We have previously discussed the dollar doom loop scenario, whereby a strengthening US dollar could cause a disastrous downward spiral around the globe, especially with respect to commodity dependent nations. However, there is also the possibility that this scenario does not unfold, and rather than having a “swan song” to new heights before its eventual collapse, the US dollar, just continues its descent. If this happens, this too can have devastating global effects, especially if this causes commodity prices to spike, among a whole host of other issues. In the midst of the Greatest Depression, higher prices are not a panacea, but will simply make the situation even worse. As higher prices will not be a result of an increase in demand, but rather the demise of the US dollar, rendering them near worthless. Looking into gold and silver as potential hedges against such scenarios may prove prudent as both have served as true money for millennia.
Is a new cold war brewing – this time between the US and China? Yes, most likely. Today the US government ordered the Chinese to leave their consulate in Houston, Texas. This is an escalation in recent tensions between the two nations as the pair goes back and forth on a number of geopolitical issues. Some of these pertain to the South China Sea, Hong Kong, Taiwan, trade and tariffs, human rights issues, and COVID-19, amongst others. It is unlikely that all of these disagreements will be solved in the near future. Therefore, expect a lot of uncertainty and volatility for the foreseeable future as both sides attempt to play the “strong-man.” Let us hope this does not turn into a hot war, but be prepared if it does happen. And should it happen, the economic fallout will be nothing short of catastrophic, not to mention the loss of life. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Gold #Silver #Debt #Bailouts #USA #China #BananaRepublic #Depression #Recession
Ep. 361 - State Bailouts Next + Market Manipulation?
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We have been talking about it for weeks and now there appears to be an appetite from President Trump and the Democrats to work on another bailout program that incorporates the States and cities. Yet, now, after various spending programs in the trillions of dollars, Mitch McConnell, Senate Majority Leader, is now drawing a line in the sand when it comes to assisting the States. May it be known that The Kapital News is against all forms of bailouts. But isn’t it interesting that Wall Street and Corporate America can receive trillions of dollars within the blink of an eye from Senator McConnell, yet when the States ask for assistance, now hes’ all of a sudden concerned about debt levels and future generations paying for it. This is exactly what is wrong with our political system – amongst many other issues. Perhaps the States do not contribute to the Senator’s campaign fund(s) and is therefore of little significance to him? We digress. Some numbers that have been noted when it comes to “assisting” the States may amount to $500B and if including cities, this can be another $250B. So, just for the States and cities, we could be talking a near $1T spending program. Also note, as far as we know as of today, these figures are to make up for tax revenue shortfalls, pension plan assistance, and other responsibilities of State and local governments. Therefore, these figures are absent any major type of infrastructure spending, which has already been rumored to amount to nearly $2T! Where is all of this money coming from? Because Uncle Sam is as broke as a joke – which makes it ironic that broke States are asking a broke Federal government for assistance. So who comes to the “rescue?” That’s right, the Federal Reserve will have to continue its counterfeiting, oops, we mean, money printing operations. Just for a FYI – US national debt is $24.5T and the deficit as of now is $2.3T and expected to double – at least, by end of FY2020. Ain’t you proud to be an American?
We also continue our discussion of the oil markets, since history was made earlier this week when WTI went negative and settled at nearly -$38 per barrel. Well, this of course raises a lot of questions, and now Continental Resources, is asking the Chicago Mercantile Exchange (CME), to look into market manipulation. In their request, they provide a timeline of events which they argue gives the appearance of market manipulation and/or a flaw in a new computer model. Either way, these are legitimate questions and they require thoughtful and truthful answers. We will keep you posted as updates become available. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Bailouts #Gold #USA #Recession #Debt #Depression #Congress #War #Peace
This is a day for the history books as WTI (West Texas Intermediate) entered negative territory for the 1st time ever! Settling around -$38.00/bbl, the negative price sent shock-waves around the world. Now, it must be stressed that this is for the May futures contracts that will be expiring tomorrow. But nevertheless, for prices to go negative, is a major historic event. From the demand side – there basically is none. From the supply side – the globe is awash in both oil and gas, and storage facilities are nearing max capacity. Great attention will be paid to the June futures contracts for WTI and make no mistake about it – these contracts could hit negative prices as well. If they do, then there is unquestionably something structural underneath the oil markets that is broken. Also, understand that free-markets is about price discovery and this may simply be an attempt by markets to clear. However, we think that this is something much more structural. This could be hedge fund(s) failing, energy corps failing, etc… or some combination, amongst other issues.
The geopolitics of the matter can also not be forgotten or downplayed. OPEC + just agreed to cut nearly 10 million b/d from production and despite this – prices continued their descent – which we argued would happen. This calls into question the petro-dollar system and we discuss this during our podcast. We also note the continued stress this places on energy firms that were already struggling to begin with, due to the supply and demand dynamics of the markets, in conjunction with their massive debt loads. This is far from over. Also, note that many countries protesting prior to COVID19 are heavily dependent on oil for their government revenues. This downward trend will only exacerbate any and all issues that already existed in these countries. Be prepared for more global protests – these are not transitory – they are history in the making.
Lastly, we discuss some brief articles centered around the health and life or death situation of North Korean leader, Kim Jong Un. As well as President Trump’s recent decision and Executive Order to temporarily suspend immigration. We also mention Iranian criticisms of the USA with respect to the economic sanctions that continue to cripple the country, especially in light of COVID19, from which Iran is suffering severely. And then announced earlier, there was the formation of an “emergency” government in Israel as the two sides have been unable to successfully form a government despite multiple attempts. Something tells us all of these stories are connected, but time will tell all. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Oil #Recession #Protests #War #Peace #USA #Iran #Russia #Venezuela #China #SaudiArabia #Debt #Gold #Depression
Perhaps it’s the final chapter (singular) as opposed to plural or even worse, perhaps it’s already over? And sad to say, there are many out there who study the social and moral decay of this country who could articulately and eloquently argue that the United States of America has already ended for all intents and purposes. In today’s discussion we highlight the continued expansion of the Federal Reserves balance sheet, which now stands at over $6.3 trillion and growing rapidly – mainly for the benefit of Wall Street and Corporate America. And of course with very little to no oversight. We also discuss the $25 billion airline bailout and some of the terms of this agreement between the government and the airline industry. Of course the airlines weren’t too thrilled with some of the conditions – further showing their shamelessness and making it appear as if these bailouts are simply a part of the process and that they’re well deserving.
Other mentions pertained to Boeing opening up production next week. This is despite the fact that airlines remain grounded and Boeing losing some 300 orders for new jets. Raises the question, what then are they producing? Perhaps war planes, drones, or other aircraft for defense/war purposes? We hope not, but remember, when all else fails, they take us to war. And lastly, we note some of this increased language about the lack of transparency from China with respect to COVID19. This is likely to continue and may very well start some sort of conflict and/or war – whether that’s bio, cyber, economic, or kinetic. It’s also quite possible that there may be a proxy-war that could likely erupt in Iran and/or Venezuela, as we have been noting here for months. It’s not a pretty picture and conditions are likely to get much worse before they get better. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Bailouts #EndTheFed #Debt #USA #Depression #Oil #Gold #COVID19
Today, we finally get a “hard” number on how much all of this “stimulus” nonsense is going to cost us. Sit down. Strap yourselves in. According to Larry Kudlow, White House Economic Adviser, it’s going to total $6 trillion! This will be broken down between the government ($2T) and the Federal Reserve ($4T). This is of course a huge amount of money and is equivalent to nearly 1/3 of annual US GDP. And we’re about to throw that much money into the system immediately! And don’t be surprised if this number keeps climbing. Look out below, because who knows how all of this is going to play out. But we imagine it will add a good deal a volatility to the system. A lot of unknowns will remain. There is no free lunch, so, on the other side of this, be prepared for high levels of inflation if not hyperinflation. This means that all of this stimulus will have been for naught because any purchasing power you have saved or earned is now going to evaporate due to the effects of said inflation. By how much will simply be a question of degree and how money makes its way through the system. This is beyond ridiculous. This is downright criminal. And instead of focusing on the $6T figure, our politicians seem to find any and all excuse to blame the other side on pointless details, which only serves the purpose of distraction. Pay no attention to the man behind the curtain – says the man behind the curtain. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Debt #EndTheFed #Republic #Freedom #Liberty #USA #Recession
Well folks, it looks like $700 billion in quantitative easing just isn’t enough. Recall, this was only announced one week ago! So, here we are, one week later after the Fed’s 2nd emergency meeting, and we’re already through that $700 billion and/or it’s been determined during their 3rd emergency meeting that it wasn’t going to be enough. Well you ask, by how much did they increase QE? Great question. Answer: to the “amount needed.” That’s right, the Fed just wrote themselves a blank check to buy as much as they want and whatever they want. We have been warning that this “helicopter money” was coming and here it is – at least the first tranche. We’ve also been warning that the Fed would start to enter other markets than just Treasuries and mortgage-backed-securities (MBS). Well now they’re going to be purchasing corporate bonds – both directly from “credit worthy” companies, whatever that means, and also on the secondary market. They may even do this by purchasing ETFs too. This is beyond ridiculous and of course it has the blessing of our elected officials in Washington, DC. The same officials by the way that are working on a $2 trillion “stimulus” package. How is this to be paid for? That’s right, with trillion dollar deficits that need to be paid back by the very same taxpayers who are bailing themselves out. This would truly be laughable if it wasn’t true. From free-market capitalism to nationalization. From free nation to bailout nation. From Constitutional Republic to banana republic. This madness must end or it will be the end of us. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Bailouts #Recession #USA #Republic #Constitution #EndTheFed #Congress #Gold #Debt
With all of the money printing and fiscal “stimulus” measures being undertaken around the world, when, oh, when, will inflation rear it’s ugly little head? Now, depending on the sector of the economy or a particular good and/or service, there may already be considerable inflation. However, when the United States has amassed over $23T in debt and rising in trillion dollar increments, while heading into a recession, if not depression, then how can this debt be paid off? Possibly through inflation or dare we even say, hyperinflation. Don’t say that it cannot happen, because if history is any guide, then that is almost certain to happen some time in the not too distant future. This will decimate any remaining purchasing power that people have. Savings will be destroyed. Many people who will be out of work due to the recession and/or depression will now have to also deal with ever-higher costs of living. Of course, much of this was predictable because what natural conclusion would follow generations of ever-increasing credit expansions, deficits, and debts on the household, corporate, governmental, and central bank balance sheet? Well we’re witnessing these negative effects coming together all at once and sad to say, we’re just getting started.
So, in our analysis, yes, the stage for inflation if not hyperinflation has been set. It’s a process and it will take time as there are still the effects of deflation hitting global markets because the demand side of the equation has been all but decimated. On the other side when this comes to pass, with all of the monetary and fiscal measures that have been undertaken and all of the debts and unfunded liabilities that remain on the books – a serious question will arise. How is this all to be paid for? Well economic growth is not going to do it because there’s not going to be enough growth to put a dent into the size of these debts – especially not during the years of a recession/depression. Therefore, a logical conclusion is to say it will be “paid” for through inflation/hyperinflation. Again, say good bye to our Constitutional Republic and say hello to our new banana republic. How far we have fallen. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Bailouts #Depression #Deficits #USA #Politics #War #Peace #Truth #Justice #EndTheFed #Gold #Oil
With all of these bailouts at the federal level and all of the emergency monetary measures, a logical question comes to mind – does money, debt, and price(s) matter? If it’s perfectly ok for a government to rack up as large a deficit as it likes, and as such, a national debt, and with no consequence – then what difference does it make what the price of anything is? This is getting eerily close to adopting Modern Monetary Theory (MMT), which is a bogus “economic” theory that basically states that deficits and debts do not matter. It could reasonably be argued that we’re already under that paradigm, but we digress.
So if deficits and debts do not matter – then again, why have prices? In a market economy, the pricing mechanism is key. Embedded in a price is a ton of information. It can tell a consumer that they’re getting a deal for a good or a service they demand. It sends signals to producers and potential producers what kind of profits they can make if they enter a certain market. Prices are the clearing mechanism between consumers and producers that allows for equilibrium to be established. Now of course, with governmental and monetary policy interference, this system becomes distorted and leads to the types of financial market and economic collapses that we are in the midst of. But getting back to debts not mattering. One can run up his debt tab by purchasing things he cannot currently afford by purchasing them on credit – thus debt. But with MMT, we’re told that debts don’t matter – so then logically, prices would not matter either. If it costs $10,000 but you don’t have $10,000 who cares? Buy it anyway and go into debt. Why? Because debt doesn’t matter. We hope you understand the ridiculousness of this crackpot theory, but nonetheless we could be heading in this direction. All one needs to do is look at the emergency measures being taken by the monetary and fiscal authorities. And all we can say is that it looks a lot closer to MMT than FMC (free-market capitalism). Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Debt #Gold #COVID19 #USA #EndTheFed #Revolution
We don’t know what the historians will call this time in which we currently find ourselves, but if we may, we would suggest they call it “The Great Unraveling.” A recession in the United States as well as most of the globe is all but certain, especially on a technical level. However, given the fact that the global economy was already slowing prior to the onset of COVID19 and the oil price war, it is likely that the world is headed towards a depression. We do not say this lightly. This is a very serious and dire situation as this will hurt millions if not billions of people on a number of fronts. The world needs leadership. And the world needs the truth. And unfortunately, the world is in short supply of both.
Here in the United States it’s not a question of bailouts, fiscal and monetary stimulus, it’s simply a question of how much is all of this going to cost? One industry after the next is lining up in Washington, DC seeking “assistance.” On the fiscal side, every time it’s discussed, the price tag goes higher and higher. From $850 billion to $1.2 trillion to $1.3 trillion, and we don’t know if we’re finished. If you think this is a lot of money – it is. But it doesn’t hold a candle to what the central banks are doing. The Federal Reserve has been pumping hundred of billions into the repo market. They’ve cut rates by 150bps over the last two weeks. They’ve made tapping the discount window more accommodative. And they’ve reduced the reserve requirements for banks with respect to cash on hand against deposits. Oh, and they’re still not done. Why does this continue? Are these people completely unaware that the reason we’re in The Great Unraveling is because of these very programs and actions that have been at the helm for over a decade? Again, there is no leadership to say that enough is enough. Or that these policies are not the cure, but rather the disease.
The funding of all of this, especially the bailouts and fiscal measures will be financed through debt. This means that the US Treasury is going to have to issue US Treasuries across the curve. This additional supply coming to the market is likely to depress bond prices, thus increasing yields (or borrowing costs). In addition, given the wave of global debt coming due, many countries around the world, especially emerging markets are selling their US Treasury holdings because they need US Dollars to satisfy their dollar denominated debts. This is also occurring at a time in the Foreign Exchange markets, where many (virtually all) of these currencies have been greatly weakened against the US Dollar. This then puts additional pressure on these same countries because it now takes more of their domestic currencies to be swapped for dollars. This is also coupled during a time of a global slowdown where prices for commodities are at decade(s) if not all-time lows. Many of these emerging economies are highly dependent on commodities for the economic survival. So it’s easily evident that much of the world is facing single, double, triple, and even quadruple whammies. This is a vicious downward spiral that will not find a bottom for some time and it will likely not end until this bottom is found. Central authorities are rendered impotent in such an environment despite their intentions and actions. Markets must be allowed to clear.
The people in the United States of America should be ashamed of what we have allowed to happen in and to our country. This is not the Constitutional Republic of Washington, Jefferson, Adams, and Franklin. Nor is this a country of free-market capitalism – because clearly what exists in this country is NOT free-market capitalism. This is the time for leadership, this is the time for the truth, this is the time to restore our country to our founding principles, and this is the time to place our faith and confidence in each other. Otherwise, this country will truly cease to be a country of, by, and for the people. Stay safe. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #TheGreatUnraveling #Debt #USA #Gold #Bonds #Oil #Truth #Peace #Bailouts #EndTheFed #1776
Another day and another historic day in the markets. A sell-off the likes which has not been seen since Black Monday of October 1987. This of course was also on the heels of the Federal Reserve’s emergency meeting and subsequent 100bps rate cut, expansion of QE, lowering the rates for the discount window, and the basic removal of the reserve requirement. So despite all of this, the major indexes were all down 12-14%! Can anyone say that the Fed is out of ammo? This has been the biggest risk that we have been warning about here at The Kapital News since we’ve been online – once the markets no longer believe in the efficacy of monetary policy then what tools remain to boost the markets? And we’ve always cautioned that if and when this day came to pass, that this would be the end of the bull market and the start of something we may have never witnessed before. Well, behold, a massive 20-30% sell-off in only a few weeks’ time. And remember and be warned that we have still yet to see credit/bond downgrades and/or bankruptcies – both of which are virtually inevitable given the COVID19 situation, the oil price war, and the massive amounts of debt in existence.
In addition, we now have the airline industry lining up at the government trough requesting a bailout of at least $50 billion. Are you kidding us here?! Tax cuts, deregulation, billions of people now taking to air travel, etc, etc… and they need bailed out? Where did all of their cashflows go? Oh, that’s right, it went to share buybacks so they could financially and artificially engineer their stock prices higher – which happened – which then led to handsome compensation packages for the executives. Now we, the US taxpayer have to bail them out?! Today during a COVID19 press conference, the President commented on how the virus is not the fault of the airlines and thus the government needs to assist the industry. While the President is correct that the airlines are not responsible for the virus, they are responsible for their cashflow management! So again, why does the taxpayer need to bail them out? Let them file bankruptcy, restructure, etc… Let them sell their assets for pennies on the dollar to someone who knows how to manage an airline. No more bailouts! And we’re just getting started. Boeing is lining up. As is the cruise line industry. What about the hotel, casino, restaurant, entertainment, energy sectors, and others? Bailouts for all?! This is beyond ridiculous and I hope the American people wake up to this fraud.
When and where will this market find its bottom? We have no idea. But if history, math, economics, financial analysis, and human behavior have anything to say, then we likely have another leg or two lower to go. And the subsequent economic recovery is also likely to take years to find its footing. Therefore, we hope during this massive transition that the correct and prudent policies are adopted and implemented. This of course would be the restoration of our Constitutional Republic and a return to free-market capitalism. We already have the blueprints. We just need the will power, work ethic, and leadership to build our economy on a solid foundation. We can do this and we must do this, if our future is to be brighter than our past. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Recession #Invest #Bonds #Gold #Debt #Bailouts #Stocks #Politics #USA #Oil #EndTheFed
