The official unemployment rate now stands at 6.0 percent according to the Bureau of Labor Statistics. The jobs reports was released last Friday, which is the standard schedule being that it was the first Friday of the month. Employment rose by some 916,000 jobs. The bulk no doubt is more of a reflection of lockdowns and restrictions being lifted as opposed to new economic and business growth. In short, it is people being called back to work. This is still a good thing generally speaking, however, The Kapital News has some serious concerns as it relates to the true economic damage that has been done, much of which is still hanging in the balance, and the fiscal and monetary policies that have solved nothing, but have filled a void for the time being. Economic growth is not generated via the printing press, but rather through savings, capital formation, investment, and productivity gains. Printed money is not a substitute for real economic growth and activity. These policies are extremely expensive, reckless, and dangerous.
Nonetheless, some of the biggest gains came from the leisure and hospitality sector, which put on a gain of 280,000. This sector was one of the hardest hit due to the pandemic and subsequent lockdowns and restrictions. It is fair to reason that such gains were witnessed last month since such restrictions have been lifted in part or in their entirety. Most other sectors also saw job gains. It is important to note that many of the macro data points with respect to the employment picture, were little changed from the previous month. This signals that structural unemployment and underemployment remains throughout the economy. This can of course reverse course to the positive, but until we see these numbers improve significantly, then it is a hard sell to say that this is a solid jobs report. There is a long way to go and their exists major headwinds. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #FoodPrices #Gold #Silver #Housing #Liberty #USA #Leadership #EndTheFed #bananarepublic #FireCongress #Protests
Volcanoes, floods, and printing presses, oh my! Just when you thought it was a relief to put 2020 in the rearview mirror, we now start to see that 2021 may end up in a similar fashion. Whether it is once in a millennia volcanic eruption (Iceland), or the worst flooding in 60 years (Australia), one thing is certain, nature is unpredictable and very powerful. It will not be a surprise to The Kapital News if nature should continue to throw us several curveballs throughout this year.
Onto the trillions! So you thought the Nobody CARES Act 3.0 that just passed with a price tag of $1.9 trillion was going to be the cherry on top, well guess again. The ink is barely dry on that spending bill and President Biden is allegedly about to propose further measures amounting to nearly $3 trillion. How many times have we said that they are just getting started? We know that we have lost count. It would be one thing to say that while it is reckless and irresponsible to spend like this, we could at least point to several major accomplishments that resulted from this spending – like infrastructure, better education results, improved health, less financial systemic risk, etc…However, we unfortunately cannot even do that. This continues to be one major bailout after the next with the taxpayer paying the bill. And the worst is yet to come in the form of higher inflation, lower living standards, and loss of opportunities. These trillions also have an impact on the housing market. The median US existing home price increased by 15.8 percent year-over-year and now stands at $313,000. People are simply being priced out of the market. The ensuing correction, just like its increase, will be epic.
Social unrest is unfortunately a near daily theme, but it is the reality of our time. The country of Turkey has been on our radar for months and has been discussed on occasion. Turkey is back in the news due to the recent firing of their central bank head. The nation is dealing with runaway inflation and recent actions undertaken by the central bank were attempting to contain it by increasing their benchmark interest rates. Apparently, President Erdogan was not too fond of this monetary maneuver and decided to oust the top banker. Markets did not like this action as Turkish stocks suffered their worst one day decline in eight years, as equities fell by nearly 10 percent. Furthermore, the Turkish Lira declined by over 9 percent. What makes Turkey an interesting situation is that they are a larger economy than say Lebanon or Venezuela, but that Turkey is also an important geopolitical player. Turkey is being wooed by both western and eastern nations, due to the size of their economy and geographical location. This is something to most definitely pay close attention to. As the economy weakens and is at the hands of a “strong man,” in President Erdogan, the environment is ripe for social unrest to occur. The weakest links of the global economy are breaking down and now those ripple effects are grabbing larger economies. This story and trend is likely to continue throughout this year and into 2022. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Protests #FoodPrices #USA #Turkey #China #Brazil #Liberty #Gold #Silver #Commodities #Revolution #Leadership #EndTheFed #bananarepublic #FireCongress
With the $1.9 trillion spending bill all but certain to pass through Congress this week and make it to President Biden’s desk, we wanted to take a moment to provide some context. It was only a little over a decade ago when we were in the midst of the Great Financial Crisis or GFC. It was here that Congress decided to pass the Troubled Asset Relief Program or TARP. It had a price tag of $700 billion. According to those who drafted the legislation and came up with the number, apparently this was large enough to save the US financial system, and thus the US economy. Fast-forward to where we are today, and just looking at a handful of spending measures that Congress has passed in one year’s time – it takes us to roughly $6.4 trillion! This is nearly 10x the amount of the TARP funds during the GFC, which was the worst financial and economic crisis since the Great Depression.
The $6.4 trillion figure comes from the Nobody CARES Act 1.0, which was around $2.2 trillion. The Nobody CARES Act 2.0, which was passed last December as the spending from 1.0 was coming to an end, cost another $900 billion. This was accompanied by a $1.4 trillion spending measure just to “keep the lights on,” as this was for ordinary government expenditures. And now finally, at least for now, we have the $1.9 trillion monstrosity. This gives us a total of $6.4 trillion. This is nearly two full years of federal government revenues! It is thus easy to understand why the country is running multi-trillion dollar deficits. And to place this into further perspective, any one of those aforementioned spending measures would be one of the top 20 economies in the world by GDP. The total of $6.4 trillion would be the third largest behind the US and China. And more than $1 trillion above the GDP of Japan!
To add insult to injury, the $1.4 trillion spending bill was only good for through Q1 2021, which means another round will have to be passed or the government may have to shut down. This also does not take into consideration any further spending with respect to infrastructure, which is needed, healthcare policies, environmental policies, or the like, which are likely to be brought up with Democrats in control of the White House and Congress. So one of the saddest things about all of this is that all of this money is being borrowed and printed into existence and then spent, but with very little to show for it. All of this spending could have rebuilt this country’s infrastructure 2x or 3x over. And you can use your imagination on all the other items that may have been improved with that kind of money…Of course none of this is free. The inflation that has thus been created and unleashed is now underway and the costs will be historic and devastating. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Debt #Markets #Spending #EndTheFed #bananarepublic #FireCongress #Jobs #Bailouts #Liberty #USA #Gold #Silver
A focus on the overnight trading session on Sunday evening as markets around the globe begin to open. What is of particular interest, is the price increase in WTI and Brent crude oil. Where WTI is trading at over $67 per barrel, levels not seen since 2018, and Brent is trading near $71 per barrel, levels not seen since 2019. Of course, the global economy was quite different only 18-24 months ago. There was no pandemic and there were greater numbers of people employed globally. Now, we are living in a pandemic world with lockdowns, restrictions, and millions unemployed. It would make sense in an environment of full or near full employment to see energy prices increasing. However, with so many people still without work, it becomes a little more of a head-scratcher. That is, when analyzing the energy market from a demand perspective. However, if looking through the lens of inflation and inflationary pressures, then it makes complete sense to see prices rising across the commodity spectrum – from energy, to industrial metals, to agricultural goods.
You see, there is no free lunch and there are consequences to printing trillions of dollars, euros, yen, yuan, et cetera globally. Now, once economies begin to re-open and restrictions are lifted, there is likely going to be a rush of people who want to go out and attempt to live as they were prior to the pandemic. This is understandable, yet this will contribute to the price increases, as inflationary pressures are met with demand for goods and services. And on the other side of the equation is supply. There remains supply chain disruptions, geopolitical risks, and production levels of OPEC+ that will likely contribute to energy prices remaining at elevated levels for the foreseeable future. This will squeeze corporate profit margins for small, mid, and large firms, and also squeeze the consumers’ balance sheet as well due to higher prices. As we stated last year, free was never so expensive! And we are about to find that out the hard way. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Inflation #Gold #Silver #USA #Liberty #EndTheFed #bananarepublic #FireCongress #Leadership
For the month of February, employment rose by 379,000 well higher than market expectations. The official unemployment rate now stands at 6.2 percent, little changed from January. Most of these gains were in the leisure and hospitality sectors. In fact, nearly 3/4 of the gains came from restaurant and bar workers. Of course it is tough to classify these jobs as “gains,” as they are more realistically just call backs from being laid off due to the pandemic restrictions. Such gains are likely unsustainable in this area because so many small businesses have closed for good. Therefore, the places of employment are no longer available to readily employ the millions that remain out of work. Furthermore, those bars and restaurants that remain open will gain some market share. However, they will likely remain hesitant to expand their operations due to the uncertainties that exist, as well as limited access to capital to finance such expansions. Also, as commodity prices continue to rise, it is likely that dining out will become more expensive as well. There is no free lunch, even with all of the money printing. Especially because of the money printing. Revisions for the months of December and January combined, result in an additional 38,000 jobs than was previously reported.
In some other news, Q4 2020 data for productivity shows a decline of 4.2 percent, and unit labor costs increased by 6 percent (annual rates). This is the exact opposite of what we want to witness. However, with people not working, then how is productivity to truly increase? This becomes a double whammy of lower productivity and higher costs. If we had higher levels of productivity, then this would likely result in costs dropping. The US trade deficit widened in January. And net exports of goods and services hit a near record low of -$804 billion. The only reading worse than this was prior to the GFC, which stood at -$805 billion. The US has to contend with a very serious problem with respect to its dual deficits of fiscal and trade. Both measures are further evidence of a weakening economy, not a strengthening one. This need not be the case, but when such policies are enacted, this is the result. Stay diversified, stay vigilant, and stay with The Kapital News. Happy Birthday YiaYia! #Economy #Debt #Jobs #Inflation #Markets #Bonds #Gold #Silver #Commodities #Oil #EndTheFed #Liberty #USA #bananarepublic #FireCongress #Bailouts #Protests #Leadership
A busy week with the second impeachment trial of former President, Donald J. Trump, announcements made by the Treasury Department and Federal Reserve in support of further fiscal measures that amount to trillions in additional spending, initial jobless claims that remain stubbornly high even as we near the one year anniversary of lockdowns and restrictions, and monetary measures hitting or nearing all-time highs. Also learned from the Congressional Budget Office that this fiscal year will incur a budget deficit of $2.3 trillion, and this is without any additional spending measures. The CBO also projected that 1.4 million jobs will be lost if the minimum wage is increased to $15 per hour. And lastly, another $14 billion may be making its way to the airline industry if the $1.9 trillion spending bill is passed. This will serve as yet another bailout to the airline industry that has already received tens of billions of dollars throughout 2020. Happy Valentine’s Day! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Markets #Debt #Inflation #USA #Gold #Silver #Liberty #Bailouts #EndTheFed #Recession #Depression #bananarepublic #Protests
Elon Musk, CEO of Tesla, announced today that the company purchased $1.5 billion worth of Bitcoin in attempts to diversify their cash position. It was also noted that the company would be open to purchasing gold bullion and gold ETFs. This may be all fine and well as the company is at liberty to invest and diversify as they see fit, however, it is kind of ironic because in the view of The Kapital News, both Tesla and Bitcoin will be known as the posterchildren of this bubble era when the music stops playing. What is concerning, is the fact that Elon Musk announced such measures over social media as well, that caused a frenzy of buying for Bitcoin, which hit an all-time high today above $46,000 per coin. Mr. Musk knows very well that when he says something on any media platform that it will have an impact on markets, especially with respect to this topic. Knowing he has this power has him straddling a very thin line that neighbors market manipulation. The SEC may be well served in looking further into this matter. If the layman had this type of ability to sway markets, the SEC would probably already have him in handcuffs. Talk about little guys versus the big guy…
The Congressional Budget Office, (CBO), came out today with their analysis on the proposed minimum wage hike to $15 per hour, and concluded that while 900k may be lifted out of poverty, 1.4 million job losses will occur. At a time of chronic and structural unemployment and underemployment, the Biden administration and Democrats believe now is the time for such a policy. Are they trying to be stupid? There should not even be a minimum wage. This is to be negotiated between employee and employer based off of experience and responsibilities of the role, and the supply and demand of labor thereof. The government has no business in this transaction, just like they have no business in most other areas across the economy and society. The unfortunate thing in all of this is that the very people who think they will benefit the most from such an increase in the minimum wage, will be the ones most adversely impacted. They will be replaced by touchscreen monitors, robots, and other technologies. They will have their hours reduced so that employers’ operational costs do not balloon. This could have the impact of going from full-time to part-time, which may impact health insurance and/or retirement benefits. Of course, none of this is mentioned by the proponents of such a policy. In their view, it must be better to let the people find out the hard-way, even though the Democrats pretend to be the party that cares for the little guy.
Other items discussed during today’s podcast pertain to the potential executive action to forgive student debt. This may be as high as $50,000 per student. This is a travesty and the President does not have the authority to legislate via fiat, a.k.a Executive Order. Such an act, whether at the executive or legislative level is wrong. It is immoral, unethical, and un-American. What of those people who sacrificed to pay their loans off? What of those people who never went to college, never wanted to attend, and never will? Why should all of these people now bear the costs of paying off these debts of others? The argument is that if such debt is “forgiven,” then the money used for debt payments can now be used to spend into the economy. If this argument were true, then why stop at student debt? What about mortgages, auto loans, credit cards, personal loans, and others? Such forgiveness would add nearly $1.7 trillion to our national debt instantly, which is already nearing the $28 trillion level. Letting everyone else pay for the debts and/or mistakes of others is no way to run a government or society. The moral hazard that this creates will last generations. And who does the government pick and choose as the “winners” of such a policy? Only for those with outstanding debts or also those who will be entering college this year, next year, for how many years forward or otherwise?
And lastly, the second impeachment trial of former President, Donald J. Trump commences tomorrow. This is a constitutional act, period. Whether or not you believe this issue is an impeachable offense is another matter entirely, but the Congress has the authority to do so. Otherwise, there would be a loophole within the constitution that would allow for a President on his last day(s) in office to commit an impeachable offense and suffer no consequence for such action(s). Nonetheless, the trial will resemble another circus – a circus that never seems to leave town. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Tesla #Bitcoin #Markets #Fraud #Jobs #USA #Liberty #Bailouts #Bubbles #Recession #Depression #EndTheFed #Debt #Spending #bananarepublic #Inflation #Gold #Silver #FireCongress
With central banks and governments around the world putting the pedal to the metal with currency creation, spending, and borrowing, they are sure to ignite the effects of inflation. The increase in money supply is inflation by definition. The subsequent increase in financial asset prices and consumer prices are the effects of inflation – monetary and fiscal policies. We know as a matter of policy, that such inflation is to make its way into financial asset prices, which we have been witnessing with equity prices at record valuation levels, and housing prices at all-time highs. The hope with such a policy is that with higher prices, profits can be taken and thus spent into the real economy to generate growth. This is a false narrative and only has marginal benefits at best that are short-term and come at a cost. So on a net-net basis, this translates into a drag on current and future economic growth. True growth does not simply come from spending, but rather production and investment. If economic growth could come from a printing press, then the likes of Venezuela, Argentina, Lebanon, Iran, Zimbabwe, Turkey, and others would be the envy of the world. But they are not, because money printing is not a solution. In fact, such actions are a major part of the problem and will only make matters worse.
An increase in consumer prices and commodity prices is also underway. If this trend continues, then a vicious cycle will occur. As commodity prices rise, these prices will be passed on to consumers, and in this environment, we will have stagflation – inflation with a stagnant economy. Another interesting occurrence that may well happen will be with respect to the bond market and yields. If yields continue to rise, this will put upward pressure on borrowing costs for other loans such as mortgages, as well as the national debt. The Federal Reserve is attempting to keep rates low to “stimulate” the economy. But if yields are rising, then the Fed will have to print (inflate) even more currency to go into the bond market to buy US debt across the yield curve in order to suppress the rising yields. In effect, this translates into the Fed fighting inflation with more inflation. See the problem? Because the rising yields reflect the ensuing inflation as opposed to any real economic growth. We continue to see one metric after the next slow down or roll over, and several hundred thousand Americans are filing initial jobless claims on a weekly basis as we approach the one year anniversary of restrictions and lockdowns. So where is the economic growth? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Markets #USA #bananarepublic #EndTheFed #Liberty #Debt #Gold #Silver #Recession #Depression #Stagflation
President Trump gave his farewell address to the nation this afternoon, via a videotaped speech. It was more or less a Trump campaign speech, with a much better tone and delivery. He highlighted what he believed to be the achievements of his administration, thanking his staff, and wishing well the incoming administration. As The Kapital News has stated for months, had President Trump carried himself as he did today, and maintained such composure over the last four years, he very well would be the one being sworn into office tomorrow, and not Joe Biden.
In today’s discussion, we note how the Trump administration did not embark upon a policy pathway much different than any other Republican president. He and his team attempted and/or did the following: tax cuts, regulation cuts, trade deals, build up of the military, international agreements, various social reforms, saber rattling with various countries, and undoing what Democrats had previously implemented. Now while people will disagree with certain policies, this is more about politics than anything else. There was not anything major and structurally reformed. There was no draining of the swamp. It was a continuation of the status quo. A military-industrial complex that received more money than ever before; an out of control Federal Reserve, trillion dollar deficits, and several trillion added to the national debt; a national security state that is still alive and well; no structural reforms to Medicare/Medicaid and Social Security; continuation of the two-tiered justice system; and no major investment to the nation’s infrastructure. And yes, the President’s rhetoric, style, and behavior were often unorthodox and proved to be counterproductive, and served to further divide the country. But it must be understood and understood well that people tolerated these actions because of their distrust and frustrations with the status quo. And that says something as to where we are as a people and as a nation…
The incoming Biden-Harris administration are not going to fix or solve any of these structural issues and failures. In fact, they are all but guaranteed to make them worse. The same people who were a part of previous governments and administrations are now prominent members of this team. A classic case of, “meet the new boss, same as the old boss.” The Kapital News highly suggests that the people leave the two-party system and change your voter registration to Libertarian, Independent, unaffiliated, et cetera. The point is to send a message that the people no longer support the status quo – and this is a peaceful step in that direction. Farewell President Trump and Godspeed to you and yours. Stay diversified, stay vigilant, and stay with The Kapital News. #Trump #Biden #USA #Vote #Liberty #Revolution #EndTheFed #bananarepublic #Inflation #Gold #Silver #Economy #Peace #Recession #Depression #Protests #FireCongress
Initial jobless claims filed for the week ending 9 January came in at 965,000! This is another in a long line of devastating and heart-breaking figures. Such a number has not been seen since last August. Now while the major stock averages closed slightly lower today, they nonetheless traded higher during the day session, following this news release. This is just further evidence as to how Wall Street has grown numb to and decoupled from Main Street. Perhaps it is the promise of another $2T that we do not have that is being promised by the incoming Biden team. This will increase the $600 checks to $1,400, thus making the total $2,000. Extensions will also be given to unemployment benefits as well as increases to those benefits. Currently these extensions were scheduled to last until the end of the first quarter, but now, if the new bill passes, will extend the extension to September. Eviction moratoriums are also a part of the deal and will receive further extensions as well. When will this all end? This is hundreds of billion of dollars in back rent and mortgage payments. How is this all going to be paid back?
And also in the bill is the increase in the minimum wage to $15 per hour. They really have to be trying to be this stupid and irresponsible. We are in the midst of the largest economic and job loss crises perhaps ever seen, where the hardest hit industries are those with low wages and they want to increase the minimum wage? If these employers cannot afford to keep their employees on payroll at lower wages, then what makes one think that they will be able to afford the $15 minimum? This is only going to serve the purpose of prolonging the structural unemployment and underemployment situation. All of this spending in totality is doing nothing more than robbing us and future generations of future growth and prosperity. There is no free-lunch and printing presses do not print jobs or productivity. The remainder of today’s discussion briefly mentions the Federal Reserve’s balance sheet and M1 and M2 money stock. Stay diversified, stay vigilant, and stay wit The Kapital News. #Economy #Jobs #FireCongress #Debt #Inflation #Gold #Silver #Liberty #Revolution #EndTheFed #BananaRepublic #USA
