This week is surely setting up to be one for the front pages. There will undoubtedly be further remarks and tweets from President Trump regarding an interim “Phase 1” trade deal with China. Short on specifics and reminiscent of this summer’s trade truce, we here at The Kapital News are highly skeptical of any deal of worth. Even if there is substance, this would simply take us back to where we were prior to the trade war in regards to the amount of agricultural products being purchased by the Chinese. Nevertheless, The White House will continue its jawboning and market manipulation tactics. Other market rallying headlines were the rumors of a Brexit deal in the works only to have conflicting stories come out this weekend claiming that there is still much work to do. The Queen’s Speech is also set to take place on Monday and if Parliament shoots down the vote on the Queen’s Speech then there is going to be much pressure on PM Boris Johnson to resign. This would only serve to throw another curveball in the Brexit saga. The Federal Reserve has started another round of QE. Welcome to QE4, but don’t you dare call it that – at least the Fed doesn’t want you calling it QE. Why? Because the Fed also claims that the US economy is strong and is in a good place, so then why would they need to engage in an emergency monetary policy? A rose by any other name is still as beautiful. #EndTheFed The Fed is also expanding their involvement in the overnight repo market. Recall it was initially just a one-off, then extended to 10 October, then extended to 4 November, now it’s going to last until at least January of 2020 (and it’s not likely going to be enough). There is also continuing escalation between Syria and the Turks. It is likely that if the Turkish military continues deeper into Syria that Syria will declare war against Turkey. Also, since President Trump has ordered the removal of US forces from Syria, the Kurds have now formed an alliance with the Syrian government in order to fight-off the Turkish military. This story has drawn the ire of Republicans and Democrats alike and are pressuring the President to hit Turkey with harsh sanctions to crumble their economy. It is unknown at this time as to what sanctions if any the White House will impose. President Trump is calling an end to these endless wars by withdrawing US forces from Syria, only to deploy thousands more to Saudi Arabia and surrounding countries to fend off Iranian aggression. Does this make any sense? Stay diversified, stay vigilant, and stay with The Kapital News. #Brexit #War #Peace #Economy #TradeWar #Politics #Impeachment #Whistleblower #Justice #Truth #Recession #Stocks
With high-level talks expected to take place this Thursday and Friday in Washington, DC, all eyes and ears are anxiously awaiting the outcome. This is ridiculous in what’s supposed to be a free-market capitalistic system, that the masses await the words of a few people – sounds much more akin to a dictatorship if you ask us. The markets rallied today on the back of “positive” trade headlines that suggested that despite some of the recent moves made by the US against China that China was still willing to discuss and potentially agree to a partial trade deal. The markets must have a very short memory, because the President along with his chief trade advisor, Peter Navarro, have both claimed that they don’t want a partial deal, they want a complete deal. Now we understand that these men talk out of both sides of their mouths, but nevertheless, the markets are once again, for the millionth time, simply looking for any good news to warrant more stock buying. Interestingly, however, right before the US exchanges closed for the day and a couple times since then, reports were dropped claiming that no progress has been made regarding the trade talks and the markets sold-off from their highs with about twenty minutes remaining in the trading session. Then, more news came out during the futures trading session where the major indexes were down 1%. Basically giving back in a couple of hours what took all day for the market to gain and hold onto. Why? Because a story broke that the Chinese trade delegation might not stay until the weekend – just one day of high-level talks and then back to Beijing they go. And then another story broke that said things were again fine. We can’t make this stuff up. Market manipulation anyone? The first casualty of war – trade or kinetic – is the truth. We trust neither side anymore and that in and of itself is a sad statement, but we have been told for nearly two years that trade wars were easy to win, that a deal was close at hand, etc etc etc, and the result has been NO trade deal and only further escalation on both sides. We’ll now wait to see what BS they feed the masses tomorrow, the next day, and the many days that will follow. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #TradeWar #EndTheFed #Economy #USA #China #Trump #Xi #Tariffs #FreeMarkets #Politics #Truth #Peace #Stocks #Debt #Justice #NoWar
Yesterday was the US Constitution day and today is Fed day. And the Fed did not disappoint. The markets were expecting a rate cut of 25 basis points and that’s exactly what the Fed did. There has been some chatter about the overnight lending market and how the Fed has had to intervene and inject tens of billions of dollars to ensure that markets were properly funded. This is basically QE, but by a different mechanism. QE was injecting around $50 billion a month into the system – this recent action was at least $54 billion on an overnight basis! When asked during his press conference about this, Jay Powell, the Chairman of the Fed, stated that it was due to corporate taxes being due as well as US Treasuries maturing. He also noted, perhaps ironically, or ominously, that this is “contained.” Former Fed Chairman, Ben Bernanke, said that sub-prime was “contained,” and we all know what happened next. The Kapital News continues to believe that the Fed will continue with its easing cycle. This does not mean that every meeting will result in a rate cut, but this will be the direction in both subsequent action and communication. The Fed was not the only central bank to cut rates today. The lineup includes: Hong Kong, Jordan, Brazil, Saudi Arabia, and UAE to name a few. In addition, the BOJ held steady, but signaled that more easing is likely in October. Further, we have higher unemployment in Australia, which is likely to lead to lower rates down-under as well. The Reserve Bank of Australia has made it explicitly clear that a lot of their rate decision making process will be predicated on unemployment – and we also know from recent meeting minutes that rates will be lower for longer. So, what we have here is a race to the bottom. And a thinly-veiled acknowledgement that lower interest rates, zero interest rates, negative interest rates, and QE are not working. Especially not to the extent that they “worked” a decade ago when these were “new” and “experimental” and “temporary” policies. Now they appear to be etched in stone and signed in blood with no end in sight. This is diminishing marginal returns at its best and this is a flawed and fraudulent monetary policy at its worse. There is much more to come and this simply pushes people, corporations, governments, and even central bankers, further out onto the risk curve. Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #Recession #Economy #Invest #InterestRates #Politics #Stocks #Peace #WakeUpAmerica
It’s breaking news by tweet on a near daily basis. Well today and this evening we came across two newsworthy stories. First, President Trump is now calling for the Federal Reserve to cut interest rates to 0 or perhaps even lower. This of course would mean bringing negative interest rates to the US. The very monetary policy that is destroying the financial system in Europe and Japan is now being called for by the commander-in-chief of the US. This is in addition to repeated calls for not only lower rates, but also further rounds of QE. These are emergency monetary measures that were implemented during the depths of the Great Recession – why then would the President call for such measures? We have a multi-decade low unemployment figure at 3.7%, inflation nearing the Fed’s target of 2%, and the major stock market indexes nearing all-time highs. In addition, the President repeatedly claims that this is the greatest economy in US history – so why call for emergency monetary measures, Mr. President? The second round of tweets sent out this evening was in regards to the US-China trade war. The increase from 25% to 30% that was set to go into effect on 1 October will now be delayed, in the name of “good will,” until 15 October. Just the other day, the Chinese added a handful of US products to their tariff exemption list and so this is the US reciprocating to some degree. The 1 October date is also the 70th anniversary of China. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #NegativeRates #USChinaTrade #TradeWar #Economics #EndTheFed #WakeUpAmerica #Politics #2020 #Peace #FireNavarro
It matters not the direction, North, South, East, or West, all regions of the globe are undergoing some major shift. Whether it’s Brexit in the UK, escalation with Israel, Lebanon, and Iran, India and Pakistan, Hong Kong protests, the US-China trade war, or others, the conclusion to these stories will affect the future of the geo-political landscape for generations. The Kapital News is a strong advocate of peace and prosperity, and let us pray this is the outcome. Yet with all the “strong-man” tactics and antics being played out by nearly all countries, the probability of a civil resolution to all areas, is unfortunately very low. Things on tap throughout September will be low-level US-China trade talks, global economics figures will be published, major central banks will be making monetary policy decisions, and then there’s always the wild-card. Stay diversified, stay vigilant, and stay with The Kapital News. #Economics #Brexit #USChina #TradeWar #Politics #Recesion #Investing #Peace
So many headlines and so little time. The deadline for Brexit is now only a couple of months away and UK Parliament is no closer to striking a deal with the EU or amongst themselves to leave with a deal. PM Boris Johnson was shot down a few times already as the new PM – with Parliament voting to strike down the possibility of leaving the EU without a deal. This led the PM to call for a snap election for 15 October, which was also struck down by Parliament – at least for now. Given the many back and forth tactics and antics, we imagine there will be more calls for a general election. In Hong Kong, the Chief Executive, Carrie Lam, has formally removed the highly contentious extradition bill from consideration. This bill is a main cause to the 13 weeks of protests, which have shut down several parts of Hong Kong. While this was a big issue for the protesters, the question becomes, will this be enough to end the protests and riots? On the US-China trade front, despite escalation from both sides, there has been a formal announcement that high-level talks will resume in Washington DC in October. All and any outcome is pure speculation, so we shall wait for the results. We lastly discuss the divergence between the main US equity indices against the bond market, the internals of the US stock market, precious metals, and commodities, given their movements, they cannot all be right. One group points to growth and the other, a slowdown. Well, which will it be? Stay diversified, stay vigilant, and stay with The Kapital News. #Brexit #HongKong #USChinaTrade #TradeWar #Economy #Recession #Politics
Not only is there a physical hurricane brewing in the Atlantic, but also a coming storm in the financial markets. While hurricane Dorian is likely to do significant damage in Florida over the coming days, the financial hurricane will cause even more carnage over the weeks and months ahead, perhaps even years. We foretold of a highly volatile month of August and it lived up to the forecast. We anticipate that this volatility will be here to stay for the remainder of the year and is likely to carry over well into 2020. In today’s podcast, we discuss a whole host of issues, from continued economics and financial warnings from Ray Dalio, founder of the world’s largest hedge fund, Argentina being downgraded to “default watch” by the major ratings agencies, the US/China trade war saga, more Presidential tweets – some even attacking US businesses, escalation between India and Pakistan, rumblings of war between Israel and Lebanon, and headlines continuing to show weakness in the global economy. It’s a lot to discuss and this will be par for the course for quite some time because a resolution to these issues and many others are well into the distance. Therefore, stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #EndTheFed #WakeUpAmerica #Peace #War #TradeWar #Politics #Stocks #FireNavarro
Given central banks the world over standing by to once again adopt an interest rate easing cycle along with new rounds of QE, this is setting the stage for a precious metals bull market run. The early innings of this bull market are evidenced by the recent price performance by both gold and silver alike, along with mining stocks. But be mindful that nothing goes straight up or down. The globe is awash in $17 trillion worth of negative yielding debt and some of this includes corporate junk bonds! Completely unsustainable in the opinion of The Kapital News, but nevertheless, the real-negative interest rates that exist will likely prove to be a boon to the precious metals market. In other news, the major US indexes were in negative territory for the day. But the main point is to focus on the credibility of the President, his Office, and his Administration. We had the markets rally yesterday on the tweets by the President claiming that China made a phone call and wanted to continue “talking.” China denies this. So whom to believe? This is more important than GDP figures, “winning” or “losing” a trade war and saving face. The credibility of the President himself and the Office he holds is of the utmost importance. Given the recent actions and rhetoric by President Trump – something is clearly amiss, and one side, the US or China is lying. Who will the markets begin to believe? Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #Silver #Gold #WakeUpAmerica #EndTheFed #Politics #Stocks #Peace
Well right on cue, President Donald J Trump took to Twitter earlier this morning to do his best to calm market fears and to “cause” stocks to rally. He once again succeeded in doing so and one has to wonder, how much longer will the markets believe the ‘boy who cried wolf?’ While US stock futures were down significantly, with the Dow down around 300 points, following the tweets, the Dow reversed course and gained 1% for the day. A 500 point swing! All on the back of the statement that China wants to talk and that a deal is possible. How many times have we heard this before and yet we are presumably even further from a deal as we ever were. As was most evidenced by last week’s escalation by both sides. The leaders in Washington and Beijing are playing the role of “strong-man,” and there is simply no way that either man is going to fold like a cheap suit just to strike a deal. As we make our way further into the 2020 Presidential campaign, it appears more and more likely that China will continue to slow-play the trade talks. Perhaps waiting for a new US President or simply applying pressure to President Trump, thereby adding an additional layer of uncertainty to his Administration and his campaign. Regardless, one thing is certain – the credibility of President Trump and his Administration is in serious question. While today’s “market-pumping” statements were centered around phone calls from China to senior US trade negotiators, China is stating that they are unaware of any such calls. This is not good and is just the latest example of a President who is desperate to keep the stock market elevated – even at the cost of the credibility of the Office of the President of the United States of America. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #TradeWar #Economy #EndTheFed #WakeUpAmerica #Politics #Stocks #Peace
Just when we thought today was going to be all about the Federal Reserve and statements made by Fed Chair Jerome Powell, the markets were shaken by news from China and President Trump. While the markets were responding somewhat positively to what the Fed was saying, China came out and said they will be increasing tariffs on $75 billion worth of US goods. This caused President Trump to retaliate by doing the following: raising tariffs from 25% to 30% on $250 billion worth of Chinese goods and to increase tariffs from 10% to 15% on $300 billion worth of Chinese goods. The latter of these of course being the tariffs that the President just threatened and then delayed. So again, the question remains, are these tariffs hurting the US economy and consumer or aren’t they? In what can only be considered a ‘tweet-storm’ the President attacked the Fed and China by asking, “who is the bigger enemy – Jay Powell or Chairman Xi?” He continues by stating an escalation in tariffs and by “hereby ordering” US companies to look for alternatives to China. This last point is rather frightening. Does this mean the President is going to be placing sanctions on China – whereby he would have the authority to stop all trade with China or does he believe he already has this power and authority to dictate to Us companies? Both are concerning and for similar reasons. First, due to economic concerns and secondly, due to political concerns and what would be a clear abuse of power. In addition, we have manufacturing PMI in contraction for the 1st time since the Great Recession. The yield curve, the spread between the 10 and 2 year Treasury has closed in negative territory for the 1st time since 2007 – a strong indicator for recessions. A recent government report stating that 500,000 fewer jobs were created than what was previously stated. And lastly, US equity prices were down 2% to 3% depending on the index. Volatility as The Kapital News has been predicting is here and we imagine it will be here throughout the rest of the year. Therefore, stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #Recession #TradeWar #Economics #WakeUpAmerica #Politics #Peace
