Category Archives: Uncategorized

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

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


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

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

Swedes are Getting Implants in Their Hands to Replace Cash, Credit Cards (7.14.19)

Powell Says Libra Cannot go Forward without Addressing Serious Concerns (7.10.19) Yahoo Finance

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


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)


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)

The U.S. National Debt, Visualized (8.3.19) WSJ

Federal Borrowing Soars as Deficit Fear Fades (7.29.19) WSJ

White House & Congress Reach Deal on Spending, Debt Ceiling (7.22.19) WSJ

Switzerland Has a Budget Surplus. Here’s How, and What the US Could Learn (7.8.19)

Ex-RBI Chief Flags Risks for India’s Overseas Borrowing Plan (7.13.19) Bloomberg

The 2019 Annual Report of The Board of Trustees of The Federal Old-Age & Survivors Insurance & Federal Disability Insurance Trust Funds, Social Security & Medicare


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

By Not Renewing the CBGA, Central Banks in Europe Look Ready to Buy Gold (7.26.19)


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)

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

China’s Economic Growth Slumps to Lowest in 27 Years as the Trade War Hits (7.15.19) CNN


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

Italian Politics Meet European Rigidity (8.21.19) Bloomberg

Italy Stumbles Into Its Next Absurd Crisis (8.21.19) Bloomberg

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

Pakistan Extends Powerful Army Chief’s Term (8.19.19) WSJ

More Russian Nuclear Monitoring Stations Went Silent Days After Blast, Official Says (8.19.19) WSJ |

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

Huawei Technicians Helped African Governments Spy (8.14.19) WSJ

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

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

Q-2 Economic Update (7.7.19)

The US economy and stock markets continue to perform well, unemployment is at record lows and wages are rising.  That is not the case for the EU, whose economy and stock market are low and falling and whose unemployment is rising.  The UK’s economy is preforming far better than the EU as a whole, but is hoping for some positive changes and a more decisive leader as Prime Minister May exits and Brexit architect Boris Johnston, her likely successor, takes the helm.  The G-20 nations met and, for the first time, discussed global risk of aging populations and also took another step to towards enacting the first global tax.


U.S. Adds 224,000 Jobs in June, Exceeding Expectations (7.5.19) WSJ

U.K.’s Boris Johnson Strengthens Lead in Conservative Party Race (6.18.19) WSJ

G20 Digital Tax Takes Step Closer (5.31.19)

In Historic First, G20 Weighs Ageing as Global Risk (6.9.19)

Japan Has More People Over the Age of 80 Than Under the Age of 10 (6.20.19) SMC


Central Banks & Crypto Currency

There is much action going on in the central banks of the world, with interest rates going up and down, chairmen being replaced and governments intervening and attempting to control them.  Turkey’s President Erdogan just replaced his chairman for going against his wishes.  Longtime Japanese Chairman Kuroda, once the rock star, is now being criticized and falling out of favor.  Longtime ECB Chairman Mario Draghi will be retiring in fall and it looks like the current Director of the IMF, Christine Lagarde, will replace him.  Last month, Mr. Draghi indicated a possible rate cut from the already negative interest rate of -.41 while most of the rest of the central banks of the world  at -.1 have raised interest rates in 2017 and 2018 (save Japan).  The US Federal Reserve has reversed course from their December meeting in 2018, and are now discussing lowering rates in the second half of 2019, under pressure from the Trump Administration. Many central banks in the Asia-Pacific region, including New Zealand and Australia, have already reduced interest rates over the last month.

Erdogan Dismisses Governor of Turkey’s Central Bank (7.6.19) WSJ

IMF’s Christine Lagarde Wins Backing to Run European Central Bank (7.2.19) WSJ

Fed Holds Rates Steady, Hints at a Possible Cut (6.19.19) WSJ

How Japan Turned Against Its Bazooka Wielding Central Bank Chief (6.17.19)

ECB Signals Possible Rate Cut Prompting Trump Tweets (6.18.19) WSJ

How to Make Negative Interest Rates Work (2.6.19)


Banks & Crypto-Currency

In the second quarter, crypto-currencies both gained and lost ground. Bitcoin fluctuated, but despite volatility, central banks, commercial banks and governments/government organizations are moving toward digital currency.  Deutsche Bank, the EU’s largest bank, has been struggling; its stock has been falling and it has had a difficult time securing financing to keep going.  If Deutsche Bank were to default, it would severely cripple the EU banking system and create problems around the world. In his June 2019 article “Rejoice the End of Banking is Nigh,” Simon Black predicts the conventional banking system that has dominated the world for hundreds of years is drawing to a close as digital currencies gain prominence.

The IMF and World Bank are working together to establish a private blockchain network to create a Distributed Ledger Technology (DLT refers to the technological infrastructure and protocols that allows simultaneous access, validation and record updating in an immutable manner across a network spread across multiple entities or locations. – Investor Encyclopedia).  Russia is looking to create its own crypto-currency and back it by gold to facilitate international settlements.  Elvira Nabiullina, governor of the Bank of Russia, said that her institution is set to review a proposal for the development of the cryptocurrency.  Fox News reported that, “Bank of America CEO Brian Moynihan spoke this week about embracing digital payment transactions while moving toward a cashless society. He said Bank of America “will continue to move” toward digital banking transactions. “We want a cashless society…”   It also appears Facebook will be dipping its hands in another pot, as they announced they will be coming out with their own crypto called “Libra.”  US Rep Maxine Waters fired back that Facebook should not be competing with the US dollar.

Bank of America CEO Says Company Wants a Cashless Society (6.28.19) Fox News

Rep. Maxine Waters Says US Can’t Let Facebook’s Libra Compete With the Dollar (6.19.19)

Rejoice the End of Banking is Nigh (6.19.19) SMC

Why Everyone Should Be Following Deutsche Bank (6.17.19)

Facebook’s New Cryptocurrency, Libra, Gets Big Backers (6.13.19) WSJ

The World Bank & IMF Floats a Joint Private Blockchain Network & Cryptocurrency (4.16.19)

Russian Central Bank to Consider Gold-Backed Cryptocurrency (5.23.19)


World Economy, Debt, Recession

Many mainstream economists and commentators are starting to concede that a recession is likely in the next year or two, but most of them downplay its likely severity. The Zero Hedge view is, however, that “virtually everyone is underestimating the tremendous economic risks that have built up globally during the past decade of extremely stimulative monetary policies.”  They believe everything is lining up much like 2008, but worse.

A CNBC broadcast reported that, “DoubleLine CEO Jeffrey Gundlach is betting on gold.  ‘I am certainly long gold,’ Gundlach said in an investor webcast Thursday. He added his trade is based on the expectation that the dollar will finish the year lower.  When the dollar weakens, gold tends to appreciate as it becomes cheaper for investors holding other currencies.  Gold prices hit a three-month high this month as investors flee to the safe-haven bullion amid escalated trade tensions. Meanwhile the dollar fell to a 11-week low on Wednesday as the market increasingly bet on a rate cut in the coming months.”

Bond King Jeffrey Gundlach Bets on Gold, Sees Rising Recession Chances, Dollar Decline (6.14.19) CNBC

Why You Should Not Underestimate the Severity of the Coming Recession (6.9.19) Zero Hedge


Political Unrest

The intensity of ideological conflict is on the rise globally.  The battle between socialism and capitalism, globalism and nationalism and liberalism and conservativism is being fought in many nations, especially the US.  Simon Black wrote, “the Bolsheviks are already here.”  The battle between the globalists and nationalists seems to be expanding and show no signs of waning.  The WSJ reported: “New parties are finding success by addressing the concerns of voters who feel neglected and disdained by liberal elites.  Mr. Salvini, the de facto head of Europe’s growing national populist family. “Marine Le Pen is the biggest party in France. Nigel Farage has the biggest party in Great Britain. It is a sign of a Europe that has changed.” Many people simply want more of a say over the decisions that affect their nations and their daily lives.  A second key current is destruction: widespread fears that national identities, cultures and ways of life are slipping away. When eight in 10 Trump voters support building a wall on the southern border, or three in four Brexit voters, worried about how immigration is changing Britain, voted to “take back control,” they knew what they were supporting.”

It is doubtful that anything is going to calm down on the social-political front anytime in the near future.  Iran declared they are breaking the agreement they made with the rest of the World on enriched uranium, which came as no surprise to those who had the foresight to oppose the deal from the beginning, but the sanctions are taking a toll on Iran’s economy.  Greece just replaced their socialist Prime Minister and majority party, with a Conservative one, and the UK is about to vote on a new Prime Minister to replace Theresa May.  The WSJ reported, “In the battle for influence within Europe, Angela Merkel is ceding ground to France’s Emmanuel Macron, who has emerged as an increasingly potent rival to the German chancellor. Ms. Merkel bowed to Mr. Macron this week after marathon talks to carve up the European Union’s top leadership positions in the clearest display to date of the German chancellor’s fading clout.”

The EU continues to fight with its own and is deciding whether it will take disciplinary action against Italy for not meeting the budget targets Brussel’s set for them.  Continued chastisement from the EU may drive more member nations to follow the UK’s lead to exit the EU.  There were also many demonstrations in Hong Kong to retain their freedom from Beijing.  The US continued the trade war in its fight against the Chinese telecommunications company Huawei, a company many believe to be a spying tool of the Chinese government.

China is also being condemned by the rest of the world because of their crackdown on Islam and other religious groups.  In a Fox News interview, Lt. Col Maginnis warned of the plans by China to dominate the world militarily and economically by the middle of this century, not to mention Russian intentions.  President Trump and President Lopez of Mexico also struck a deal to stop the flow of illegal immigrants into the US.

Conservatives Regain Control in Greece (7.7.19) WSJ

Iran Plans New Breach of Limits of Nuclear Agreement (7.7.19) WSJ

Iranians Say Their Bones Breaking Under US Sanctions (6.24.19) AP

EU Compromise Exposes Merkel’s Waning Influence (7.4.19) WSJ

EU Drills Into Italy’s 2020 Deficit Before Decision on Sanctions (6.25.19) Bloomberg

The Bolsheviks Aren’t Coming, They’re Already Here (7.1.19) SMC

Europe’s Populists Are Here to Stay (6.15.19) WSJ

Putin Stands By China, Criticizes U.S., In Trade, Huawei Disputes (6.7.19) Reuters

Hong Kong Upheaval Puts Beijing in a Bind (6.16.19) WSJ

Lt. Col. Maginnis Warns of Xi’s China Dream of World Dominance by Mid Century (6.12.19) Fox News

Crowds Turn Out to Cheer Mexico’s President & the Deal He Struck With Trump (6.919) WSJ

Former Goldman CEO Lloyd Blankfein Trump’s Tariffs Aren’t a Bad Idea (6.20.19) CNBC

As Trump Demands Major Concessions, Beijing Wants the World to Think That the US Will Blink First (6.14.19) CNBC

Large European Routing Leak Sends Traffic Through China Telecom (6.6.19)

Pentagon working to reduce US reliance on Chinese rare earth minerals after trade war threat (5.29.19) CNBC

Costco is looking at alternative sourcing and price hikes as tariffs loom (5.31.19) CNBC

April 2019 Update

Brexit just won’t break!  March 29th and April 12th came and went and now the deadline has been extended to October 31, 2019.  Will Parliament make a decision between now and then, will it be a soft/negotiated Brexit, or a hard Brexit which would be an automatic ejection from the European market? Will another extension be given?   Anything could happen and there is no way of predicting the outcome.  If the UK capitulates, its days as a world economic power are over and it is very unlikely that any nation will ever challenge the EU again because, if the UK failed, how could anyone else resist them?  If the UK resists and retains their sovereignty, the other EU nations may do the same and the EU’s ability to intimidate and control its members will begin to diminish with more of their members likely exiting.


EU Leaders Agree to Delay Brexit Until Oct. 31 (4.10.19) WSJ

Brexit Betrayal – Treachery or Treason? (3.24.19)

May’s Brexit Deal Is Rejected for a Third Time by Lawmakers (3.29.19) WSJ

Theresa May Vows to Resign to Get Brexit Deal Through Parliament (3.27.19) WSJ


Central Banks & Currency

In the first three months of this year, the Fed has gone from arguing about how much and how often interest rates should be raised to arguing about whether or not to lower them.  When compared to the EU, Japanese or Chinese central banks, the Federal Reserve looks pretty good at the moment; however, the Fed’s balance sheet plans have too many assets.  US debt is too high, and too much qualitative easing for too long has put the Fed between a rock and hard place.  The Feds are not alone; however, as most of the central banks of the world are in a similar place.  James Skinner wrote:

The Pound remains the best performing currency in the G10 universe for 2019 but the British currency has much further to rise, according to analysts at Morgan Stanley, who’ve recently told clients to buy the British currency.  The U.S. Federal Funds rate of 2.5% is substantially higher than the BoE’s 0.75% but markets are already speculating the Federal Reserve could cut its interest rate next year so if the BoE were to lift Bank Rate the Pound-to-Dollar rate differential would move in favour of Sterling.  It is a gradual increase in market bets on BoE rate hikes that Redeker says will drive the Pound-to-Dollar rate up to Morgan Stanley’s forecast of 1.52 by year-end.”

Reuters reported that Saudi Arabia is threatening to sell its oil in currencies other than the US Dollar if Washington passes a bill exposing OPEC members to US antitrust lawsuits, three sources familiar with Saudi energy policy said.  The bill called NOPEC has been purposed a number of times but has never gotten any traction.  According to the WSJ:

India’s central bank cut its main lending rate for the second time this year as recent low inflation rates gave it the freedom to try to bolster economic growth.  The Reserve Bank of India’s monetary-policy committee, headed by Gov. Shaktikanta Das, on Thursday lowered the repurchase rate to 6% from 6.25%. All 10 economists polled by The Wall Street Journal had predicted a quarter-percentage-point rate cut.”

Growth Stumbling, but Central Bank Arsenals are Near Empty (4.12.19) Reuters

India’s Central Bank Cuts Key Lending Rate to 6.0% (4.4.19) WSJ                                  

Things are Only Getting Tougher for Chair Jerome Powell and his all Over the Place Fed (4.3.19) CNBC

The British Pound is a Buy says Morgan Stanley (3.28.19)

Saudi Arabia Threatens to Ditch Dollar Oil Trades to Stop NOPEC (4.4.19) Reuters



Fox News reported that, “last month, the national debtOpens a New Window. surpassed $22 trillion — or nearly $180,000 per taxpayer. That figure will roughly double within three decades, since spending on Social SecurityOpens a New Window., Medicare and Medicaid will balloon as America’s population ages.  Unfortunately, it’s too late for a “grand bargain” now.”  A slowing world economy, tighter credit and rising debt are creating problems for China as well.   CNBC said, “According to experts, defaults for Chinese corporate bonds — issued in both U.S. dollars and the Chinese yuan — soared last year, according to numbers from two banks.  Yuan-denominated debt rose to an unprecedented 119.6 billion yuan ($17.8 billion) — four times more than 2017, according to a February report by Singapore bank DBS.  Japanese bank Nomura’s estimates, provided to CNBC, were even higher, putting the size of defaults in onshore bonds — or yuan-denominated bonds — at 159.6 billion yuan ($23.8 billion) last year. That number is roughly four times more than its 2017 estimate.”

Chinese Companies Are Defaulting on Their Debts at an Unprecedented Level (3.20.19) CNBC

The Federal Government Should Default on its Debt (3.19.19) Fox News


Political Unrest & Elections

The battle between globalism and nationalism continues to playout across the globe.  Finland’s Social Democrats look to have edged a victory for the first time since 1999, barely beating the nationalist Finns Party 17.7% to 17.5%.  Israeli Prime Minister Netanyahu won a 5th term and gained seats in the Knesset strengthening his position, and Australia’s prime minister has just called for new elections, hoping to expand the number of seats in his party’s control.

Immigration continues to create political unrest, as another migrant horde has broken through Mexico’s southern border and attacked Mexican border police on their way to the US border.  There are complaints that the bottle necked ports and borders are costing shippers millions.  President Trump has threatened to close the US-Mexican border if Mexico does not stop the stream of immigrants on their end.

Chinese fishing boats invaded Philippine sovereign territory, as China continues to push at the borders of international waters.  The WSJ reported that “Chinese fishing vessels have swarmed the waters around a Philippine-controlled island in the South China Sea in recent months—sparking fears in Manila that Beijing is trying to assert greater control in a disputed area.  Since January, at least 275 Chinese boats functioning as part of a maritime militia have gathered for varying lengths of time near Thitu Island, according to the Philippines’ military. Their tactics raise concerns about their “role in support of coercive objectives.”

The WSJ reported problems in both Libya and Turkey, as a renegade Libyan military commander, reportedly supported by Saudi Arabia, launched an assault on the Tripoli capital, risking returning the country to a full-blown civil war.  Turkey’s Erdogan decided to purchase an air-defense system from Russia despite US warnings that using the equipment would jeopardize Ankara’s role within the North Atlantic Treaty Organization.  Vice President Pence called Erdogan’s decision reckless.  The US declared Iran’s Revolutionary Guard a terrorist organization, subjugating it to all the penalties that go with such a designation. It is unusual to brand a branch of a nation’s military a terrorist group, but Iran’s support of terrorism is clear, and the Revolutionary Guard are a complicit party.  Facebook and CEO Mark Zuckerberg are also stirring up international unrest by continuing to anger individuals and governments around the world by their reckless disregard for people’s privacy, the rule of law of various nations, and the imposition of their bias views and removal  of people and groups from Facebook with whom they disagree with.

Social Democrats Set to Win Close Legislative Election in Finland (4.14.19) WSJ

Netanyahu Rode Israel’s Rightward Shift to Successful Election Result (4.10.19) WSJ

Australia to Pick Its Next Leader—With an Election (4.11.19) WSJ

Saudi Arabia Promised Support to Libyan Warlord (4.12.19) WSJ

Libyan Warlord Launches Assault on Country’s Capital (4.5.19) WSJ

US Designates Iran’s Islamic Revolutionary Guard Corps a Foreign Terrorist Org. (4.8.19) WSJ

Erdogan Vows to Buy Russian Missiles Despite U.S. Warnings (4.8.18) WSJ

U.S. Clashes With Turkey Over Russian Air-Defense System (4.3.19) WSJ

China’s Fishing Militia Swarms Philippine Island, Seeking Edge in Sea Dispute (4.4.19) WSJ

Hostile Migrants Break Border Gate to Enter Mexico, Then Attack Police & They’re Headed North

U.S. Shift on Mexican Border Triggers Trade Bottleneck (4.3.19) WSJ


World Economies & Market

The WSJ reported that “The International Monetary Fund cut its outlook for global growth to the lowest since the financial crisis amid a bleaker outlook in most major advanced economies and signs that higher tariffs are weighing on trade.  It’s the third time the IMF has downgraded its outlook in six months.”  The report goes on to say that the IMF raised its forecast for Chinese growth, while lowering it for the US, the euro area, Japan and India.  The UK economy grew in February, in spite of the Brexit uncertainty.  Italy’s populist government conceded it won’t hit the budget-deficit target agreed on with European Union authorities, setting the stage for renewed tensions with Brussels.  Currently world stock markets are continuing to grow, even as the outlook for world economies is beginning to diminish.  Trade wars and negotiations continue between the US and China, but it looks as though they may have made a little progress with a trade deal enforcement accord and discussions on currency manipulation over the past month.  In the second week of April the EU prepared tariffs against the US, but two days later, changed their minds and paved a way for trade pact talks. Many of the EU nation economies continue to struggle, including Germany.


Global Stock Rally Defies Dimming Outlook for World Economy (4.14.19) WSJ

European Union Paves Way for U.S. Trade-Pact Talks (4.14.19) WSJ

EU Prepares Tariffs Against U.S. Amid WTO Battle (4.12.19) WSJ

U.S.-China Trade Pact Takes Aim at Currency Manipulation (4.12.19) WSJ

U.S., China Reach Accord on Trade-Deal Enforcement, Mnuchin Says (4.10.19) WSJ

UK Economy Grew Steadily in February (4.10.19) WSJ         

IMF Cuts Global Growth Outlook to Lowest Pace Since Crisis (4.9.19) Bloomberg

Italy Warns of Bigger Budget Deficit (4. .19) WSJ

Japan’s Business Confidence Hits Two-Year Low as Trade War Stings (3.31.19) Reuters

German Manufacturing Slump Piques Fears Over Europe’s Flagship Economy (4.4.9) WSJ

2018 Wrap Up & Jan 2019 Update

In the last week of 2018 the Dow saw the worst-ever Christmas Eve selloff, followed by the greatest one day gain and then another drop.  Needless to say, steep losses and extreme volatility reigned in the final quarter of 2018 and have continued in the first month of 2019. The WSJ summed it up 2018 as follows:

Stocks rise on the year’s final trading day, but not enough to offset bruising last few weeks of selling.  U.S. stocks drifted higher, but closed out 2018 with their steepest annual declines since the financial crisis, reflecting growing unease among investors about the health of the nearly decade-long bull run.  For the year, the Dow industrials were down 5.6%, the S&P 500 off 6.2% and the Nasdaq down 3.9%.  Stock markets elsewhere around the world fared even worse. The Stoxx Europe 600 shed 13% in 2018, while the U.K.’s FTSE 100 declined 13% and Japan’s Nikkei Stock Average fell 12%.  The volatility spared few asset classes. Oil prices hit multiyear highs in October, only to tumble in the fourth quarter as investors grew increasingly worried about a potential supply glut.”

At the mid-January World Economic Forum in Davos, Switzerland, the investment experts seemed to uniformly agree that, globally, things are moving toward lower growth and an eventual recession. A coming recession would wreak much greater havoc on the EU and Japan, who still have negative interest rates and are printing money.  The WSJ reported that “Europe seems stuck, its economic recovery running out of steam and its politics shaken by the growing strength of nationalist politicians in many European countries.  The International Monetary Fund cut its 2019 global growth forecast by 3.5% based on weaker-than-expected economic performance in Europe, especially in Germany and Italy.  Decision-making could be further hampered after EU elections in May. Anti-EU parties are widely expected to make headway in the European Parliament.”

On Jan 25th, a bill was passed that ended the partial US government shutdown, an event which had no tangible impact and few people even would have known was happening if media outlets with agendas had not sensationalized it.  A short-term spending bill was passed, however this quick fix will only last until February when the issue will need to be addressed again.

Trump Signs Spending Bill, Ending Longest Government Shutdown in U.S. History (1.25.19)

Guggenheim’s Minerd Says a Recession Will Be Tough When It Gets Here (1.23.19) Bloomberg

Europe’s Political Funk Sets Back Its Economy (1.23.19) WSJ

U.S. Indexes Close With Worst Yearly Losses Since 2008 (12.31.18) WSJ

Volatile Stocks Test Investors Resolve (12.29.18) WSJ

Dow Industrials Fall to End Volatile Week (12.29.18) WSJ

Chinese Dumped $1B of U.S. Real Estate in Third Quarter, Extending Retreat (12.25.18) WSJ


World Markets

Bloomberg reported: “The Nikkei 225 Stock Average skidded below the 20,000 level and was headed for bear market territory in the latest blow for Japanese equities experiencing their worst December on record.  The Nikkei 225 fell 5.1 percent to 19,147.45 in Tokyo at the midday break Tuesday, with all members in the red. The blue-chip stock gauge dropped below 20,000 for the first time since September 2017.”

The WSJ reported: “U.S. stocks fell, notching their second straight session of losses, after downbeat Chinese economic data added to signs of slowing growth around the world.  Major indexes began the day lower and never managed to break higher, weighed down by a report showing China’s exports unexpectedly slid in December.  The data showed both slowing global growth and uncertainty over trade relations have started to take a toll on the world’s second-largest economy.  Dimmer expectations for global growth and disappointing holiday sales have forced many U.S. companies to slash their forecasts, pushing the estimated earnings-growth rate for the quarter to around 11%, according to FactSet.  Elsewhere, the Stoxx Europe 600 fell 0.5% following a downbeat session across Asian markets.”

The WSJ also reported: “China’s overall December exports unexpectedly fell 4.4 percent from last year.  China’s December trade surplus with the U.S. fell to $29.87 billion from $35.54 billion in November. WATCH: Trump will win the trade war with China, says Gary Shilling | China’s economic expansion slowed to its slowest pace in nearly three decades last year, as a bruising trade fight with the U.S. exacerbated weakness in the world’s second-largest economy.  The 6.6% growth rate for 2018 is the slowest annual pace China has recorded since 1990.”  At the World forum in Davos, the IMF lowered its global growth forecasts, affirming what most of the global finance managers had already been forecasting as well.

IMF Lowers 2019 Global Growth Forecast (1.21.19) WSJ

China Annual Economic Growth Is Slowest Since 1990 (1.21.19) WSJ

The World Braces for Slower Economic Growth (1.21.19) WSJ

Stocks Slip on Signs of Slowing Growth (1.14.19) WSJ

US trade deficit with China grows to a record and it’s likely even worse than the data show (1.13.19)

Japanese Stock Rout Accelerates in Worst December for Almost 60 Years (12.24.18)


Brexit & the EU

In December PM May brought back the Brexit deal she negotiated with the EU, which both the liberal and conservative parties said was DOA, nine of her cabinet ministers resigned and a no confidence vote was taken, however she retained enough votes to remain PM.  Weeks later May’s agreement was officially voted down and another no confidence vote was taken, which May survived a second time.  The plan has since been revamped and another vote is scheduled for next week, however prospects for acceptance by the EU and passage in Parliament are low. If the plan fails to pass again, May could resign or face a third no confidence vote which could remove her from office.  Former British Foreign Minister and primary architect of the original Brexit vote, Boris Johnson, is being named as a likely successor, which would almost guarantee a hard Brexit and an ejection form the EU market. UK markets and the pound will initially take a hit, but once the trade deals the UK has negotiated with the rest of the world are revealed, they will ascend, just as they did after the initial Brexit vote. These trade deals will likely undercut EU trade deals, positioning UK markets and the pound to continue to outperform the EU, as the UK has outperformed the EU in almost every economic measurement, since its citizens voted to leave the EU three years ago.

Goldman Sachs Says Brexit May Help Sterling Shine (1.24.19) Bloomberg

Pound Heads for Best Week Against Euro Since 2017 (1.24.19) Bloomberg

U.K. Parliament Roundly Rejects May’s Brexit Plan (1.15.19) WSJ

Britons Most at Risk in a Messy Split from EU are Least Worried (1.10.19) WSJ


Central Banks & Currencies

Ever since the crisis of 2008, there has been a desire by many nations of the world to be less reliant on the US.  Since that time, a new world bank, the AIIB, is now fully operational. Treaties have been signed to directly exchange currencies, bypassing the USD.   Another global payment system is about to be launched which will be an option to the current SWIFT system.  In the next global financial crisis, other nations won’t have to rely on the US if they don’t want to.

The endgame is an alternative global payments system that will substitute for SWIFT and be controlled by Russia and China with participation by countries including Turkey, Iran, North Korea and possibly many others. This alternative system will exclude the U.S. and U.S. dollars, finally creating a way for nations to trade and settle balance of payments without using dollars and without relying on portals such as SWIFT and Fedwire that are controlled by the U.S. In turn, this means that U.S. economic sanctions will no longer be effective because countries will have an easy way around them using this new nondollar system. Putin is insistent on this new system and is close to achieving it. When the new system is rolled out, you won’t be able to say you weren’t warned “We are not setting the target of moving away from the dollar — the dollar is moving away from us…”- Vladimir Putin  “…and those who take respective (sanctions) decisions are shooting themselves not just in the foot but slightly higher, as such instability in calculations in dollars creates a desire of many global economies to find alternative reserve currencies and create settlement systems independent of the dollar,” Putin added, speaking at an investment forum in Moscow, according to Russian TV network RT.” -Market Watch

The WSJ also reported, “the banks hit hardest by the financial crisis have retreated from overseas lending in the decade since the 2008 collapse of Lehman Brothers, marking a rare example of a sector in which leverage has been curtailed even as global debt has boomed.  The total amount of cross-border bank debt has dropped from a peak of $35.453 trillion in the first quarter of 2008 to $29.456 trillion in the second quarter of this year, a fall of nearly 17%. The decline in interbank lending—the credit banks extend to other banks—has been particularly steep.   Two of the top contenders to become the next European Central Bank president said they don’t know if the institution will be able to raise interest rates this year.”


The global boom may be over, but this doesn’t mean the world is about to stumble into a recession. Labor markets, in particular remain quite strong, businesses may be reluctant to invest, but not to hire. Nonetheless, central banks need to proceed carefully, “in a low-growth world, a little bit of monetary tightening can go a long, and painful, way.” – WSJ

Fed Weighs Earlier End to Bond Portfolio Runoff (1.25.19) WSJ

The Global Boom, Barely Begun, May Be Over (1.23.19) WSJ

ECB Presidential Contenders Wary on Chance of 2019 Rate Hike (1.25.19) Bloomberg

Great Retreat from Global Bank Lending Continues (12.31.18) WSJ

Putin Says U.S. Actions Driving The World Away From The Dollar (11.29.18)


Debt, Downturns & Recessions

The US economy is still strong; growth is good, unemployment is at historical lows and will probably remain so in the first half of this year, but the signs of recession are appearing and there are great concerns on the horizon.  While interest rates were low, all the Fannie Mae & Freddie Mac bonds that were purchased by the Federal Reserve with 3% and 4% coupon rates easily paid the debt service attached to them.  Last year the US prime rate began the year at 1.5% and treasuries had a 3% over all interest rate, but in 2019 our prime rate is now 2% and treasuries are starting with a 4% or more rate.   If interest rates are raised two more times, as they are slated to be, our debt service will rise to 5%, which means most of the bonds that were purchased will no longer be able to pay the debt maintenance on what the US owes.

According to the WSJ: “In the aftermath of the financial crisis, a swath of individuals and families began a long and painful deleveraging process.  Businesses, meanwhile, quickly moved in the opposite direction—loading up on cheap debt to the point where many observers now worry that highly leveraged companies pose a threat to the global economy.  U.S. corporate debt has climbed to roughly 46% of gross domestic product, the highest on record, according to data from the Federal Reserve and Commerce Department. Businesses in emerging markets, such as China, have gone on an even bigger borrowing binge, taking advantage of ultralow interest rates and, in some cases, state-driven policies designed to propel economies forward.”

There is a pension crisis brewing in the private sector, but even more so in the government sector.  Simon Black wrote, “The World Economic Forum reported that in 2015, worldwide pensions were underfunded by $70 TRILLION. That is larger than the top 20 economies in the world, combined.  In the US alone, federal, state, and local government pensions are $7 trillion short on the funding they need to pay what they have promised.  And none of this includes Social Security’s almost $50 trillion of unfunded obligations.  And the private sector isn’t in great shape, either. US corporate pensions are a combined $553 billion in the hole. And one quarter of those funds are expected to go broke within a decade.”

The WSJ also reported that: “Los Angeles officials are socking away money for the next recession.  The nation’s second-largest city has set aside close to $500 million across several funds to help weather emergencies.  States commonly use rainy-day funds to smooth the jolt from recessions, which can come quickly when sales- and income-tax revenue plummets. Thirty-one states boosted rainy-day fund balances in the last fiscal year, and 26 have projected increases this year, according to the National Association of State Budget Officers.”  The article goes on to list many other cites beginning to prepare for the next recession.  The coming recession has been a major focus in the first month of 2019 by US cities, major investment analysts, as well as at the World Financial Forum in Davos, Switzerland.  It would probably be wise for the average investor to be paying attention as well.

Los Angeles and Other Cities Stash Money to Prepare for a Recession (1.24.19) WSJ

Debt, Dope & Casinos Chicago is Circling the Drain (1.8.19) SMC

Your Tax Dollars at Work Govt Officially Forgiving Student Debt (12.31.18) SMC

Corporate Debt Hitting Record Levels (12.29.18) WSJ

Congress Quietly Formed a Committee to Bail out 200 Pension Funds (12.26.18) SMC

Chinese Dumped $1B of U.S. Real Estate in Third Quarter, Extending Retreat (12.25.18) WSJ

The Biggest Emerging Market Debt Problem Is in America (12.20.18)

I Thought This Deal Was Absurd, But Pensions Are Piling In (12.8.18) SMC

Time to Worry (11.30.18) Weekly Standard


Political Unrest

There is much political turmoil across the world; the battle between globalism and nationalism is on center stage and nationalism has clearly gained the upper hand.  There are many internal and international conflicts going on at the same time, and even more agendas.

On January, 23 the US declared its support of the Venezuelan opposition leader who, along with the Venezuelan parliament, declared the current leader Maurado a usurper and himself to be the legal and rightful leader of the country.  Greece is edging toward political uncertainty with the Macedonia agreement which is being rejected by various factions and is resulting in many internal conflicts.  French citizens have been demonstrating in mass for the last nine weeks and the government has capitulated to their demands.  Italy ignored the EU and passed a budget which the EU condemned.  The US is sanctioning Iran, Israel has been carrying out military strikes on Iranian targets, and there is mass public unrest and demonstrations against the Iranian government.  China has declared war on both its Christian & Islamic populations, attempting to eradicate these faiths, and if they deem it necessary, even the citizens who hold them.

The Chinese technology company Huawei and the Chinese government have been universally condemned, their business executives arrested in many nations for espionage, and the use of their services declared illegal.  Forbes wrote: “The arrest of Huawei CFO Meng Wanzhou in Canada last month for breaking U.S. sanctions law, followed by the firing of Huawei sales executive Wang Weijing in Poland last week shows China can be a bad actor, exactly as Washington believes. The Poland story centers around spying allegations, where Wang allegedly sought trade secrets from the government.’  China is losing the PR battle, for years, U.S. companies have been complaining that China does not honor intellectual property rights. Washington believes tech powerhouses like Huawei owe much of their growth to IP theft.” 

China’s growth estimates don’t look good and are getting worse.  They are clearly losing the trade war and its about to get a lot worse for them.  Quite simply, 90% of China’s GDP comes from exports, so the US is affecting 90% of their trade with us, but exports account for only 15% of US GDP, thus China is only affecting 15% of our trade with them.  No matter how you look at it, the US easily wins any trade war between China and the US.

The Russians and the Chinese have been pushed together into an uneasy alliance, something the US has always tried to strategically prevent.  The US has always attempted to work with China against Russia or Russia against China.  President Trump tried to do this with Russia to prevent an ever aggressive China from gaining more ground, but was prevented from doing so by Congress and the inept Mueller investigation.

U.S. Recognizes Venezuelan Opposition Leader as Interim President (1.23.19) WSJ

China Is Losing The Trade War In Nearly Every Way (1.14.19) Forbes

French Antigovernment Protesters March for Ninth Straight Weekend (1.13.19) WSJ

Greece Edges Toward Political Uncertainty Over Macedonia Deal (1.10.19) WSJ

Huawei Targeted in U.S. Criminal Probe for Alleged Theft of Trade Secrets (1.16.19) WSJ

Venezuela’s Congress Declares President Nicolas Maduro a Usurper as Opposition Leader Rises (1.15.19)

China Applies Xinjiang’s Policing Lessons to Other Muslim Areas (12.23.18) WSJ

China and Russia Inch Closer Together (12.13.18)

In First for Europe, Brussels Rejects Italy’s Budget (10.23.18) WSJ

Five Eyes Intelligence Alliance Builds Coalition to Counter China (10.28.18) Reuters

Antiestablishment Candidate Wins Brazil’s Presidential Race (10.29.18) WSJ

Change, Uncertainty, Highs & Lows Mark Third Quarter

The third quarter and the month of October saw a lot of ups and downs in both stock and bond markets as well as currency values.  We also saw many long standing leaders/parties fall from power as voters continue the worldwide trend of replacing the establishment with new parties and nationalistic/populist leaders who reject the political status-quo and put their nation’s interests first, ahead of the world community.  We saw leadership change in Australia, Brazil, Italy and Mexico; we also saw what looks like a prelude to the exit of long time German Chancellor Angela Merkle and Prime Minister Theresa May.

IMF Managing Director Christine Lagarde, said in a speech last week that “the global economic weather is beginning to change.”  Saudi Arabia and Russia are expected to experience stronger growth.  The eurozone economy is expected to grow 2% this year, down from a 2.2%.  Argentina’s economy is expected to contract sharply this year and next.  The economy of Turkey is seen expanding just 0.4% next year, down from 7.4% last year.

The Australian Broadcasting Network quoted the IMF as saying: The world remains vulnerable to another financial meltdown as a result of “side effects” from extraordinary measures to prevent a repeat of the Great Depression.  In its latest World Economic Outlook, the IMF singled out ultra-low interest rates and surging debt levels as potential triggers for another meltdown, saying: “large challenges loom for the global economy … The extended period of ultralow interest rates in advanced economies has contributed to the build-up of financial vulnerabilities.”

IMF Lowers Global Growth Forecasts for 2018 and 2019 (10.8.18) WSJ

World Vulnerable To Another Financial Meltdown, IMF Warns (10.4.18) (Australian Broadcasting Corporation)


World Markets

The US economy has continued its strong growth, generating a 3.5% growth rate for the third quarter.   The WSJ reported that, for the first time since 2008, the U.S. is once again the world’s most competitive economy.  The month of October has been a rollercoaster ride for US markets, hundreds of points up and down, at one point wiping out all the gains for 2018.  It regained some of the loss, but will definitely finish down for the first month of the fourth quarter.  The S&P 500, the Dow and Nasdaq markets appear to be headed for correction territory, falling 10% from their recent highs.

According to the WSJ, “Overseas investors, traders and central bankers are buying fewer Treasurys, a potential turning point for a $15 trillion market at the center of global finance and economics.  Foreign buyers now hold 41% of outstanding Treasury debt, their lowest share in 15 years, down from 50% as recently as 2013, according to U.S. Treasury data.  The dollar’s share of global foreign-exchange reserves fell to 62.5% in the second quarter, its lowest level in five years, data from the International Monetary Fund showed. Goldman Sachs estimates that Russia’s central bank alone may have sold as much as $85 billion in dollar-denominated assets, a move that may have been prompted by concerns over U.S. sanctions.”

In another article the WSJ reported, “The eurozone economy slowed sharply this summer, posting the weakest quarter in five years, as the region begins to suffer from a slowdown in China and turmoil in Italy takes a toll.  While the eurozone economy kept pace with the U.S. in 2016 and 2017, it has fallen behind it this year and the divergence between the two is growing more stark.  There seems little prospect of an imminent escape from the country’s long period of low growth.”

Italy’s credit rating was lowered by Moody’s, from Baa2 to Baa3, citing a “material weakening in Italy’s fiscal strength” after the government targeted higher budget deficits and stalled economic and fiscal reforms.  In contrast to the EU, the UK economy continues to experience an overall better economy with a stronger currency and higher growth rates.  This makes it difficult to claim that being a part of the EU is economically beneficial or that nations like the UK are suffering from exiting.   The EU is doing its best to propagandize, but the writing is on the wall and they fear that Italy, Poland, Hungry, the Czech Republic and other nations may soon exit as well.

The WSJ reported, “Beijing is trying to kick its habit of using big-ticket infrastructure spending to fuel the economy, a turning point from a growth model that has left many Chinese cities adorned with empty high-rises and underused highways.  China bolstered economic growth for decades by pouring trillions of dollars into roads, factories, railroads and more, and doubled down to protect the economy from the global financial crisis of the last decade.  Now the torrent has subsided as debt soared and needless projects blossomed.”

Turkey has created its own problems politically as well financially; it seems that Erdogan irritates his friends as much as he does his enemies.  He arrogantly took on Trump for a foolish reason and was trumped by sanctions, causing the Turkish economy to falter and sending its financial markets and currency into free fall.  Turkey has overtaken Argentina as the world’s worst nation for sovereign debt investors.  Bloomberg reported, “Turkey’s economic outlook has deteriorated, so much that bankers and traders are starting to talk about the need for an International Monetary Fund rescue.  The yield on 10-year bonds has surged to an all-time high, above 20 percent.”

Trade tariffs and the threat of trade tariffs are being used very effectively by President Trump to bring China, the EU and other nations to the table to talk and renegotiate trade agreements.  The reason this is so effective is simple math; 15% of the US GDP comes from exports and 85% is derived from domestic purchases, while in a majority of other nations exports represent 80% – 90% of the GDP with domestic purchases representing only 10% – 20%.  Thus, in a trade war the U.S. can affect 80% – 90% of most other nations ‘economies, while other nations can only affect about 15% of the US economy.

Eurozone Growth Stutters as U.S. Economy Powers Ahead (10.30.18) WSJ

Investors Flee Tech Stocks, Dragging Down U.S. Indexes (10.29.18) WSJ

GDP Grows 3.5% on Consumer Vigor but Investment Slows (10.26.18) WSJ

Dow, S&P 500 Erase 2018 Gains & Nasdaq Drops 4.4% (10.24.18) WSJ

Foreign Buying of U.S. Treasurys Softens, Unsettling Financial Markets (10.23.18) WSJ

Stocks Wild Swings Rattle Investors (10.22.18) WSJ

China Finds Big-Ticket Spending Is a Road to Nowhere (10.20.18) WSJ

U.S. & EU Trade Teams Seek Fast Results and Big Savings (10. 20.18) WSJ 2

Ross Says Progress of Trade Talks With EU Is Unsatisfactory (10.18.18) WJS

Italian Credit Downgrade Likely to Add to Pressure on Europe’s Markets (10.19.18) WSJ

In First for Europe, Brussels Rejects Italy’s Budget (10.23.18) WSJ

U.S. Is World’s Most Competitive Economy Again (10.17.18) WSJ

China Growth Slows to Weakest Pace Since the Financial Crisis (10.19.18) WSJ

Investor Shift Triggers Stocks’ Wild Ride (10.12.18) WSJ

U.K. Economy Rebounded in Summer (10.10.18) WSJ

Worst Hit in Global Markets Rout Tech and China (10.10.18) WSJ

Big Lenders Make Push to Liquidate Sears (10.10.18) WSJ

Why Can’t Turkey Stop Its Economic Nose-Dive (8.8.18)


Central Banks

The US, Australia and the UK have raised their benchmark interest rates. Japan and the EU have discussed it quietly, but continue to print more currency and their interest rates continue to be negative.  Canada is likely to raise interest rates while Mexico holds tight.  At the last meeting of the Federal Reserve, they determined the US economy to be strong, raised interest rates and stated that they are planning on continuing to raise them.

Fed Minutes Point to Continued, Gradual Interest-Rate Increases (10.17.18) WSJ

Bank of Canada Likely to Raise Rates, Even if Nafta Talks Collapse (9.6.18) WSJ

Bank of Mexico Leaves Interest Rates Unchanged (8.2.18) WSJ

Carney Hikes Rate in What May Be Final Pre-Brexit Push (8.2.18)



As most global stock markets and national GDP are going up, so are most of their debt levels.  At some point in the future, rising national debt levels will collide with stock markets & GDP, because you cannot continue to fuel growth with debt; businesses can’t do it and neither can governments.  According to CNBC, “Unreported Chinese local government debt may amount to trillions of U.S. dollars, meaning the country’s debt-to-GDP ratio has hit “alarming” levels; S&P Global Ratings said in a report released TuesdayThe actual level of off-balance sheet debt could be several times more than what is publicly disclosed and range as high as 30 trillion yuan to 40 trillion yuan.”  Pakistan, the flagship country for China’s global infrastructure building initiative, asked for a bailout from the International Monetary Fund, amid growing concerns that Beijing’s program is pushing recipient countries into financial crisis. Ballooning trade deficit and fast-depleting foreign exchange reserves left the Pakistani government no other choice.

Germany held up the final $57.1 billion bailout disbursement for Greece and did not sign off on the deal.  “The International Monetary Fund agreed to boost its bailout package signed with Argentina in June, providing additional financial support and accelerating the disbursement of funds.  The expanded program will aim to reduce the country’s double-digit inflation by replacing inflation targets with monetary base goals to contain the money supply, the IMF said.  Argentina’s debt ratio will reach 84% of gross domestic product by the end of the year, compared with 57% a year earlier, consultancy Oxford Economics said this week. “Argentina’s debt-to-GDP ratio is rising at an unsustainable pace,” the firm said.”(WSJ).   The US Court of Federal Claims has ruled that hedge fund creditors of Puerto Rico’s debt can sue the United States government for losses incurred by investors.

Simon Black wrote:

Right now many pension funds around the world simply don’t have enough assets to cover the retirement obligations they owe to millions of workers.  In the US alone, federal, state, and local governments, pensions are about $7 trillion short of the funding they need to pay out all the benefits they’ve promised.  (** And that doesn’t include another $49 trillion in unfunded Social Security obligations…).  In 2015, the total worldwide gap in pension funding was $70 trillion according to the World Economic Forum. That is larger than the twenty largest economies in the world combined.  And it’s only gotten worse since then…  The WEC said that the worldwide pension shortfall is on track to reach $400 trillion by 2050.  In a world full of reckless and extreme monetary policy, Japan no doubt takes the cake. The country has total debt of more than ONE QUADRILLION YEN (around $10 trillion) pushing its debt-to-GDP ratio to a whopping 224% – that puts it ahead of financial basket case Greece, whose debt-to-GDP is around 180%.  Japan spent 24.1% of its total revenue (appx. 23.5 trillion yen) last year servicing its debt – both paying down principal and interest. And that percentage has no doubt moved even higher this year.  And, keep in mind, this isn’t some banana republic. It’s the world’s third-largest economy.  In another Simon Black post: As of June, U.S. non-financial firms are sitting on a record $6.3 trillion in debt.  AT&T alone has an astounding $180 billion of debt, making it the most indebted non-government controlled and non-financial firm in history… and more indebted than many governments around the world. And the quality of corporate debt is getting worse and worse.”

The U.S. Treasury Department estimates it will issue more than $1 trillion in debt this year as higher government spending and sluggish tax revenues push the deficit higher. The Treasury said Monday it expects net marketable debt to total $425 billion in the fourth quarter, which would bring total debt issuance in 2018 to $1.338 trillion, compared with $546 billion in 2017. That would be the highest annual debt issuance since $1.586 trillion in 2010, when the U.S. economy was still crawling out of a recession.  The higher debt issuance comes as the Federal Reserve has been raising short-term interest rates following an extended period of near-zero rates in the years since the financial crisis. Fed officials lifted their benchmark federal-funds rate to a range between 2% and 2.25%.  Annual home-price gains fell below 6% for the first time in a year in August, another sign that the slowdown in the housing market is becoming widespread and is likely to persist in the months to come.

Home Prices Continue to Lose Momentum (10.30.18) WSJ

Treasury Expects to Issue Over $1 Trillion in Debt in 2018 (10.29.18) WSJ

$6 Trillion of Local Government Debt may be Lurking Under the Surface in China (10.16.18) CNBC

U.S. Deficit Rose 17% in Fiscal 2018 (10.15.18) WSJ

Sears, a Onetime Retail Giant, Now Banks on Bankruptcy (10.15.18) WSJ

The Pension Crisis is Bigger Than the World’s 20 Largest Economies and only Getting Worse (9.7.18)  SMC |

Why Japan May Spark The Next Crisis (8.1.18) SMC

The Pension Crisis is Bigger Than the World’s 20 Largest Economies and only Getting Worse (9.7.18)  SMC |

Judge Rules that Bankrupt Puerto Rico’s bondholders can sue the United States (7.16.18) WSJ

IMF Expands Aid Package for Argentina (9.26.18) WSJ

Pakistan Requests IMF Bailout Talks (10.8.18) WSJ

One of the Greatest Follies from the Last Crisis is Back (10.2.18) SMC

Germany Delays Greece’s Final Bailout Payment (7.12.18) WSJ


Political Unrest

Political unrest is increasing along with most global markets and national GDPs, nationalism continues to defeat Globalism, and independent non-establishment candidates continue to defeat establishment candidates.  Financial weapons like trade sanctions and tariffs are being used to pressure, force and even defeat world leaders and governmental regimes.  According to the WSJ “The Pakistani request for an IMF loan could further test already-strained U.S.-China relations.  In July, U.S. Secretary of State Mike Pompeo warned that the U.S. didn’t want to see any IMF lending to Pakistan “go to bail out Chinese bondholders or—or China itself.”  South Africa is scrambling to shore up investor confidence as Africa’s most-developed economy has plunged into recession, its rand currency has slid and pressure is mounting from a dissident faction within his ruling party.  President Trump, South African banks and white farming groups have all attacked an ANC proposal to start expropriating land without compensation—despite Mr. Ramaphosa’s assurances that this would be done without hurting the economy or agricultural production.”

Disunity continues in the European Union as Immigration, European courts, over regulation, banking problems, low growth and tight budgets continue to fracture European unity, causing many countries to challenge basic EU fundamentals.  The utopian idealistic view of a united Europe with no borders and overlapping economies are no match for financial reality.  EU nations are frustrated that they can’t do what they believe is best for their nation and its citizens.  In one election after another nationalist/populist candidates are defeating their globalist/establishment counter parts.  German Chancellor Angela Merkle, who, less than a year ago, was one of the world’s most powerful leaders, recently resigned as head of her party, and said she would not run again after her current term is over.  British Prime Minister Theresa May likely will not last much longer, and a number of her cabinet ministers have already resigned.  May’s former Foreign Minister, Boris Johnson (who was the main leader of Brexit), will likely become Prime Minister and lead the UK through a hard Brexit at the end of March of 2019.

Anti-establishment nationalistic leaders are growing in popularity in Poland, Hungry, the Czech Republic and Italy.  Italy defied the EU by passing a budget that did not follow EU guidelines and have thus far refused to change it.   Nationalist leaders are also replacing their globalist counter parts in Brazil and Australia.  People all over the world are pushing back against government and multi-national corporations and technology companies.  They are tired of being controlled and manipulated by these entities and told what to do, by what they perceive to be the ruling elites, who do not have their best interests at heart.

The biggest tech companies have tremendous power over the hearts and minds of people—as much as many of the governments in countries where they operate. All over the world, citizens, bureaucrats and politicians are now pushing back against that power.  Most often, the backlash is directed at America’s tech giants, such as Alphabet Inc.’s Google, Facebook Inc. and Inc., and how their ubiquity affects individuals and businesses. But resistance to Big Tech also includes China curbing the power of its own technology companies, and India rejecting foreign monopolists in favor of homegrown players.    The worst-case scenario in China, says Paul Triolo, a technology analyst at the Eurasia Group think tank, is if Beijing were to nationalize some of its tech giants.” (WSJ)

As August came to a close Reuters reported, that China completed its own SWIFT alternative.  The new system was created to combat how the U.S. has used the Belgium-based SWIFT system (the world’s biggest electronic payments system) as a financial weapon to target Russia, when Russia does things the U.S. doesn’t like.  This is how the U.S. sanctions other nations who do things they don’t like, because if those nations can’t wire money in or out, their economies would be destroyed.  If China and Russia implement this, it would represent a major step in nations being able to defend their economies from Washington’s ability to sanction and control international financial transactions.  Russia and China are not the only ones looking at electronic transaction payment alternatives.  Germany urged the EU to come up with their own system, to loosen the ability of the US to apply pressure in this manner.  I think we are going to see more and more countries coming up with their own SWIFT alternatives. The world of financial transaction has radically changed in the last ten years with an additional World Bank (AIIB), crypto-currencies and alternative SWIFT systems; the next world financial crisis will not play out the same as the last one.

How the Desire for Change Might Not Be Just an American Experience (10.30.18) WSJ

Anti-Establishment Candidate Wins Brazil’s Presidential Race (10.29.18) WSJ

The Global Tech Backlash Is Just Beginning (10.28.18) WSJ

Italy Vows to Stick to Budget That Breaches EU Rules (10.22.18) WSJ

Foreign Buying of U.S. Treasurys Softens, Unsettling Financial Markets (10.23.18) WSJ

Yemen Could be Worst Famine in 100 Years (10.15.18) BBC

Merkel, Already Wobbling, Faces Fresh Blow in Historical Stronghold (10.12.18) WSJ

Brazil Voters Buck Status Quo With Rise of Right-Wing Firebrand (10.11.18) WSJ

Pakistan Requests IMF Bailout Talks (10.8.18) WSJ

Economic Problems Exacerbate Challenges for South Africa’s Leader (9.26.18) WSJ

Germany Urges EU Payment System without U.S. to Save Iran Deal (8.21.18) Reuters


Brief Commentary on Mid-Tem US Election Results:

Just a quick comment, I am in Israel at the ICCC Conference which just ended Wednesday.  The loss of the House of Representatives means that the Trump and the Republicans will push through a lot of Legislation in the next month and a half.  After that little or no legislation will get passed after Dec 31st and Trump will rule by executive order. Unfortunately, the Democrats are going to start multiple baseless Congressional investigations against Trump.  This will make things even more contentious and create even a greater media circus than we have seen the last two years.

2018 Mid-Year Economic Update

At mid-year global financial markets are doing well in most places, but presidents, prime ministers, parliaments and governments are changing at break neck pace.  In the last two months:

  • Turkey’s constitution was changed & Erdogan was given dictatorial powers
  • Trump became the first US president to meet with N. Korea, reportedly striking a deal for NK to de-nuclearize, but there are reports they are still building nuclear facilities
  • North and South Korea have begun the process of ending the technical state of war between them as well as eliminating the Demilitarized Zone
  • Putin won reelection by more than 80% about the same as his approval ratings
  • Iraq elections were so close and so corrupt, they are doing a 12M vote re-count by hand
  • Venezuela is experiencing rioting, mass poverty and economic freefall as Maduro was reelected in what is being hailed as a corrupt contest
  • Brexit negotiations are going no where
  • Immigration is driving the EU apart
  • Trade Wars and Tariffs are being fired back & forth
  • Hungarian Prime Minister Viktor Orban decisively won a fourth term
  • Iran is being ostracized and sanctioned by the US and its citizens are protesting
  • Spain’s prime minister Rajoy has lost his majority and prime ministership and the Catalonians have voted separatist leaders back in
  • Like Italy, Mexican’s elected a brand new year old party to run Mexico


Political Unrest

Venezuelan President Nicolás Maduro’s re-election has almost universally been condemned, with the US calling it a “sham” and Canada, Brazil, Chile, and Panama declaring they will not recognize Venezuela’s government.  Venezuela’s annual inflation rate is the highest in the world, according to a BBC report, “Venezuela’s Central Bank has not published inflation figures since 2015 but economist Steve Hanke from Johns Hopkins University calculated it rose to almost 18,000% in April.” Nearly 2 Million people have fled the country since 1999 and Venezuelan’s are the top seekers of US asylum.   Another establishment government bites the dust in Mexico, as Andrés Manuel López Obrador and the National Regeneration Movement takes over the reins, ending ninety years of rule by one of three parties.

In Russia-China-US relations – the WSJ reported: “Russia and China have signed a raft of deals and pledged tighter coordination on security and foreign policy, underscoring how disputes with the U.S. are drawing the neighbors closer.”  This is not a good sign as the goal of super power foreign policy has always been to ally with China against Russia or allied with Russia against China, but we’ve never seen Russian and China allied against the US.  Trump has clearly chosen Russia to buddy up with and is actively ostracizing China on multiple fronts.  China is doing its best to look like they can be trusted, however few world leaders trust China, which is why President Trump has called their bluff, which they are not used to have happen.  According to the WSJ, “The Defense Department’s inspector general is investigating a major security breach after Chinese hackers allegedly stole large amounts of sensitive data from a Navy contractor, according to military officials.  Adm. Davidson said: “I believe they are stealing technology in just about every domain, and trying to use it to their advantage.”

Mexico Vote Snubs the Political Establishment (7.2.18) WSJ

North Korea Expands Key Missile-Manufacturing Plant (7.1.18) WSJ

Iraq Will Proceed With Extraordinary Recount of 12 Million Ballots (6.21.18) WSJ

Russia and China Show Off Ties With Putin Visit (6.8.18) WSJ

Spain’s Rajoy Ousted by Lawmakers (6.1.18) WSJ

Chinese Hackers Stole Secret U.S. Submarine-Warfare Data, Military Says (6.8.18) WSJ

After Venezuela Strongman’s Victory, Isolated Nation Faces Growing Chaos (5.21.18) WSJ

Catalonia’s Assembly Elects New Hard-Line Separatist Leader (5.14.18) WSJ

North Korea & South Korea to Pursue Peace Deal, Denuclearization (4.27.18) WSJ |


Nationalism v Globalism

The battle of Nationalism v Globalism is raging almost everywhere, especially in western nations.  Nationalists want to keep their cultural and historical identity and retain control of their national sovereignty to determine their own destiny.  Globalists believes these differences are divisive and that it’s not fair that one nation should have an advantage over another.  Globalists want to eliminate national identities, cultures and sovereignty and replace them with a one world economy and government that distributes individual wealth and world resources equally.  Globalists believe large bureaucratic structures like the UN and the European Union run by unelected bureaucrats, would do a better job than elected officials and individual sovereign nations.

Now that Special Counsel Robert Mueller’s 18 month investigation into Trump/Russian collusion has failed to turn up any evidence or indictments, Trump & Putin are scheduled to meet in their first formal summit in mid-July.  Trump plans to visit the UK, then attend a NATO meeting in Brussels, after which he and Putin will meet in Finland.  Trump and Putin are unarguably the most effective and forceful global leaders in the world and should they decide to work together to achieve a mutually advantageous set of goals, the combined governments of the world couldn’t do anything to stop them.  This is why the deep state and the rest of the world leaders have done everything in their power to keep them apart.  China has to walk a fine line, wanting to remain Russia’s friend, and not wanting Trump & Putin to make any joint agreements that make things any more difficult for them than Trump already has.  No doubt NATO nation leaders (primarily EU nations) will pressure Trump not to make any deals, but Trump has proved fairly impervious to pressure, in fact he seems to enjoy it.  No doubt this why Trump is visiting the UK to cut some deals with Prime Minister May, who isn’t getting anywhere with Brussels either, as he positions himself for the NATO meetings.

Trump to Meet Russia’s Putin in Finland on July 16 (6.28.18) WSJ


EU Continues to Fracture

Immigration is dismantling the EU and almost brought down German Chancellor Merkle’s government a mere three months after it was finally formed.  Before the meeting of EU leaders on Immigration the WSJ reported, “Ms. Merkel is under fire from her conservative allies in Bavaria, who are part of her government and control the Interior Ministry in Berlin. They have given the chancellor until this weekend to strike an unlikely European deal that puts a lid on immigration or closes the border to certain immigrants. Failure could bring about a collapse of her fragile coalition.”  An agreement was reached on the matter, the final Friday in June, which wasn’t what Merkel wanted, but it was enough to keep her chancellorship, at the moment.

The WSJ reported: “Italian Interior Minister Matteo Salvini is blocking migrant-laden boats from landing in Italy, challenging European Union rules on asylum.  “Italy has stopped bowing its head and obeying,” Mr. Salvini said this month after blocking a ship bearing asylum seekers from landing.  Mr. Salvini and his League are the real power behind the new government in Rome, overshadowing their more moderate partners, the 5 Star Movement.  The League’s popularity continues to grow, reaching around 28% in the latest opinion polls, compared with 17% in March elections, their campaign slogan, “Italians First” kinda sounds familiar.  The rift in Ms. Merkel’s government over the issue is so deep as Berlin is rife with speculation the chancellor could fall.”

Hungarian Prime Minister Viktor Orban won a fourth term decisively, with his anti-EU, immigration and strong nationalistic platform.  Brexit negotiations continue to produce nothing but discord.  The UK and the EU are going through the motions, but there is little hope on either side of an agreement being reached.  Bloomberg reported: U.K. Prime Minister Theresa May accused the European Union of putting the safety of its 500 million citizens at risk by blocking a broad Brexit deal on security, as the atmosphere surrounding negotiations soured.  During a working dinner at the EU summit in Brussels on Thursday, May told her fellow leaders that Britain wants to play a major role in European security after it leaves the bloc. “Our ability to do so is being put at risk,” she said.


European Leaders Reach Migration Deal, Giving Merkel Respite at Home (6.29.18) WSJ

May Hits EU With Terror Warning as Brexit Mood Gets Bitter (6.28.18)

EU Worries Worst Is Yet to Come in U.K.’s Brexit Soap Opera (6.20.18)

Italy’s Salvini Puts Roadblocks in Migrants’ Way While Reaching Out to Fellow European Populists (6.25.18) WSJ

Immigration Backlash Erodes Merkel’s Power in Conservative Stronghold (6.26.18)

The Good Times for Illegals Is Over, Get Ready to Pack Your Bags Italy’s New Interior Minister Promises Mass Deportations (6.4.18)

Macron Appeals for EU Unity in Face of Nationalism (4.17.18) WSJ

Hungary’s Orban Wins Fourth Term as PM (4.8.18) WSJ


Central Banks

The Federal Reserve raised interest rates a quarter point in their mid-June meeting and indicated they would raise them two additional times this year.  The following day the European Central Bank said they were going to keep their interest rates at the current -.04, but they planned to begin to wind down their bond buying and euro printing.  The number of US mortgage refinances dropped to the lowest level in 18 years in May, as the Federal Reserve hiked interest rates and made it clear they plan to continue to raise rates.  Bloomberg reported: “China’s central bank will cut the amount of cash some lenders must hold as reserves, unlocking about 700 billion yuan ($108 billion) of liquidity, as it seeks to control leverage and support smaller companies.  The required reserve ratio for some banks will drop by 0.5 percentage point, effective July 5, the People’s Bank of China said on its website. That’s the day before the U.S. and China are scheduled to impose tariffs on each other.”

The Argentine peso has fallen to historic lows despite the change in its central bank chairman which the global market views as favorable.  Argentine 100 year government bond rates rose to 9% which begs the question why would anybody buy 100 year bond from a country which has defaulted three times in the last 70 years.  Central bankers want to regulate crypto-currency, but can’t agree on how to do it.  They are beginning to research and prepare for the future in which digital currencies will challenge their supremacy and their ability to control the liquidity and transactional activities within their borders.


China to Unleash $108 Billion in Reserve Cut for Some Banks (6.24.18)

ECB to End Bond-Buying Program in December as Crisis-Era Policies Wind Down (6.14.18) WSJ

Fed Raises Interest Rates, Sets Stage for Two More Increases in 2018 (6.13.18) WSJ

Argentine Peso Resumes Plunge After Central Bank Shakeup (6.15.18)

Weekly Mortgage Refinances Drop to an 18-Year Low as Rates Jump (5.23.18) CNBC

Central Bankers Can’t Agree on Cryptocurrencies (4.26.18)


Crypto Currency

Bitcoin is currently being investigated for price manipulation, as Bitcoin values have dropped 70% from their December highs.  According to the WSJ, “Government investigators have demanded that several bitcoin exchanges hand over comprehensive trading data to assist a probe into whether manipulation is distorting prices in markets linked to the cryptocurrency.  The investigation followed the launch of bitcoin futures on CME Group Inc.’s CME -0.45% exchange six months ago. CME’s bitcoin futures derive their final value from prices at four bitcoin exchanges: Bitstamp, Coinbase, itBit and Kraken. Manipulative trading in those markets could skew the price of bitcoin futures that the government directly regulates.”

Bitcoin Bloodbath Nears Dot-Com Levels as Many Tokens Go to Zero (6.28.18)

Bitcoin Extends Its Collapse (6.13.18)

U.S. Regulator Demands Trading Data From Bitcoin Exchanges (6.8.18) WSJ

The Real Opportunities in Cryptocurrency Aren’t Cryptocurrencies (6.11.18) SMC



The International Monetary Fund (IMF) has provided a credit line of $50B to Argentina.  Bloomberg reported it was the largest loan the IMF has ever issued.  Again, is it wise to issue a nation whose currency has fallen 32% and that has defaulted three times in the last 70 years, the largest loan ever?  Eurozone nations agreed on the final elements of a plan to get Greece out of its eight-year bailout program and make its debt more manageable.  The ministers needed to complete a deal between Greece and its creditors that would allow it to safely emerge from its third bailout program on Aug. 20 and face the international bond markets again.

Chinese local government debt is over 16.6 trillion yuan up almost 1% from the beginning of the year.  In an attempt to curtail the debt Beijing is letting local governments sell bonds, but are not allowing them to guarantee the debt.  Reuters reported, “A firm controlled by a city government in China’s Inner Mongolia region has failed to make interest and principal payments on nearly 4 billion yuan ($629 million) in off-balance sheet loans, two sources with direct knowledge of the matter said.  The rare loan default highlights growing funding strains on Chinese local governments as Beijing cracks down on riskier types of financing and rising debt, which some outside agencies have warned could lead to a banking crisis.”  

Simon Black summarizes the dire condition of the US debt: “The Medicare and Social Security Trust Fund issued their June 2018 Annual Report stating, the Medicare fund will be fully depleted in 2026 and the Social Security fund will be depleted in 2034.  The 2018 Annual US Treasury report shows the US is already insolvent by over $20T and by 2020 annual budgets will be over $1T annually.”  He gives an analysis of insolvent world pension funds which are going to fail and little is being done to fix this inevitable crisis.  China reduced its US Treasury holdings by $5.8B in April, and Russia and other nations are selling their US Treasury holdings as well.

IMF Board Approves Argentina’s $50 Billion Stand-By Arrangement (6.20.18)

The Latest Casualty in the Global Pension Catastrophe (6.22.18) SMC

China Local Govt Firm Fails to Repay $629 MLN Loans in Rare Default Sources (5.18.18) Reuters

Eurozone Agrees on Final Details of Plan to End Greece’s Bailout (6.21.18) WSJ

China’s U.S. Treasuries Holdings Fell $5.8 Billion in April (6.15.18)

Its Official Medicare Trust Fund Will Run Out Of Money in 8 Years (6.7.18) SMC


The Middle East

The Middle East has been a powder keg of activity with continuing war in Syria, Turkey’s Erdogan achieving one man dictatorial rule and the US moving its embassy to Jerusalem.  The power brokering dream of Iran is currently crumbling, as their three recent bumbled attacks on Israel ended with strategic and humiliating retaliation by the Israelis, while at the same time, their citizens are protesting again and ignoring the threats of the ruling Mullahs.  No work, no food and no delivery on the promises of an Islamic paradise are taking their toll.  This coupled with Trump withdrawing from the sweetheart deal the Obama Administration gave them and imposing new more stringent economic sanctions, leave Iran with a dreary future outlook.  When the citizens of a nation no longer respond to governmental fears and threats, because their circumstances are more dire, regimes change.

Unlike the current Iranian leaders who have been difficult to deal with who broke the nuclear with Obama administration shortly after they made it, the new Saudi Arabian leader Crown Prince Mohammed bin Salman is looked at as reasonable, personable, a dynamic deal maker and has quickly consolidated power, raised oil production, started many new non-oil economic initiatives, declared Israel’s right to exist and most earth shattering, let Saudi women drive.

Bloomberg reported: The Kingdom ramps up oil production as prices rise and sanctions pressure Tehran.  The Trump administration’s effort to drive Iranian oil exports down to zero is boosting the fortunes of Tehran’s rival, Saudi Arabia, and putting the U.S. ally on a stronger footing for a showdown across the Persian Gulf.  Saudi Crown Prince Mohammed bin Salman’s government is planning to increase oil production to a record high of nearly 11 million barrels a day by next month to replace Iranian crude expected to be lost because of U.S. sanctions..

Trump’s Bid to Weaken Iran Is Strengthening the Saudi Economy (6.28.18) WSJ

New Protests in Tehran Pose Fresh Challenge to Iran’s Rulers (6.25.18) WSJ

Erdogan Extends His Hold in Turkey in Pivotal Election Win (6.24.18) WSJ

Erdogan Election Triumph Takes Turkey Into Era of One-Man Rule (6.24.18)

Saudi Arabian Arrest Wave Shows Crown Prince’s Bid to Control Change (6.5.18) WSJ

OPEC Resistance to Saudi Supply Plan Grows With Iraqi Defiance (6.11.18)

Saudis Start to Ramp Up Oil Output, Ahead of OPEC Meeting (6.818) WSJ

Iran Attack on Israel and Got Beaten Bad and Internationally Abandoned (5.10.18)

Saudi Crown Prince Says Israelis Have the Right to Their Own Land (4.3.18)

US Embassy Opens In Jerusalem Full Ceremony (5.14.18) Fox News

April 2018 Update

The Dow Jones Index has been very volatile in the last two and half months fluctuating almost 3000 points.  The Dow began at 24,719 rose to 26,307 at the end of January and dropped into the 2300s to finish the first quarter with a loss.  As of April18, it had risen back up to 24,748.  US markets are not based on a firm foundation, which is why almost any event or even rumor of an event sends them radically higher or lower.   Treasury Secretary Mnuchin commented at the International Finance Conference in Davos Switzerland, that they weren’t concerned about the US Dollar losing value and the USD lost 5% against all the major currencies.  Morgan Stanley is predicting that market growth may soon be coming to an end.

US retail stores continue to struggle as they did throughout 2017, with many malls and retail shops closing across the nation.  Bloomberg reported that stores have announced the closing of 77 million square feet of shopping space so far this year.  The fall of the Toys R Us chain, with more than 700 U.S. stores, shows how much retail real estate has changed in just the last decade.  Morgan Stanley told Bloomberg that “Investors need to prepare for a downside as the end of the economic cycle is near and U.S. markets are priced for best-case scenarios.”


Morgan Stanley Warns Markets the Best Times May Be Near an End (4.17.18)

U.S. Stocks End Worst Week in Years (3.24.18) WSJ

The Retail Real Estate Glut Is Getting Worse (4.17.18)

Mnuchin Said Trump Tariffs Will Benefit US Despite Retaliation Risk (3.7.18) NewsMax


World Markets

Despite economic sanctions and dire predictions, Russia is continuing their third year of growth.  Their economy, stock market and the average Russian citizen’s standard of living are continuing to rise.  Nations are ignoring the US sanctions as Russia’s $4B bond sold, and sold quickly.  Australia is experiencing its strongest earning season in 15 years and is projected to continue to perform well.  China and the US are in a tariff battle, and it is uncertain how these tariffs will affect world markets.  China stands to lose more in a trade war with the US, as 80% or more of Chinese GDP is based on foreign trade and only 20% is domestic, while approximately 80% of US GDP is domestic, with only about 20% based on foreign trade.

Where are world are markets headed and what’s going to happen next is very difficult to determine, as circumstances are not playing out in accordance with fundamental indicators.  “You aren’t just imagining it: global markets are flashing conflicting signals as they struggle to price trade friction, an easing of global synchronized growth, and the excesses of an aging bull market.  Stocks are heading toward weekly gains, while the Treasury curve is the flattest in more than a decade — an indication of subdued long-term growth prospects and, to some, looming recession risks.  For those attempting to navigate the path of rate normalization and economic expansion, trading over the past month has only muddied the narrative.” -Bloomberg


The Global Trading Map Looks Really Confusing Right Now (4.13.18)

Russia’s Trade With the West Surges Even as Sanctions Mount (4.12.18) WSJ

Russia’s $4 Billion Bond Sale Defies U.K. Spat as Bids Roll In (3.16.18)

Trump to Ramp Up Trade Restraints on China (3.22.18) WSJ

China Responds to Tariffs by Targeting These 128 U.S. Products (3.22.18) Daily Wire

G-20 Offensive Against U.S. Trade Policy Fails to Sway Mnuchin (3.20.18)

The Case for Trump’s Tariffs and America First Economics (3.8.18) NYT

Australian Earnings Season One of the Strongest in Years, Credit Suisse Says (2.19.18)


Central Banking

The new Federal Reserve Chairman Jerome Powell, along with the last Chairman, made it very clear that the Fed intends to raise interest rates, but recent Fed comments are suggesting great caution and sensitivity as to how much and when.  Australia looks like they will refrain from raising interest rates for the moment.  China’s new Central Bank Chief Yi just initiated a 1 percentage point cut in the reserve requirement for most of its banks.  The European Central Bank and Bank of Japan are only thinking about raising interest rates and reducing bond purchases at this point, as most central banks are just sitting back, watching and waiting.


The World’s Finance Chiefs Are Fretting About Cryptocurrencies (3.20.18)

U.S. Budget Director Warns Interest Rates May Spike on Deficit (2.11.18)

Stocks Drop, Treasuries Tumble on Powell Testimony (2.26.18)

U.S. Yield Closes In on 3% (2.19.18) WSJ



Bloomberg reported that, “Global debt rose to a record $237 trillion in the fourth quarter of 2017, more than $70 trillion higher from a decade earlier, according to an analysis by the Institute of International Finance.” The White House has expressed it wants to roll back some of the spending in the recently passed budget, as it increases deficit spending. Some elected officials and the financial analysts are warning against the rising debt. The EU is concerned as its private sector debt is rising to some of the highest levels ever as well.


Global Debt Jumped to Record $237 Trillion Last Year (4.9.18)

White House Aims to Roll Back Newly Passed Spending (4.9.18) WSJ

CBO Raises Estimates for Budget Deficits (4.9.18) WSJ

At Last, a Backlash against Federal Spending (4.7.18) WSJ

Dollar Under Siege With U.S. Deficits Back on Wall Street’s Radar (2.14.18)


Currency & Crypto-Currencies

Bitcoin slumped after the US Securities and Exchange Commission reiterated that many online trading platforms for digital assets should register with the agency as exchanges.  Bitcoin is down nearly 50 percent from its high of around $18,000 (December 2017), in part because regulators worldwide have clamped down on trading, mining and initial coin offerings.  CNBC reported, Bitcoin dropped below the key $10,000 level after the Securities and Exchange Commission said it will require digital asset exchanges to register with the agency.  In March, world finance chiefs met and discussed cryptos and expressed concern about the rapid growth and lack of regulation of these currencies.  The reason the finance chiefs were concerned and wouldn’t label cryptos as official currency is because, if it was, they would lose control of over the financial transactions of a growing sector of the world market place and would have no ability to manipulate it like they do sovereign nation currency.  Bloomberg articles have also sounded warnings: “cryptos could destabilize the market … and lack the key attributes of sovereign currency.”


$3 Million Bitcoin Heist Reported by India’s Coinsecure (4.13.18) WSJ

Cryptocurrency Trading Upended in Chile as Banks Close Accounts (4.13.18) WSJ

India Bans Bitcoin Wallets, Bank Funding All Cryptocurrency Services (4.5.18)

The World’s Finance Chiefs Are Fretting About Cryptocurrencies (3.20.18)

Ripple Develops Blockchain Payments App With 61 Japanese Banks (3.7.18)

Bitcoin Dives After SEC Says Crypto Platforms Must Be Registered (3.7.18)

Bitcoin just tanked below $10K after SEC says crypto exchanges must register with agency (3.7.18) CNBC |

Bitcoin drops after SEC demands platforms should be registered  2:56 PM ET Wed, 7 March 2018 | 00:41

 Chase, Bank of America, and Citigroup All Ban Cryptocurrency Purchases on Credit Cards (2.4.18)


Political Upheaval

Political upheaval has increased in the first four months of 2018 and will likely continue to increase in the near future.  Italy the 10th largest economy in the world held elections and no one won, not one party even got close to a majority and all the parties that did gain seats were either anti-EU or leaning anti EU.  Whether they can piece together a collation or call new elections remains to be seen, however, based on current circumstances, Italy will likely hold their own referendum on exiting the EU.

In China XI has become emperor for life and Turkey’s Erdogan changed the Turkish constitution giving himself dictatorial power, neither of the events are positive for the rest of the world.  Russia, Turkey and Iran have just entered into a treaty of mutual support which certainly will create more problems and complication in the Middle East.

The Syrian problem has so many players, agendas and nations involved it’s almost impossible to figure out what’s really happening, much less what happens next.  In retaliation for Assad allegedly releasing chemical weapons on its citizens, the US, UK and France bombed supposed chemical weapon production facilities and other military targets in Syria.  Russia & Syria claim to have shot down around 80% or more of these missiles.  Russia warned the US not to bomb Syria and China said they would side with Russia, if things were to escalate.  Questioning has arisen in regard to the chemical weapons claims as many are asking:  Why would Assad release chemical weapons knowing that it would turn the whole world against him, just after the US announced they were pulling out, which means he wins?  The only group that would benefit from such an action would be the rebels. Assad continues to deny the chemical weapons claims, and we’re left with a narrative fraught with unanswered questions.


Sense of Relief in Russia After Syria Strikes (4.16.18)

History Repeating Itself Tucker Carlson Reacts to US Bombing Syria (4.15.18) Fox News

Trump Orders Strikes on Syria Over Suspected Chemical Weapons Attack (4.13.18) NYT

Europe’s Boom Reawakens the Ghost of Crisis Past Debt (4.9.18) WSJ

China Installed Military Jamming Equipment on Spratly Islands, U.S. Says (4.9.17) WSJ

Saudi Crown Prince Says Israelis Have the Right to Their Own Land (4.3.18)

China Announces Military Alliance With Russia to Show Americans (4.3.18) Blaze

Putin Just Doesn’t Care About Western Anger (3.16.18)

Has the King of the East Now Taken His Throne China’s New Emperor for Life (3.6.18)  Newsweek |

Angela Merkel Pays a Steep Price to Stay in Power (2.15.18)

Merkel Begins Last-Ditch Effort to Form Coalition Government (1.7.18) WSJ

As Turkey Invades, Kurds See Betrayal Once Again (1.23.18) WSJ

Turkey’s President Dismisses U.S. Call for Restraint Along Syria Border (1.22.18)

Behind Turkey’s Actions in Syria a Fear of Waning Influence (2.16.18) WSJ

US-Turkey Ties at Crisis Point Over Syria, Top American Diplomat Says (2.16.18) WSJ



The EU & the UK  

Much to the chagrin of the EU, the UK is doing well. Bloomberg reported:

“Britain’s services sectors, making up the biggest part of the economy, saw growth improve this month, helped by a rebound at restaurants, bars and other consumer industries.  Consumer services growth was the strongest in a year, while confidence also picked up.  The WSJ wrote, “For a country supposedly crawling out of the ruins of the Brexit vote, the U.K. has been having a strikingly good year so far. The number of people working stands at a record high, and income inequality is approaching a 30-year low, according to the Office for National Statistics. New orders for manufacturers are at their highest level in a generation, and employers in general are struggling to find enough staff to cope with demand. Even the (relatively new) national happiness index stands at a peak.”  Ultimately, I believe the UK will end up doing a hard Brexit, but will stretch out negotiations to the March deadline in 2019, because it will give them more time to prepare and cement new trade agreements with other nations.


The UK Is Doing Just Fine, Thanks (3.23.18) WSJ

U.K. Consumer Services Grow at Fastest Pace in a Year, CBI Says (2.25.18)

Brexit Rift Among Tories Revealed in Leavers WhatsApp Messages (3.10.18)


Globalism v Nationalism & the EU v Itself

There is a war going on all over the globe and Brexit, Trump’s election, EU elections trade tariffs are glaring examples of it.  People are pushing back against globalism.  The British want to be British, the Italians want to be Italian, the Germans want to be German the Americans want to be American.  People don’t mind being a part of the world community, but they want to retain their history, culture and national identity.  President Macron of France is trying to combat nationalism, by calling for expanded ties, European integration and a stronger European Union. His pleas are falling on deaf ears as most EU elections are resulting in leaders who want to move in the opposite direction.  Even the powerful German Chancellor Angela Merkel took four months to form a very precarious coalition and functioning government.  The WSJ reported, “Voters around Europe have also indicated little support for his broader European ambitions.  Parties skeptical of the bloc have surged in recent years among voters worried about their economic security and fearful of immigration and rapid cultural changes.”   The most recent example of this was the decisive election of Hungarian Prime Minister Viktor Orban (a leading figure of the nationalist right) on an anti-immigration, euroskeptic platform.

Trade wars are another example of nationalism, as nations direct their focus on their own economies, markets, labor forces and sovereignty.  Being part of the world community and world commerce is important, but it’s more important to put your nation and its citizen welfare first in order to be a successful nation that provides for its citizens.  The NYTs wrote: “Economic nationalism differs from free-trade ideology in having three distinct goals rather than one. The first isn’t discussed very often in a time of relative global peace: maintaining the industries necessary for prevailing in a large-scale war… The second goal of economic nationalism is the need to preserve a middle layer (class) in the nation’s economic order… The third goal of economic nationalism is if the price of national security and a durable, free middle class is a modest reduction in gross domestic product, the economic nationalist is willing to pay it.”


Macron Appeals for EU Unity in Face of Nationalism (4.17.18) WSJ

Hungary’s Orban Wins Fourth Term as PM (4.8.18) WSJ

Disillusionment Is Sweeping Eastern Europe (3.22.18)

Surge by Populists Leaves Italy Without Clear Victor (3.4.18) WSJ

The Case for Trump’s Tariffs and America First Economics (3.8.18) NYT

Has the King of the East Now Taken His Throne China’s New Emperor for Life (3.6.18)  Newsweek |

Germany’s Oldest Party Drops Below Right-Wing Upstart in Poll (2.19.18) WSJ

In Europe Separatists & Nationalists Are Sprouting Old Colors (1.3.18) WSJ



So what does the future hold?  Simon Black shared some of the highlights of Bank of America CEO Jamie Dimon’s annual newsletter to shareholders, stating that the US is facing some serious economic headwinds and that the unwinding of quantitative easing could have unintended consequences.  He also acknowledged that markets have a mind of their own, regardless of what fundamentals say and that he sees a real risk “that volatile and declining markets can lead to a market panic.” One must make decisions with great caution and wisdom in these times, as conventional indicators are no longer proving accurate in predicting market behavior.


IMF Spots Trouble Ahead for the Global Economy After 2020 (4.17.18)

The World’s Most Powerful Banker Sees Chance of Market Panic (4.5.18) SMC

Saudi Crown Prince Says Israelis Have the Right to Their Own Land (4.3.18)

South Africa’s New President Shuffles Cabinet, With an Eye to the Past (2.27.18)

Jan 2018 Economic Update

Many things happened in 2017 that no one anticipated or expected.  The Dow finished at 24,719.22, the highest annual close in history.  On January 24th, the markets opened with the Dow at 26,307, Gold at $1,357 and silver at $17.33.  The US economy and markets were not expected to do as well as they did.  President Trump’s tax reform & deregulatory actions helped boost market expectations.

In the first month of 2018, President Trump issued some of the promised tariffs on solar panels and washing machines which are a part of his America First plan. The US government also shut down, only to be refunded a few days later for three more weeks.  It will probably shut down again in February, as the Democrats and Republican threaten each other with the political hammer of a future shut down.  The one person in Washington who is benefitting is President Trump, who is continuing to stand firm on immigration and getting the border wall built.  Stay tuned for Feb 8th when the US government runs out of money again.

The WSJ reported, “Lawmakers in both parties and the Trump administration are negotiating overhauls of the two companies critical to home mortgages, but in government conservatorship since the financial crisis—that could keep them at the center of the U.S. mortgage market for years to come, abandoning long-stalled proposals to wind them down.”  WSJ also expressed concerns about the market saying:

Bond yields are on the rise again, and it’s making shareholders jittery. They are right to worry, as low yields are the main support for historically high stock valuations. Shares are very expensive compared with their own history on almost every measure, but compared with locking in a paltry 2.5% for 10 years they don’t look so bad. Working out this equity risk premium is contentious, to put it mildly.  Worse, we know that when investors are overly optimistic they overestimate earnings, making it look like the reward for holding equities is higher.  If the narrative changes, bond yields could rise rapidly. Perhaps 2018 is the year inflation fears finally arrive.

Rising bond yields are causing shareholders to worry, as low rates are the main support for historically high stock valuations.   One positive correction in the banking market is the repeal of the Jimmy Carter era mandatory requirement for banks to lend to low income borrowers, which was a major contributor to the 2008 financial and real estate crisis.

US Imposes New Tariffs, Ramping Up ‘America First’ Trade Policy (1.22.18)

Congress Passes Three-Week Spending Bill to End Shutdown (1.22.18) WSJ

Deadline Passes, Triggering Shutdown (1.20.18) WSJ

Shares Are Wildly Overpriced. But Bonds May Be Even Worse (1.11.81) WSJ

Trump Officials Seek to Change Rules on Lending to the Poor (1.10.10) WSJ

Government Shifts Gears on Fannie Mae, Freddie Mac (12.16.17) WSJ

Senate Passes Sweeping Revision of U.S. Tax Code (12.2.17) WSJ


World Markets

EU and UK markets and economies continue to perform well in spite of the ups & downs of Brexit talks.   Bloomberg reported Europe’s growth resurgence is showing little sign of losing steam.  Angel Talavera, an economist at Oxford Economics in London Said, “The rebound in the hard numbers provides a more consistent growth picture for the eurozone.” The latest forecasts predict that Germany, France and Spain will all grow 2 percent or more this year.  In Italy, where elections are one of the key risk factors, expansion may slow to 1.4 percent from 1.6 percent.  Christian Lips of NordLB Hanover said, “We are optimistic for 2018 and expect the upswing to continue with similar momentumHowever, the currently positive corporate and consumer sentiment should not obscure the fact that the forecast for 2018 is subject to considerable risks, including geopolitical conflicts, political risks, Greece, and elections in Italy.”

EU businesses are letting Brussels know they are not happy with US regulatory reform & tax reform, because it makes their top heavy bureaucracy, over regulated and over taxed system less competitive.  This is a perfect example why competition is positive.  Bloomberg reported that the International Energy Agency predicted the US is positioned to dominate global gas and oil markets for many years to come, thanks to their resumption of crude oil sales and the shale oil production.  In New Zealand, home purchases by non-citizens have been banned in an attempt to quell the property value bubble created by foreign home buyers.  The US has dropped out of the top 10 most innovative countries in the world, South Korea holds the number one seat, Sweden is number two for the second year in a row.  Singapore, Germany, Switzerland, Finland, Japan and France, placed in the top 10 as well.  President Trump ruffled more feathers in Brussels right before he exited the annual International Finance meetings in Davos Switzerland, by threatening retaliation against the EU unfair trade policies.

President Trump Hints at Retaliation Against EU for Unfair Trade Policies (1.28.18) WSJ

The U.S. Drops Out of the Top 10 in Innovation Ranking (1.24.18)

Euro-Area Economic Boom to Roll on After Strong Start to 18 (1.15.18)

U.S. Tax Plan Draws Attacks Abroad, Prompts Calls for Cuts in Response (12.11.17) WSJ

U.S. to Dominate Oil Markets After Biggest Boom in World History (11.13.17)

New Zealand Bans Foreign Home Buyers (10.25.17) BBC |


Central Banks

Most Central banks are talking interest rates hikes, and US, UK & Australian banks have already began raising rates.  While the EU economy has seen improvement, it’s not enough to stop printing money and raise interest rates, but they are giving lip service to scaling down their bond buying.  Japan and many EU nations are staying pat and keeping their negative rate positions.  Italy’s fragile economy is very concerned about the ECB raising interest rates, thereby reducing the amount of Italian debt that would be purchases by the EU, potentially derailing its meager recovery.  In December, former Federal Reserve Chair Janet Yellen raised the bench mark interest rate and said the Fed expects to raise rates three times in 2018; new Fed Chair Jerome Powell expects to raise them as well.  There is potential for change in Fed policy, as President Trump has appointed a new chairman and three new Federal Reserve Board members.

Fed Raises Rates, Eyes Three 2018 Hikes as Yellen Era Nears End (12.13.17)

European Shares Down as ECB Leaves Rates Untouched (12.14.17) WSJ

ECB to Scale Down but Extend Bond-Buying Program (10.26.17) WSJ

Italy Faces Challenge of Living Without ECB Alchemy (10.29.17) WSJ



Bloomberg’s dollar index approached its lowest level in three years as the euro extended gains that have pushed it to its strongest positioning since 2014.  Mexico’s peso was the big outperformer as emerging currencies gained, while the yuan reached a two-year high as the People’s Bank of China raised the currency’s fixing.  The dollar remains under pressure after five straight weeks of declines, despite solid U.S. growth.  The German central bank’s decision to include the Chinese yuan in its own reserves was another factor dragging on the dollar.  On Jan 14, The Bloomberg Dollar Spot Index declined 0.6 percent to the lowest in about three years.  The euro climbed 0.6 percent to $1.2274, the strongest in more than three years.  The British pound increased 0.6 percent to $1.3811, the strongest in about 19 months.  The Japanese yen appreciated 0.5 percent to 110.53 per dollar, hitting the strongest in more than four months.  The Mexican peso jumped 1.2 percent to 18.8176 per dollar, the strongest in almost six weeks.  On January 24, at the world finance meetings in Davos Switzerland, the US made it clear that the USD value is going lower, making US products more competitively priced in the international market place.

Hong Kong is a rare exception in the world.  The Hong Kong Monetary Authority, the country’s central bank, is among the best capitalized on the planet.  Plus, the government is awash with cash and routinely runs substantial budget surpluses.  Hong Kong has virtually zero debt and nearly $1 trillion Hong Kong dollars ($126 billion) in net foreign reserves. At some point Hong Kong will be depegging form the USD and when it does it will shoot up in value.

Gold Rally Picks Up Steam as Dollar Falters (1.27.18)

White House Declares Open Season on the Dollar at Davos (1.24.18)

Dollar Slide Deepens as Euro Strength Saps Stocks: Markets Wrap (1.14.18)

Own This Currency No Its Not a Cryptocurrency (10.18.17) SMC



The biggest surprise in 2017 was the crypto currency market expansion into the mainstream which left every other market in its dust.  Even Bank of America’s chairman Jamie Dimon had to eat his own words.  Crypto currencies are now in hedge funds, banks, retail and business purchases, they are here to stay and they are going to expand into both the investment and everyday buying and selling of world markets.  However, the SEC and other market regulators are making moves to try and reign in the wild wild west crypto currency market.

Bitcoin continues its unpredictable radical ups and downs, however after a 1000% plus gains in 2017, but in 2018 has been mostly down.  Bloomberg reported: 

Bitcoin was overbought and sentiment was ecstatic,” said Ari Paul, chief investment officer of BlockTower Capital Advisors. “This is an overdue correction triggered by South Korean regulation fears.”  In South Korea, a hotbed of trading, regulators warned they may shut down cryptocurrency exchanges completely after limiting their operations. China is said to have intensified its curbs on trading of the digital coins, extending restrictions to over-the-counter and peer-to-peer platforms after banning exchanges last year. In the U.S., the Securities and Exchange Commission asked at least 15 funds to pull applications this month for bitcoin-related exchange-traded funds.  Bloomberg went on to write, In 2018, things will be different,” says Eugéne Etsebeth, formerly of the South African Reserve Bank.  “G7 central banks will start buying cryptocurrencies to bolster their foreign reserves,” he affirms, concluding:  “Central bank money will pour into cryptocurrencies.”  Here is a voice not of the bitcoin glee club or the moon-mad fringe… but a former central banker… a totem of the establishment.  Our agents have also forwarded us the following dispatch, by way of Peter Smith, CEO of Blockchain:  I think this year will be the first year we start to see central banks start to hold digital currencies as part of their balance sheet.  

Germany has developed some of the most sophisticated crypto platforms. The German people have embraced cryptocurrencies because of their love for cash and irritation with the EU central bank negative interest rates and money printing, both of which have lowered the value of German currency.  Even the IMF is looking into creating its own crypto currency; I suspect the crypto craze will continue its invasion into markets, businesses and banks in 2018.  

Bitcoin Finds a Home in Cash-Loving Germany (1.17.18) WSJ

Bitcoin Steadies After 26% Slump as Traders Brave Volatility (1.7.18)

SEC Statement on Cryptocurrencies and Initial Coin Offerings (12.11.17)

SEC Chairman Jay Clayton |

SEC Halts a Real Initial Coin Offering (12.12.17) WSJ

IMF’s Lagarde says digital currencies could boost its own SDR (9.29.17) Reuters



In January, Venezuela’s oil industry has continued it’s decent into collapse.  The S&P declared Venezuela in default on their bond payments which they paid late, but there is little hope in their ability to make any future is payments; default looks to be a foregone conclusion for 2018.

According to Bloomberg, “US delinquencies on subprime loans made by non-bank lenders are soaring toward crisis levels. Fresh investment has dried up and some of the big banks, long seen as potential suitors, have pulled back from the auto lending business. To top it off, state regulators are circling the industry, asking whether it preyed on borrowers and put them in cars they couldn’t afford.”

Reuters reported that China announced deleveraging, asset management and other financial reforms and is moving very quickly to implementing these reforms.  The IMF and international rating agencies have been encouraging them to do this for some time.  Bloomberg also reported:

A Chinese central bank official said China should allow local governments to go bankrupt to help rein in regional authorities’ excessive borrowing.  Vice Finance Minister Zhu Guangyao said on Saturday that addressing “hidden debts” of local governments and state-owned companies’ debts are key to prevention of systemic financial risks, the China Securities Journal reported.    China may very well devalue its own currency later this year, as they did in 2015, in order to pay off some of their debt. . 

Venezuela Has Some Bad News and Some Really Bad News (1.18.18)

China Central Bank Official Says Bankruptcy May Benefit the Country (12.24.17)

Subprime Auto Defaults Are Soaring, and PE Firms Have No Way Out (12.21.17)

Markets Get Wake-up call from China’s Post-congress Deleveraging Moves (11.28.17)

Venezuela’s Bondholder Meeting Is a Bust as S&P Declares Default (11.14.17)



The only thing the UK & EU have agreed upon is the divorce settlement.  The battle lines for Brexit remain immovable with each side saying the other must relent.  Foreign Secretary Boris Johnson and Environment Secretary Michael Gove say the country’s best hope lies in setting its own regulations, even if that means tougher trading restrictions.  According to Bloomberg: 

Johnson fired a fresh salvo over the weekend, using an interview with the Sunday Times to call for a “liberal Brexit.” He said the advantages of leaving the EU haven’t been properly outlined to the public. He said the U.K. must strike a trade deal that gives it the power to discard EU laws, and that failure to do so would render Britain a “vassal state” of Brussels.

The prospects of a soft Brexit (negotiated settlement) appear low, with a hard Brexit (exiting the EU market with no trade deal) looking far more likely.  As long as both sides at least pretend to be negotiating, the formal trade agreements remain in place, so the UK might as well string it out, since they know that hard exit is the most likely outcome.

UK & EU Reach an Agreement on Brexit Divorce Terms (12.8.17) WSJ

May Risks Brexit Row Over Migration and Trade During Transition (12.17.17)


Political Unrest

There is great political unrest throughout the nations and it does not appear the turmoil will subside anytime in the near future.  Much of this turmoil is being caused by the clash between the rise of nationalism and the push for globalism.  It’s happening in the UK, US, Poland, Spain Italy, Austria and many other nations.  People in the EU, don’t want be Europeans, they want be British, Italian, Polish, etc.  People are resisting becoming one global community, they want to be nations with their own unique culture history and identity and this trend seems to be increasing.

According to the WSJ: Italy’s President Sergio Mattarella dissolved parliament Thursday and called elections for early March, a vote that will highlight the economic and political problems still stalking Europe and the country’s role as the weakest flank in the currency union.  The vote—the latest in a series of momentous elections in Europe—will be in line with the overwhelming trends of 2017, featuring a fractured electorate, continued pressure from populist movements and predictions of a struggle to form a cohesive government.  But for many European leaders, Italy remains the most worrisome spot in the eurozone, given the huge size of its public sector debt, its weak banks and poor competitiveness.  The elections, set for March 4, aren’t likely to put those concerns to rest, as the center-left tries to fend off a populist upstart and the return of Silvio Berlusconi, the 81-year-old whose political rebirth is further shaking up politics. The 5 Star Movement—the anti-establishment group that stormed Italian politics during the crisis on popular anger with legacy politicians—could win about 30% of the vote.

Italy experienced much conflict with the EU throughout 2017, resulting in the growing anti-EU sentiment among its citizens and political candidates.  Depending on the outcome of Italian elections, Italy may propose its own referendum to exit the EU.

German Chancellor Angela Merkel, who was supposed to be the strongest leader in the EU, has not been able to form a cohesive government.  The WSJ reported, “The failure of Ms. Merkel has left Germany in one of the worst political crises of its postwar period.  The poll also showed that 67% of Germans think Ms. Merkel’s best days as chancellor are behind her.  If they are not, Ms. Merkel will have to rule Germany with the first minority government in its postwar history or ask voters to return for a second ballot.”

Poland is ignoring EU court rulings against it and is being looked at like a rogue state by the EU.  Catalan separatist have won elections once again in Spain and continue their quest for independence.  The European Union is anything but united.

The EU is not alone in its political and economic uncertainty, Venezuela is being sanctioned by most of the Western nations, further complicating their deteriorating economy.   Turkey just invaded Syria and is attacking the Kurds, ignoring warnings from the US, UK, Russia.  China just accused the US of incursion of their territory in the South China Sea.  Palestinian UN reps called for countries to repeal their recognition of Israel as a nation.  Saudi Arabia is positioning itself for a territorial conflict with Iran, and the Iranian people have been violently protesting their government. This is just few of these international incidents, as many others nations are experiencing financial and territorial disputes.

US legislators and the Trump Administration are continuing to shake up world economies and foreign policy by: recognizing Jerusalem as the capital of Israel, reducing funding to the UN, putting new trade tariffs into effect, raising interest rates, immigration policies, tax reform and pushing America First policies.

As Turkey Invades, Kurds See Betrayal Once Again (1.23.18) WSJ

Next Year in Jerusalem (12.22.17) WSJ |

Turkey’s President Dismisses U.S. Call for Restraint Along Syria Border (1.22.18) WSJ

DHS Secretary Reveals Crackdown is coming against leaders of Sanctuary Cities (1.17.18) GB

Merkel Begins Last-Ditch Effort to Form Coalition Government (1.7.18) WSJ

Iranians Protest Over Economic Malaise (12.30.17) WSJ

Italy’s President Calls National Elections as Country Grapples with Economic Pain (12.28.17) WSJ |

Poland Risks Being the EU’s Rogue State (12.10.17)

Catalan Separatists Have a New Plan to Defy Madrid’s Authority (11.25.17)

Australian Government Loses Majority After Court Ousts Dual-Citizen Lawmakers (10.27.17) WSJ

Austrian Vote Paves Way for Nationalist Party to Enter Government (10.15.17)



The last weekend in January finance ministers, treasurers, directors and financial services business met in Davos Switzerland to access & discuss the current state of global economies and markets.  Many of the attendees were upbeat and the IMFs Christine Laguard expected growth to be on the increase in 2018.   President Trump, US Treasurer Mnuchin and a large US delegation arrived and put a damper on globalist aspirations.  President Trump declared that America was open for business and that the world has nothing to fear and will benefit from his America First policies.  Central bankers and many global leaders aren’t happy about US policy, but international corporations doing business in the US were supportive.  US markets continue rise and optimism continues to prevail.  The EU, Japan, the emerging markets all seem to be moving in a positive direction.  Unfortunately, the other thing that is rising along with the markets in these nations is their debt.  Many economies like the EU and Japan are still being fueled by artificially low interest rates, and money printing.   We enter 2018 with a positive outlook and rising markets, but there are undercurrents that will eventually push to the surface and have to be dealt with.

Business, Political Leaders Size Up Trump’s Speech at Davos (1.27.18) WSJ

Davos 2018 Updates From the World Economic Forum (1.27.18) WSJ

White House Declares Open Season on the Dollar at Davos (1.24.18)

Trump Tells Davos America First Will Benefit the World (1.26.18)

The IRS’s Guidance on Property Taxes Has the U.S. Confused (12.28.17)

Tax Changes Are Coming Monday Here’s When it Will Affect You (12.29.17) MSN |

Russia Skirts U.S. Sanctions With $27 Billion Arctic Gas Plant (12.9.17) WSJ

CFPB Chief Mulvaney Says Days of Pushing the Envelope Are Over (1.24.18)

My Opinion of Bitcoin & Crypto Currencies

Let me first attempt to define Bitcoin, after which I will explain how one actually can purchase and transact with it.  Bitcoin is a crypto/digital currency, its money just like paper currency, and it fluctuates against other currencies both paper and digital.  It’s a tool, a method of legal tender, to whoever agrees to accept it, no different than any other currency.

There are over 1100 crypto currencies, collectively referred to as blockchain technologies.  Bitcoin is the most recognizable, because it was the first crypto currency and in many ways, acts as the unofficial world reserve digital currency.  Currently, the only way most people can purchase any other crypto currency is to first convert their cash into Bitcoin after which they can exchange their Bitcoin for other digital currencies.

Most governments frown upon crypto currencies because they can’t effectively control, track or tax them, which many consider, to be crypto currency’s most attractive features.   It enables people to anonymously purchase things with no paper trail.  There is no doubt that eventually crypto currency will be regulated and taxed, but for now it’s the wild, wild west.  In fact the largest crypto currency depository Coinbase was just told to release all the names and Bitcoin purchases under $20K to the IRS in the first week of December.

Bitcoin and crypto currencies were never intended to be an investment, but that is how the public and markets are treating them.  You aren’t buying a share your buying a token, which is a digital representation of a currency that has a specific value at the moment you purchase it.  Its value goes up and down against other currencies, like the dollar goes up and down against other currencies.  Different digital currencies have different values, consequently the cryptos that used by more people, companies and financial institutions will tend to have a greater value and potential for gain.  Thus it takes research to decide which of these digital currencies may have the greatest future potential.

Many people are interested in purchasing crypto currencies, but are uncertain about how to do it and how these currencies really work.  There are many companies and crypto brokers who for $2,500 or more will be happy to help, however, a prudent investor ought not to buy what they don’t understand, because if you don’t understand it how will you know a good price to buy it or sell it or why one crypto currency is better than another.  Unfortunately, the masses only look at the return they see some are getting and jump on the band wagon.

It took around 10 years for Bitcoin to reach $1,000, but it has taken only eleven months in 2017 for it to reach $16K per token.  This calls for some questioning… is Bitcoin in a bubble… of course it is.  Could the bubble get bigger… yes it can.  Will it eventually pop… most likely.  Are all cryptos in a bubble… no.  Are there various reasons to look at one crypto currency as opposed to another… yes.

Bitcoin will hit a certain level and drop and its fall will likely be dramatic as its ascent. However, regardless of what happens to Bitcoin, crypto currencies are here to stay and corporations, the markets, the regulators, the IRS and even the banks know it.  Physical cash will eventually be replaced by digital currencies and this likely will happen more quickly than most think.  There are many pros and cons to going digital for companies, global markets, banks and individuals, but for the sake of brevity, let’s leave that for another article. 

How do you get crypto currency?

The process of opening a crypto currency account, converting your cash into digital currency, purchasing specific cryptos and then storing them is complicated and cumbersome.  Some people will not be able to figure it out; others will not have the patience to follow through, while others who are techies will love it.  The learning curve is steep and you have to methodically go through every step to protect your assets from being hacked.  This is why people are willing to pay $2,500 or more for someone to do it for them, and/or walk them through the process step by step.



  • To open up a crypto currency account you will first have to select a digital currency conversion company to do the conversion. Coinbase is the largest digital conversion company com
  • You will have download a google app called Authenticator which requires you to input a code within 20 seconds every time you do anything on the account or you won’t be able to move to the next step.
  • After you open a digital currency account you must complete a test deposit into your digital currency conversion company from your bank account, debit card or credit card.
  • You then must go online or check with your bank, debit or credit card to make sure the transaction was successful (this could take from 30 minutes to 4 days)
  • Once you have confirmed the transaction amount, you repeat the process  to do the actual transfer
  • Once the transfer is complete you will own that amount in Bitcoin. Again, this step can take30 minutes up to 4 full days, after which point you can transfer your Bitcoin to the crypto currency platform of your choice
  • To transfer to a Crypto platform (Bittrex is currently the most common with the most choices ) you must down load another authenticator code (which again changes every 20 seconds and must be inserted for every step)
  • Then you transfer the Bitcoin from the currency conversion company to your chosen crypto currency platform. Confirmation can take from 1 to 24 hours
  • After you receive confirmation, you can then purchase other crypto currencies. You have to purchase each crypto currency in Bitcoin, so if you want to purchase $200 of a specific crypto currency you have to go a website ( ) that will tell you what fraction of a Bitcoin that equates to in order to make the purchase and you must complete the transaction in 20 seconds or start over.
  • After you finish your first purchase, you must place it in a “digital wallet,” which is usually a part of the digital platform company you chose.
  • You can only purchase one digital currency at a time, so you have to go through the whole process each time you choose a different crypto


As you can see, it’s complicated.  If you don’t have a smart phone like an android or i-phone, you can’t do this, because it’s the only way to download the Authenticator App and receives texts while making the transactions.  If you are not proficient on the computer and smart phone, you should also think twice before attempting to purchase crypto currency.  Regardless of what happens to Bitcoin, crypto currencies are here to stay and are the currency of the future.

Even so, crypto currencies are fiat currency backed by nothing, just like paper currency.  The question is: who is really in control of it?  We are told no one controls it, which is hard for me to believe.  Many people lost billions when the Bitcoin exchanges got hacked, and because the transactions are not traceable, there was no recourse.  The exchanges said they have fixed the problem, but that begs the question: who fixed it and how did they fix it?  It is claimed that peer to peer transactions (transactions between two people or sources) can’t be hacked, which so far that seems to be true, but there is still uncertainty surrounding this new market. 

How I Selected My Crypto Currency

  • As with any option, I personally wouldn’t put too many eggs in one basket, like Bitcoin, but diversify into a number of different crypto currencies
  • I would pay attention to those which are more functional and technologically advanced

and are being widely utilized by companies, banks and nations to transact and do business

I have gone through the process of purchasing five different crypto currencies.  I did it with the knowing I could lose it.  The crypto currency market is very volatile, but I wanted to have a better understanding of the process, so I could explain it to others.  I think there is money to be made in crypto currency, but its not like a mutual fund, you need to pay attention to what’s happening and you have to buy, sell and transact on the account   Bitcoin and crypto currencies have never experienced a downturn or a drop in the US dollar, both of which would definitely effect crypto currencies, but we don’t know how.   My greatest concern in regard to this new digital currency technology this: If I wanted to create a one world currency, I would create a crypto currency that everyone would have to participate in.  Once in place this system could destroy people’s ability to buy things privately and anonymously.  When people ask me about Bitcoin, I tell them they should do whatever they personally feel led to do; because at this point the future of each blockchain technology is unknown.

What to Expect When Bitcoin Future Start Trading (12.8.17) Bloomberg Video

Here’s What You’ll Want to Know About the Bitcoin Bubble (12.8.17) The Blaze

Jim Rickards Bubble Can’t Be Maintained (12.8.17) Business Insider

Is Bitcoin a Bubble Here’s What Two Bubble Experts Told Us (12.8.17)

Coinbase CEO on Crypto Surge, Bitcoin Futures, IRS (12.6.17) Bloomberg Video

How Do You Keep Your Bitcoin Safe (12.7.17) WSJ

Bitcoin’s Wildest Rise Yet: 40% in 40 Hours (12.7.17 WSJ

Hackers Steal More Than $70 Million in Bitcoin (12.7.17) WSJ

The Government is Coming for Your Bitcoin (12.1.17) SMC

Here’s How to Stay One Step Ahead of the Government’s Secret Plan for Crypto Cash (11.16.17)

The IRS Is Puzzled Why Out of 500,000 Coinbase Users, Only 900 Reported Gains or Losses (11.13.17)

Bitcoin Has an Unusual Relationship With Volatility (11.19.17)

Even a $31 Million Hack Couldn’t Keep Bitcoin Down (11.21.17)

The One Way Governments Could Actually Kill Bitcoin (10.16.17) SMC

Only Buy Bitcoin if You’re Ready to Lose (10.31.17)

IMF’s Lagarde says digital currencies could boost its own SDR (9.29.17) Reuters

Cryptocurrency Mania Goes Beyond Bitcoin (5-24-17)

What is this Blockchain Thing (4-20-17)

Post-Bitcoin Technology Has Geeks, Giants, and Hackers Excited (3-28-17)

The Future of Cryptocurrency By Investopedia Staff |

Bitcoin & ICBMs up, Inflation, Retail Sales & Productivity Down, Political Instability Continues

In his first speech to the UN, Trump denounced NK and Iran, who in turn denounced him.  Trump said he would “totally destroy” NK if necessary.  Chancellor Merkel won her re-election in Germany, but by the weakest majority since WWII, and with the anti-EU parties gaining seats.  Catalonia passed an Independence Referendum to secede from Spain and become their own nation.  Spain is calling the referendum illegal, Catalonia says it is legal, and so ensues another version of Crimea vs Ukraine.  The EU sides with Spain because Catalonia doesn’t want to be a part of the EU and, as with the UK Brexit, they are afraid other parts of the EU might resort to this method of exiting the EU.  The Kurds voted overwhelmingly for independence, which has upset Turkey, Iraq and Iran who consider the Kurds a threat politically and economically as they would control some large oil reserves.

Retail sales and inflation are down in both the US & EU.  Bitcoin is still up from its value at the beginning of the year, but down 40% from its highest point.  The one thing that keeps going up is North Korean ICBMs.  Not be out done, Iran also felt it necessary to do a nuclear test.   Needless to say stability is not a part of the equation.


Central Banks

Central banks are all talking about raising interest rates, printing less currency and beginning to unwind their portfolios, which means they will stop buying bonds and/or start selling some of their holdings.  So far the only major central bank to raise interest rates has been the US.  The Federal Reserve has set October for the start of their previously announced plan to shrink its $4.5 trillion balance sheet. As expected, policy makers left the benchmark interest rate unchanged in a range of 1 percent to 1.25 percent.  In a press conference, Fed Chair Janet Yellen called this year’s inflation undershoot a “mystery.” They have missed their target for the past five years.  Actually, the Fed has missed the target for 25 years, which begs the question, why anyone pays any attention to a Fed estimate.  The WSJ wrote, “In her press conference, Ms. Yellen acknowledged the inflation shortfall had proved more persistent and was more broad-based than officials had anticipated. “I can’t say I can easily point to a sufficient set of factors that explain this year why inflation has been as low,” she said.”  Vincent Reinhart, chief economist at Standish Mellon Asset Management and former head of the Fed’s monetary affairs department said, ““Central bankers feel guilty about where they are and if given an opportunity to renormalize policy, they’ll take it.”

Fed to Start Paring Holdings, Keeps December Rate Rise on the Table (9-20-17) WSJ

Fed to Shrink Assets Next Month, Boost Rates by Year End (9-20-17)


Debt & Signs of Recession

Bloomberg reported that Canada, Turkey, Thailand and many other nations would be on the edge of a banking crisis, if global borrowing rose by 250 basis points (2.5%).  The Bank for International Settlement (BIS) warned that, “Credit-to-GDP ratios remained well above trend levels for a number of jurisdictions, including Canada, China and Hong Kong SAR.”

A forensic study conducted by the BIS, concluded: “enormous liabilities have accrued through FX swaps, currency swaps, and “forwards.” The data is tucked away in the “footnotes” of bank reports. Contracts worth tens of trillions of dollars stand open and trillions change hands daily. Yet one cannot find these amounts on balance sheets. This debt is, in effect, missing. “These transactions are functionally equivalent to borrowing and lending in the cash market. Yet the corresponding debt is not shown on the balance sheet and thus remains obscured,” said BIS’s quarterly report.  Signs of excess are visible everywhere, as the London Telegraph Financial Post reported, “Corporate debt is now considerably higher than it was pre-crisis. Leverage indicators have reached levels reminiscent of those that prevailed during previous corporate credit booms.  A growing share of firms face interest expenses exceeding earnings before interest and taxes.

Bloomberg reported that, S&P Global Ratings cut China’s sovereign credit rating for the first time since 1999, citing the risks from soaring debt, and revised its outlook to stable from negative.  The sovereign rating was cut by one step, to A+ from AA-.  Analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. would be unlikely to avoid default should the nation default on its sovereign debt.  Moody’s cut its rating on China to A1 from Aa3 in May, citing similar concerns over economy-wide debt and effects on state finances.

Both Trump & Treasury Secretary Mulvaney said Puerto Rico will receive hurricane aide but no bailout for their bankrupt nation.  Bloomberg reported that Mulvaney said the administration is devising an aid package to send to Congress that will deal with rebuilding and repair:  “We are not going to bail them out. We are not going to pay off those debts. We are not going to bail out those bond holders,” he said.  Puerto Rico is not alone in its financial struggles, as the sub-prime problems which helped create the 2008 crisis are happening again in nations across the board, and Fannie & Freddie may need a $100 billion bailout.

No U.S. Bailout for Puerto Rican Debt, Trump’s Budget Chief Says (10.3.17)

S&P Cuts China’s Credit Rating, Citing Risk from Debt Growth (9-21-17)

Canada Flagged as Hidden $14 Trillion Credit Bubble Stokes Global Crisis Fears (9-18-17)

Fannie-Freddie Might Need $100 Billion in New Crisis, FHFA Says (8-7-17)

New U.S. Subprime Boom, Same Old Sins: Auto Defaults Are Soaring (7-17-17)


World Economies & Markets

WSJ reported that: Eurozone wages rose at the fastest pace in more than two years during the three months leading up to June, a sign inflation may be set to rise to the European Central Bank’s target.  The 19-nation eurozone economy has grown more strongly than expected this year, shrugging off the uncertainty created by a series of elections in the Netherlands, France and Germany that threatened, but failed, to yield gains for anti-euro nationalists.  The ECB’s economists now forecast the eurozone economy is on course for its best year since 2007, reducing the need for support from policy makers.  Just like in the U.S., however, inflation has yet to show signs of a sustained rise toward the central bank’s target, which is just under 2%.  Despite this, retail sales declined across the euro area for the second straight month in August, signaling a warning to the European Central Bank as it considers a reduction in its stimulus measures from early 2018.

WSJ reported: “Canadian factory sales plunged in July on a pullback in auto production, in a further sign that the economy has hit a rough patch following a year of roaring growth.   Manufacturing shipments declined 2.6% in July, on a volume, or price-adjusted, basis, factory sales fell 1.4%.New Zealand’s gross domestic product expanded 0.8% in the second quarter from the previous three months and along with Australia is preforming very well.  China’s consumer-price index increased 1.8% from a year earlier, compared with a 1.4% gain in July, but that did not prevent China from being downgraded by Moody & the S&P.”

In her Global Outlook report, Gail Fosler wrote, “We see the U.S. stock market as fragile and increasingly vulnerable to a downshift in employment. While stock prices lead unemployment in recoveries, an unemployment upturn tends to lead stock price downturns at peaks. Recent trends in recession indicators point to a pending reversal in unemployment, and hence a prospective decline in stock prices.  These trends are consistent with the discussion of financial risk and the notion of a U.S. reset/recession.”

Eurozone Retail Sales Fall Again, Posing Quandary for ECB (10.4.17) WSJ

Stock Market Risks (9-21-17) By Gail Fosler |

Eurozone Wage Growth Hits Two-Year High (9-15-17) WSJ

New Zealand Economy Rebounds Ahead of Election (9-20-17) WSJ

China Inflation Rebounds in August, Beating Expectations (9-20-17 WSJ

Canada Factory Sales Plunge in July (9-19-17) WSJ


The EU, Political Uncertainty & Shifting Allegiances

The WSJ reported that the EU is trying to get more tax revenue from multinational companies and they say they are trying to level the corporate playing field across the continent.  The Journal went on to say, “This move risks exacerbating tax disputes among member states, and undermining the bloc’s unity.   And the European Commission, the bloc’s executive, is considering adopting a French-led proposal to tax digital companies on revenue—as opposed to profit—generated in Europe to better account for what they believe companies should be paying.  Bureaucrats always prefer to tax economic activity rather than profits because it secures tax revenues even in downtimes. 

The EU bureaucracy in Brussels, doesn’t care about companies or their employees, it only cares that it has tax revenue to spend.  It should be irrelevant what the EU thinks they should get, they aren’t a nation and they weren’t voted into office; they are an unelected bureaucratic body which answers to no one and has no checks or balances on their power.  The WSJ explains that this is why several EU countries, such as Luxembourg and Ireland, have already expressed skepticism, and larger more indebted EU members want to protect their revenues from what some smaller countries see as a power grab by the EU.   EU member countries are supposed to agree unanimously on tax matters, but the smaller states have insisted on maintaining their freedom to maneuver on tax matters.  EU antitrust chief Margrethe Vestager stressed the importance of a level playing field and a functioning single market, and wants to usurp that power from member nations.  This is the MO of federal bureaucracies, they usurp an ever increasing amount of control and authority. This is why the UK and Switzerland left, why Italy, Poland, the Czech Republic and Hungry may leave, and why Germany’s Chancellor Merkel and the Netherlands establishment party lost seats.  In spite of her dwindling support, Chancellor Merkel arrogantly declares the UK must pay the EU divorce settlement.  The EU and UK are no closer to an agreement than they were in March when negotiations began.

Taxation Tests European Unity (10.5.17) WSJ |

German Results Reflect European Unease Over Identity, Economy (9.24.17) WSJ

Merkel Warns U.K. It’ll Have to Pay EU Obligations in Brexit (8-26-17)

EU Takes Action Against Poland Over Judiciary Overhaul (7-29-17) WSJ

Bloomberg wrote: “A tainted election victory for the German chancellor betrays the east-west divide in Europe. The surge in support for Germany’s anti-immigrant party in weekend elections is a stark reminder of the fault line that cuts through the European Union.  Chancellor Angela Merkel’s conservative alliance won the German election, but a steep drop in its support and an anti-immigrant party surge signaled political turbulence ahead for Europe’s largest economy.”

Another article in the WSJ went on the say, “The election result signaled a sudden turn for a political system whose relative stability has underpinned the European Union in recent years as it lurched from crisis to crisis.  Ms. Merkel’s Christian Democrats and their Bavarian sister party saw their worst result since 1949, losing around a fifth of the 41.5% support they garnered just four years ago. The Social Democrats suffered their worst election since World War II.  The nationalist AfD (AfD is the alternative for Deutschland Party, which wants to exit the EU) party was predicted to get 13.5%, which would make it the first time in more than half a century that a party this far to the right has won seats.”   Germany’s election result confirms the overriding trend of European politics in the past year: the crumbling of the Continent’s established parties in the face of voter anxiety over economics and identity.

The WSJ reported that in Hungry the ANO party’s mantra is to reject the euro because it would be “another issue that Brussels would be meddling with,” said Hungarian Prime Minister Viktor Orban.  His approval ratings are very high, even after he scoffed at a European court defeat over having to accept migrants.  Orban suggested the EU is trying to “rape” his country into being like Western Europe.  The leadership in Warsaw appears unfazed, as do financial markets. The zloty is among the world’s 10 best-performing currencies against the euro this year, along with the Czech koruna.

Poland angered Germany by asking for as much as $1 trillion of World War II reparations.  The French Prime Minister showed his support for Germany by skipping a scheduled meeting with Kaczynski and cancelling a defense contract for new helicopters.  “Nobody will impose their will on us from abroad,” said Polish the President.  “Even if in certain matters we’ll be alone in Europe, we’ll remain an island of freedom.”

In New Zealand, like in Europe and the US, immigration is one of the biggest issues and political party differences.   The WSJ reported that, “Immigration to New Zealand hit 72,400 this year, fanning criticism that the National-led government has fueled economic growth with this influx.  The New Zealand First Party takes an especially tough line on immigration. Nationalism, the desire to be a sovereign nation, is on the rise all over the world.  The people in New Zealand want to be New Zealanders, the UK want to British, Italians want to be Italian, Germans want to German, US citizens want to be Americans etc.

WSJ reported that, “…voters in the Spanish region of Catalonia overwhelmingly backed independence on Sunday in a referendum that was boycotted by opponents and marred by violence, putting Spain on the brink of a political and constitutional crisis.  Preliminary results showed that approximately 90% of votes were cast in favor of a split with Spain.”  The EU is calling the vote illegal, because Catalonia didn’t ask permission and doesn’t want to be a part of the EU.  The vote is also upsetting other European Union members, concerned it could fuel discontent in independence-minded regions such as the U.K.’s Scotland and Belgium’s Flanders. The vote could also lead to Spanish Prime Minister Rajoy to resign.

Catalans Support Secession from Spain in Vote Boycotted by Opponents (10-1-17) WSJ

European Commission Calls Catalonia Vote Illegal (10.2.17) WSJ

Catalonia’s Independence Referendum: What You Need to Know (9.29.17) WSJ

Kurds Vote Overwhelmingly in Favor of Independence from Iraq (9-27-17) CNN

Iraq Imposes Flight Ban on Kurds After Independence Vote (9-29-17) WSJ

Merkel’s Bavarian Ally Wages Rebellion from the Right (10.6.17) WSJ

The Dark Past in Merkel’s Backyard (9-26 -17) WSJ

Merkel’s Coalition Wins German Election, but Share of Votes Drops (9-24-17) WSJ

After New Zealand’s Unclear Election, Populists Play Kingmaker (9-23-17) WSJ

Even in Staid Germany, Protest Parties Poised to Gain Ground (9-21-17) WSJ



The EU, the UN and other global entities’ influence and control are currently diminishing.  The global establishment is being challenged and shaken by the rise of nationalism and the desire of individual citizens to keep their national sovereignty, history, culture and identity.  Bloomberg reported that, UK Prime Minister May’s threat to withhold funding from the UN, echoes a call for reform.  Secretary-General Antonio Guterres, is pushing for overhaul of some of the organization’s troubled peacekeeping programs. Tests that will need to be met before U.K. funding is released include centralizing UN operations in each country, and improvements in transparency, including the UN publishing its expenditures, according to May’s office.

The US is also questioning many of the UN’s programs and considering not funding things they deem detrimental to the US and its citizens.  North Korea, Iran, China and other nations are forcing the US to go it alone and form its own policy to deal with trade, international disputes and military threats, due to the lack of cooperation from the UN, EU and other globalist groups with their own agendas.   The exact outcomes of the political, social and economic unrest and irregularities currently brewing are undeterminable at this time.  It is certain however, as water in a kettle, this economic and political instability will eventually come to a boil and no matter which area hits the boiling point first, it will spill over into other areas.

A North Korea Nuclear Test Over the Pacific Logical, Terrifying (9-22-17) Reuters

May Says U.K. to Withhold Part of Funding If UN Doesn’t Reform (9-21-17)

Russia and China Hold First Joint Naval Exercises in Baltic Sea (7-25-17) Bloomberg