Tag: Stocks

Ep. 601 – Debt Distorts Reality

The Kapital News
The Kapital News
Ep. 601 - Debt Distorts Reality
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With politicians and central bankers attempting to solve or alleviate the impact from the pandemic, they are in actuality making the problem worse. This is because one cannot expect to solve a global debt crisis by adding record amounts of debt onto the system. Furthermore, the massive printing press operation that is being conducted globally does not translate into productivity. Rather, it translates into inflation, which is an increase in the money supply. Sure, printing presses can print currency, but they cannot print productivity, jobs, or innovation. Yet, what will result from all of this, and it is already being felt across the world, are higher prices. Whether it is in energy, commodities, food, housing, transportation, medical expenses, or more, prices are moving up and will likely stay there for some time. The Kapital News believes that we will be entering a period of structural inflation – meaning that the effects of inflation, higher prices, will be sustained due to central bank and federal government policies, supply-chain disruptions, and geopolitical events.

In fact, much of this is already well underway and many smaller nations are suffering from high rates of inflation. This will lead, if it has not already, to political fallout, protests, riots, conflicts, and revolutions. These events will likely first take root in weaker economies, but will make their way to more developed and diversified economies as well. Inflationary policies can greatly distort reality whereby people think that rising asset prices means that there is a strong underlying economy causing such price movements. However, nothing could be further from the truth. It is not a growing economy that is leading to such price increases, but rather a growing money supply. Another way of looking at it, is to say that it is a weakening currency or a devaluing of the US dollar that is causing prices to rise. Meaning it takes more dollars to purchase the same amount of goods because those dollars have been devalued. This does not occur in a strong economy, but rather a weak one.

If one wants to look at some of the distortionary effects of these policies, then look no further than US retail sales. The trend line has been completely decimated. It can be understood when looking at this data series that there would be a downward deviation to retail sales during the GFC and during the pandemic. However, there is a notable difference when comparing these two time periods. In the former, during the GFC, retail sales peaked in late 2007 and did not recover to that peek until early 2011. This makes intuitive sense that it would take awhile to regain the previous trend. Yet, when we review the pandemic, we see a massive drop-off in retail sales, which makes sense given the lockdowns and restrictions. However, we see a huge V-shaped recovery back to where retail sales were prior to the pandemic in only a few short months, and beyond this, we now see retail sales well above the previous trend. In fact, even if we were to remove the GFC and pandemic deviations, we would likely still not be at the high levels we are currently witnessing. Peak sales prior to the pandemic were around $525 billion in early 2020. In March, the most recent data point, now stands at $620 billion. What this data series suggests is that a couple to a few years’ worth of spending has been pulled forward to today! This is all thanks to Uncle Sam spending money that we do not have and the Federal Reserve printing up the money out of thin air like some 3rd world banana republic. In essence, future growth and prosperity has been stolen from the future in order to make today look better than what it actually is. This is the moral of the story on how debt distorts reality. This is completely unsustainable and when the bottom falls out, it will cause tremendous amounts of damage across the spectrum and around the globe.

Initial jobless claims for the week ending 22 May came in at 406,000. This is the lowest figure since the pandemic began and is a continuation of trend with falling claims figures. The prior week saw no change, thus remaining at 466,000. The Pandemic Unemployment Assistance program saw 93,000 filing, thus taking the total to just shy of 500,000. In aggregate, some 15.8 million Americans continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.4 percent. The official unemployment rate stands at 6.1 percent. The May jobs report will be released on the first Friday in June. The Federal Reserve’s balance sheet came down by $19 billion and now stands at $7.903 trillion. The Fed remains committed to their QE policy whereby they are purchasing at least $120 billion per month in US Treasuries and mortgage-backed securities. Their balance sheet is likely to make new all-time highs on a near weekly basis. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #FoodPrices #Housing #Debt #Bailouts #Protests #Liberty #USA #Revolution #EndTheFed #bananarepublic #FireCongress #Spending #Commodities

Ep. 568 – March Jobs Report

The Kapital News
The Kapital News
Ep. 568 - March Jobs Report
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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

Ep. 555 – Global Food Prices Rising

The Kapital News
The Kapital News
Ep. 555 - Global Food Prices Rising
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Revolutions are fought on empty stomachs and with global food prices hitting a six-year high, only serves to increase the likelihood of further protests, riots, wars, and revolutions. This is especially true for the poorest of nations as food is so crucially important, scarce, and insecure to begin with. From supply-chain disruptions due to the pandemic, to volatile weather that has harmed production, to inflationary policies from governments and central bankers, a triple-whammy has been released and spares no one in its path.

The Kapital News has been discussing the interconnectedness of economics, politics, and society since we have been online – in fact, this is the purpose and mission of The Kapital News – to educate our audience on these connections by using the news of the day as real-world case studies. It is the weakest link of the chain that breaks first and such is the case with countries. We have unfortunately been seeing these poorer nations crumble one after the next due to external and internal pressures. However, there are common traits amongst them, such as, high levels of debt, political corruption, and high levels of inflation. All of these forces combined, in addition to several others, is a recipe for instability at best, and disaster at worst.

Some countries may be able to withstand some of these pressures and find solutions – we hope this happens. However, if history is any guide, chances are that the majority of nations will resort to protests, riots, wars, and revolutions. If such actions do occur, then we can hope that things are made better once the dust settles. But hope is not a strategy and time is of the essence. The globe was awash in protests and riots prior to the pandemic and it already appears in early 2021 that they are reigniting and gaining momentum. A political sea change is underway and the months and years ahead will try our institutions, constitutions, and humanity like never before. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #FoodPrices #Inflation #Protests #Riots #USA #Gold #Silver #Commodities #Oil #Debt #Yields #EndTheFed #bananarepublic #FireCongress #Liberty

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

Ep. 524 – GameStop = Game Over?

The Kapital News
The Kapital News
Ep. 524 - GameStop = Game Over?
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With the continued market frenzy and pandemonium occurring again today in the likes of GameStop, Bed, Bath, and Beyond, AMC Entertainment, and BlackBerry, it is time to step back and gain a better understanding as to what is really going on. The media and social media narrative is that a bunch of “little guys” on message boards are banding together to take down the “big guys” (a couple hedge funds). While the narrative plays very well and there is no doubt that there are separate rules between the smalls and the bigs, this does not mean that two wrongs make a right. The Kapital News discusses on a near daily basis the amount of market rigging and manipulation that takes place and talk about all of the fines and deferred prosecution agreements that are given to the major banks whom engaged in such fraud. Of course if anyone else engaged in such behavior, they would be locked up and they would throw away the key. So, this makes the narrative compelling and allows people to justify the current actions that are underway with respect to these stocks. An eye for an eye is not the solution. In fact, this is likely going to cause more short and long-term damage to the markets and society at large.

What is failing to be understood by many on these message boards, is that going after a hedge fund, does not mean that they are only going to do financial damage to the managers alone. What they fail to grasp, is the fact that these funds on many occasions are managing money for the little guy through pension funds, university endowments, hospital chains, non-profits, and charities et cetera. There is going to be collateral damage and the group mostly likely to the suffer the greatest losses is ironically going to be the little guys.

The Kapital News is gravely concerned with these actions on both sides of the trade as well as with the brokerage houses that halted trading on these stocks today with respect to the buy side. This seems more likely that this is a pump and dump scheme, which is illegal, as opposed to some sort of organic uprising of new day-traders against hedge funds. Unfortunately, most of these little guys, do not understand financial statements and fundamental analysis. So how is one to believe that all of a sudden they go after a company that is heavily shorted by a couple of hedge funds, and prove somewhat successful in hurting the hedge funds’ position – at least momentarily? Furthermore, what does not pass the smell test is the fact that we have some strange bedfellows in Congress right now with the likes of AOC, Ted Cruz, Elizabeth Warren, and Maxine Waters joining forces to investigate what is going on in this matter.

So let us understand something, for years there has been open and blatant market manipulation, tweets from the former President, massive amounts of money printing from the Federal Reserve and spending from the Congress juicing asset prices, deferred prosecution agreements being handed out like candy to the largest financial firms on the planet, and now all of a sudden these politicians are concerned with market manipulation? This does not pass the smell test. Something is afoot. The Kapital News suspects that there will be a concerted effort in Congress to clamp down further on the markets. This will likely pertain to financial institutions as well as to the individual investor. So be careful what you wish for, because this is not just a story about David v Goliath. Oh no, there is much more underway and it is not going to be for the best. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Fraud #Markets #Debt #Liberty #EndTheFed #USA #Revolution #Justice #Inflation #Gold #Silver #bananarepublic #FireCongress

Ep. 513 – Impeached Again + Savings Stolen

The Kapital News
The Kapital News
Ep. 513 - Impeached Again + Savings Stolen
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The House of Representatives voted today to impeach President Donald J. Trump for the second time. The vote was 232-197. This makes President Trump the first and only President to have been impeached twice, and this occurred within one term in office. This speaks volumes with respect to the President’s actions and behaviors and to the animus that exists within the Democratic party towards the President. This is a reflection of the country. We the people vote these characters into office, so we cannot be surprised that our government is as divided as the people of this country. Next steps in the process is for there to be a trial in the Senate and then a vote to acquit or convict. With the upcoming inauguration only one week away, there is really no plausible way that the Senate can manage a full trial within this timeframe. Therefore, it is very likely that the trial will take place after Trump is out of office. This will be another first, as there has never been an impeachment trial of a President after he has left office. This, plus the fact that the President has been impeached, is likely to increase the volume, frustration, and anger of many Trump’s supporters, and perhaps others who are tired of all the politics. All 50 states and Washington, DC are on high alert against the possibility of violent riots. The US Capitol is currently surrounded by fences. This is such a tragic sight to see and is more akin to a third world banana republic as opposed to the nation that is supposed to be the beacon of democracy and self-governance.

News came across the wires this evening that the incoming Biden administration is looking to send to Congress a $2T spending bill. Take the $900 billion bill that was just passed, in conjunction with the $1.4 trillion spending bill, and we are already looking at $4.3T in spending! This is just getting started. This first bill is likely focused on more “stimulus” checks and other Covid-19 relief. Other bills will come that address environmental and healthcare concerns, amongst others. This is ridiculous and it is robbery. The government does not have the money and so more deficits, debt, borrowing, and printing must ensue. This is all serves to destroy savings and one’s purchasing power. As highlighted by usdebtclock.org, average savings per family currently stands around $28,500. Fast-forward four years from now and this figures falls to $1,500! And this is the average, meaning that this figure is highly skewed by those in the upper income brackets that actually hold most of the savings. Many Americans actually have a negative savings rate, meaning that they are in debt on a net-net basis. This scenario is 100 percent predictable, yet this is what is likely to unfold. It does not have to, but then again, we have the same people in Congress. So how can anyone truly be surprised by these outcomes? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Debt #Savings #Jobs #Bailouts #USA #Vote #Impeachment #Liberty #Revolution #EndTheFed #BananaRepublic #Inflation #Gold #Silver

Ep. 512 – Another Impeachment + Debt Craziness

The Kapital News
The Kapital News
Ep. 512 - Another Impeachment + Debt Craziness
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With only a week left to go until a change in administrations, the House of Representatives is moving forward with a vote on impeachment. This time, however, there will be Republicans joining in to vote, yes. If impeached again, Trump will be the first President to have been impeached twice. This action comes on the back of last week’s protests at the US Capitol that turned violent and led to some deaths and injuries. There is a lot of political calculus on both sides of the aisle as to whether or not impeachment is a good idea. There are valid arguments on both sides – for and against. But it must be understood that the most loyal of Trump supporters will see this as another assault on the President and on them as well. This will likely result in further protests and violence across the country. However, the threat of violence is not an excuse to not do something if it serves the purpose of justice and upholding the rule of law. Regardless as to which side wins out, the hypocrisy from both parties is thick enough to cut with a knife and they should all resign #FireCongress. The division will get worse before it gets better.

In the latter half of today’s discussion we look once again at the US debt clock to see where we are now and where we will be four years from now. Their analysis assumes current rates for all revenues and expenses. Suffice to say we are on an unsustainable path and things are likely going to get worse. The real effects of such policies that are and have led us to this economic, political, and societal ruin, may best be seen when it is shown that savings per family today is around $28,000. In January of 2025, this figure drops to around $1,500! This is theft, this is taxation, this is inflation, this is a lack and loss of opportunities and future prosperity. There is no free lunch and things that may appear “good” now are coming at the expense of the future. This is only the beginning. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Impeachment #Vote #USA #Liberty #Revolution #Debt #EndTheFed #BananaRepublic #Inflation

Ep. 511 – High Alert for Inauguration Day

The Kapital News
The Kapital News
Ep. 511 - High Alert for Inauguration Day
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It might as well be official in that the United States of America has become a first world banana republic. While it is common to have a large security presence on the day a new President is sworn into office, it is quite another to have thousands of National Guardsman being called to Washington, DC, and the FBI warning all 50 states, that there may very likely be protests, and perhaps armed protests, in their respective capitals. And while all of this is going on, we have a Congress that is setting up another impeachment trial of President Trump, and if that does not work, then they will put greater pressure on Vice President, Mike Pence, and the cabinet to invoke the 25th Amendment. This is, was, and has been all foreseeable. When a country, a government, an economy, and a society are declining – these types of events occur. There is legitimate anger, frustration, depression, despair, and concern that exists with millions of Americans. This stems from terrible policymaking on all fronts – much of which is unconstitutional to begin with and is rife with fraud and nepotism. The only logical conclusion that one can draw from such actions is the subsequent decay and decline of the country itself.

As we reported last week, the structural issues as it relates to unemployment and underemployment continue in the wrong direction. With this, the real economy will continue to drag. However, Wall Street may or may not care. Since April of last year, it has been the latter, as the real economy set against the stock market has never been so disconnected. This too, a direct result of asinine policies, thus driving a bigger wedge between the haves and the have-nots. This is a vicious cycle that will only work itself out when market forces take hold. They will. The question is when. And it must be understood that there is no easy way out of this quagmire and that further pain and hardship is all but guaranteed. However, we must restore our Republic. We must restore our free-markets. We must restore our system of justice and the rule of law. And we must restore the American spirit. If we do this, then our foundation can be rebuilt and our future brighter than our past. If we do not, then our experiment of self-government will go the way of the Greeks, Romans, Persians, Dutch, and the British. Nothing lasts forever, but that does not mean that it has to end now. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Vote #Protests #Revolution #FireCongress #Liberty #EndTheFed #BananaRepublic #Debt #Inflation #Gold #Silver #USA #Bailouts

Ep. 509 – Jobless Train Continues, Markets Higher

The Kapital News
The Kapital News
Ep. 509 - Jobless Train Continues, Markets Higher
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Another 787,000 Americans filed an initial jobless claim last week and markets hit all-time highs. Apparently Wall Street has become numb to these devastating and heartbreaking employment figures. Or, they simply continue to view bad news as good news, because this means more “free” money from the government and the Federal Reserve. Regardless as to which is the case, this is a disgraceful display of markets completely decoupled from reality. Unfortunately, this is likely to continue for a little longer at least. For context, these jobless claims are still higher than during the depths of the GFC. We also briefly mention, the Fed’s balance sheet and M1 and M2 money stock figures.

The President released a video address today with his remarks centered around the events that unfolded yesterday at the US Capitol. He basically threw his supporters and those he convinced to rally and march on Washington, under the bus. A complete 180 from the rhetoric he has been spewing for the last several months. Perhaps he is concerned for himself from a legal standpoint or maybe attempting to salvage some type of legacy. Regardless, this was further evidence that he is putting himself ahead of the country. How will his most loyal supporters interpret his statement? Will they feel betrayed? Will they feel abandoned? Do they even realize what he said? Or will they just shrug it off? The answers to these questions matter as this nation remains divided. So can we unite or will divisions and tensions rise even further? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Vote #Jobs #Liberty #Revolution #EndTheFed #Debt #BananaRepublic #Bailouts

Ep. 507 – The Balance of the Senate

The Kapital News
The Kapital News
Ep. 507 - The Balance of the Senate
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It’s election day in Georgia as both Senate seats are up for grabs. At the time the podcast it’s a dead-heat in both races at or around 50/50. It’s quite possible that the winners may be declared at some point on Wednesday. However, if the race is too close to call, then the overseas ballots may be the deciding factor. There are about 17,000 overseas votes that have a deadline for this Friday. So, if these votes would make a difference to the outcome, then it may not be until the weekend or next Monday, when one or both of these races are called.

As it stands now, the Republicans have 50 seats and the Democrats 48 seats, including two Independent Senators who caucus with the Democratic party. Should the Democrats win both seats in Georgia, then this would give the majority to the Democrats because the incoming Vice President, Kamala Harris, serves as the President of the Senate, and would thus be the tie-breaking vote. Such a scenario would also give the Democrats control of both chambers of Congress and the White House. A similar scenario as we witnessed following the 2016 elections, but for the Republicans.

The question that remains, is does it really make a difference as to who controls the Senate? It may mean things move more quickly or slowly depending on who holds the majority – but if the destination is over the cliff, does it really make that much of a difference if it’s quick or a little slower? When and where have any of these politicians took a real stand against something and stopped one terribly flawed bill after the next? When and where did anyone stand up against the out of control deficits and national debt? Same for monetary policy. Same for our defense budget. Same for our welfare state for both corporate and low income transfer payments. Same for our national security and surveillance state, et cetera, et cetera. So lip service will be given to those ideas and principles that so many believe in; yet nothing structural will be done about it. Our advice is to leave these two-parties and to stop voting for them – they have not done anything to deserve your vote. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Vote #Politics #Senate #USA #Liberty #Gold #Silver #Inflation #Revolution #BananaRepublic #EndTheFed #FireCongress