August 2019

And so it Begins: USDA Staff Withdrawn After Unidentified Threats During Farm Tour

by John Galt August 21, 2019 20:00 ET The next downturn will NOT be a repeat of 2007 to 2009. That is a guarantee. While the U.S. experienced isolated incidents of people being served eviction or foreclosure notices offering up armed resistance to law enforcement, such as what happened in Missouri last week, it has been all quiet on the agricultural front until today. From the Grand Folks Herald this afternoon: Farm tensions escalate as USDA staffer is threatened in Midwest The so-called strong rural supporters of President Trump may have…


First Ghost Cities in China, Now Ghost Trains to the EU

by John Galt August 20, 2019 22:30 ET The first articles and recent ones about the infamous Chinese ghost cities appeared to support conjecture about China building cities just for the sake of building them to keep people employed with their excess foreign reserves. Interestingly enough in tonight’s edition of the South China Morning Post appears this story: China’s belt and road cargo to Europe under scrutiny as operator admits to moving empty containers Within the article the report discusses that one in six rail containers are shipped empty from Chinese…


The 2007 Style Credit Downgrades Have Begun

by John Galt August 18, 2019 22:30 ET The nightmare has returned. Despite the fact that it is “different this time” as housing is not the central reason for our economic issues, the story sounds eerily familiar. First and foremost this story from the Nikkei Asian Review which dropped earlier today: Credit downgrades accelerate on all sides in US-China trade war How bad is it per the article? Here is a brutal excerpt: Credit rating agencies have downgraded listed companies worldwide at rarely seen levels this year, underscoring the risks to the…


Trump’s August Stock Market Fake Out Bounce

by John Galt August 18, 2019 22:00 ET President Donald Regalus Postulus Magnanimous Renaldo Trumpus hereby declares that while the Congress is in recess, the American Stock Markets shall no longer be allowed wild swings or dramatic declines until after September 5, 2019. Or something like that. As one of my favorite economists said this past Friday: The White House is now delaying the tariffs and removing some items. Did some acronym called the SPX cause someone to blink?— David Rosenberg (@EconguyRosie) August 13, 2019 Ummm, yeah!!!!! So what has happened…


A Veiled Threat by China to Blockade Taiwan

by John Galt August 18, 2019 21:35 ET Just when one thinks are beginning to calm down between the United States and China, the U.S. decides to sell upgraded F-16 fighter planes to Taiwan. This brings back memories of something the Chinese military leadership hinted at and although it does take a bit of searching but fortunately RT has not been totally eradicated from the internet yet: Then today in The Global Times, an organ of the Chinese Communist Party, this beauty of an article appears: US F-16 sale to Taiwan…


Kudlow’s Ominous Interviews on Today’s Sunday Shows

by John Galt August 18, 2019 13:15 ET In what can only be called a weird twist of irony, Larry Kudlow, who just happens to be President Trump’s Director of the National Economic Council in the White House said this on December 6, 2007 (From the National Review): There ain’t no recession. Sadly for Mr. Kudlow, the NBER disagreed with home some 24 months later and pegged the start of the “Great Recession” as starting in December of 2007. Many of us proclaimed it started in October of 2007, but that’s…


Xi Zaps Trump Rally Today

by John Galt August 15, 2019 05:25 ET All it took was one headline: China Says U.S. Violates Xi-Trump Consensus With New 10% Tariff And boom. There goes the 150 point rally the DJIA was set to have this morning: Even though this was set up as a reflex rally on over sold conditions, in a bear market beginning over sold can become more over sold before it bounces. The other action was in the credit markets where in an amazing move, the 30 year US Treasury which broke the 2.00%…


U.S. 30 Year Treasury Hits All Time Record Low Yield

by John Galt August 14, 2019 06:30 ET Via INVESTING.com Today the talking heads will say this is “bullish” because mortgage rates will become more affordable, even though they are based on the 10 year US Treasury. Then the rest of the lefty financial talking heads will blame Trump. The reality is that today is a historic marker: The end of the modern United States business cycle. Next up: Japanification


What to Expect when 2Y/10Y US Treasury Yields Invert

by John Galt August 14, 2019 06:00 ET Doom. Death. Locusts. Fire from the sky. Global warming. Global cooling. CNBC anchors crying. Fox Business hosts blaming Democrats. Bloomberg hosts blaming the US 2nd Amendment. Is that the kind of pure hot holy hell we can expect when the 2 year US Treasury and 10 year US Treasury rates invert soon (possibly today)? Chart from CNBC.com Actually no. But the algorithms which power 80+% of all Wall Street activity will notice the uptick in mentions of the words “inversion” and “recession” and…


PBOC Sets Morning Fix Above 7 Tonight

by John Galt August 7, 2019 21:20 ET Watching CNBC-Asia coverage tonight (Bloomberg was getting boring) and for the first time in my memory, they People’s Bank of China just set the domestic Yuan’s morning fix at 7.0039. This was not as weak as market projections but it does demonstrate that the PBOC will not only poke Trump in the eye, but shove a stick up Jay Powell’s tuckus in retribution for not stemming Trump’s trade war before it accelerated. Someone in China must have U.S. equities to sell still because…


Someone, Somewhere Said “Sell it All” Today

by John Galt August 7, 2019 21:00 ET For those who never saw the movie “Margin Call” here is why what I am about to say is so important: The key phrase? Sell it all. Why is this important today? In an era where liquidity appears to be tightening on a global scale and a potential dollar shortage is on the horizon, someone around 4 a.m. EDT liquidated a ton of futures contracts and apparently bought gold, silver, 10 year U.S. Treasuries, Yen, and God knows what else in the safety…


08.05 BREAKING NEWS: U.S. Treasury Designates China as a Currency Manipulator

by John Galt August 5, 2019 17:56 ET Flash headline on CNBC, more details to follow shortly. This is not going to be a good night in the currency, bond, or equity markets, IMHO! Updated with more 18:02 ET via ForexLive: Mnuchin says China is a currency manipulator Excerpted: US Treasury Secretary Mnuchin has said China is a currency manipulator. Via an official Treasury statement.  Mnuchin adds: will engage with the IMF to eliminate unfair competitive advantage by China’s actionssays China’s actions are a violation of China’s G20 commitments to refrain…


The Deadly Fork in the Road in 12 Terrifying Outcomes

by John Galt August 5, 2019 05:00 ET To be quite honest, I like President Donald J. Trump’s approach to the Presidency in many ways. However, I fear some of his tactics and personality traits are putting us on the road to disaster. His history of “getting going” when the going gets tough is not an attribute I would rate as a premium optimal outcome for our society. After all, there is this as evidence, among a lot more: Thus as I discussed in a previous article about the fork in…


BREAKING NEWS: China Retaliates, Orders all Entities to CEASE buying U.S. Agricultural Products

by John Galt August 4, 2019 22:28 ET Breaking news live on Bloomberg Asia coverage. The Chinese government has ordered all state entities inside the People’s Republic of China to cease buying United States Agricultural products. More to follow once PRC websites update…. First link via FX Street reporting from Bloomberg also.




The Trump Stock Market Crash of 2019

by John Galt August 4, 2019 19:00 ET Ugh, not this garbage once again. The truth is that Bill Maher sadly may get his wish only because President Trump is not playing this game of political-economy very well. One can not treat this as a one on one negotiation nor an “Art of the Deal” type winner take all scenario. The economy is made up of billions of individuals who make billions of decisions along with now, computer algorithms which make billions of decisions per second. First however, let me be…


Coming Soon? Trump’s Wall for an Assault Weapons Ban

by John Galt August 4, 2019 16:30 ET The new, most recent tragedies in El Paso, TX and Dayton, OH are bringing the gun control debate back to the forefront at a time when President Trump needs this distraction at the least. Internationally the drums of war are starting to beat louder with Iran, North Korea, China, and even Russia starting to stir up trouble in their own back yards and in some cases our allies front lines. As the media and Democrat hysteria reach a fever pitch, there is a…


Back to the Future of 1972

by John Galt August 2, 2019 05:00 ET The future of America has hit a major fork in the road, but to buy our economic future more time, we may have to revisit the past. The odds of a 1972 type Republican landslide are distant if not impossible due to leftist voter fraud and the divisions which now sharpen the true divide we are living in as a society. 1972 Nixon-McGovern Electoral Map The slaughter was total and complete for Nixon during that era. His campaign was replete with dirty tricks,…


America’s 2019 Fork in The Road

by John Galt August 1, 2019 20:17 ET As I return to the keyboard in my own home after travels throughout my state and up to the north, I must state that a realization after talking to customers, vendors, and listening to the locals has hit me like a ton of bricks: We’re forking here. At the proverbial historic fork in the road. Ignore the political circus in Washington, D.C. at your own peril my friends because once the political-economy becomes your personal enemy, the recovery and survival of a long…


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