Tag: Stocks

Ep. 488 – The Headline Economy
The Kapital News
The Kapital News
Ep. 488 - The Headline Economy
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It’s all about the story, the narrative, the headline. Global equities are all about weaving a nice bed time story to pump stocks higher and here in the US – to all-time highs and record valuations. This historically does not bode well at all for future positive returns. In fact, it’s usually a harbinger of a significant decline – a reversion to the mean. As we have been witnessing, markets, once they sell-off, have been doing so to a greater degree and with greater rapidity. Recall Q4 of 2018 where the major indexes lost around 20 percent. Then fast forward to earlier this year, where we witnessed a near 40 percent drop within 6 weeks. What might this portend for the next leg down? Perhaps 50 percent within a few weeks – could you imagine the carnage?

Nonetheless, like a good little addict, the market has been conditioned to take any negative news in stride, “knowing” that their dealer(s), the Federal Reserve and the Congress will have their backs and throw as much monetary and fiscal support (dope), into the system as they can. And if the actual liquidity isn’t enough – don’t worry. This is because there are a number of headlines that can be circulated to juice the markets. Take for example the US-China trade talks that we heard about endlessly throughout 2019 and only to come to a “Phase 1” agreement that was no where near the hype. Then onto Covid-19 and the “need” for monetary and fiscal support – this coming to the tune of trillions of dollars that we did not and do not have. Then calls for further actions from our policymakers and this has been making the headlines for several months now, but with no deal yet agreed upon and signed. Why actually do something, if the headline is good enough to pump the markets? Then there’s the vaccine headlines – with several major pharmaceutical companies working on this assignment, this means that there can be headlines galore promising a vaccine soon to enter the market. Over the last two weeks and even today we hear of more information on the effectiveness of some of these vaccines. And while there are others, we’ll leave with the rush of IPOs – reminiscent of the late 1990s and the dot-com bust, a myriad of companies, mainly tech, are rushing the markets to raise capital. Of course very few, if any, are actually profitable – but profits matter not. This is because we’re in the midst of the headline economy – fundamentals don’t matter – just a good story. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Jobs #Markets #Liberty #Revolution #EndTheFed #BananaRepublic #USA

Ep. 487 – The Zombie Economy
The Kapital News
The Kapital News
Ep. 487 - The Zombie Economy
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According to estimates from Deutsche Bank, nearly 18 percent of US companies can be classified as “zombie” businesses. This is 50 percent higher than levels seen only two years ago. Zombies are generally defined as firms that can pay their operational expenses and make debt servicing payments, but are unable to pay off their debt(s). Their existence, especially at these levels, are extremely dangerous and destructive to the economy and society. Many, if not all, are “kept alive” by governmental and monetary policies. However, these actions in the long-run prove detrimental to the economy because the capital and/or liquidity injections into the system come at the expense of more debt, less investment, and fewer to no gains to productivity and innovation. Furthermore, it also hurts successful businesses more than otherwise would be the case in the event of an economic downturn. This situation arises, because in a well-functioning market economy, these zombies would go out of business or restructure, thus allowing the healthier firms to grab more market share. Well, if the zombies are kept alive, then it becomes harder for the well-run firms to acquire a bigger piece of the market. This essentially is policy making for the short-term at the expense of the long-term.

What becomes more disconcerting is that there is currently around $1.4 trillion of debt obligations on the books of these zombies. This is more than double the amount seen during the depths of the GFC. In fact, if about $1 trillion of this amount were paid down, we’d still be staring at GFC levels – just to provide some perspective. This is completely unsustainable and unhealthy. The federal government through the Nobody CARES Act, and Federal Reserve through several of their “emergency facilities,” have served to prop up these zombie firms. What should have happened is rates should have increased, poorly managed firms would have went bankrupt or insolvent, malinvestments would be flushed out throughout the economy, and well-managed firms would begin to gain market share. This is not an easy process and because of the size of this massive bubble, the correction would prove devastating to a lot of people. Nonetheless, this would have been a correction on which to build a solid foundation for future prosperity. But because politicians and central bankers do not want to be held to account, they take the “easy” way out and borrow, print, and spend money we do not have, in order to make it appear that the economy is in good shape – it is not. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Zombies #Bailouts #Recession #Liberty #Revolution #BananaRepublic #Debt #USA

Ep. 486 – Vaccine Monday
The Kapital News
The Kapital News
Ep. 486 - Vaccine Monday
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Another Monday and another vaccine headline. This one from Moderna, where according to their press release, their vaccine is 94.5 percent effective. This bests last week’s vaccine headline from Pfizer, where theirs was “only” 90 percent effective. Yes, Pfizer’ press release also came out for the Monday trading session. There are still several other pharmaceutical companies attempting to create a vaccine, so we might see this every Monday from now until perhaps the end of the year. These companies appear to be on a rotation when it comes to their vaccine announcements. We shall see. Nonetheless, the news catapulted US equities to new all-time highs and carried global stocks up as well. So despite having tens of millions of Americans out of work, collecting unemployment, in line at food banks, and facing evictions, we also have a stock market that is making new all-time highs. This is clearly a first world banana republic. And serves as further evidence of our moral, political, social, and economic decay and decline as a nation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Vaccine #Bailouts #Debt #Recession #Depression #Gold #Silver #Liberty #Revolution

Ep. 485 – The Myth of Economic Recovery
The Kapital News
The Kapital News
Ep. 485 - The Myth of Economic Recovery
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Another week and another initial jobless claims report. For the week ending 7 November, 709,000 Americans filed an initial claim. While this may be the lowest number we have witnessed in months, this is still 3.5 times the average of what was “normal,” prior to the lockdowns, restrictions, and recession. This is still a stubbornly high number despite the fact that several trillion dollars have been thrown at and into the system. Continuing claims continue to decline, but this is a function of people returning to work and/or finding new jobs, but it’s also a function of state unemployment benefits being exhausted. This leaves those who remain unemployed and without regular state assistance to file for extended benefits if they’re available and qualified, or to apply to the Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation programs. Both of these programs are the children of the Nobody CARES Act and both have been trending higher in recent weeks. These programs can also assist “gig” workers and the self-employed. The fact that these numbers are increasing is disconcerting and evidence that a lot of stress remains throughout the economy.

This is also in agreement with the recent October jobs report where we continue to see about 3.7 million permanent job losers, high levels of part-time workers, and an increase in the long-term unemployed. Not to mention a lot of distortionary effects are still in the system as a result of fiscal and monetary measures. Some of which are near exhaustion and/or expiration, while others are continuing. Creating trillions of dollars and throwing them into the system will get you so far and even with that we still have 21.1 million Americans claiming some form of unemployment insurance. This is not an economic recovery – this is smoke and mirrors from our government and central bank – and will carry with it a very hefty price tag. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #USA #Bailouts #Debt #Recession #Depression #Inflation #Gold #Silver #Liberty #Revolution

Ep. 481 – Election, Jobs, + Money, Oh My!
The Kapital News
The Kapital News
Ep. 481 - Election, Jobs, + Money, Oh My!
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A few days from election day and we still do not have a President-Elect. Many votes are still being counting across several battleground states that will decide this election. A recount will be taking place in the state of Georgia, due to the razor thin margins. A previous large lead held by President Trump in Pennsylvania has now switched to a Biden lead. And with more mail-in ballots to be counted, if the trend continues, it appears that Biden will widen his lead, which currently stands at around 28,000 votes. Should Biden win Pennsylvania, he will have 273 electoral votes, which would be enough to declare him the winner. Biden still has several avenues to get to the 270 electoral vote threshold. However, President Trump is in a situation where he has to win virtually every remaining state. This is a tall order, especially given the fact that Biden leads in all contests, but it can still happen. Until all votes are counted, this race will continue.

In other news, we discuss the initial jobless claims figures. Another 751,000 Americans have filed for unemployment insurance for the week ending 31 October. The previous week’s tally was increased by 7,000 to 758,000. In total, amongst all forms of unemployment insurance, for the week ending 17 October, comes to 21.5 million – a decrease of 1.1 million from the previous week. We also note that the Federal Reserve has decided to keep rates at the zero bound and that the Fed will continue to do whatever it takes to “support” the economy and the markets. Expect the Fed’s balance sheet to continue to increase and to make new all-time highs.

With respect to the election – please be patient and civil as all valid votes are counted. This is a record turnout in terms of total votes cast – this is something to be proud of. While it may be easy to chase conspiracy theories and/or to claim fraud or other illegal activity because the vote counting is taking a while – please refrain from going down this path. It’s more important to be accurate than it is to be fast. Each vote is someone’s voice, and their voice deserves to be counted and to be heard. So respect this and pass the message along. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Vote #Jobs #USA #Economy #Gold #Silver #Liberty #Revolution

Ep. 472 – Closing Arguments – Election 2020
The Kapital News
The Kapital News
Ep. 472 - Closing Arguments - Election 2020
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With only one week to go until 3 November, early voting continues to shatter through 2016 figures. Current early votes stand at 70.5 million with 47.2 million being mail ballots, and 23.3 million being in-person. This is now over 50 percent of the total turnout in 2016. It is estimated that this year will see anywhere between 150-160 million votes. Should the trajectory of early voting continue through this week, then it is highly possible that this will represent 50-70 percent of the total vote turnout of 2020. If this proves true, then it increases the likelihood that a winner will be announced on election night or within a day or two. However, if the race is shown to be close, especially in key battleground states, such as Pennsylvania and Florida, then we can expect a legal battle up to the US Supreme Court, and this could takes weeks, if not months to resolve. Despite the probability that the Biden/Harris ticket will prove victorious, it is still very much either man’s race. This is 2020 and a lot can happen in a week to put it mildly. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #Economy #Liberty #Revolution #USA #Trump #Biden #Vote

Ep. 471 – Home Stretch: Election 2020
The Kapital News
The Kapital News
Ep. 471 - Home Stretch: Election 2020
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With one week to go until election day, it is still very much either man’s race. However, with the consistency in the polling, both nationally and across the states, the probability is that Joe Biden will win this election. When analyzing the electoral college map, there are several avenues to victory for the Biden ticket, as opposed to a few for the President. But recall, in 2016, there were only a few avenues for then candidate Trump – and he won – so it can happen again.

Early voting is simply on a roll as we are now standing at 64.2 million votes being cast! Mail ballots represent the largest block with 43.2 million votes, while in-person accounts for 21 million. This is shattering the numbers for early voting in 2016 and some analysts project as high as 100 million votes may be in prior to election day, 3 November. If this is the case, or even close to it, then it is likely that we will know the winner on election night or within a day or two. Of course, if it’s a close race, then this may drag on for weeks, if not months, as it makes its way through the courts. Another indicator of an early election night, would be if Joe Biden should win the state of Florida. Should this happen, Biden is nearly guaranteed a victory. However, should Trump win Florida, as he did in 2016, then it’ll likely be a long night, unless Biden sweeps across the board in other battleground states.

Election 2020 and Joe Biden are much different than election 2016 and Hillary Clinton. An outsider versus an insider, straight talk against political correctness, no political track record versus a lifetime in politics, and a few others. Now, in the midst of a global pandemic and the greatest depression, coupled with the President having a political record on the books, changes the dynamic. Lots of Democrats “crossed the line” to vote for Trump in 2016 as did many Independents. There was also a large contingency that didn’t vote due to the unpopularity of the two candidates. Also, many Democrats who wanted Bernie Sanders to be the nominee, did not like how the DNC treated Sanders, and so they either didn’t vote, or voted third party. A lot of this drama that helped Trump in 2016 appears to be non-existent or at least much smaller than before. Will those same Democrats be comfortable giving Trump another four years, now that they know how he governs? Same question for Independents and even Republicans who were hesitant last time, but are they now not going to vote for Trump in 2020?

With one week left to go, it’s anybody’s guess, but what is not a guess, is the fact that the structural issues are not being addressed, nor will they likely be regardless who wins. What’s also a near 100 percent certainty is the continuation of the political, social, and economic decline and decay – again, because the structural issues are not being dealt with and because of the lack of leadership. Stay diversified, stay vigilant, and stay with The Kapital News. #Election2020 #Debates2020 #Economy #Liberty #Revolution #Trump #Biden #USA

Ep. 469 – Election Interference
The Kapital News
The Kapital News
Ep. 469 - Election Interference
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No one holds a candle to the type of election interference that the US engages in, but nevertheless, we heard from the Director of National Intelligence (DNI), and Director of the FBI this evening about interference campaigns being run by Iran and Russia. Apparently, Iran is sending out emails to Americans with threatening statements to vote for a certain candidate. The Kapital News is sure that there are many other attacks and attempts underway, but this is what we are being informed of as of this evening – with only two weeks to go until election day.

We have discussed in previous podcasts the dangers of social media platforms and their effectiveness with respect to spreading misinformation and disinformation. With some deep pockets and/or a very creative mind, individuals, teams, campaigns, political groups, and yes, foreign actors, can shape political opinions, and with it, potentially drive election outcomes. This social media Pandora’s box has been opened, and the contents are not going back in anytime soon – if ever. And don’t forget, this is all going on while President Trump claims that it’s a rigged election if he should lose, but evidently everything is fine if should he win – this is outrageous and only goes to further divide, confuse, and frustrate the American people.

In other news, President Obama was on the campaign trail this evening in Philadelphia, Pennsylvania – a battleground state. Attempting to be the “closer” for the Biden-Harris campaign. The Democrats are looking to regain Pennsylvania, Michigan, and Wisconsin, the “blue wall.” If this should happen, then odds have it that Joe Biden will become the next President. Current polling would indicate that Biden has a lead in all three states, but so did Clinton in 2016 – this race is far from over. We shall see if President Obama’s message was enough to turn PA blue once again for the Democrats. Early vote counts are currently north of 44 million, representing about 32 percent of 2016 total voter turnout. It’s nearly 3-to-1 in the breakdown between mail ballots and in-person votes at this juncture. With more votes taking place in these early rounds, it increases the likelihood that we’ll know the winner within a day or two of the election. However, should there be some tight races in key battleground states, then it could take weeks or months to determine the winner of the White House. And buckle up – tomorrow evening is the second and final debate between President Trump and VP Joe Biden – anything can happen. Stay diversified, stay vigilant, and stay with The Kapital News. #Elections2020 #Debates2020 #Economy #USA #Russia #Iran #China #Vote #Gold #Silver #Inflation #Debt #Bailouts #Jobs #Liberty #Revolution

Ep. 468 – Democrats + Republicans Have To Go!
The Kapital News
The Kapital News
Ep. 468 - Democrats + Republicans Have To Go!
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This country is beyond its tipping point and the economic and political system is to blame – as are the people for allowing this to build up around them. The merger of big business with big government was always going to bring us to this point in time – it was merely a question as to when this would happen. Well, here we are. Taken with the two-party system, which is really just one party, has brought this nation to her knees, and because of the economic and political system, our choices are more of the same. This time with two, seventy-something years-old men, who, as we’ll put it nicely, have lost their fast ball. In such trying and dire times, we get to choose between a bombastic demagogue who takes zero responsibility and someone who has been in government for nearly fifty years who very much is a part of the problem and the system. This is pathetic, embarrassing, and a disgrace. And because these are bad choices, the country is still naturally split on who to vote for. It’s possible that there will be a red or blue wave, but it’s also possible that there’s a divided government – we don’t know which scenario is the worst one!

We are in the midst of the greatest depression. The reason we do not yet realize this is due to the fact that central governments and banks have thrown trillions of dollars into the system. All this has done is to buy the system some time. And in the interim, for these governments and central banks to give the newly printed money to their closest of friends and corporations. Meanwhile, small businesses and individuals are suffering, and unfortunately, this will continue. In fact, this is likely to get even worse. This is because the trillions of dollars have only served the purpose of keeping the system afloat. Once these dollars have been used and thus their effects diminished, then markets are going to have to face reality. This reality consists of, a commercial real estate collapse, millions of evictions, a countless number of insolvencies and bankruptcies, which will bring massive layoffs, residential real estate declines, and if the funny money cannot continue to lift equity prices, then massive selloffs in the equities markets. This podcast highlights the destructive nature of our system and provides an untold amount of data points and evidence affirming our argument. So the question becomes – when will you leave this two-party system and demand real change? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Elections2020 #Bailouts #Debt #Inflation #Gold #Silver #BananaRepublic #EndTheFed #Liberty #Revolution #USA #RNC #GOP #DNC

Ep. 467 – More Spending – Put Up or Shut Up
The Kapital News
The Kapital News
Ep. 467 - More Spending - Put Up or Shut Up
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Wall Street did not like the fact that there was not another round of spending agreed to over the weekend or during the day’s trading session – equities sold off. This is the same song and dance we have witnessed several times before throughout 2018-2019 with the US-China trade talks, and the last several months with talks of more spending. Of course, we don’t have the money – but we guess, who cares?! Nonetheless, these stories are thrown out there to juice and pump stocks higher even though there isn’t really anything agreed to. But as we noted last week, as was the case in previous situations, there will come a day when the markets say enough talk – put up or shut up. Well that appears to have been the case today as noted by the selloff across the major indexes. Now, in overnight futures trading, we have the major indexes trading higher again on hopes that Speaker of the House, Nancy Pelosi, along with the White House, and Republicans will continue talks tomorrow, and believe something can be agreed to prior to election day. These headlines are an insult, pure propaganda, and market manipulation, but we digress. And of course, it’s the country and the American people who suffer the consequences and are caught in the crossfire.

On the election front, some 31.3 million votes have already been cast, representing about 22.5 percent of the 2016 total vote turnout. This is quite astonishing and we may very well witness more than half the 2016 turnout occur before election day. This will likely lead to knowing on election night or the day after, who has won the Presidency – as opposed to having all or the majority of votes on election day. A potential con of all this early voting is voters may miss an, “October Surprise,” but we doubt this would have any major effect – most people know who they want to vote for and not much will sway that in either direction.

The President is campaigning heavily and has even been going to some strong red-states, such as Arizona and Georgia, thus signaling that the Trump campaign is concerned with the polling results coming out of these traditional red-states, which Trump won in 2016. President Obama will also be on the campaign trail this week for his former Vice President, as he makes stops in Pennsylvania. The race is still very much up for grabs, but if Biden is able to win Wisconsin, Michigan, and Pennsylvania, which he’s up in the polls for all three, then Joe Biden is likely the next President. This would even assume Trump wins the south as in 2016, Iowa, Nevada (which he lost in 2016), Texas, Arizona, and Ohio. So this paints a very big uphill battle for the President to gain those 270 electoral votes that are needed to cross the finish line. It can happen, but the path is slim. The last debate between the Presidential candidates is also taking place this Thursday. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Elections2020 #Debates2020 #Inflation #Debt #Gold #Silver #Bailouts #Liberty #Revolution