Fed up with the Federal Reserve yet? What about domestic US politics? What about geopolitics? Well pick your poison, and we imagine that you’re fed up in one way or another. When it comes to our all-knowing Federal Reserve, we now have word that the repo madness is likely going to continue through Q1 of 2020 and take us into April. Recall that it was supposed to be a one-off in Q3 of 2019. Then it got extended, and extended, and extended once more. No surprise to this audience. We informed you back in July that if the Fed was going to keep the gravy-train running that they would have to put the pedal to the metal and that’s exactly what we’re witnessing. This is why we have a melt-up in stocks, fueling an ever-increasing bubble. This is why we have a growing number of zombie corporations roaming the countryside. A day of reckoning will come – it always does. But perhaps, just perhaps, one day people will be so Fed up that they’ll wake up to this fraudulent practice and call for true price discovery and a return to something we call free-market capitalism. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Politics #EndTheFed #Recession #Truth #Justice #Peace #War #USA #China #Iran
While the main focus of this week is likely to be centered around trade talks between the US and China, perhaps a bigger story pertains to the industrial/manufacturing sector. Heading into the 4th week of negotiations, the UAW and GM appear to be further apart than ever before since the talks began. The UAW is reportedly looking for assurances from GM that they will not close and/or relocate current US GM plants to another country. Well it appears that GM is not willing to provide such assurances and as such, the talks and the strike continues. How much longer can both the workers afford to be on strike and how big of a financial hit will GM bear throughout this process? Other news out today came from GE when they announced that they are freezing the pensions of some 20,000 current employees in an effort to save billions of dollars. This decision comes only after a couple of months when Harry Markopolos, the forensic accountant, declared publicly that GE has been engaged in accounting fraud for years and filed a report with various federal agencies. It should be noted, however, that Markopolos has entered into a payment agreement with a hedge fund that has a short position in GE. Nevertheless, Markopolos’ claim to fame was outing Bernie Madoff and his multi-billion dollar Ponzi scheme – so he does warrant some credibility. Is this current move by GE a further indication that Markopolos is correct and GE may very well be on the path to bankruptcy in the very near-term, or is this simply the new CEO of GE making good on cutting back on debt? Time will tell. Additionally, in the same world of industry, Southwest airline pilots are suing Boeing over lost wages stemming from the grounding of Boeing’s 737 Max aircraft. The story goes that the aircraft needs to have a software systems upgrade in conjunction with better training for pilots. Once complete, the hope is that these aircraft will be granted regulatory approval and thus will be back in operation. However, during today’s podcast, we speculate – what if this is more than a software glitch, but actually a structural and engineering issue that leads to the aircraft being deemed obsolete? The damage this would cause to Boeing would be near immeasurable and the downstream effects with respect to supply-chains and the overall economy in general would be catastrophic. Let us hope this is not the case, but we are literally talking about life and death and so we and the regulators must be certain as to the worthiness of this aircraft to be deemed operational once again. If not, an iconic American company may find itself in dire straits, bringing the rest of the economy with them. Stay diversified, stay vigilant, and stay with The Kapital News. #GE #GM #Boeing #Recession #Economy #Stocks #Invest #Money #Debt #Pensions #UAW #Autos #Truth #Justice #Peace
“Urgent concern” and “appears credible” is the language from the Office of the Inspector General of the Intelligence Community (ICIG) regarding the whistleblower’s complaint of wrongdoing by President Donald Trump. Despite the fact that the Democrats had decided to move forward with a formal impeachment inquiry prior to the release of the whistleblower’s complaint, the letter from the Inspector General to the Acting Director of National Intelligence, Joseph Maguire, states that given the US statutes that guide his decision-making, and following a preliminary review, the whistleblower’s complaint meets the definition(s) of “urgent concern” and “appears credible.” This letter outlines the reasoning as to how and why the ICIG came to this conclusion. It is also made known that the whistleblower is a member of the intelligence community, either directly or through a contractor. At this time, as is allowed by law, the whistleblower has elected to keep his/her name withheld, however, the Inspector General does know the identity of the whistleblower. It is also noted that an attorney has been selected by the whistleblower and that all communication is to go through said attorney. Further, it is expected that the whistleblower will appear before Congress in the future. The Inspector General also states that during their preliminary review, that the whistleblower does appear to have a political bias against the President and is in favor of a Democratic Presidential contender. Nevertheless, given the preliminary review, the Inspector General states that the evidence provided by the whistleblower outweighs any such political bias – as the complaint rises to meet the definition(s) of “urgent concern” and “appears credible.” In addition, while we will also cover the whistleblower’s complaint, as it too has been declassified and made public, the complaint is in general agreement with the telephone call transcript that The White House released yesterday. This investigation will take time and understand that this is US political history in the making. A sitting US President will either be impeached and possibly removed from office, or this will become one of the biggest political blunders of all-time on behalf of the Democratic Party if they cannot impeach the President. Stay diversified, stay vigilant, and stay with The Kapital News. #Whistleblower #Justice #Truth #InspectorGeneral #Congress #2020 #WakeUpAmerica
Ep. 118B - Cass Freight Index Predicts Negative GDP
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Despite the fact that the Federal Reserve was out yesterday providing their GDP forecasts for 2019 and 2020, 2.2% and 2% respectively, the Cass Freight Index report says otherwise. In their August report, the Cass Freight Index, which is seen by many analysts as a reliable leading indicator, is stating that given both lower freight volumes and prices, GDP is likely to turn negative by the end of 2019. August marks the ninth month in a row of negative YoY growth for the index. Citing the global slowdown and the ongoing trade war between the US and China, the report notes that the headwinds abroad are making their way to the US. Consistent with what we discuss here on a daily basis at The Kapital News, the transportation sector is a simple, yet reliable leading indicator – which is why we highlight the price action of the Dow Jones Transportation Average. The Cass Freight Index, in agreement with the DJT, is showing a disconnect/divergence between the major indexes and the broader economy. The question remains, will the transports play a game of “catch-up” and make or near all-time highs, or will the major indexes reverse course, which could make for a sizable correction? It’s anyone’s guess, but the major indexes are approaching strong resistance levels as they near all-time highs. In other news, the President is mired in another political/legal situation where a whistleblower appears to be claiming that the President made very concerning comments to a foreign leader. Facts are clearly lacking as this is a new story and pertains to perhaps highly classified information, but what the reports are claiming is that the foreign country in question is, Ukraine. This story is sure to be the focus of the Democrats for some time and will lead to more divisiveness until their is a conclusion – and who knows when that will be? We just want the truth to be known and for justice to be served, regardless of the parties involved. Stay diversified, stay vigilant, and stay with The Kapital News. #Recession #Economy #Justice #Truth #EndTheFed #Politics #WakeUpAmerica #Peace
With the major US indices posting their worst week of 2019 and other financial markets around the world suffering declines of -1%, -2%, and 3% for the day, let alone the week – the question remains, are global markets shocked? Did the global markets truly believe that a 25 bps cut from the Federal Reserve was going to be enough to conjure up the animal spirits of traders and investors alike? Or was it the “shock” that President Trump ended the trade truce and is calling on additional tariffs to be placed on Chinese goods effective September 1st? A combination of both perhaps, but nevertheless, the markets have priced in the action by the Fed and has been doing so for months. The trade story of how a deal was imminent, strung along global markets for months, only to find that no deal was made and now there is even further escalation – and the Chinese are vowing to retaliate. With the absence of the Federal Reserve and the Congress during the month of August – what will markets cling to as they hope for some sort of rescue? Hope is not a strategy and if they must now pay attention to the underlying economic and financial data, then perhaps this week’s sell-off may be the beginning of more to come. If so, we will not be shocked. Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #WakeUpAmerica #Economy #Recession
We have a busy week coming up with lots of political and economic news and data being released. The Federal Reserve along with the Bank of England and Bank of Japan will be deciding on monetary policy. The Kapital News is anticipating the beginning of the next easing-cycle, especially regarding the Fed. Other global economic data releases will pertain to PMI figures, trade and income numbers, Eurozone Q2 GDP, UK and Japanese consumer confidence figures, and Australian inflation numbers. On the political front, here in the US, Director of National Intelligence, Dan Coats has resigned and will likely be replaced by Republican Congressman, John Ratcliffe. Ratcliffe has been a vocal supporter and defender of President Donald Trump, especially regarding the Mueller investigation. Will the President use Ratcliffe as a means to investigate the investigators as he will have access to information that very well may have led to the claim of Russia-Trump conspiracy or perhaps information showing that there may have been an abuse of power during the Obama administration? Stay diversified, stay vigilant, and stay with The Kapital News. #EndTheFed #WakeUpAmerica #Justice
Well the S&P 500 and Nasdaq made new all-time highs today. Yet somehow central banks the world over are getting set to undergo the next interest rate easing cycle. We have stock markets making all-time highs in the USA, Australia, and New Zealand. Meanwhile, other markets, like the Nikkei are hitting multi-month highs. If the markets are making all-time highs, and prices are stable (i.e. low inflationary effects), then why do central bankers need to cut interest rates and even embark on further rounds of quantitative easing, QE? The title of today’s podcast explains this well – this is a market mania and if history is any guide, mania’s do NOT end well. Stay diversified, stay vigilant, and stay tuned to The Kapital News. #EndTheFed #WakeUpAmerica #Economy
As the saying goes, power corrupts and absolute power, corrupts absolutely. Concentrated and centralized power amongst the few is the antithesis of the United States of America. Nevertheless, we have before us a handful of powerful men and women on the global stage that have the power to move trillions of dollars worth of financial assets and markets with just a simple word or phrase. If this isn’t absolute power, then The Kapital News doesn’t know what is. Yet again today, we witness John Williams, President of the Federal Reserve Bank of New York, give a speech and make remarks during a Q&A session whereby he “hinted” that the Federal Reserve should slash interest rates. Saying it’s better to be preventive than to wait for the crisis to happen. Wait?! Aren’t we told by the President on a near daily basis that this is the greatest economy is US history – so why throw around the word crisis or problem or recession or even slow-down? The addicts on Wall Street took this as positive news as the junkies are set to get their next fix after crying about it – even though stocks are at all-time highs? Is this making any sense to anyone? Yet, only a few hours later a spokesperson from the Federal Reserve came out and said, the statements from Mr. Williams does NOT represent what the FOMC will be doing at the end of this month – referring to the Fed’s meeting on July 30-31 to decide interest rate policy. These members of the Fed are poor economists and they’re even worse at communicating. And by all indications, they want to continue pumping the patient (i.e. the economy) with more of the disease – lower interest rates and QE. Toto – I don’t think we’re in Kansas anymore. Buckle up! We’re Fed Up! #EndTheFed #WakeUpAmerica
Jerome Powell, Chairman of the Federal Reserve, concluded his two-day testimony before Congress and strongly hinted that the Fed will be cutting interest rates at the end of July. The question remains as to what degree. Will it be a 25 or 50 bps cut? In addition, we have reports and statements out from the IMF and ECB both stating that Europe is likely to continue to face challenging economic times ahead. Both institutions are advocating for more stimulus and the ECB is standing at the ready to cut rates further into negative territory and/or to launch another round of their version of QE. Elsewhere around the world, we continue to witness further deterioration in the fundamentals and there are hints that many other central banks will continue to cut interest rates or embark on a cutting-cycle. This is a new currency war in the making and it’s a race to the bottom.
Today we examine our volatility model. It is simplistic in nature and by design, but nevertheless, it has proven accurate. If history is any indicator as to what we are likely to witness over the remainder of 2019, it’s that volatility is on its way. This is especially true for the DOW and the S&P 500 and to a lesser extent for the Nasdaq and the Russell 2000. However, nothing is written in stone and while volatility tends to coincide with moves to the downside, given the fact that central banks the world over are priming their printing presses and some central governments are looking to deploy fiscal stimulus measures, the melt-up scenario is still possible. The Kapital News, however, at this juncture continues to put more weight on the downside risks given the overall economic environment. Stay vigilant and have a plan.
