This article was first published at the McAlvany Intelligence Advisor on Wednesday, November 20th, 2013:
Six federal agencies were invited to a Senate committee hearing on Monday to explain why each should be granted the privilege of regulating the Bitcoin. Four showed up:
This article appeared online at TheNewAmerican.com on Friday, April 6, 2018:
Flag of the Chinese Communist Party
In the nascent “trade war” between the United States and China, there is one option the Communist Chinese government isn’t considering using: its current stash of $1.1 trillion of U.S. Treasuries. Trevor Hunnicutt, writing for Reuters, said that, for the moment at least, “Chinese officials are holding back on taking aim at their largest American import: [U.S.] government debt.”
Hunnicutt posited that, if the Chinese did unleash what he called their “nuclear option,” it would devastate the American economy by forcing interest rates much higher and increasing the U.S. Treasury Department’s costs of financing its trillions in debt.
He also noted that, once liquidated, those assets would no longer serve as a threat to the United States, having already been expended. As Jeffrey Gundlach — known as Wall Street’s Bond King — said, “It is more effective as a threat. If they sell, they have no [more] threat.”
In his typically brash negotiating style, President Trump opened the bidding in March by
This article was published by The McAlvany Intelligence Advisor on Wednesday, March 28, 2018:
Followers of the Dow Theory are having their faith in Wall Street’s oldest and most accurate market-timing model tested. Last week’s selloff triggered one of the last two indicators necessary for its followers to declare that the nine-year old bull market has ended.
Charles Dow never used his theory to trade stocks, but his followers have, with great success. It has outperformed the traditional “buy and hold” strategy by an astonishing 4.4 percentage points annually. Mark Hulbert, who watches the market watchers and publishes his results in his Hulbert Financial Digest, wrote that the key support levels to watch are 23,860 on the Dow Jones Industrial Average (DJIA) and 10,136 on the Dow Jones Transportation Average (DJT).
Near the close on Friday, the Dow broke through support, but
This article appeared online at TheNewAmerican.com on Friday, March 23, 2018:
Thursday’s selloff on Wall Street pushed the S&P 500 Index (which tracks the price performance of the stocks of 500 of America’s largest companies) into negative territory. All four of the widely-watched indexes — the Dow Jones Industrial Average (DJIA), the S&P 500 Index (SPX), the Nasdaq Composite Index (COMP), and the Russell 2000 Index (RUT) — dropped the most on Thursday since February 8.
Dow Theory followers were more focused on the Dow Jones Transportation Average (DJT), as it came perilously close to triggering the last of three indicators needed to declare that the Bull Market in stocks is over.
Ironically, the Dow Theory, developed by Charles Dow, the founder and first editor of the Wall Street Journal and co-founder of Dow Jones and Company, was never used by him to trade stocks. But followers of his theory are legion, which could spell trouble
This article appeared online at TheNewAmerican.com on Tuesday, March 20, 2018:
Coat of Arms of Saudi Arabia
The chairman of Aramco, Saudi Arabia’s privately held oil producer, told avid listeners in Davos, Switzerland, in January that “we hope that 2018 will be the right time [to list shares of the company for sale], but ultimately we have to make sure the market is ready.”
There is increasing evidence that the market might never be ready.
When Saudi Arabia’s Crown Prince Mohammed bin Salman announced his plans in January 2016 for moving his country’s economy away from its dependence on oil (called Vision 2030), he guessed he could raise $100 billion from the sale of part of Aramco to help with the transition. He also felt that the sale of just five percent of the company would do the job nicely. In addition he thought that those shares might be offered as soon as 2017.
The year 2017 came and went, and Saudi Arabia’s oil minister Khalid Al-Falih said last week that the new deadline for the listing — in late 2018 — was now “artificial,” adding that the next target date is April 2019.
There are so many challenges facing the elites in Saudi Arabia that the deal might never take place.
This article appeared online at TheNewAmerican.com on Wednesday, February 14, 2018:
Money-supply (this is an old chart, but you get the idea)
Once Wall Street traders read beyond the headlines released early Wednesday morning by the Bureau of Labor Statistics (BLS), they reversed the early selloff and bid the market higher.
Those traders were on high alert following the January report that wages had jumped nearly three percent last year. This triggered concerns that inflation was imminent, and that the Fed would institute interest rate increases which would slow the economy.
The headline from the BLS seemed to confirm those concerns:
This article appeared online at TheNewAmerican.com on Wednesday, February 7, 2018:
With Wall Street regaining its footing following the decline that started last Thursday, commentators in the mainstream media are still searching for the decline’s cause. Initially they claimed that it was an unexpected surge in inflation evidenced by the rise in the yield of 10-year U.S. Treasury notes approaching three percent (in early September it was closer to two percent). This was followed by the jobs report that announced that wages increased 2.9 percent year-over-year, up from just over two percent previously.
Writers at the Wall Street Journal dug deeper: The selloff was caused by — ready? — “volatility sellers, risk-party funds and algorithmic trading.” They then went into mind-numbing detail about how these strategies work and how the crash cost people using in them in excess of $200 billion.
Peter Schiff, CEO of Euro Pacific Capital, told TheStreet.com that maybe it was the Federal Reserve’s unhappiness with The Donald:
This article was published by The McAlvany Intelligence Advisor on Wednesday, January 24, 2018:
It would seem so. Following Monday’s announcement by President Trump that tariffs of between 30 and 50 percent would immediately apply to imported solar panels from China and washing machines from South Korea, U.S. Trade Representative Robert Lighthizer rejoiced: “The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranches, and businesses.” This view was confirmed by a White House trade official who told reporters:
This article appeared online at TheNewAmerican.com on Tuesday, January 23, 2018:
Seal of the United States International Trade Commission.
Following the announcement by the White House on Monday that it was imposing tariffs and import quotas on solar panels and washing machines, effective immediately, U.S. Trade Representative Robert Lighthizer rejoiced: “The president’s action makes clear again that the Trump administration will always defend American workers, farmers, ranches, and businesses.” This view was confirmed by a White House trade official who told reporters:
If you look at solar closely, you have a clear example of Chinese trade policy propping up an industry, creating excess capacity in an industry [causing] significant harm to the United States and globally as well.
He assured reporters that this isn’t just about washing machines coming from South Korea or solar panels from China, either:
This article appeared online at TheNewAmerican.com on Friday, October 20, 2017:
Days after the fraudulent election of mayors in Venezuela, Marxist dictator Nicolás Maduro banned the five mayors from the opposition party from taking office. He replaced them with party hacks, all but ending any opposition to his increasingly repressive regime. The election, in which 17 of the 23 mayoral races went to Maduro supporters, was widely criticized for being manipulated in order to give the country’s dictator the win.
Evidence that the election was fraudulent provided by the opposition is being ignored, with the head of Maduro’s National Electoral Council, Tibisay Lucena, calling the elections
This article appeared online at TheNewAmerican.com on Thursday, April 6, 2017:
Xi Jinping, the Chinese communist dictator
When the Wall Street Journal reported that, according to the U.S. Department of Commerce, America’s “trade gap” shrank in January and February, it intoned that while this was allegedly good news, over the last 10 years it’s been bad news: the trade gap “remains far higher than a decade ago.” The Journal called it a “mixed trade outlook” that bodes ill for the upcoming talks between U.S. President Donald Trump and China’s communist leader, Xi Jinping.
Josh Mitchell, writing for the Journal, tried to explain why this was bad:
This article was published by The McAlvany Intelligence Advisor on Friday, March 10, 2017:
The tsunami threatening to sink OPEC into oblivion began early Tuesday. At the time, crude oil was selling for $54 a barrel, with expectations that the price would move higher. Those expectations were reflected in the highest ratio of longs to shorts that the Commodity Futures Trading Commission had seen in ten years.
And then came the announcement from the American Petroleum Institute that domestic crude oil inventories rose by a whopping 11.6 million barrels the previous week, against expectations of an increase of just 1.6 million. The selloff began, pushed along on Wednesday following the report from the U.S. Energy Information Administration that
This article appeared online at TheNewAmerican.com on Thursday, March 9, 2017:
Wednesday’s crude oil price drop caught hedge fund managers, big money investors, day traders, and OPEC by surprise, with the sell-off, the biggest one-day drop in 13 months, continuing into Thursday. The five-percent drop on Wednesday pushed crude oil down to $50 a barrel, with Thursday witnessing a further drop to $49. Early Tuesday morning crude was selling at $54 a barrel.
The sell-off started with the announcement on Tuesday by the American Petroleum Institute (API) that
This article appeared online at TheNewAmerican.com on Wednesday, February 8, 2017:
Brian Krzanich, head of Intel, probably didn’t know he was making the case for free trade, despite the fact that trade deficits happen, when he announced from the White House on Wednesday morning his company’s plans to build a new plant in Chandler, Arizona. In a microcosm, his announcement perfectly expressed just how free trade between nations and their citizens generally benefits everyone. Krzanich said his company was planning to build a $7 billion microchip plant in Chandler that would directly employ 3,000 people with “high-paying jobs,” and generate a total of 10,000 jobs when support services for those new jobs are factored in.
Krzanich said that most of Intel’s customers are overseas. Last year Intel’s gross revenues exceeded $10 billion, so, doing the math, it’s likely that Intel will sell $6 to 8 billion worth of chips to foreigners. That creates a trade “surplus” for the United States of between $6 and $8 billion. That will offset some of the trade “deficit” just announced by the Commerce Department the day before, of about $500 billion, an announcement that was met with much wringing of hands and gnashing of teeth by economists claiming that that deficit put the United States at some type of unfair disadvantage to the rest of the world.
However, in the real world, trade deficits are not necessarily bad. When someone buys an automobile or a t-shirt or a cellphone, the money they spend winds up as revenues for manufacturers located overseas. Then those manufacturers have excess American dollars that are now available for investment. Many of those dollars get cycled back to the United States, either by buying U.S. goods and services, or U.S. treasuries, or real estate or businesses, which then generate more products to sell overseas.
In 2016, Americans bought from foreign countries $171 billion worth of automobiles, engines and auto parts, $94 billion worth of clothing, $80 billion of crude and refined oil products, $73 billion of cellphones and other household goods, $58 billion of pharmaceutical drugs, with the balance made up of telecommunications equipment, toys, games, sporting goods, televisions, and video games.
In return foreigners — individuals, companies and governments — bought from the United States $65 billion worth of civilian aircraft and engines, $86 billion on travel to the United States, $78 billion on “intellectual property rights” (mostly leases or patents that foreign companies pay to American companies), $70 billion on financial services, with the rest made up of soybeans, chemicals, and newsprint.
The difference is $502 billion. Americans spent $502 billion more abroad than foreigners bought from us. Is that a problem?
Not for companies such as Intel. Its highly regarded technology, in the form of microchips that outperform its competitors, is in great demand worldwide. Foreign companies will use some of those American dollars that Americans spent to buy them. Intel, for its part, will invest billions in new plants and in hiring new people, paying them good salaries, in order to supply that foreign demand. Intel certainly hopes that foreigners will continue to buy them in massive quantities so that it can continue to expand, build, and hire, and so forth.
As Dan Griswold, writing for Cato, put it: No one would do business with anyone else unless both were better off afterwards:
Nations do not trade with each other: people do. America’s trade deficit with the rest of the world is only the sum of the individual choices made by American citizens. Those choices, to buy an import or to sell an export, only take place if both parties to the transaction believe it will make them better off.
In this way, the “balance of trade,” is always positive.
However, Griswold is likely putting too kind a face on trade deficits, per se, for while free trade seems universally beneficial, the use of fiat money — money not backed by a valuable asset such as gold — in the process of trading could lead to hyperinflation in a country, causing widespread devastation. Whether one calls that a trade problem or a currency problem, it is still a problem inherent in trade, maybe especially for the United States. See the article “So I’m Told Trade Deficits Are Good.”
In general, though, if politicians made it even easier for companies here and abroad to do business, then everyone would be even better off, and concerns about trade “wars” and “tariffs” and “mercantilism” would fade back into the woodwork where they belong.
This article appeared online at TheNewAmerican.com on Wednesday, October 19, 2016:
Wednesday is the 29th anniversary of the largest percentage sell-off of stocks in the history of Wall Street, including the sell-off that triggered the Great Depression on October 28, 1929. On that day in 1929, the Dow dropped 13 percent. In 1987, it dropped 22 percent.
Concerns abound about whether a repeat is likely to take place this month.
This article appeared online at TheNewAmerican.com on Friday, October 7, 2016:
Jon Corzine
Five years ago this summer, former New Jersey Governer Jon Corzine’s high-risk futures and options trading company, MF Global, began having liquidity problems, thanks to risky trades that he had made with company money. When those trades began going sour the firm’s lenders starting issuing margin calls. When he couldn’t meet them, instead of admitting he’d erred by liquidating the failed trades and taking his losses, he simply called up the company’s treasurer and ordered her to raid customers’ accounts to meet the demands.
It’s one thing to risk one’s own money. It’s another thing entirely to push that risk onto unsuspecting and uninformed customers. Even worse, it’s wrong to lie that he never intended to do it.
Now Corzine will pay a small fine and move on.
The details of the final days of MF Global were spelled out by the New York Times last Thursday:
This article appeared online at TheNewAmerican.com on Tuesday, February 16, 2016:
Following a brief meeting of oil ministers from Russia, Saudi Arabia, Qatar, and Venezuela on Tuesday morning, the Russian Ministry of Energy issued this statement: “The four countries … are ready to freeze oil production at January levels if other producers join this initiative.”
Issued before the market opened on Tuesday following the long weekend, the announcement caused stocks and the prices of crude oil to jump for joy. Dow futures were up 250 points and NYMEX crude jumped two dollars a barrel.
Reality set in shortly thereafter.
This article appeared online at TheNewAmerican.com on Wednesday, September 30, 2015:
Investors in the stock of Glencore, the giant commodities mining and trading company founded by Marc Rich (disgraced friend of Bill Clinton), lost almost a third of their portfolios’ value on Monday, only to see the company’s stock price rebound strongly the next two days. The company’s statement seemed reassuring to those unwilling to dig deeper:
This article appeared online at TheNewAmerican.com on Thursday, July 30, 2015:
A graph of the Shanghai Index showing the first bubble in 2006-2008
In the last 30 minutes of trading on Wednesday, the Shanghai Composite Index jumped more than three percent, while the smaller Shenzhen Composite (equivalent to the U.S. Nasdaq index) leaped more than four percent. That this was the result of actions taken by China’s unofficial “plunge protection team” was obvious to Jacky Zhang, an analyst at BOC International: “Clearly it is government intervention again.”
China’s plunge protection team (PPT), equivalent to the U.S. stock market’s “Working Group on Financial Markets” set up under President Reagan following Black Monday in October 1987, has moved heaven and earth to keep its stock markets from collapsing. The team, made up of China’s Securities Finance Corporation and the China Securities Regulatory Commission, along with top officials from the country’s 21 largest brokerages and the Chinese central bank, has implemented an entire panoply of measures to stem the tide, including:
This article appeared online at TheNewAmerican.com on Wednesday, July 8, 2015:
As predicted, the Chinese stock market accelerated its decline on Wednesday despite efforts by Chinese government officials to slow it.
The combination of over-leveraged investors with little prior experience about the prudent use of margin to buy stocks has turned the decline of the Chinese stock market into a rout. Closing on Wednesday at 3,507, the Shanghai Index has lost one-third of its value just since June 12 when it hit 5,178. The smaller Shenzhen Composite, made up of smaller technology stocks, is down 40 percent.
Jeremy Warner, economics commentator and assistant editor at London’s Daily Telegraph, viewed the carnage and remarked:
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