debt #USA #Gold #Silver #HousingPrices

Ep. 596 – Bitcoin or Bitcon?

The Kapital News
The Kapital News
Ep. 596 - Bitcoin or Bitcon?
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The price of Bitcoin is known to be volatile with large swings to the upside and the downside. Currently, it is swinging to the downside where it is trading at $39,300 per coin. Not long ago it was trading around $65,000 per coin, which translates into a loss of over 40 percent in a very short timespan. This type of volatility does not lend itself well for those who advocate that Bitcoin is a store of value. In fact, with such volatility it is quite the opposite. It is a speculative play whereby people are hoping to catch their lottery ticket that is going to give them eternal financial freedom. Markets just simply do not work this way. Some of the recent downside volatility has been a direct result of comments made by Tesla CEO, Elon Musk, and statements from several Chinese regulatory agencies.

Mr. Musk, through Tesla, purchased around $1.5 billion worth of Bitcoin earlier this year. As one would imagine, it caught the attention of the media and the markets and Bitcoin would eventually go on to make new all-time highs. Yet after only a few shorts months of being on the balance sheet of Tesla, Musk tweets out the flaws that pertain to Bitcoin, namely the energy consumption that is used to mine Bitcoin and to use it for transactions. This was a rather shocking statement, only because these facts have been well-known for years and Musk is supposed to be all about the “green” economy. Yet here he was supporting Bitcoin, at least temporarily, despite the inefficient nature of Bitcoin and the energy usage associated with it. Was this a pump and dump scheme? Because it is virtually impossible that Musk did not know those facts prior to adding it to Tesla’s financials.

Another issue to contend with are the Chinese regulators that are prohibiting institutions and their citizens of engaging with cryptocurrencies. Now it is interesting to note that China, along with many other countries and their respective central banks are planning, building, or testing their own versions of central bank digital currencies (CBDCs). So it should come as no surprise that governments want to be the only game in town. After all, they can tax, fine, and imprison you if you do not comply with their orders. Bitcoin and other cryptos, or any private institution or individual lacks that power. It is therefore likely that more governments will start to come out and limit, restrict, or outright ban the use of cryptos other than their own. This speculative mania will without question be remembered in the history books, especially after it all comes tumbling down. Stay diversified, stay vigilant, and stay with The Kapital News. #Bitcoin #Inflation #Gold #Silver #Protests #Liberty #USA #Leadership #Economy #bananarepublic #EndTheFed #Revolution #FireCongress #Debt

Ep. 539 – Jobless Claims Keep Rising

The Kapital News
The Kapital News
Ep. 539 - Jobless Claims Keep Rising
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The markets were expecting initial jobless claims to come in around 773,000 for the week ending 13 February. However, reality bites as the Department of Labor reported a figure of 861,000 on a seasonally adjusted basis. To add insult to injury, last week’s figure was revised upward by 55,000 taking the total from 793,000 to 848,000. We are nearing the one year anniversary of pandemic lockdowns and restrictions and these figures remain well above the claims that were recorded during the depths of the GFC. This is a travesty. With respect to all unemployment insurance programs, some 18.3 million Americans continue to claim some form of benefit. This gives us a de facto unemployment rate near 13 percent. The official unemployment rate is at 6.3 percent. As we near the mid-point of Q1, we should be mindful that benefit and moratorium extensions are set to expire at the end of March. If Congress does not pass further measures, then serious ramifications will transpire. If further spending is passed, then serious ramifications will transpire. The Kapital News does not want Congress and/or the Federal Reserve to spend, borrow, or print more money and throw it into the system. There is no easy solution. But continuing with the same policies that brought us to this current environment is only asking for trouble.

The Federal Reserve’s balance sheet expanded by more than $100 billion week-over-week and now sits at an all-time high at $7.55 trillion. The Fed has stated on numerous occasions that they remain ready to continue to support the economy and markets for as long as necessary. The Fed remains committed to their quantitative easing (QE), program whereby they will expand their balance sheet by $120 billion per month. They will do so by purchasing US Treasuries and mortgage-backed securities. This alone will take the balance sheet to around $8.5 trillion. If Congress should pass more spending measures, then this figure could very well surpass $10 trillion by the end of 2021. For context, this will be about 50 percent of US GDP! Can you say banana republic? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #Commodities #USA #Liberty #Recession #Depression #Leadership #bananarepublic #EndTheFed #Revolution #Bailouts #Fraud #Pandemic #FireCongress

Monetary Measures – Part I

Link to video:

Monetary Measures – Part I

In this presentation we take the time to briefly go over a few monetary measures that are discussed weekly on The Kapital News podcast. We are focusing on the Federal Reserve’s Balance Sheet, M1, and M2 Money Stock. This is a basic introduction and overview of these metrics and simply want to inform the audience as to their historical trends, where we are today, and where we are likely headed. Subsequent presentations will go into greater detail and will look at these measures against market performance as well. #Economy #FederalReserve #Inflation #Gold #Silver #Commodities

Ep. 340 – Stage Set for Inflation?

The Kapital News
The Kapital News
Ep. 340 - Stage Set for Inflation?
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With all of the money printing and fiscal “stimulus” measures being undertaken around the world, when, oh, when, will inflation rear it’s ugly little head? Now, depending on the sector of the economy or a particular good and/or service, there may already be considerable inflation. However, when the United States has amassed over $23T in debt and rising in trillion dollar increments, while heading into a recession, if not depression, then how can this debt be paid off? Possibly through inflation or dare we even say, hyperinflation. Don’t say that it cannot happen, because if history is any guide, then that is almost certain to happen some time in the not too distant future. This will decimate any remaining purchasing power that people have. Savings will be destroyed. Many people who will be out of work due to the recession and/or depression will now have to also deal with ever-higher costs of living. Of course, much of this was predictable because what natural conclusion would follow generations of ever-increasing credit expansions, deficits, and debts on the household, corporate, governmental, and central bank balance sheet? Well we’re witnessing these negative effects coming together all at once and sad to say, we’re just getting started.

So, in our analysis, yes, the stage for inflation if not hyperinflation has been set. It’s a process and it will take time as there are still the effects of deflation hitting global markets because the demand side of the equation has been all but decimated. On the other side when this comes to pass, with all of the monetary and fiscal measures that have been undertaken and all of the debts and unfunded liabilities that remain on the books – a serious question will arise. How is this all to be paid for? Well economic growth is not going to do it because there’s not going to be enough growth to put a dent into the size of these debts – especially not during the years of a recession/depression. Therefore, a logical conclusion is to say it will be “paid” for through inflation/hyperinflation. Again, say good bye to our Constitutional Republic and say hello to our new banana republic. How far we have fallen. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Bailouts #Depression #Deficits #USA #Politics #War #Peace #Truth #Justice #EndTheFed #Gold #Oil

Ep. 338 – The Great Unraveling

The Kapital News
The Kapital News
Ep. 338 - The Great Unraveling
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We don’t know what the historians will call this time in which we currently find ourselves, but if we may, we would suggest they call it “The Great Unraveling.” A recession in the United States as well as most of the globe is all but certain, especially on a technical level. However, given the fact that the global economy was already slowing prior to the onset of COVID19 and the oil price war, it is likely that the world is headed towards a depression. We do not say this lightly. This is a very serious and dire situation as this will hurt millions if not billions of people on a number of fronts. The world needs leadership. And the world needs the truth. And unfortunately, the world is in short supply of both.

Here in the United States it’s not a question of bailouts, fiscal and monetary stimulus, it’s simply a question of how much is all of this going to cost? One industry after the next is lining up in Washington, DC seeking “assistance.” On the fiscal side, every time it’s discussed, the price tag goes higher and higher. From $850 billion to $1.2 trillion to $1.3 trillion, and we don’t know if we’re finished. If you think this is a lot of money – it is. But it doesn’t hold a candle to what the central banks are doing. The Federal Reserve has been pumping hundred of billions into the repo market. They’ve cut rates by 150bps over the last two weeks. They’ve made tapping the discount window more accommodative. And they’ve reduced the reserve requirements for banks with respect to cash on hand against deposits. Oh, and they’re still not done. Why does this continue? Are these people completely unaware that the reason we’re in The Great Unraveling is because of these very programs and actions that have been at the helm for over a decade? Again, there is no leadership to say that enough is enough. Or that these policies are not the cure, but rather the disease.

The funding of all of this, especially the bailouts and fiscal measures will be financed through debt. This means that the US Treasury is going to have to issue US Treasuries across the curve. This additional supply coming to the market is likely to depress bond prices, thus increasing yields (or borrowing costs). In addition, given the wave of global debt coming due, many countries around the world, especially emerging markets are selling their US Treasury holdings because they need US Dollars to satisfy their dollar denominated debts. This is also occurring at a time in the Foreign Exchange markets, where many (virtually all) of these currencies have been greatly weakened against the US Dollar. This then puts additional pressure on these same countries because it now takes more of their domestic currencies to be swapped for dollars. This is also coupled during a time of a global slowdown where prices for commodities are at decade(s) if not all-time lows. Many of these emerging economies are highly dependent on commodities for the economic survival. So it’s easily evident that much of the world is facing single, double, triple, and even quadruple whammies. This is a vicious downward spiral that will not find a bottom for some time and it will likely not end until this bottom is found. Central authorities are rendered impotent in such an environment despite their intentions and actions. Markets must be allowed to clear.

The people in the United States of America should be ashamed of what we have allowed to happen in and to our country. This is not the Constitutional Republic of Washington, Jefferson, Adams, and Franklin. Nor is this a country of free-market capitalism – because clearly what exists in this country is NOT free-market capitalism. This is the time for leadership, this is the time for the truth, this is the time to restore our country to our founding principles, and this is the time to place our faith and confidence in each other. Otherwise, this country will truly cease to be a country of, by, and for the people. Stay safe. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #TheGreatUnraveling #Debt #USA #Gold #Bonds #Oil #Truth #Peace #Bailouts #EndTheFed #1776

Ep. 337 – Bailout Nation + Black Monday Jr

The Kapital News
The Kapital News
Ep. 337 - Bailout Nation + Black Monday Jr
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Another day and another historic day in the markets. A sell-off the likes which has not been seen since Black Monday of October 1987. This of course was also on the heels of the Federal Reserve’s emergency meeting and subsequent 100bps rate cut, expansion of QE, lowering the rates for the discount window, and the basic removal of the reserve requirement. So despite all of this, the major indexes were all down 12-14%! Can anyone say that the Fed is out of ammo? This has been the biggest risk that we have been warning about here at The Kapital News since we’ve been online – once the markets no longer believe in the efficacy of monetary policy then what tools remain to boost the markets? And we’ve always cautioned that if and when this day came to pass, that this would be the end of the bull market and the start of something we may have never witnessed before. Well, behold, a massive 20-30% sell-off in only a few weeks’ time. And remember and be warned that we have still yet to see credit/bond downgrades and/or bankruptcies – both of which are virtually inevitable given the COVID19 situation, the oil price war, and the massive amounts of debt in existence.

In addition, we now have the airline industry lining up at the government trough requesting a bailout of at least $50 billion. Are you kidding us here?! Tax cuts, deregulation, billions of people now taking to air travel, etc, etc… and they need bailed out? Where did all of their cashflows go? Oh, that’s right, it went to share buybacks so they could financially and artificially engineer their stock prices higher – which happened – which then led to handsome compensation packages for the executives. Now we, the US taxpayer have to bail them out?! Today during a COVID19 press conference, the President commented on how the virus is not the fault of the airlines and thus the government needs to assist the industry. While the President is correct that the airlines are not responsible for the virus, they are responsible for their cashflow management! So again, why does the taxpayer need to bail them out? Let them file bankruptcy, restructure, etc… Let them sell their assets for pennies on the dollar to someone who knows how to manage an airline. No more bailouts! And we’re just getting started. Boeing is lining up. As is the cruise line industry. What about the hotel, casino, restaurant, entertainment, energy sectors, and others? Bailouts for all?! This is beyond ridiculous and I hope the American people wake up to this fraud.

When and where will this market find its bottom? We have no idea. But if history, math, economics, financial analysis, and human behavior have anything to say, then we likely have another leg or two lower to go. And the subsequent economic recovery is also likely to take years to find its footing. Therefore, we hope during this massive transition that the correct and prudent policies are adopted and implemented. This of course would be the restoration of our Constitutional Republic and a return to free-market capitalism. We already have the blueprints. We just need the will power, work ethic, and leadership to build our economy on a solid foundation. We can do this and we must do this, if our future is to be brighter than our past. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Invest #Bonds #Gold #Debt #Bailouts #Stocks #Politics #USA #Oil #EndTheFed

Ep. 336 – Central Banks Panic!

The Kapital News
The Kapital News
Ep. 336 - Central Banks Panic!
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In a second emergency meeting in as little as two weeks, the Federal Reserve has met, and decided to cut interest rates by 100bps. This now takes the Federal Funds Rate down to a range of 0.0 – 0.25%. The last time rates were this low was during the depths of the Great Financial Crisis in 2008. Recall, it was just a couple of weeks ago that the Fed cut rates by 50bps during that emergency meeting. So in very short order, the Fed has cut rates by 150bps! The next leg down, by definition would take us into negative territory on a nominal basis. On a real basis, the US has been in negative territory for quite awhile.

On the back of this information, we believed their were only two outcomes for how markets would respond. First, this decision could be seen as a panic move because the FOMC was scheduled to meet this week and announce their decision on Wednesday. However, they instead held this meeting this weekend and announced their decision this afternoon. So, the question becomes, why couldn’t the Fed wait another 48-72 hours to announce their decision – panic perhaps? Or option two would be, the crack addicts got their fix from their dealer a few days earlier, thus setting the stage for stocks to rally. Well, it appears the former. At least for now as the US futures market has hit limit down once again – the 5th time in the last six sessions, which means the circuit breakers have kicked in because stock futures have fallen by 5% and thus trading has been halted. Despite the massive rally on Friday – should the futures market hold, then half of Friday’s gains will be eliminated if not more. But not much surprises us anymore.

On the COVID19 front as well as economic front, country after country is making the decision to close their borders and/or make stricter guidelines surrounding travel in and out of their respective countries. This is in effect a global quarantine. The economic shock from both the supply side and demand side cannot be remedied by monetary or fiscal stimulus. These efforts to be undertaken by monetary and governmental authorities will serve only as mere attempts at looking like they are in charge – as if there is some kind of leadership. After a decade of deranged and fraudulent monetary policies, coupled with asinine fiscal measures, out of control corporate debt, and over levered consumers, the debt and credit chickens are coming home to roost. What COVID19 did was that is served as the pin that pricked the out of control global debt bubble. On top of this, don’t forget about the oil price war and all of the other economic data that has been pointing to a global slowdown prior to both COVID19 and the oil price wars.

We are only witnessing the tip of the iceberg, which is why central authorities are panicking. We have yet to see any cascading effect with respect to bankruptcies, let alone any bankruptcy of a major corporation. This outcome is unfortunately likely because of the size and duration of this supply and demand shock, coupled with the massive amounts of debt. This is a double, triple, maybe even a quadruple whammy across various sectors the world over. This massive unraveling will not end well nor will it end quickly. People must understand the root cause of this if we are ever to put into place a solid foundation on which to build a lasting economy and society. Otherwise, we’ll continue with the same old antics, on the same old foundation of sand. We can and must do better. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #COVID19 #EndTheFed #Truth #Justice #Peace #Politics #USA #Coronavirus

Ep. 335 – Birth of a Bear Market

The Kapital News
The Kapital News
Ep. 335 - Birth of a Bear Market
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Well the major indexes finally entered that closely watched 20% decline from an all-time-high constituting a bear market. It was quite the run in terms of the bull market, which started in early 2009. But like every party, they all must come to an end. However, the rapidity of this decline is nothing short of historic. It’s always possible that there can be a bounce back and perhaps even a sizeable one – but we believe the markets have finally caught up with the economic reality of the world. Many major global indexes have given back years of stock market gains. The UK for instance has given back 8 years of gains – and did so in the course of one month! What this confirms for us is the fact that the bull market from 2009 was built on a foundation of sand. So, what we’re witnessing is simply economic gravity taking root of stock markets that were highly overvalued. It’s ok to be “steady as she goes.” We don’t need these massive melt-ups, only to be followed by their massive melt-downs. This does serious damage to millions of people as most are not informed of the topics we discuss here at The Kapital News. This is a lack of leadership from our elected officials and the members of the media for not providing the full-picture.

Millions of Americans are set to retire in waves over the coming years. Their portfolios just lost 20-30%. What do they do now? These are the real questions facing real people. And, oh, despite this recent sell-off, we’ve still yet to see any major corporation file for bankruptcy or even be downgraded to junk status – just wait until this happens and watch how the markets respond. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Invest #Gold #Silver #Bonds #USD #Politics #COVID19 #USA

Ep. 333 – The War for Oil

The Kapital News
The Kapital News
Ep. 333 - The War for Oil
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Lots and lots of volatility in the markets amid much uncertainty. Take into consideration debt levels, monetary and fiscal measures, COVID19 and that’s enough to cause some serious concerns. Now add on top of that a price war for oil and you really start to have some problems. Whether this is a true spat between Russia and Saudi Arabia or some sort of backroom deal between the two nations to attack US oil and gas producers, we will likely never know. However, regardless as to which is the case, the same outcome holds true – oil prices plunged, they’re likely to remain lower for longer, and this has serious negative consequences for US producers.

The world was already awash in oil and gas and now with Saudi Arabia pledging to produce even more, well prices will just go that much lower. Why? Well for one, global demand has been weak, remains weak, and will continue to be so for the foreseeable future. This was the case even before COVID19. So add all of these things together and you have this perfect storm of weakening global demand and a sizeable surge in supply creating this plunge in prices. With the amount of debt that exists on the balance sheets of many US oil and gas producers, especially the marginal, small, and mid-sized producers, we should expect a decent amount of bankruptcies. In the very least, we will witness a reduction in capex and hours worked, which will likely then lead to sizeable layoffs. And a lot of this stems from poor fiscal and monetary policies, but we digress.

Another key point to note is in relation to global protests and the countries where many of them have taken root. It just so happens to coincide with a lot of oil and gas producing states! So add to the list less revenue for nations’ coffers, which means less money for social programs, which means more outrage from people who are already outraged – get the picture? This war for oil is going to get much worse before it gets better. And this will be true on several fronts – economic, financial markets, commodity markets, government budgets, and social unrest. Don’t say we didn’t warn you. Stay diversified, stay vigilant, and stay with The Kapital News. #Oil #Economy #Recession #Russia #SaudiArabia #USA #Gold #Silver #Politics #COVID19