Just yesterday we asked if the risk-reward breakdown was signaling danger ahead? Well as timing would have it, there was a large market pullback today across the major indexes. The question moving forward of course is, is there more downside to come, or is this just a much needed “breather” in a very overbought and overextended rally, whereby the next leg up is to be realized? Well, as we know, anything is possible when you have policymakers around the world doing their best to keep asset prices elevated. Unfortunately, these governments and central banks are doing so at any cost. And these costs are going to be truly devastating to the masses. These costs will show up, and many of them are already here, with some of the most destructive being that of inflation and hyperinflation.
Further today during our discussion was the initial jobless claims number which came in at 881,000 for the week ending 29 August. For the entire month of August, initial claims totaled over 5.1 million Americans. When we take into consideration all of the unemployment benefits being paid out, over 29.2 million Americans are receiving some form of benefit. This is for the week ending 15 August, so there is a lag involved, but what is most startling, is that the week-over-week change was an additional 2.195 million Americans claiming benefits. This is clearly in the wrong direction, but consistent with our analysis of the many distortionary effects that exist within the system due to various policy programs from the government and the Federal Reserve. A fuller and more accurate picture of the jobs market will be made known once the moratoriums and other policies are lifted and/or exhausted. Tomorrow, the August jobs report will be released. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Gold #Bailouts #Unemployment #BananaRepublic #EndTheFed #Silver #Recession #Depression #USA #Protests #Liberty #Revolution
Markets making new highs and yet the volatility index, the VIX, is also moving higher. What might this suggest for markets? Despite the massive rally across the major indexes, the VIX has held relatively firm. But with the VIX moving up with the S&P 500 of which it tracks, might this be a warning of more volatility ahead? With valuations breaking one record after the next on a daily basis, the risk-reward picture is definitely not pointing in favor of adding more risk to one’s portfolio. For example, just yesterday, Apple, Inc.’s market cap was larger than the entirety of the Russell 2000 index! However, if enough people believe that printing presses are panaceas, then this mania may very well last for longer than many think possible. Time will tell.
On another risk-reward note, the Trump Administration is floating a story that a COVID-19 vaccine may very well be available by the end of October to 1 November. Let’s see, what also is around that time-frame? Oh, yes, that’s right, the presidential election. So a process that usually takes years is now going to approve a vaccine within months? Talk about “Operation Warp Speed.” And of course, The Kapital News imagines that there will be massive insider trading on this information as the Administration is going to know in advance what companies are going to be approved. And on top of this, because this is a rush-job, the same pharma companies that are going to print a mint on the back of this news, will also be immune from any potential lawsuit, should their vaccine(s) not prove safe and/or effective. How can they lose? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Gold #Jobs #Bailouts #BananaRepublic #EndTheFed #Silver #Liberty #Revolution #Depression #Recession #USA
During our discussion today we recap the Republican National Convention, the Federal Reserve’s new policy stance with respect to inflation and employment, and we also cover economic data pertaining to jobless claims and the money supply. Hint, hint, inflation is here, stagflation is here, and hyperinflation is even a possibility in the not too distant future, even here in the USA. Stay diversified, stay vigilant, and stay with The Kapital News. #RNC #DNC #Politics #Economy #USA #BananaRepublic #EndTheFed #Inflation #Stagflation #Hyperinflation #Gold #Silver #Recession #Depression #Protests #Liberty #Revolution
Since the President wanted to sign executive orders to extend unemployment benefits and to suspend the payroll tax cut, among others, which is unconstitutional, we wanted to discuss the unfunded liability situation in the US. The payroll tax is responsible for funding the social security fund as well as that of medicare. Understand that at this juncture, the payroll tax cut is really just a suspension, meaning that the tax will have to be paid at a later date – by the tax deadline in 2021. This could prove to be a big shock to many people who may decide to spend the extra income as oppose to saving it. Of course, many employers will be hesitant to comply with this executive order since it is unconstitutional and because it will likely cause obstacles with respect to their bookkeeping. But hey, it’s an election year, so who cares about the details and the US Constitution?
In other news, we also discuss the decision by the Lebanese government today to resign their post. The weakest link of any chain is the first to break and the dominoes are set as we continue to see countries in economic collapse and others on the brink. The global protests and riots that were occurring prior to COVID-19 were not and are not transitory, but rather history in the making. They will continue and likely escalate as we continue through 2020 and beyond. The world is lacking leadership and direction. Governments are unaccountable and corrupt and central bankers are in a currency war to the bottom where the true costs of these fraudulent acts are borne by the people – and the lower on the income scale, the worse the effects. People around the world are sick and tired of being sick and tired, and thus we are witnessing history in the making with these global protests. Some are violent, some will turn violent, others will demand government resignations, others will overthrow their governments, civil war(s) may ensue, as wars between nations. Let us pray for a peaceful resolution, but if current policies are implemented, then we are sealing our fate to a dim future. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Gold #Depression #BananaRepublic #Silver #Bailouts #USA #Lebanon #Protests
With another busy news week, we thought it prudent to go over some of the major points. Recapping the decision by the Federal Reserve, the GDP and jobless figures, and market performance rounded out the economic and financial news. While on the political front, we covered the disgraceful hearing of AG Barr earlier this week before the House Judiciary Committee, and briefly discuss Joe Biden’s upcoming decision as he announces his VP candidate next week. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Recession #Debt #Protests #Depression #Bailouts #Inflation #BananaRepublic #EndTheFed
A big data release today as we saw the first estimate for Q2 GDP, initial and continuing jobless claims, and the Fed’s balance sheet. On the GDP front, we witnessed an annualized contraction of -32.9% for Q2 of 2020. This is an historic contraction with nearly every facet of the economy experiencing a decline. One area of increase of course was federal government spending.
With respect to initial jobless claims, for the week ending 25 July, we witnesses the second consecutive week over week increase. This is the wrong direction, but unfortunately this is not shocking to The Kapital News. Another 1.434 million Americans filed for initial jobless benefits, which was an increase from the previous week of 1.422 million. Continuing claims also moved higher for the first time in several weeks, now resting at 17.018 million Americans. In aggregate, which takes into consideration the various emergency and pandemic related programs, for the week ending 11 July, there were 30.202 million Americans receiving some form of unemployment compensation. This was a decrease from the prior week ending 4 July of 31.804 million. This is moving in the right direction, however, this data lags a couple of weeks. And with the recent set-back(s) in re-openings, this number may very well increase in the coming weeks. There is also the effect of some of these programs potentially coming to an end if Congress does not extend them or create something new. And there remains some distortionary effects on the “true” jobs picture as PPP loans are still being utilized. So, once these loans expire, will these employers retain all of their employees or will the let some of them go (again)? Time will tell.
Lastly, the Federal Reserve’s balance sheet was reduced slightly from the prior week continuing its recent plateauing trend. However, as Jay Powell stated yesterday following the conclusion of the FOMC meeting, that the Fed will continue to do whatever it takes and will continue to buy US Treasuries and mortgaged-backed securities at its current rate. With recent announcements of extension of various emergency facilities and dollar swap lines, and expectations that Congress will soon be passing another $1 trillion plus spending bill, it is reasonable to assume that the Fed’s balance sheet will be moving higher over the coming months. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #GDP #Jobs #Gold #USA #Depression #Recession #Silver #Liberty #Inflation
Well no surprise, as was expected, the Federal Reserve decided to keep interest rates at record lows between 0.00-0.25 bps. The Fed has also decided to extend their dollar swap line program until at least March of 2021. This is in addition to the extension of their alphabet soup of emergency facilities that are now set to expire by the end of December 2020. When asked this afternoon by a reporter about when the Fed may begin increasing interest rates, Jay Powell, Chairman of the Federal Reserve, responded that he isn’t even thinking about thinking about raising interest rates. This has been a consistent answer as the Fed has cornered themselves by these various policies. If the Fed was unable to raise rates during 2018 and to “normalize” its balance sheet, (supposedly when the economy was strong), and the markets threw a tantrum and sold off some 20% in the Q4 of 2018, then how will the Fed be able to do it this time? Especially with their balance sheet nearly double where it was back in 2018. Recall that rates got to about 2.5% in 2018 and the economy and/or markets couldn’t tolerate it – hence the market sell-off. So presumably, if and when the Fed attempts to raise rates, we’ll be looking at 1 to 1.5%, maybe even less, that will have the same effect whereby the markets won’t be able to withstand such “high” rates. This is so laughable and yet so tragic at the same time. Be on the lookout for inflation, because it is coming – in fact, it’s already here.
In some other news, former VP Joe Biden is expected to announce his VP pick during the first week of August. This is one the biggest decisions that any Presidential contender has to make during their campaign and so we can expect quite a bit of news coverage on this topic. What we do know is that it will be a woman, as Biden has already made this commitment. Some of the top picks may be Senators Kamala Harris and Elizabeth Warren, along with former Obama Administration official and National Security Advisor, Susan Rice. This news event will take the campaign on both sides to the next level. There’s only a few months to go before election day and if 2020 continues in the same way, then that amounts to a lifetime between now and 3 November. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Debt #Bailouts #USA #BananaRepublic #EndTheFed #Depression #Recession #Silver #Protests #Liberty
More is never enough and more is coming to town. The Senate Republicans revealed their $1 trillion spending bill to “assist” the with pandemic response, while simultaneously attempting to appear concerned about the national debt and deficit. We would love to laugh, but it’s such a tragedy. With a nearing $27 trillion national debt with an annual deficit for FY2020 approaching $4 trillion, the Republicans are now becoming concerned? Give us a break. Now Congress will go back and forth between the House Democrats’ version and that of the Republicans’. One thing is certain, this is going to have a price tag of at least $1 trillion and we imagine it will be even higher once the ink dries.
Also taking place during the “week of more,” is the FOMC two-day meeting beginning tomorrow and concluding on Wednesday. The decision by the Federal Reserve will be made known Wednesday and Chairman Jay Powell will make remarks and take questions from reporters. An easing bias is likely to be signaled along with a continuation of the “whatever it takes” attitude that has now become the de facto motto of the Federal Reserve. Recall that the Fed’s balance sheet is around $7 trillion, which has exploded from $3.8 trillion (also an historically high figure), from only several months ago. With Congress continuing their beg, borrow, and steal operation, the Fed will become one of the only buyers in town for Uncle Sam’s junk debt, and as such, we expect the Fed’s balance sheet to continue its ascent to ever new highs.
The actions undertaken by governments and central banks the world over have started to make investors wary of fiat currencies and with good reason – they’re going out of style. In addition to the inflationary and currency destructive practices, there is also an onslaught of geopolitical risks. This combination is causing a flight to safety in the likes of gold and silver. Barring some major reversal of policies, the long-term bull market for gold and silver is now underway. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Recession #Silver #Debt #USA #BananaRepublic #EndTheFed #Bailouts #Jobs #Depression
Another busy week, which has been par for the course throughout 2020. In today’s podcast we recap some of the economic data that made its way across the newswires. We also discuss the many distortionary effects that exist within the markets and how these relationships are likely going to be breaking down in the near future. Some other stories that we touched upon were the torrential rains and flooding that is taking place in China, some parts of India, and Bangladesh. With respect to China, if a major dam gives way due to the flooding, then some 40 million Chinese will be directly affected – this will make for international news and a major humanitarian crisis.
Lastly, we conclude with an update to the Jeffrey Epstein and Ghislaine Maxwell court cases. The pair, allegedly along with many other powerful people from around the world were involved in decades long sex trafficking ring(s). Epstein committed “suicide” last year while in a maximum security prison and Maxwell was recently apprehended by the FBI. Her trial date is set for next summer (if she can make it that long). There are also reports that a judge on the case has ordered that some sealed court documents are to be unsealed as early as next week. In it, there are supposedly a list of names that details who was involved in the sex trafficking ring in one form or another. These are likely going to be well known names in politics, business, and entertainment, so do not be surprised when the names drop, and hopefully this information is released. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Debt #Recession #Silver #Depression #USA #Liberty #Justice #Truth #Peace #Revolution
Another Thursday is in the books and as such it’s a data dump of initial jobless claims and an update to the Federal Reserve’s balance sheet. Despite being several months into the COVID-19 pandemic and the Greatest Depression, we are still unfortunately witnessing over 1 million Americans filing for initial unemployment benefits for the week ending 18 July, as the number was 1.4 million – an increase from the prior week. This is not in agreement with any kind of V-shaped economic recovery. In fact, as we continue to see several states across the country close, re-close, or slow their re-openings, it is likely that the jobs report for the month of July will paint an ugly picture. While the White House may want to cheer the June jobs report, which they did, it may prove to be a premature victory lap, as the reality of the pandemic and depression starts to set in.
As we have noted in previous podcasts, the actions taken by governments and central banks can aid the liquidity issues (at least for awhile), but they cannot alleviate the coming insolvency crisis. The insolvency crisis is waiting in the wings and with it will be the loss of hundreds of thousands, if not millions of more jobs – many of which will be classified as permanent job losses. This was an inevitable outcome for living off of debt and thinking that it was all real and sustainable. Unfortunately, we’re repeating the mistakes of the past, which will only prove to make any economic recovery slower and more painful than what otherwise could have happened.
In other news, the Fed’s balance sheet increased “minimally” by $6 billion from the previous week. However, with Congress set to pass new legislation to extend unemployment benefits and spending to help states and local governments, amongst others, will send the Fed’s balance sheet north of $7 trillion and beyond in short order. In a tit-for-tat response to yesterday’s order from the US State Department ordering Chinese diplomats to close down their consulate in Houston, Texas, the Chinese have ordered US diplomats to leave a US consulate in China. This is the new cold war and tensions will likely remain high for the foreseeable future and this issue will also become center stage politically here in the US during the 2020 Presidential election. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Debt #Recession #USA #China #Depression #BananaRepublic #EndTheFed #Congress #Silver #Protests #Bailouts
