Tag: stock market

Ep. 545 – Market Bubble Blame Game
The Kapital News
The Kapital News
Ep. 545 - Market Bubble Blame Game
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Top Chinese financial regulators are sounding the alarm bells with financial bubbles that exist globally. The focus of the statement was on the disconnect between the underlying economies in the USA and throughout Europe and their respective financial markets. This is of course true, as we are observing equity prices at or near all-time highs on a price basis and across virtually all valuation metrics. The only comparable points would take us to 1929, 1937, 2000, and 2007/8 – and things did not end well. The Chinese regulators nonetheless did look internally to their real estate markets and mentioned the frothiness is of concern. Noting how many people are buying real estate and homes not for the purpose of living, but rather as a form of speculation. Has the global economy not learned anything from the housing crisis that is only a decade old?

What further makes these statements interesting, is how the regulators warned of potential spillover effects from the US and European bubbles impacting the Chinese economy. The Kapital News believes this is the first shot across the bow and the start of a narrative that the Chinese want to begin building so that they can blame others for their own missteps and failures, if and when their economy and financial markets turn downward. There is no question that many financial markets are greatly disconnected from their respective economies, and China is guilty of this as well. Now, it will be interesting to see how other regulators and central bankers in the US and Europe respond to these statements. True to form, no policymaker wants to be held responsible for their actions and policies, and it is always easier to play the blame game and say it is the irresponsibility of another country.

These policymakers know that time is running out and they are low on ammunition. And there is no question that due to the interconnectedness of the global economy that there will be spillover effects from one country to the next. This is already being experienced in weaker economies around the world. It is always the weakest links that break first. And a couple or few countries experiencing difficulty may not be of significant concern for the rest of the world, but as these weaknesses persist and travel to other countries, then momentum starts to build. It is this momentum and its size and scope that can begin to negatively impact larger economies. When this takes root, coupled with market forces moving global debt yields higher, is when we will know that we are in the final chapters of this massive central bank economic money printing experiment. We are there. And it will not end well. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #Debt #Liberty #EndTheFed #Infrstaructure #Inflation #Gold #Silver #Bonds #Markets #bananarepublic #Leadership

Ep. 543 – Fragile Markets
The Kapital News
The Kapital News
Ep. 543 - Fragile Markets
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A large sell-off today occurred across the major stock indexes as global bond yields continue to rise. The US 10 year note hit 1.6 percent earlier in the trading session and is now around 1.5 percent. Some are arguing that this is a sign of growth, which is causing the rise in yields. Well if this was attributed to growth, then why would stocks sell-off some 2-4 percent today? Stocks are supposed to be vehicles of growth, no? The more realistic answer is because it is not growth expectations, but rather inflation expectations, as well as the inflation that already exists. The effects of inflation will prove destructive over the coming years.

Earlier this week in testimony before Senate and House committees, Jay Powell, Chair of the Federal Reserve, declared that there is robust demand for US debt. The Treasury auction that occurred today saw poor performance and demand to say the least. That is to say, not much of a bid, so prices dropped and yields rose. This is a phenomenon that will be witnessed more and more around the globe as the only buyer (or major buyer) of government debt is going to be that country’s respective central bank. Rising yields are causing much concern in central banks around the world. After all, their entire plan was to get interest rates and yields to record lows in the hopes of stimulating the global economy. US mortgage rates hit a six month high, while prices are at record highs and continue their climb. So what can they do now? In order to push these yields back down, central banks will have to go back into the markets and purchase this debt, bid up the price and push down the yields. Of course, this is all inflationary by its very definition, as central banks will have to expand their money supply in order to do so. In effect, this is monetary authorities, fighting inflation with inflation. They are trapped and they know it.

The Kapital News has been saying for the last two years since we have been online that one day the markets will say enough is enough to these radical fiscal and monetary policies. And that this would be witnessed with rising yields. We are not saying that the end of the road is right here, but we are getting closer, and this is what one would expect to see. When the markets call out these central authorities, and they attempt to utilize the same policies, but no longer get the expected return, such as rising stock markets, then this will be the time when we know that the clock has run out of time. Look out below. What is also a near certainty is that it will take a lower yield on bonds, and lower market interest rates to pop these bubbles. This is because the economy and various markets are extremely fragile. Recall in Q4 of 2018 that the stock market dropped nearly 20 percent because the Fed dared to taper their balance sheet and increase interest rates. The Fed Funds Rate was around 2.25-2.5 percent and the US 10 year note was around 3.25 percent. Those levels could not be sustained within the US economy nor the stock market in 2018. With even greater levels of debt and millions of Americans out of work, and countless numbers of businesses closed, it will take even lower rates to bring the economy and markets to its knees. The markets know this. Central authorities know this. They are scared. And they are trapped.

Initial jobless claims for the week ending 20 February came in at 730,000 on a seasonally adjusted basis. The prior week’s figures were revised downward by 20,000 to now sit at 841,000. The number released today is the lowest figure since last November. However, this is still some 80,000 higher that what was experienced during the depths of the GFC. For all unemployment insurance programs, some 19 million Americans are still claiming benefits. This gives us a de facto unemployment rate of 13.4 percent, which is double the official rate at 6.7 percent. The Federal Reserve’s balance sheet hit a new all-time high at $7.59 trillion. Weekly all-time highs are likely the norm throughout the remainder of this year as the Fed remains committed to purchasing $120 billion worth of Treasuries and mortgage-backed securities. This will take the balance sheet to at least $8.5 trillion and The Kapital News projects a figure closer to $10 trillion. M1 and M2 money stock figures are also around all-time highs and both measures have been updated, definitionally speaking, by the Fed. New data sets have been created and the older sets have been discontinued. Always moving the goal posts. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Inflation #Markets #Bonds #Gold #Silver #USA #Liberty #EndTheFed #bananarepublic #Commodities #FireCongress #Fraud #Bubbles #Leadership

Ep. 541 – These Markets Are A Joke
The Kapital News
The Kapital News
Ep. 541 - These Markets Are A Joke
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Large intraday trading swings may likely become the new normal as we continue through this asinine economic experiment. Or perhaps these are the foreshocks to something much larger awaiting us over the horizon. Such volatility of course is not new, as this is something that has been witnessed from time to time over the last few years. But today was clearly a case in point. The Nasdaq Composite was down nearly 4 percent earlier in the day’s trading session, only to close down 0.5 percent. Much of the bounce-back came off of the statements made this morning by Jay Powell, Chairman of the Federal Reserve, as he was giving testimony before the Senate Banking Committee.

Continuing with the same narrative of remaining accommodative for as long as it takes, evidently is what the markets wanted to hear to cause a frenzy of late-day buying. The question is of course, how much longer can this go on before the system reaches exhaustion? If bond yields are any indicator, then we may not be too far from that point. Powell remains committed to the Fed’s policy of purchasing $120 billion per month in Treasuries and mortgage-backed-securities through the remainder of the year. This will take their balance sheet to levels around $8.5 trillion. Questions and comments were made about inflation as well, and the Fed Chair nonchalantly swept them under the rug as not of major concern and that if inflation does occur that there will be plenty of time to contend with it and that the Fed has the requisite tools to manage it properly. Talk about a bunch of hogwash. Inflation is here, it has been here, and it is only going to get worse as we make our way through this decade. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Inflation #USA #EndTheFed #Revolution #Liberty #bananarepublic #FireCongress #Recession #Depression #Fraud #Leadership

Ep. 540 – Yield Curve Control Coming?
The Kapital News
The Kapital News
Ep. 540 - Yield Curve Control Coming?
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With yields moving noticeably higher on the US 10 year note and 30 year bond, we can be certain that this is gaining the attention of central bankers, the Treasury Department, and investors. While some will and do argue that this increase in yields is a sign of future growth expectations, The Kapital News believes that the bulk of the increase is due to inflationary expectations. Utilizing the printing press as the cure for everything will only get an economy so far. You can print money, but you cannot print jobs, and you cannot print production. Given these yield increases and the volume of speeches, interviews, and conferences of Federal Reserve and Treasury Department officials, signals to us that they know they are running out of ammunition and runway. This is why we continue to hear the aggressive lobbying to pass the $1.9 trillion in additional spending. Such fiscal policy, financed via monetary policy will buy some more time – at least that is the hope. If yields continue their ascent, this may very well be the point of no-return and where the markets are saying enough is enough. All systems have a breaking point. There is only so much a person can drink and eat, or how far he can run before exhaustion. The same holds true for an economy or any system – there are limits. The global economic experiment of QE has been going on for over a decade and is likely nearing its limits, if it has not already hit such constraints. And understand that it will likely take a smaller yield to prick the markets’ bubble due to the fragility of the system.

What is left, is for policymakers to continue onward with their narrative. And this story can and will change with the wind if that is what is needed to calm the markets. So as yields continue their climb, it would not be surprising to hear a lot more Fed officials and others discussing the possibility of yield curve control. The yield curve is simply the graphical plot of Treasuries of differing maturities and connecting those dots, thus drawing a curve. The attempt to control it, is already something that the Fed and other central banks do. However, they do not openly say that is what they are doing. So if they come out and announce such a policy, then this allows for their narrative to stay alive for a little longer until it is on to something else. Despite how powerful central banks and governments are, they are not bigger nor more powerful than the markets. When the markets no longer buy these narratives, then it is look out below because there will be no policy measure to combat the coming correction. Policymakers are running out of time and they know it. It is now all about the narrative and keeping hope alive and hope is not a good strategy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Debt #Inflation #Gold #Silver #Commodities #USA #Liberty #Recession #Depression #Bailouts #FireCongress #EndTheFed #bananarepublic #Leadership

Ep. 538 – Robinhood, Reddit, and Roaring Kitty, Oh My!
The Kapital News
The Kapital News
Ep. 538 - Robinhood, Reddit, and Roaring Kitty, Oh My!
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The House Financial Services Committee will be holding a hearing Thursday afternoon that is centered around the recent stock market frenzy with respect to GameStop and other stocks. The witnesses testifying will be the CEO of Robinhood, the co-founder of Reddit, the trader who allegedly started the frenzy on social media, whose online handle is “Roaring Kitty,” and the CEO of Citadel, a hedge fund at the center of the controversy.

The hearings will focus on Robinhood’s trading platform and how they monetize their business. Questions will also be asked about the marketing practices that Robinhood engages in and how these mimic those of casinos and other online gaming apps. Further still, politicians will likely grandstand and pretend to all of a sudden be concerned for the average investor and the integrity of markets. The Kapital News highlights the market manipulation that occurs regularly and how the firms engaged in such behaviors are slapped with fines and deferred prosecution agreements; only to engage in said behaviors again. While the topic at hand is very important, it will amount to more of a dog and pony show. It is an important topic because we are witnessing the merger of online trading platforms, social media platforms, and financial markets. This is a perfect storm for market manipulation to take root, and in the process, for millions of people, potentially, to be harmed financially due to the predatory practices that may easily spread across social media platforms. People with little to no investing and/or trading experience will be preyed upon by more sophisticated players, in the hopes of getting rich quick. This is a real concern and is the bastardization of capital markets. It is a casino. It is the wild west. Every man for himself. This will not end well. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Reddit #Robinhood #Fraud #Markets #Liberty #USA #bananarepublic #EndTheFed #Inflation #Gold #Silver #Leadership

Ep. 536 – Impeached President’s Day
The Kapital News
The Kapital News
Ep. 536 - Impeached President's Day
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Over the weekend the former President, Donald J. Trump, was acquitted for the second time by the Senate. In a vote of 57-43, it was the most bipartisan impeachment. However, a 2/3 majority is required to convict and remove and to bar an official from holding federal office again. Even the speech made by minority leader, Mitch McConnell, laid the groundwork for a convincing vote of conviction. McConnell of course decided to vote against conviction, seemingly hiding behind some form of constitutional technicality, and more realistically, he is eyeing the 2022 mid-term elections and is hoping to once again become the Senate majority leader. His vote to acquit is to serve as cover so as to not upset members within his caucus. Despite this, McConnell still makes the argument that Trump is not out of the woods, as criminal and civil charges may be brought against him. And for historical reference, McConnell, along with several other Republican Senators who were around for the Clinton impeachment, voted to convict Clinton, but voted to acquit Trump. What a circus! Stay diversified, stay vigilant, and stay with The Kapital News. #Economy Impeachment #FireCongress #Fraud #Fake #Markets #Inflation #Gold #Silver #Commodities #Liberty #USA #bananarepublic #EndTheFed #Recession #Depression

Ep. 535 – Weekly Wrap Up
The Kapital News
The Kapital News
Ep. 535 - Weekly Wrap Up
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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

Ep. 534 – Economic Match Made In Hell
The Kapital News
The Kapital News
Ep. 534 - Economic Match Made In Hell
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It is highly evident that the sunlight between the Treasury Department and the Federal Reserve no longer exists. The merger has been underway for years and is nearing its completion. Talk about the United States turning into a banana republic, well here it is. If you thought last year was a wild ride with respect to fiscal and monetary support, buckle up, because you ain’t seen anything yet. We know that Congress (Democrats), the Treasury Secretary, and Fed Chairman, are all hand-in-hand when it comes to the $1.9 trillion spending bill proposed by the Democrats and Biden administration. The argument is all about returning to full employment and how the passage of this bill will help to secure that goal. Furthermore, the Fed is completely behind it and willing to finance the deal (because we do not have the money), also arguing that full employment is their goal as well and how the Fed will remain accommodative until that end is met. Recall that one of the mandates of the Fed is to achieve and maintain full employment. The other is to achieve and maintain price stability.

This is just the opening salvo for what is going to be fiscal and monetary authorities gone wild. The $1.9 trillion is more about transfer payments, unemployment benefits, assistance to state finances, Covid-19 programs, and perhaps increasing the minimum wage to $15 per hour than anything else. This means that the Democrats will likely continue onward with the spending spree and attempt to tackle healthcare, the environment, and infrastructure. Some of these measures will likely pass and the cost is unknown, but it will be in the hundreds of billions, if not trillions in aggregate by the time the dust settles. The Congressional Budget Office is already predicting a national deficit north of $2 trillion for this fiscal year alone and this figure does not take into consideration any of the above spending measures.

Speaking of jobs, for the week ending 6 February, 793,000 Americans filed an initial jobless claim, which was above market expectations. The prior week’s figure was revised upward by 33,000 to rest at 812,000. For all programs, for the week ending 23 January, 20.4 million Americans continue to receive some form of unemployment insurance. This is a week-over-week increase of nearly 2.6 million. This would give us an unemployment rate closer to 14.3 percent as opposed to the official rate of 6.3 percent. We are nearly one year into the lockdowns and restrictions, and we continue to witness this type of carnage in the jobs market. This is after several trillions of dollars were flushed into the system. So what makes $1.9 trillion so magical if several trillion dollars could not stop the damage?

The Federal Reserve’s balance sheet hit a new all-time high at $7.44 trillion dollars. Some $30 billion above its previous high. With respect to M1 and M2 money stock, both of these measures are near their respective all-time highs, which were hit within the last few weeks. These numbers will continue higher as fiscal and monetary policies continue their expansion. This is by definition inflation and will prove utterly destructive to the financial system, and more importantly to the real economy. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Markets #Fraud #Fake #FireCongress #Liberty #USA #Inflation #Gold #Silver #Jobs #Bailouts #Spending #Recession #Depression #Protests #bananarepublic #EndTheFed

Ep. 533 – Fake Unemployment!
The Kapital News
The Kapital News
Ep. 533 - Fake Unemployment!
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Jerome Powell, the Chairman of the Federal Reserve, made some comments this afternoon, and one in particular pertained to stating that the “real” unemployment rate is closer to 10 percent. The BLS just released the jobs report last Friday and informed us that the official unemployment rate is 6.3 percent. This is quite the discrepancy. So what gives? The Kapital News believes this is the first of many one-two punches to be thrown by Treasury Secretary, Janet “Dingbat” Yellen, and Jay Powell. Recall that Yellen was the former Chair of the Fed. This past weekend, Yellen made comments supporting the $1.9 trillion spending package being proposed by the Biden administration, arguing that its passage will help return the US economy to full employment. This is hogwash. Nevertheless, we now have Mr. Powell arguing with official government statistics, which is highly uncommon, and also arguing that monetary policy will remain accommodative until we once again reach full employment. Clearly, something is afoot. Especially when one considers how important the “independence” of the Fed is in the eyes of Fed officials. They always note how important it is for the government to stay out of the business of the Fed. So why is the Fed so concerned with the policies of the government? Wouldn’t this invite political interference into their decision-making?

The Kapital News believes that the Federal Reserve along with the Treasury Secretary, know that they are trapped. They know that their fiscal and monetary policies have run their course and are at their end. But they also do not want to take any responsibility for their actions since the GFC and so they would simply rather continue with the same policies as opposed to admit their mistakes and change course. This pride or perhaps complete ignorance and incompetence has proven to be and will continue to be extremely expensive and destructive to the economy. The inflation that has thus been generated will continue to make its way throughout the global economy. The first to be affected has been and remains financial assets, but inflation has also been hitting healthcare costs, commodities, and food. It is in these latter groups where the most destruction will occur. Most people do not own financial assets, but everyone needs food and energy. Even with respect to financial assets, as prices go higher for equities and housing, it prices much of the population out of these markets because they cannot afford them. It is one thing to be in a position where one cannot afford equities and/or housing. It is a completely different situation when they cannot afford their utilities, transportation, medical care, and food. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Fraud #FakeMarkets #Fake #Bailouts #FireCongress #bananarepublic #EndTheFed #Recession #Depression #Inflation #Gold #Silver #USA #Liberty

Ep. 531 – The Bubble Buys A Bubble
The Kapital News
The Kapital News
Ep. 531 - The Bubble Buys A Bubble
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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