Category Archives: Uncategorized

3rd Quarter Economic Update

SUMMARY

The 3rd quarter ended with great volatility which continued into the first two weeks of the 4th quarter. US stocks fell sharply in the first week of October due to concerns of slowing US manufacturing; all three major indexes have been negative for the past 12 months.  The second week brought news of potential succession of the trade war between the US and China, after which the stock market recovered.  Many large players have withdrawn their participation in Facebook’s new Libra crypto currency.  Political unrest continued around the world, especially in Hong Kong.  Brexit didn’t break in the third quarter, but Boris Johnson struck a deal with the EU on Oct 16th and brought it to Parliament for approval, but the deadline is less than two weeks away.  While everyone was watching the trade wars, global markets and political events, there was much under-reported central bank action, and a brand new international wire system also came online.

U.S., China Move Forward on Trade (10.11.19) WSJ

https://www.wsj.com/articles/trump-strikes-upbeat-notes-on-trade-talks-11570804097

Facebook’s Backers of Libra Reconsider Their Involvement (10.1.19) WSJ

https://www.wsj.com/articles/visa-mastercard-others-reconsider-involvement-in-facebook-s-libra-network-11569967023

Glenn Beck Issues Fiscal Warning Just Like he Did Before the 2008 Financial Crisis Something is Very Wrong (9.19.19) The Blaze https://www.theblaze.com/glenn-radio/federal-reserve-repo-market?utm_source=Sailthru&utm_medium=email&utm_campaign=Daily-Newsletter__PM-Final%202019-09-19&utm_term=TheBlaze%20Daily%20PM%20-%20last%20270%20days

 

CENTRAL BANKS

In early September, The Federal Reserve voted to cut interest rates by a quarter-percentage point for the second time in two months, due to rising concerns of a global slowdown.  The WSJ reported:

For first time since 2008 the central bank injects funds into money markets after a sudden shortage of cash.  For the first time in more than a decade, the Federal Reserve injected cash into money markets Tuesday to pull down interest rates and said it would do so again Wednesday after technical factors led to a sudden shortfall of cash. The federal-funds rate, a benchmark that influences borrowing costs throughout the financial system, rose to 2.25% on Monday, from 2.14% Friday. The Fed seeks to keep the rate in a target range between 2% and 2.25%. Bids in the fed-funds market reached as high as 5% early Tuesday, according to traders, well above the band.  The New York Fed moved Tuesday morning to inject $53 billion into the banking system through transactions known as repurchase agreements, or repos. (The repo market is where one bank will borrow from another bank on a short term basis usually overnight, because it doesn’t have enough cash at a higher interest rate.)  The bank said Tuesday afternoon it would inject up to $75 billion more on Wednesday morning, but many in the market were looking beyond that decision.

The infusing of cash into the overnight banking system, which the Fed said they would continue to do until Oct 9th, is a clear indication of current and future troubles, however, this action has infused the banking system with sufficient cash, at least for the short term.  The Federal Reserve will extend its cash injections into overnight lending markets for at least another month, after pumping in more than $330 billion since mid-September, as banks face a wave of Treasury bond sales this week, amid a near-record budget deficit and ongoing concern over the strength of the U.S. economy.

In addition, “The Fed plans to buy $60 billion of Treasurys per month, and many are wondering if it is leading the charge back into quantitative easing, often known as money printing,” – WSJ.

The San Francisco Fed made the following concerning, and hopefully not prophetic, statement, “negative interest rates are a viable tool to provide stimulus to economies that need it, and the U.S. might have benefited from using it during the financial crisis.”.

The entire concept of negative interest rates is already hard to understand, the WSJ reported that, “The European Central Bank is about to start lending to some banks at less than it pays them for putting money on deposit.  The ECB said last week that it would both pay a higher rate of interest on deposits and charge a lower fee for lending, both under strict conditions. On the deposit side, the introduction of what the ECB calls “tiering” allows banks to avoid the penalty rate of minus 0.5% on deposits of excess reserves.”

Finding Meaning in Quantitative Easing (10.11.19) WSJ https://www.wsj.com/articles/finding-meaning-in-quantitative-easing-11570872601

Fed Paper Says Negative Rate Policy Can Provide Real Stimulus (10.15.19) WSJ

https://www.wsj.com/articles/sf-fed-paper-says-negative-rate-policy-can-provide-real-stimulus-11571158871?mod=hp_lista_pos4

Fed Extends Repos Until Nov 4 Dealers Brace for $193 Billion in Treasury Sales (10.7.19) https://www.thestreet.com/investing/fixed-income/fed-extends-repos-until-nov-4-dealers-brace-for-193-billion-in-treasury-sales-15116925

Fed Intervenes to Curb Soaring Short-Term Borrowing Costs (9.17.19) WSJ

https://www.wsj.com/articles/fed-to-conduct-first-overnight-repo-transactions-in-several-years-11568729757

Another Coming Recession Federal Reserve Funds Banks Billions, Market is Broken (9.21.19) TheBlaze

https://www.youtube.com/watch?v=bW7ZYc4w3ds&feature=youtu.be

Fed Cuts Rates by Quarter Point But Faces Growing Split (9.18.19) WSJ

https://www.wsj.com/articles/fed-cuts-rates-by-quarter-point-but-faces-growing-split-11568830081?mod=hp_lead_pos1

Big Banks Loom Over Fed Repo Efforts (9.26.19) WSJ https://www.wsj.com/articles/big-banks-loom-over-fed-repo-efforts-11569490202

A  New Central Bank Approach Pay Banks to Lend (9.17.19) WSJ

https://www.wsj.com/articles/a-new-central-bank-approach-pay-banks-to-lend-11568721602

 

A NEW INTERNATIONAL WIRE SYSTEM

The First Iranian English Economic Daily reported, “Governor of the Central Bank of Iran says Iran and Russia have connected their financial messaging services to handle two-way banking transactions.  Outlining details of his talks with the Russian delegation in Turkey, Abdolnasser Hemmati said banks in both countries are now connected through the Russian SPFS and Iran’s SEPAM. The initiative is to be used as an alternative to payments through SWIFT (Society for Worldwide Interbank Financial Telecommunication) for protection against third country sanctions.

Today the USD represents 60% of world reserves and 80% of global payments.  The reason this very significant is that the US has been able to influence and control any nation using US Dollars, by imposing sanctions and cutting off their ability to transact and wire money in and out of their country using SWIFT codes.  Iran and Turkey now have another way to wire money, effectively circumventing US and EU sanctions.  Reuters reported:

“Russian lawmakers on Tuesday backed the international use of a Russian alternative system for the global financial messaging network SWIFT designed by Moscow to eliminate the risk of Western sanctions.  Russia has held talks with China, India, Iran and Turkey about joint use of Russia’s financial messaging system, said Anatoly Aksakov, who heads the Russian Banking Association and a financial committee with the lower house of parliament.  “As the system has proved to be viable and efficient, it draws interest from both Russian and foreign players, it is proposed to give any legal entities, Russian and foreign, the possibility to use it,

SWIFT, was founded in 1973 and connects more than 11,000 institutions in over 200 countries and territories, it said on its website.  Moscow has also seen interest in joining the Russia-based system from Arab countries and is ready to start negotiations about creating a switch that would connect the Russian system with the European one, Aksakov said. 

This will greatly reduce the ability of the US, the EU and other nations to curtail rogue nations utilizing non-military economic options.  It will also reduce US control over world events and increase the influence and control held by Russia and other nations.

Banks in Iran, Russia Connected via Non-SWIFT Financial Messaging Service (9.18.19) https://financialtribune.com/articles/business-and-markets/99912/banks-in-iran-russia-connected-via-non-swift-financial-messaging

Russia Backs Global Use of its Alternative SWIFT System (9.9.19) Reuters

https://uk.reuters.com/article/russia-banks-swift/russia-backs-global-use-of-its-alternative-swift-system-idUKL8N2163BU

 

CURRENCY

The euro is down, the pound is up, and former partners are distancing themselves from Facebook’s new cryptocurrency Libra.  Gold & silver are up, but buyers of gold should beware as there are counterfeit gold bars being sold in world markets.

MasterCard, Visa, eBay, Stripe Drop Out of Facebook’s Libra Network (10.11.19) WSJ

https://www.wsj.com/articles/mastercard-drops-out-of-facebook-s-libra-payments-network-11570824139

Facebook Scrambles to Keep Libra on Track as Partners Waver (10.1.19)

https://www.wsj.com/articles/visa-mastercard-others-reconsider-involvement-in-facebook-s-libra-network-11569967023

Euro Drifts Toward Its Lowest Level Against Dollar in Years (10.3.19) WSJ

https://www.wsj.com/articles/how-low-can-the-euro-go-11570098097

Fake-Branded Bars Slip Dirty Gold Into World Markets (8.28.19)

https://www.reuters.com/article/us-gold-swiss-fakes-exclusive/exclusive-fake-branded-bars-slip-dirty-gold-into-world-markets-idUSKCN1VI0DD

 

RECESSION & DEBIT

Fannie and Freddie are being released from government oversight and have already been loosening lending requirements to allow more people who don’t meet qualifications to get mortgages.  This sounds eerily very familiar, maybe they should rent The Big Short and watch it to refresh their memories.  According to the WSJ:

Mortgage-finance companies Fannie Mae FNMA 3.26% and Freddie Mac FMCC 3.16%   will start keeping earnings as part of a Trump administration process aimed at moving the companies out of conservatorship and back into the private sector.  Fannie and Freddie are central players in the housing market, buying about half of all U.S. mortgages from lenders and packaging them for issuance as securities. The government effectively nationalized them during the 2008 crisis in a bid to stabilize the housing market as mortgage defaults mounted.”

The US economy is doing well, but there are signs pointing to lurking trouble, like General Electric freezing pension plans for 20,000 workers, the US staring its new fiscal year almost $23B in debt, the Federal Reserve printing and pumping hundreds of billions of dollars into the overnight bank and repro markets, and rising individual debt levels coupled with loosening lending requirements.

General Electric Freezes Pension Plans for 20,000 US employees in an Effort to Reduce Debt (10.7.19) Yahoo News |  https://www.youtube.com/watch?v=CarVrn3JyaA

General Electric to Freeze Pensions for 20,000 Workers (RTD Quick Take) (10.7.19) https://www.youtube.com/watch?v=UorlsmGFuAk&feature=youtu.be

1,015,736,491,184 Reasons to Have a Plan B (10.1.19) SMC https://www.sovereignman.com/trends/1015736491184-reasons-to-have-a-plan-b-25656/?utm_medium=email&utm_source=sm_notes&utm_campaign=notes&utm_content=20191001_debt

The Fed, Banks Printing Money to Prevent Trouble Recession Will Come Soon (9.24.19) GB https://www.glennbeck.com/radio/the-fed-banks-printing-money-to-prevent-trouble-recession-will-come-soon

Fannie, Freddie to Retain Earnings (9.30.19) WSJ  https://www.wsj.com/articles/fannie-freddie-to-retain-earnings-11569851912

 

WORLD MARKETS

U.S. stocks rallied as banks and health-care companies reported stronger than forecasted 3rd quarter results, and a ceasefire was called on the US vs China trade war, at least temporarily.  Services, however, showed a sharp drop globally, and manufacturing also slowed.

The WSJ reported that, “The U.S. plans to swiftly impose tariffs on $7.5 billion in aircraft, food products and other goods from the European Union after the World Trade Organization authorized the levies Wednesday.  “For years, Europe has been providing massive subsidies to Airbus that have seriously injured the U.S. aerospace industry and our workers,” U.S. Trade Representative Robert Lighthizer said in a statement. “Finally, after 15 years of litigation, the WTO has confirmed that the United States is entitled to impose countermeasures in response to the EU’s illegal subsidies.”

Germany’s economy has been drifting toward recession for most of 2019, and their factories continue to preform poorly due to trade wars and Brexit..

Stocks Climb After Strong Results From Banks, Health Sector (10.15.19) WSJ

https://www.wsj.com/articles/u-k-pound-posts-gains-on-brexit-optimism-11571130220?mod=hp_lead_pos1

EU Warns of 5G Risks Amid Scrutiny of Huawei (10.11.19) WSJ

https://www.wsj.com/articles/eu-warns-of-5g-risks-amid-scrutiny-of-huawei-11570814799

Services Stumble Risks Sharper Global Slowdown (10.3.19) WSJ

https://www.wsj.com/articles/services-stumble-threatens-sharper-global-slowdown-11570094948

U.S. to Impose Tariffs on EU Goods After WTO’s Airbus Ruling (10.2.19) WSJ

https://www.wsj.com/articles/u-s-can-levy-tariffs-on-eu-exports-over-airbus-wto-says-11570025040

Stocks Drop on Worries About Growth (10.2.19) WSJ

https://www.wsj.com/articles/global-stocks-fall-amid-rising-fears-of-economic-slowdown-11570004904

Global Stocks Absorb Blow of Manufacturing Slowdown (10.1.19) WSJ

https://www.wsj.com/articles/global-stocks-fall-amid-rising-fears-of-economic-slowdown-11570004904

Germany on Brink of Recession as Factories Slump (9.23.19) WSJ

https://www.wsj.com/articles/germany-on-brink-of-recession-as-factories-slump-11569237721?mod=hp_lista_pos3

 

BREXIT

According to the WSJ, “Mr. Johnson made a significant concession earlier in October when he agreed that Northern Ireland could stay aligned to EU regulations, eliminating the need for regulatory checks on the island of Ireland, with checks being carried out when goods come from Britain into Northern Ireland.  In recent days, Britain has also proposed a special customs partnership that would allow Northern Ireland to effectively remain in the U.K. and EU customs union.

On Oct 16, the UK and EU struck an agreement. Prime Minister Johnson returned to the UK with the deal and parliament voted to approve it, however not the timetable of the deal for an Oct 31st exit.  Hence, although both sides would greatly benefit from this deal, its execution remains uncertain.

Johnson Brexit Deal Clears Hurdle but Timetable Rejected (10.22.19) WSJ

https://www.wsj.com/articles/boris-johnsons-brexit-deal-clears-vital-hurdle-in-parliament-11571768188

U.K. & EU Agree on Draft Brexit Deal, Paving Way for Key Vote (10.17.19) WSJ

https://www.wsj.com/articles/brexit-talks-are-dealt-a-blow-as-northern-irish-party-rejects-draft-11571294766?mod=hp_lead_pos4

Brexit Negotiators Edge Closer to a Draft Deal (10.15.19) WSJ

https://www.wsj.com/articles/eus-barnier-says-brexit-deal-is-still-possible-this-week-11571124007?mod=hp_lead_pos2

 

POLITICAL UNREST

Political unrest continues globally with rioting in Ecuador, Peru, Spain, Iran, Iraq, Russia and Hong Kong.  South Korea launched a ballistic missile, this time from a submarine, as a prelude to new talks with the US.  Turkey who continues to move away from the west towards Russia, started bombing Kurdish forces in Syria as the US declared it was exiting Syria.  The US then imposed more economic sanctions against Turkey, causing them to pause their attack.

Ecuador Begins Cleanup After Nearly Two Weeks of Deadly Protests (10.14.19) WSJ https://www.wsj.com/articles/ecuador-begins-cleanup-after-nearly-two-weeks-of-deadly-protests-11571089214

Spain’s Catalan Separatist Leaders Found Guilty of Sedition (10.14.19) WSJ

https://www.wsj.com/articles/catalan-separatist-leaders-sentenced-for-2017-independence-referendum-11571043234

Iraq Acts to End Deadly Response to Protests (10.9.19) WSJ

https://www.wsj.com/articles/iraq-acts-to-end-deadly-response-to-protests-11570464203

Peruvian Crisis Divides Political Class (10.1.19) WSJ

https://www.wsj.com/articles/perus-armed-forces-back-president-vizcarra-amid-constitutional-crisis-11569937062

One Hong Kong District Becomes a Combat Zone (10.1.19) WSJ

https://www.wsj.com/articles/one-hong-kong-district-becomes-a-combat-zone-11569953252

Turkey Agrees to Pause Military Operations in Syria (10.17.19) WSJ

https://www.wsj.com/articles/pence-leads-u-s-efforts-to-halt-turkey-offensive-in-syria-11571308486?mod=hp_lead_pos1

Turkey Begins Offensive Against U.S. Ally in Syria (10.9.19) WSJ

https://www.wsj.com/articles/turkey-begins-offensive-in-syria-11570627632

U.S. Officials Are Worried About Turkish Foray Into Syria (10.13.19) WSJ

https://www.wsj.com/articles/u-s-officials-are-worried-about-turkey-foray-into-syria-11570103533

North Korea Says it Successfully Tested New Submarine-Launched Ballistic Missile (10.2.19) Reuters https://www.reuters.com/article/us-northkorea-missiles/north-korea-says-successfully-tested-new-submarine-launched-ballistic-missile-idUSKBN1WH2GS

 

EU

Polish and Hungarian election results were another win for nationalism in Europe.  Poland and Hungary have been at odds with the EU for the last two years.  In Austria, another nationalist, former Chancellor Sebastian Kurz, won his election, continuing the rejection of EU establishment candidates across Europe.  German, French and other elections are coming up in the near future and the EU globalists parties are not faring well.

Poland’s Ruling Nationalists Look Narrowly Poised to Return to Power for Another 4 Years (10.11.19) WSJ https://www.wsj.com/articles/polands-ruling-nationalists-eye-new-term-as-voting-begins-11570953095

Austrian Conservative Sebastian Kurz Wins Election (9.29.19) WSJ

https://www.wsj.com/articles/austria-s-conservative-sebastian-kurz-wins-election-with-majority-of-votes-11569771495

What Happened in 2008 & Will it Happen Again? (9.17.19)

video: https://youtu.be/hgK7HR91W9A

In this presentation we discuss:

  • What happened in 2007-2008?
  • What’s happening today that is setting the stage for a repeat?
  • How will “non-performing loans” effect China, the EU, Japan, the US and global markets?
  • Why would a banking crisis today, be far more difficult than in 2008?
  • How does this effect you and what can you do about it?

NEW – Live Weekly Update – Tune in Tuesdays

Every Tuesday night at 7:00 P.M. EST, I will be providing a weekly update on international economics, global markets and political events.  Times are changing and events are unfolding in unprecedented ways that have experts scratching their heads at how it will all play out.

My hope is that this show will provide insight, discernment and greater understanding into the political and economic landscape, so we can be men and women who understand the times and know what to do.  I ask that you please pray for this effort and invite you to listen to the broadcast.

Here is the link to the next broadcast: https://www.youtube.com/watch?v=OhevvLYJoK4  

 

Sept. 3rd Episode: https://www.youtube.com/watch?v=OhevvLYJoK4&feature=em-lbrm

 

Political Upheaval & New Economics Create Uncertainty 

  • World markets are established far more on perception than they are on reality
  • New economics and unprecedented events are creating uncertainty
  • The War Between Globalism & Nationalism is dividing the EU and other nations
  • Elections are weakening the control of mainstream parties and global elites
  • Central banks have switched from raising rates in 2018 to lowering them in 2019
  • World Markets can’t be sure of anything, but they continue to rise along with their debt levels.

Are you prepared for what’s ahead? Get into position every Tuesday!
7:00 PM EST – 6:00 PM CST – 5:00 PM MST – 4:00 PM PST

Mid-August 2019 Economic Update (8.20.19)

Much has happened in the last several weeks.  The IMF downgraded world growth for the second time this year.  Boris Johnson replaced Theresa May as the UK Prime Minister and in his first speech said, “There are no ifs ands or buts, the UK will exit the European Union with or without an agreement by Oct 31, 2019.”  He also said he would not meet with EU officials unless they give him a better deal than they gave former PM May.  The G-7 Nations are meeting and all eyes and ears are on President Trump to see what he will do next in the trade wars.  The EU economy is on shaky ground with a nearly zero growth rate, and they fear they will be the next trade war victims, if they don’t get rid of their trade barriers and open their markets to US trade.  Gold has gone up almost $300 an ounce for the first time in five years and crossed the $1500 threshold, which is a 25% increase for 2019.  Central banks are lowering interest rates, while political unrest continues to rise.

Europe’s Shaky Union Faces Trump’s G-7 Stress Test (8.20.19) Bloomberg

https://www.bloomberg.com/news/articles/2019-08-20/trade-war-latest-trump-merkel-macron-g7-cars-eu-biarritz-jzjpvbgc?srnd=premium

IMF Downgrades World Growth, Warns of Precarious 2020 (7.23.19) Yahoo News

https://news.yahoo.com/imf-downgrades-world-growth-warns-precarious-2020-143309185.html

 

Currency & Crypto-Currency

JP Morgan wrote, “China, the economies of Southeast Asia, including India, have strong secular tailwinds driven by younger demographics and proliferating technological know-how. Specifically, the Asian economic zone—from the Arabian Peninsula and Turkey in the West to Japan and New Zealand in the East and from Russia in the North and Australia in the South—now represents 50% of global GDP and two-thirds of global economic growth. Of the estimated $30 trillion in middle-class consumption growth between 2015 and 2030, only $1 trillion is expected to come from today’s Western economies. As this region grows, the share of non-USD transactions will inevitably increase which will likely erode the dollar’s “reserveness”, even if the dollar isn’t replaced as the dominant international currency.  In other words, in the coming decades we think the world economy will transition from U.S. and USD dominance toward a system where Asia wields greater power. In currency space, this means the USD will likely lose value compared to a basket of other currencies, including precious commodities like gold.

New Zealand passed legislation allowing for payments to be made with crypto-currency.  Many nations have expressed both concern and outright disagreement with Facebook’s plan to release its own crypto called Libra, including the Fed Chairman Jerome Powell.  Bloomberg reported: “The People’s Bank of China is “close” to issuing its own cryptocurrency, according to a senior official.  Mu repeated the PBOC’s intention that the digital currency would replace cash in circulation, rather than M2, which would generate credit and impact monetary policy. The digital currency would also support the yuan’s circulation and internationalization, he said.  (China’s PBOC Considers Plan to Replace Cash and Sideline Bitcoin).  The remarks signal the PBOC is inching toward formally introducing a digital currency of its own after five years of research. Facebook Inc.’s push to create cryptocurrency Libra has caused concerns among global central banks, including the PBOC, which said the digital asset must be put under central bank oversight to prevent potential foreign exchange risks and protect the authority of monetary policy.”  The Swedes, on the other hand, are getting chips in their hands which allow them to buy and sell without cash credit cards or crypto- currency.

China’s PBOC Says Its Own Cryptocurrency Is Close to Release (8.11.19) Bloomberg

https://www.bloomberg.com/news/articles/2019-08-12/china-s-pboc-says-its-own-cryptocurrency-is-close-to-release

New Zealand Officially Legalizes Paying Employees With Crypto-Currency (Aug 2019)

https://www.classic.ird.govt.nz/resources/1/c/1c6029d0-611c-4a15-9cbf-b712129ab76c/tib-vol31-no7.pdf

Swedes are Getting Implants in Their Hands to Replace Cash, Credit Cards (7.14.19) https://nypost.com/2019/07/14/swedish-people-are-getting-chip-implants-to-replace-cash-credit-cards/

Powell Says Libra Cannot go Forward without Addressing Serious Concerns (7.10.19) Yahoo Finance   https://finance.yahoo.com/news/powell-libra-cannot-go-forward-without-addressing-serious-concerns-212100567.html

Is the Dollar’s Exorbitant Privilege Coming to an End (7.10.19)

https://privatebank.jpmorgan.com/gl/en/insights/investing/is-the-dollar-s-exorbitant-privilege-coming-to-an-end

 

The Gold Rush is On

Generally, if gold is going up, a company whose business is directly or indirectly related to gold also goes up.  However, if that company is not wisely managed, makes mistakes in its business operations and/or one of its managers or employees commits an illegality, it could go down in a rising gold market.  Many experts believe there is far more paper gold than there is physical gold, and in a crisis, if people want to exchange their paper gold for real gold, they will come up short.  When the stock market begins to falter, physical gold, gold company stocks and mutual funds with gold and precious metals are likely to go up.  However, if the gold and precious metals mutual fund has a big exposure to 401k plans, they could drop right along with the stock market, because, when  people panic, they don’t carefully scrutinizing their investment holdings, they tend to bail out of everything they have, driving down the value of every company in their mutual fund.  This does not happen with physical gold in a crisis, it usually goes up when the stock market goes down.  Bullion Star wrote, “The ECB, Swiss National Bank, and Swedish Riksbank have all issued coordinated press releases dated 26th July, confirming that there will not be a fifth central bank gold agreement when the current agreement expires in September 2019.”  This indicates that central banks are about to start buying gold.

By Not Renewing the CBGA, Central Banks in Europe Look Ready to Buy Gold (7.26.19) https://www.bullionstar.com/blogs/ronan-manly/by-not-renewing-the-cbga-central-banks-in-europe-look-ready-to-buy-gold/

 

Debt & Recession

The debt of most nations is rising, but there are some that have refused the addictive spend now, deal with the consequences later attitude of most nations and central banks.  The WSJ wrote: “The [U.S.] $22 trillion of debt is the most owed by any country on Earth. However, when compared with the size of the U.S. economy—also the world’s largest—the public debt doesn’t rank in the top 25, according to the Central Intelligence Agency’s World Factbook. Japan and Greece have the highest debt-to-GDP ratios, at 236% and 182%, respectively. The U.S. debt-to-GDP ratio is currently 104%.   The US economy is doing well, but the national debt is also rising at an alarming rate.  “Borrowing by the federal government is set to top $1 trillion for the second year in a row as higher spending outpaces revenue growth and concern about budget deficits wanes in Washington and on Wall Street” – WSJ.

Home Depot has joined many other companies in lowering their growth expectations, and the number of RV purchases has dropped which many say is a precursor to recession.  According to the 2019 Annual Report of The Board of Trustees of The Federal Old-Age & Survivors Insurance & Federal Disability Insurance Trust Funds, Social Security & Medicare trust funds will be fully depleted in 15 years.  The report estimates, Social Security and Medicare combined are underfunded by over $100 Trillion.  If things don’t change and corrective actions are not taken, the US dollar will eventually devalue and the US government will go bankrupt.  Congress passed a deal to defuse the debt-limit issue for two years and push the debate past the 2020 presidential election.  That said, the Trump Administration will do everything they can to keep the US economy afloat until after the 2020 election.  If re-elected, Trump will likely begin to deal with these problems and do the very unpopular things, like raise the age of Social Security from 62 & 65 to 67 & 70, cut all kinds of government programs and prepare the country for what’s coming.

The National Debt, Explained (8.11.19)  https://www.bloomberg.com/news/videos/2019-08-11/the-national-debt-explained-video

The U.S. National Debt, Visualized (8.3.19) WSJ https://www.wsj.com/articles/the-national-debt-visualized-11564830209

Federal Borrowing Soars as Deficit Fear Fades (7.29.19) WSJ

https://www.wsj.com/articles/treasury-to-borrow-over-1-trillion-in-2019-for-second-year-in-a-row-11564428624

White House & Congress Reach Deal on Spending, Debt Ceiling (7.22.19) WSJ https://www.wsj.com/articles/white-house-and-congress-near-agreement-on-spending-debt-ceiling-11563799484?mod=hp_lead_pos2

Switzerland Has a Budget Surplus. Here’s How, and What the US Could Learn (7.8.19) https://www.dailysignal.com/2019/07/08/switzerland-has-a-budget-surplus-heres-how-and-what-the-us-could-learn/

Ex-RBI Chief Flags Risks for India’s Overseas Borrowing Plan (7.13.19) Bloomberg https://www.bloomberg.com/news/articles/2019-07-13/ex-rbi-chief-rajan-flags-risks-for-india-s-overseas-debt-plan

The 2019 Annual Report of The Board of Trustees of The Federal Old-Age & Survivors Insurance & Federal Disability Insurance Trust Funds, Social Security & Medicare https://www.ssa.gov/OACT/TR/2019/tr2019.pdf

 

Central Banks

The US, Mexico, Thailand and other nations are lowering interest rates.  The EU is preparing a new expansive stimulus program which means more money printing, bond buying and lower interest rates, to be released in its September meeting.  Unlike the rest of the nations that raised their interest rates in 2017 and 2018, the EU has not raised interest rates since the 2008 crisis, and to make matters worse they are already at -.4% and are reportedly headed to -.6%.  Negative interest rates are a fiscal fantasy that shouldn’t exist.  They only serve to provide the EU with false legitimacy and solvency, when, in reality, they are insolvent and bankrupt.

ECB Primes Big Bazooka for September (8.15.19) WSJ

https://www.wsj.com/articles/ecb-stimulus-package-may-beat-expectations-official-says-11565876685

By Not Renewing the CBGA, Central Banks in Europe Look Ready to Buy Gold (7.26.19) https://www.bullionstar.com/blogs/ronan-manly/by-not-renewing-the-cbga-central-banks-in-europe-look-ready-to-buy-gold/

 

World Economy & Global Markets

German and EU economies are on the brink of recession, but other economies like the US, Australia and Switzerland are doing well.   Australia is set to triple its exports of grain-fed beef to China by 2030 to satisfy the nation’s growing appetite for the highly marbled meat, according to Rabobank Group.  CNN reported that “China’s economic growth has slumped to its lowest level in nearly three decades as the world’s second largest economy feels the effects of a prolonged trade war with the United States.”  The trade wars continue, as President Trump continues to attempt to deal with the trade deficit and open other countries to US markets.  The US is also investigating the Big Tech companies to see if they have acted unfairly, broken anti-trust laws and inhibited competition.

China’s Appetite for Australia’s Marbled Beef Is Growing (8.20.19)

https://www.bloomberg.com/news/articles/2019-08-20/grass-to-grains-shift-may-brighten-australia-beef-export-outlook

States to Launch Antitrust Probe of Big Tech Firms (8.19.19) WSJ

https://www.wsj.com/articles/attorneys-general-to-move-forward-with-antitrust-probe-of-big-tech-11566247753?mod=hp_lead_pos1

China’s Economic Growth Slumps to Lowest in 27 Years as the Trade War Hits (7.15.19) CNN https://www.cnn.com/2019/07/15/economy/china-gdp-growth/index.html

 

Political Unrest

Hong Kong protests continue; everyone is watching to see what China will do and President Trump is warning China to handle things wisely.  Italy’s Prime Minister will be resigning, ending the coalition government.  The EU bureaucrats may be rejoicing, but they could end up with an even more anti-EU replacement if they are not careful.  Tensions between India & Pakistan continue to rise and these two nuclear powers are being urged by world leaders to act with restraint.  Many believe that one of Russia’s nuclear missile depots exploded, as four monitoring stations went silent after the blast; as with most things that happen internally in Russia, all questions are met with no response.  China’s Huawei has been found to not only be spying on governments and countries which use it, but also to be helping Africa and other nations spy on one another.   It looks as if Canadian Prime Minister Trudeau may have damaged his re-election chances, having broken Canadian conflict of interest laws.  Both India and China are taking away freedoms and bearing down on their Islamic populations, with China literally placing entire Islamic town and village populations in internment facilities.

Italian Prime Minister to Resign, Declaring End of Coalition (8.20.19) WSJ

https://www.wsj.com/articles/italian-prime-minister-to-resign-declaring-end-of-government-11566310341?mod=hp_lead_pos3

Italian Politics Meet European Rigidity (8.21.19) Bloomberg

https://www.bloomberg.com/opinion/articles/2019-08-20/how-the-eu-should-respond-to-political-upheaval-in-italy?srnd=premium

Italy Stumbles Into Its Next Absurd Crisis (8.21.19) Bloomberg

https://www.bloomberg.com/opinion/articles/2019-08-20/italy-stumbles-into-its-next-absurd-political-crisis?srnd=premium

Trump Urges Restraint by India and Pakistan in Kashmir Conflict (8.19.19) WSJ

https://www.wsj.com/articles/trump-urges-restraint-by-india-and-pakistan-in-kashmir-conflict-11566261701?mod=hp_lista_pos4

Pakistan Extends Powerful Army Chief’s Term (8.19.19) WSJ https://www.wsj.com/articles/pakistan-extends-powerful-army-chiefs-term-11566239708

More Russian Nuclear Monitoring Stations Went Silent Days After Blast, Official Says (8.19.19) WSJ | https://www.wsj.com/articles/more-russian-nuclear-monitoring-stations-went-silent-days-after-blast-test-ban-officials-says-11566232680

Canada’s Trudeau Found to Have Broken Conflict-of-Interest Law (8.15.19) WSJ

https://www.wsj.com/articles/canadas-trudeau-found-to-have-broken-law-in-bid-to-aid-montreal-firm-11565801833

Huawei Technicians Helped African Governments Spy (8.14.19) WSJ

https://www.wsj.com/articles/huawei-technicians-helped-african-governments-spy-on-political-opponents-11565793017

India’s Modi Defends Decision to Clamp Down on Kashmir (8.8.19)

https://www.wsj.com/articles/indias-modi-defends-decision-to-clamp-down-on-kashmir-11565282857

After Detentions, China Razes Muslim Communities to Build Loyal City (3.20.19) WSJ

https://www.wsj.com/articles/after-mass-detentions-china-razes-muslim-communities-to-build-a-loyal-city-11553079629