The economic hits just keep on coming with two dismal reports being released. The first was retail sales – plunging 16.4% for the month of April. This is the worst reading ever and was well below market expectations of a decline of 12%. All categories were harshly hit, primarily driven by the lock-downs due to COVID-19. Some of the worst hit, and no surprise, were clothing and accessories, electronics, appliances, and furniture, and restaurants and food service. On the back of this data, we also have JC Penney filing for bankruptcy this evening. This is another blow to the retail sector, as well as commercial real estate, and adds to a list of other big name retailers filing for the protection. Another notable report pertains to industrial production, which collapsed by 11.2% for the month of April – also the largest monthly decline since records have been kept. On a year-over-year basis, the decline is over 15% – this kind of decline has not been seen since the GFC, the end of WWII, and the Great Depression. Nonetheless, the DOW, the NASDAQ, and S+P 500 all closed the day in the green. However, what also had a very strong performance was that of gold and silver. Are the precious metals starting to sniff out the effects of money printing, deficit spending, geopolitical uncertainties, and the realization of the true economic and financial damage that likely lies ahead? Time will tell, but it is most definitely worth the time to pay some attention to the precious metals.
This evening in the House, Nancy Pelosi’s, “HEROES Act,” was passed along party lines and will now head to the Senate where it is all but certain to be voted down. However, it is also likely that there will be another round of spending – the question will be, when, and how much does it cost? Also in Washington, this afternoon, the President announced that the US will have a vaccine ready for use by the end of this year. This blows past all previous comments that the earliest possible would be 12-18 months, which would have taken us into 2021. Nevertheless, “Operation Warp Speed,” as it is to be known, is underway to develop a vaccine in record time and the President has also made comments that the military is to administer the vaccine. We don’t like the sound of that and this is well deserving of further explanation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Bailouts #EndTheFed #Debt #Gold #Recession #Depression #USA #COVID19
As we continue to navigate this new world during a global pandemic, coupled with a Presidential election in the United States, one thing is certain – the blame game. With all of the fallout surrounding the genesis of COVID19, who knew what when, who knows what now, and all of the societal and economic shifts – somebody is going to be blamed. Never ones to take responsibility, politicians the world over have been slowly starting to point the finger at each other, with most of the blame being hoisted on China. In turn, China has also started a media campaign that is blaming the West, and in particular, that of the United States. Despite the recent signing of the Phase 1 trade deal between the US and China, relations between the two nations may be in for some rough waters ahead. Expect the blame game to heat up.
As we enter the spring and summer months of 2020, there is much hope and anticipation that the US economy, among others, will begin “opening” back up and with it a strong economic recovery. We are very skeptical of a strong economic bounce-back. Nevertheless, this is also a Presidential election year and there is no question that the major candidates, President Trump, and most likely, former Vice President, Joe Biden, will step up their rhetoric against China. This rhetoric will likely lead to further distance between the US and China and may cause both sides to engage in economic and cyber warfare to greater degrees than which is already being conducted. In addition, there is the possibility of stepped up aggression by China in the South China Sea and perhaps responses by the US and regional allies. Other physical disputes could take the form of proxy wars, and we believe Venezuela and Iran to be probable candidates. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #Peace #War #Trade #Recession
Another historic day for the United States of America. Today the Chief Justice of the US Supreme Court, John Roberts, was sworn in today in the US Senate. Following his swearing in, the Chief Justice swore in the members of the US Senate. This is a serious process and it needs to be treated with the gravity and thoughtfulness that it deserves for the sake of the American people and for the respect of the US Constitution. The trial is scheduled to begin on Tuesday, 21 January 2020. The trial may last as short as a couple of weeks or perhaps stretch to over a month, should witnesses come forward and further documents be entered into the record. Time will tell and let us hope the members of the US Senate take their oaths seriously and administer impartial justice. May the truth be known and justice served. Stay diversified, stay vigilant, and stay with The Kapital News. #Impeachment #Truth #Justice #USSenate #Senate #Congress #Politics #Economy #EndTheFed #Peace #USA #Constitution
The Phase 1 trade “deal,” the US-Iranian tensions, and the Federal Reserve are front-and-center during today’s podcast. Of all these topics, which one is the most fraudulent? Which one pushes the most misinformation? Disinformation? Propaganda? Outright lies? Whether it’s coming from the President himself, a member of the Administration, any member of either party in Congress, or members and officials of another country – trying to determine the truth is a monumental task. And then one has to ask himself – does it even matter? Are the powers that be just going to do what they want to regardless of the truth? Regardless of the righteous and moral action? Runaway government spending, runaway money printing, and geopolitical tensions that could place us in WWIII. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #USA #China #Iran #Peace # War #Politics #EndTheFed
Reviewing a list of 20 market risks for 2020 was the focus of today’s discussion. The list of concerns was created by Deutsche Bank and much of the points are topics that The Kapital News has been discussing for quite awhile. There is much uncertainty that remains, from trade deals, to global protests, to Brexit, to Middle East tensions, to political elections, central bank policies, and much more. The year 2019 saw a big return when it came to US equity markets, (which made new all-time highs again today), this came on the back of massive amounts of liquidity provided by the Federal Reserve and other central banks, massive debt issuance by corporations and the US government, misleading trade deal headlines by President Trump and his Administration, and many others. In short, the markets were propped up by easy money and $1 trillion deficit spending. This is a far-far cry from the “greatest” economy ever in the history of the United States. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #EndTheFed #Debt #Politics #Peace #Truth #Justice
Just a follow up today of this week’s events from the UK elections to the impeachment process, to the Phase 1 US/China trade deal, and to some general market news. As a lot of these hot button issues come to some semblance of a conclusion, the markets will now have to start looking elsewhere to gain some positive momentum. Where exactly is it going to find such positivity? Perhaps talks of Phase 2 will commence immediately, please, NO! Or perhaps the mega liquidity injections by the Federal Reserve from now until early January will be enough to cause a Santa Claus rally? Only time will tell, but the headwinds still outweigh the tailwinds as far as The Kapital News is concerned. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Impeachment #Recession #EndTheFed #Trade #USA #China #Trump #Xi #HongKong #Truth #Justice #Peace #Congress #Republic
The Federal Reserve will be announcing their interest decision tomorrow for the last time of 2019. Market expectations are for the Fed to remain on hold. However, when we peel back another layer of the onion and look at the overnight lending market, we continue to witness further deterioration in the foundations of this mysterious market. It was only back in September when Chairman Jay Powell told us that the issues in the O/N market were temporary – due to Q3 taxes and Treasuries rolling over and coming due. Nothing to see here. Pay no attention to the man behind the curtain. We warned you then and warn you again that this was not temporary and that something serious could be lurking just beneath the surface. What this problem might be is anybody’s guess, but it’s not good when the O/N rate reaches near 10% – well above the Fed Funds Rate of 1.5-1.75%. This means the Fed lost control and the market gained control. And newsflash – the market always wins – as it should.
This caused the Fed to embark on non-QE, QE to the tune of $60B/month, but only buying short-term bills for the time being. Also, the Fed essentially is the O/N repo market (so much for temporary), providing upwards of $120B on an overnight basis. Then throw on top of it all, term repo, which is tens of billions more. Surely, this is being done because this is the “greatest” economy ever (sarcasm), and stop calling me Shirley. The Fed is now placed in a situation where we’re nearing the end of Q4 and those same liquidity issues of taxes coming due are a reality (recall Q4 2018). We also have stocks at all-time highs, supposedly low inflation, and an unemployment rate that is at a 50-year low. So, how can the Fed justify a rate cut, or officially announce QE4 is here and here to stay? We don’t advocate for this action, in fact, we want nothing more than the market to clear the markets of these malinvestments – as painful as it would be, but it is the right course of action. However, to keep the “system” alive, the Fed may have to resort to lower rates and QE, just to keep the system afloat – but for how much longer? And it’s not likely to last long. Because why? Because markets always win. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #EndTheFed #Politics #Truth #Justice #Peace #Republic
We’re just going to list some of the economic and geopolitical stories that are coming to a head this week:
1. General Overall Market Performance
2. The Impeachment Inquiry and Articles of Impeachment are expected to be released or at least announced tomorrow
3. The IG report from the Department of Justice has been released and it is not the bombshell that has been promised by the President. Nevertheless, there was some wrongdoing by the FBI and DOJ and those individuals need to be held to account and policies remedied
4. UK general elections are scheduled for 12 December and the fate of Brexit is very much at stake – it’s only been 3 1/2 years
5. The Federal Reserve’s FOMC, meets for the last time of 2019 and they will be making a decision on interest rates this week. At this juncture, markets are expecting the Fed to keeps rates on hold, so as to keep some of their “powder” dry
6. Lastly, President Trump is nearing his 15 December deadline regarding tariffs on Chinese goods. Will he implement, postpone, or cancel? All eyes and ears will be anxiously awaiting that decision. Those in the “know” can potentially make a lot of money in a very short period of time for another dose of market manipulation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Impeachment #Truth #Justice #PEace #Congress #Politics #EndTheFed
Of course President Trump couldn’t stay away for too long when it comes to tariffs and so he has placed tariffs on Brazilian and Argentine steel and aluminum. Claiming on Twitter that both countries were engaged in a deliberate effort to devalue their currencies. Trump argues that this places US manufacturing firms at a disadvantage. What he leaves out is the fact that Argentina is on the brink of economic collapse and a massive debt default. This is why the Argentine peso has lost so much value. Unless the President is arguing the Argentines are conspiring to collapse their economy for the sole purpose of devaluing the peso? We think not.
In the same vein of economics – US ISM manufacturing PMI contracts for the 4th straight month with leading indicators such as new orders and employment continuing to show signs of a further slowdown. And on top of all of this, President Trump is once again attacking the Federal Reserve and “demanding” that they cut interest rates and devalue the US dollar. Do you want your cost of living to increase faster than it already is? Well if you do, then I guess you want a weaker US dollar as well. We do not.
Lastly, on the economic front, US non-financial corporate debt nears the $10 T mark, which is almost 50% of US GDP. This eclipses the corporate debt levels prior to the recessions of the early 90s, the dot-com bust, and the GFC of 08-09. So, what could possibly go wrong? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #EndTheFed #Politics #Trade #USA #China #Truth #Justice #Peace #Protests
When we analyze US and rest of the world corporate debt and benchmark this against the Wilshire 5000 total market full cap index, we see a near 1 to 1 relationship. Thus implying that stock market performance is strongly linked to debt growth. This is no surprise to us here at The Kapital News, but it’s always interesting to see this data represented graphically. (We will do a video presentation on this as well). When one understands that debt is growth from the future being brought to the present, one must then ask the question, where will the future growth come from? This is the question at the heart of this central bank and debt expansion experiment. The Kapital News expects the fallout to be detrimental for generation(s). This also gives rise to outlandish and unsustainable valuations in the stock market. Market cap to US GDP is currently around 148% – levels not seen since the height of the dot-com bubble. Again, how long can this be sustained on a growing mountain of debt and currency creation?
In other news, President Trump has a major decision to make by 2 December as this is the deadline for him to sign the bipartisan Hong Kong Human Rights Act into law. Will he do it and risk upsetting the Chinese and thus a Phase 1 trade deal? Or will he cave and not sign it because he’s more concerned with the stock market as opposed to standing up for American values and human rights? Also coming due is a decision centered around tariffs. Come 15 December, tariffs are expected to increase and be placed on additional Chinese goods. Decisions. Decisions. American values? Human rights? Or new highs in the stock market? What will the President decide? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Truth #Debt #Recession #EndTheFed #Stocks #Trade #Politics #USA #China #HongKong #Justice #Peace #Republic
