Yesterday, I wrote that the brief “eye” of the relentless PiMBEEB storm would likely pass by the time you read my “disturbing trends” article. Which it certainly did – and then some – when the “naked emperors” known as the Federal Open Market Committee published the “minutes” of their Ides of March meeting. Perhaps, an even more powerful “storm” will hit today, when Donald Trump meets with Chinese Premiere Xi Jinping in a potentially historic summit – that Trump last week “warned” of, in stating it “will be a very difficult one, in that we can no longer have massive trade deficits and job losses…American companies must be prepared to look at other alternatives.” This, a week after referring to China, America’s number one creditor, as the “grand champions of currency manipulation.”
Not to mention, “if China is not going to solve North Korea, we will” – as clearly, if we’re going to spend $600 billion per year on the military, we need someone new to bomb; atop “old” targets like ISIS, whose spokesman yesterday called Trump an “idiot”; and alas, Syria, where Trump is “pulling a Hillary” by controverting Vladimir Putin’s wishes – in suggesting that he is considering bombing Assad’s troops, in response to a chemical attack that none other than the biggest truth-teller of all, Ron Paul, said was definitively NOT perpetrated by Assad. This, just a week after American troops were apparently responsible for “accidentally” killing more than 200 civilians in Mosul, Iraq.
In other words, if you think the Trump Administration’s thirst for bloodshed will be any less powerful than Bush’s or Obama’s, I’ve got a bridge in Brooklyn to sell you. After all, in a nation whose “reserve currency” is rapidly diminishing (potentially, to gold) – and with it, America’s ability to live more above its means than any nation in history; whose largest employer, with 1.4 million employees, is the military; there is simply NO WAY the military-industrial complex will not grow larger, particularly as military contractors are amongst the largest political lobbyists; in some cases, directly tied in to government – like Halliburton, where Dick Cheney was the Chairman and CEO from 1995-2000, before serving as Chief Warmonger – I mean, Vice President – from 2001-2008. I should know, given that I personally covered Halliburton at the time, as an oilfield service analyst at Salomon Smith Barney.
Actually, I was slightly in error in suggesting the military is America’s largest employer – given that its 1.4 million employees is slightly lower than Walmart’s 1.5 million. Walmart, which has become symbolic of the part-time, minimum wage paying, non-benefits eligible “gig economy” that dominates America’s 21st century labor market. This is why “jobless claims” continue to plunge, despite a collapsing economy; as unless you are a full-time employee, instead of a part-time employee or contractor, you are not eligible for unemployment insurance. Moreover, given that Walmart’s sales have peaked, whilst its margins contract due to cutthroat competition from Amazon.com; amidst an historic “retail Armageddon,” fueled by surging online retailing, plunging consumer spending, historically ugly demographics, and explosive corporate debt; you can bet that the amount of people seeking military “jobs” will explode in the coming years.
And again, I must emphasize that NOTHING I am stating is specific to Donald Trump – or any major Western leader attempting to manage the cancerous, terminal stage of history’s largest, most destructive fiat Ponzi scheme; as no matter what he – or they – attempt, the strengthening, and irreversible, forces of economic reality will thwart them. Not to mention, the political forces, which Trump in particular must deal with because seemingly, the entire world is out to get him – in the States, for being an “outsider”; and internationally, due to the brazen, unfiltered “diplomacy” that Xi Jinping will see, in spades, today. And now that quite definitively, the Obamacare “repeal and replace” and “massive” tax cuts plans are indefinitely – if not permanently – off the table; along with “yuuggee” fiscal stimulus; who knows what he’ll attempt next, to “make America great again?” I mean, if Germany can pass a law enabling the government to fine Facebook and Twitter up to €50 million any time they fail to remove arbitrarily defined “hate speech” and “defamatory statements,” who knows what might happen here? To that end, consider that in December, I predicted “money printing and draconian actions will define 2017.”
Speaking of money printing, the soon-to-be launchers of QE4; led by their soon-to-be-unceremoniously-replaced leader Whirlybird Janet; released the (as always, doctored to suit current market conditions) “minutes” of their March 15th meeting; when they LOL, “raised rates” to 0.87%, under the guise of a “strengthening” economy that, on that very day, their own economists forecast to “grow” by only 0.9% in the first quarter. This, as their long-term GDP and inflation estimates – of roughly 2%, respectively – had absolutely ZERO correlation to the supposed urgency of raising rates. Not to mention, when the President himself is complaining that the “too strong” dollar is “killing” us.
Of course, the fact that such “hikes” – to historically low levels, 80% below the 80-year average – have not only failed to cause longer-term, market-based rates to rise (as I vehemently predicted in January, when “traders” had all-time high Treasury short positions); but caused the yield curve to flatten to pre-Election levels (i.e., predicting recession); should tell you all you need to know about how “naked” the so-called FOMC “Emperors” are. Heck, even the dollar hasn’t risen in response; actually, declining after the rate hike, despite the fact that the French Presidential Election – which, literally, could destroy the Euro; is just weeks away. And oh yeah, gold surged in said “rate hike’s” wake, contrary to the views of the same “traders” that massively shorted Treasury bonds; just as it did after the December 2015 and December 2016 “rate hikes”; the former of which, marked the bottom of the three-year “bear market” in dollar-priced gold that commenced in April 2013, when the government-orchestrated “alternative currencies destruction” raid pushed it below its 200 week moving average for the first time since 2003. A level that gold and silver re-captured last week, irrespective of the most maniacal Cartel suppression tactics I have EVER seen. Trust me, the Cartel has NEVER been more worried about losing their war against real money – and in my view, losing the battle to defend the 200 week moving averages makes the Cartel more vulnerable than ever, to the inevitable physical “Waterloo” that must mathematically occur; particularly, in the ultra-tight silver market.
That said, even I was taken aback by yesterday’s display of Fed minutes idiocy – in which, Janet’s Wall-Street-owned Keystone Kops meekly, and transparently, attempted to convince market participants it has an “exit strategy” for its $4.5 trillion balance sheet of toxic, unprecedentedly overvalued Treasury and mortgage-backed bonds (and who knows how much, “off balance sheet”). Yes, the same “exit strategy” Ben Bernanke first outlined in, I kid you not, July 2009, when the Fed’s balance sheet was “just” $2 trillion – enroute to hitting $4.5 trillion when QE was “ended” in October 2014, more than five years later. Which incidentally, is where it still stands today, two-and-a-half years later.
Since October 2014, the Fed officially stopped monetizing Treasuries – whilst unquestionably, unofficially sopping up the massive sales of Chinese, Saudi, and Russia-held Treasuries; supporting the stock market via their 10:00 AM “open market operations, which just happen to coincide with the daily bottom of the “Dow Jones Propaganda Average”; and supplying “swapped” dollars to the European Central Bank; which due to their arbitrary classification as “swaps” instead of “loans,” are considered “off balance sheet.” However, the Fed never stopped officially re-investing all proceeds (interest payments and maturing principal) of their Treasury and Mortgage-backed bond holdings; which consequently, has prevented the $4.5 trillion balance sheet from contracting. Of course, following the hideously moronic “Operation Twist” operation of 2011-12 – in which the Fed sold short-term Treasuries, to deploy the proceeds in longer duration T-bonds; the Fed has put itself into a “duration trap” – in which not only do the amounts of maturing bonds decline, but the portfolio’s sensitivity to interest rate changes dramatically increases. Thus, “exiting” such a monstrous portfolio has become all but impossible, and EVERYONE knows it.
Thus, their attempt yesterday to convince us they have an “exit strategy” couldn’t have been more pathetic, weak-kneed, or transparent. Particularly, as in the same breath, they espoused genuine fear of the dramatic bubble-burst we all know is coming – which as anyone with half a brain knows by now, is all the “data dependent” Fed cares about. To wit, “a number of participants remarked that recent and prospective changes in financial conditions posed…downside risks to their economic projections if, for example, financial markets were to experience a significant correction.”
In a nutshell, their ballyhooed “exit strategy” – which Wall Street spent the last month propagandizing as evidence of a “recovering” economy and “confident” Fed – was a giant, transparently fraudulent dud; encapsulated by the below paragraphs of prototypically vague “Fedspeak,” which commits to nothing, and describes even less.
“Provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue, and judged that a change to the Committee’s reinvestment policy would likely be appropriate later this year.”
…and, in extremely ominous fashion…
“Many participants emphasized that reducing the size of the balance sheet should be conducted in a passive and predictable manner. Some participants expressed the view that it might be appropriate for the Committee to restart reinvestment’s if the economy encountered significant adverse shocks that required a reduction in the target range for the federal funds rate.”
Clearly, the Fed is extremely fearful of “economic shocks” and a “significant market correction” – in the latter case, as espoused by a specific blatant warning, that “some participants viewed equity prices as quite high relative to standard valuation measures.” Not to mention, the fact that “a few of the participants attributed the recent equity price appreciation to expectations for corporate tax cuts”; which, as noted above, ain’t happening any time soon. Hey, I’ll give the Fed credit for one thing; which is, that if “standard valuation” measures” are utilized, the market is clearly in dotcom territory; only this time, the economy is much worse; debt levels much higher; and the Fed has zero ammunition to re-stimulate, unless hyper-inflation is what it truly aims to achieve.
In response to this wildly PiMBEEB statement, the Cartel desperately tried to push PMs down – but despite Herculean suppressive efforts, that continue as I write Thursday morning – both metals bounced exactly at their 200 week moving averages (of $1,246/oz and $18.13/oz, respectively; which couldn’t be a more bullish technical statement. We’ll see what happens after tomorrow’s NFP jobs fraud report; but if the Cartel can’t manage to push gold and silver below their 200 week moving averages in its aftermath, we could be in for some very “interesting” times in the historically suppressed – and thus, historically undervalued – Precious Metal markets.
P.S.!!!!! I kid you not, just after I hit send, this article hit the tape – of the just released “Domestic Market Operations” annual report of none other than the NEW YORK FED; claiming that its SOMA, or System Open Market Account, is projected to remain unchanged at $4.2 trillion through mid-2018, and not fall lower than $2.7 billion until 2021. In other words, directly contradicting the hastily concocted, heavily doctored March 15th FOMC “minutes.” Yet again, proving the Fed lies about everything it says and does. To wit, “the size of the SOMA portfolio is projected to remain largely unchanged at its current level of approximately $4.2 trillion through mid-2018, while full reinvestments continue.”