There is no question that the world faces and is experiencing a crisis in credibility. It is one of the reasons why there are global protests that have been continuing for months and we also believe it is one of the reasons as to why we have been experiencing this most recent pull-back in global equities.
People the world over are sick and tired of being sick and tired and rightly so. And also rightly so, they are protesting and taking a stand for themselves, their families, and their respective countries. We have asked here on multiple occasions – what’s the truth?, who to believe? These questions exist and will persist because we are in the midst of a crisis of credibility. Add to the equation COVID19 and one can really start to appreciate the fact that many governments around the world want to keep the people in the dark and may be only releasing data that makes that respective government look good – but it’s not the truth.
This virus is now in over 30 countries. The number of countries and cases is likely to continue to increase for the foreseeable future. What makes a lot of this difficult to see is that the virus and subsequent cases grows in an exponential manner. This means it’s very slow in the initial stages – maybe only a handful of cases over the course of a couple/few weeks, and then all of a sudden there’s a massive uptick, which tends to be followed by a doubling every so many days thereafter. It is this exponential or explosive growth that is hard for the human mind to see, comprehend, and forecast. Nonetheless, this has been our reality going on for three months now – with no end in sight. We hope and pray that COVID19 is fully contained and stopped and that those who have the virus make full recoveries. Unfortunately, at least for the time being, we know this is not likely to be the outcome.
There is much uncertainty. COVID19 is a supply shock. COVID19 is a demand shock. Monetary stimulus is not a panacea. Fiscal stimulus is not a panacea. Hope is not a strategy. And the world is awash in debt and credit. This will not end well, but the cleansing in the markets is necessary. The question remains, is this a standard correction in a bull market, or has the everything bubble begun its burst? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Coronavirus #Recession #Gold #Silver #Oil #Bonds #Politics #EndTheFed #Peace #Truth
Are we in the midst of or heading towards a US dollar doom loop? What this would imply is that the USD is likely to appreciate against a basket of currencies for a considerable amount of time. Reasons for this possibility include the global economic slowdown, which puts downward pressure on many commodity prices, and with current geopolitical risks and the COVID19 – there is a flight to safety underway in the USD. Also, and quite importantly, is the amount of global USD denominated debt that exists and is coming due over the next few years – especially in emerging market economies. Couple this with lower commodity prices, which is what primarily sustains emerging markets, and the amount of debt they have coming due, and it’s easy to see the writing on the wall.
These very emerging market economies are hit with a double, if not triple whammy. Slowing growth generally speaking. Lower commodity prices. And a stronger USD. All of this combined means that these very countries are going to need to expend even more of their domestic currencies in order to buy USD so that they can pay back their debt holders. Get the picture? When will this end is anybody’s guess, but it’s likely to continue to for the foreseeable future considering the massive amount of global debt on every balance sheet imaginable – household, corporate, government, and central bank. This is quite figuratively – the everything bubble.
This is why we are seeing many markets that typically move opposite each other, moving in tandem. Such as USD and gold price strength. Their is also a large divergence between the US stock market and US government debt. The stock market is painting a picture of strong and vibrant growth ahead and the bond market is forecasting slower growth for years ahead. They cannot both be right. Time will tell – as it usually does, but a US Dollar doom loop is in progress and it’s effects will be felt globally. Stay diversified, stay vigilant, and stay with The Kapital News. #USDollar #Oil #Recession #Economy #EndTheFed #Coronavirus
Today we discuss the Democratic debate in Las Vegas that was held this evening prior to the Nevada caucuses and we also chat about the global markets. It has been a consistent theme for the last so many days and weeks that the global markets continue their ascent despite further deterioration of fundamental economic data. Further still, on a technical basis, stocks and other financial assets are greatly disconnected from their underlying technical levels as well. Something is greatly amiss. If it was a true panacea – that central bank liquidity injections cured all ailments, then why has it taken mankind so long to figure this out? Perhaps it’s because monetary injections and intervention is NOT a cure-all. In fact, this is setting the stage for what may become the largest financial and economic crises the world has ever seen. Can the irrationality continue? Of course it can. But the longer the boom – the bigger the bust. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Stocks #DemsDebate #Recession #EndTheFed #Politics #USA #Coronavirus
Potential pandemics, economic disconnects on a global scale, recent natural disasters, wars and potential wars on multiple continents – it makes no difference. Global stock markets “must” keep moving higher. Does this sound like price discovery and free-market capitalism? It’s not even close! Now we have several central banks discussing the coronavirus – Covid19, as a cause for concern and something that needs to be monitored. This is correct, but what are central bankers to do? Are they virologists, microbiologists, or epidemiologists? NO! So what is money printing going to accomplish? Oh, that’s right – higher equity prices. Until of course that no longer does the trick and then they’re out of bullets. The day of reckoning will come – it always does. Yet, the further they kick this can down the road, the bigger the problem and subsequent crisis will be. So many people will be affected and most will never see it coming and they will have little if anything to protect themselves. This podcast talks about finance and economics, but there are more important things out there than money, and when the music stops, so many people are going to be hurt in so many ways – it will be a true travesty of the human experiment. We must do better than this. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #EndTheFed #Politics #Stocks #Invest #Oil #Bonds #USDollar
The President was acquitted today in the US Senate on both Articles of Impeachment. It was almost entirely along party lines, with the exception of Senator Mitt Romney of Utah voting “guilty” on the first charge of an Abuse of Power. Nevertheless the President has been acquitted and will now feel entirely vindicated and emboldened to do as he pleases. After all, he has stated that Article II of the US Constitution gives him the power to do whatever he wants – Article II does NOT grant the President this type of authority. In fact, the Constitution was drafted to protect the people from someone having such powers. So, what next? Time will tell, but we’re about to enter the 2020 Presidential campaign in full-swing. The President is supposed to make a formal statement on his acquittal tomorrow at 12pm EST. We hope it’s a solemn message and one that attempts to unite the country – but we’re not holding our breath. Stay diversified, stay vigilant, and stay with The Kapital News. #Impeachment #Truth #Justice #Peace #Economy #Politics #Congress #Constitution #Republic #Recession
What a weekend folks! Where do we even begin? The attacks on Saudi Arabian oil processing facilities has halved their production capabilities – sending ripples across global markets. At the time of this podcast, oil prices are up 10%. Secretary of State, Mike Pompeo, has already officially stated that he is blaming the Iranians. The Iranians deny the allegations, but have stated that if all US sanctions are lifted, that they’ll adopt a policy of “maximum production” to make up for the loss in output from Saudi Arabia. Meanwhile, President Trump claimed on twitter that we are “locked and loaded” should it be proven that Iran is the culprit. So there is a slight disconnect between the President and his Secretary of State. New sexual assault allegations levied against Supreme Court Justice Brett Kavanaugh are sure to bring even more divisiveness to Washington DC. Purdue Pharma, the maker of OxyContin, the powerful pain-killer, has filed for bankruptcy – could this begin a wave of more bankruptcies? However, their decline has been on the back of recent lawsuits that have awarded billions of dollars to victims. Economic data out of China has come in weaker across the board – industrial production, retail sales, and fixed asset investment. Also, their might be a strike in the works between the UAW and General Motors. This would be the first strike in 12 years – shortly before the onset of the Great Recession. Major central banks are scheduled to meet this week – the Fed, BOJ, BOE, and PBOC to determine monetary policy or provide guidance as to their future decisions. With the recent attacks in the Middle East coupled with higher oil prices, might central banks become concerned with inflation? Or will they use the attacks as another excuse to cite geopolitical risk(s) as a reason to continue cutting interest rates? Lastly, and perhaps a positive note – North Korean leader, Kim Jong-Un has sent a letter to President Trump inviting him to Pyongyang. As long as talks are continuing, then it’s less likely that both nations will be at war – this is a good thing and let us pray for peace and prosperity. These stories will continue for several weeks. Stay diversified, stay vigilant, and stay with The Kapital News. #Peace #NoWar #Recession #Economy #Politics #Oil #Invest
This week witnessed a couple of jobs reports that stand in contradiction. On the one hand there is the ADP payrolls report that showed an increase in employment of 102,000 for the month of June. In contrast, the numbers from the Bureau of Labor Statistics (BLS), reported an increase of 224,000 jobs. Quite the discrepancy. Furthermore, if looking at the data in both reports – ADP claimed a loss of 18,000 jobs in the construction industry, while the BLS report noted an 21,000 job increase. How to make heads or tails of these numbers when rational arguments could be made for either number? In addition, the markets sold off on this surprise news of 224,000 jobs because it reduced the likelihood that the Federal Reserve will cut interest rates at the end of July. This appears to be the old case of, “good news is bad news.” We’ve seen this song and dance before. The Fed will also have a look at Q2 GDP figures and earnings reports and forward guidance from many companies that are set to announce their Q2 financial results, amongst other data points that may sway their month-end monetary decision. Further yet, we have President Trump continuing to attack the Fed and calling for them to follow China, Japan, and Europe in lowering interest rates. Despite the fact that the President has stated that the United States will never be a socialist nation, then one wonders why he is calling for the US to follow the policies of Communist China, stagnant Japan, and the socialists of Europe? It doesn’t make much sense to The Kapital News, but this is the world in we find ourselves. July is set to be an interesting month.
Ep. 21B - A Chinese Paper Tiger + Where's the Beef on US/China Trade?
/
RSS Feed
Share
Link
Embed
The Chinese government is out with its 2019 projections and they point to a continuation of slower growth. Is there something deeper and structural at the heart of this, which could reverberate globally, or just the run of the mill economic slowdown?
