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The “Russia Threat” Tragicomedy

I’m still trying to understand how this nation became so deeply embroiled in this idiotic investigation into “he said, she said” about the Russians interfering in U.S. politics.  I can tie it back to the presidential election campaign when Hillary Clinton asserted, during one of the debates, that the Russians hacked her email.  LOL.  As it turns out, we know that is false. The only real connection to corruption, bribes and Russia is Hillary and her husband.  The connection between millions in donations from a Russian company to Clinton “charitable funds” which paved the way for uranium sales to Russia […]

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But, What About The Housing Market?

A colleague of mine pointed out that Trump has not been tweeting his flatulence about the economy recently.  This thankful hiatus is after he just passed a tax cuts and a spending budget that is supposed to be stimulative.  As it  turns out, the economy is hitting the headwinds of marginally higher interest rates and a consumer that is bulging from the eyeballs with debt.   Windfall tax rebates to large corporations will not fix this nor will rampant Government deficit spending. This leads us to the housing market. Mortgage originations were down 5.6% in Q4 from Q3. This is not […]

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The Fed’s “Catch 22”

Before diving into the topic, let’s be clear about one thing:  The economic definition of “inflation”  is the increase in money supply relative to the marginal increase of wealth output (GDP) in the economic system for which money supply is created. This is differentiated from “price inflation,” which would is “a general rise in prices.” Money and credit creation in excess of wealth output causes currency devaluation.  It is this currency devaluation that arises from money and credit printing that causes “price inflation.”  More money (and credit) chasing a relatively less amount of “goods.” Furthermore, the commonly used price inflation […]

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The Fed Targets Stock Prices – Here’s Why

The week before the Dow/SPX quickly plunged 10%, the Fed had reduced its SOMA account (the SOMA account is its “QE” account) by $ 21 billion.  Just as quickly as the stock market dropped, it has sharply recovered more than half of its losses from the previous week. As it turns out, the Fed added $ 11 billion back to its SOMA account. That’s an $ 11 billion injection of cash directly into the banking system.  Clearly the Fed’s actions were a large factor in the 10% plunge and the subsequent bounce. The Federal Reserve is targeting stock prices with […]

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Is The Fed Back To “Quantitative Easing?”

The Fed added $ 11 billion to its SOMA account for the week ending yesterday. It purchased $ 11 billion in mortgage securities directly from banks. This injects $ 11 billion into the banking system. Cash is “high powered” money, meaning it can be leveraged 10x (banks need to hold 10% in reserves against “high powered” money. $ 11 billion is $ 110 billion of leverage for the banks to use for activities such as propping up the stock market. This certainly explains why there appears to be another “V” recovery in the stock market after a near-10% drawdown in […]

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Why Even Pretend There’s A Debt Ceiling Limit?

The current “debt ceiling” has been suspended until March 2019. The current amount of Treasury debt outstanding is $ 20.681 trillion. It has been estimated that the amount of Treasury outstanding by March 2019 will be as high as $ 22 trillion. U.S. Government has, for all intents and purposes, operated without a constraint on debt issuance since 2013: Beginning in 2013, Congress has taken to temporarily suspending the debt limit, rather than raising it directly. The debt limit has now been suspended on five occasions, most recently as part of the Bipartisan Budget Act of 2018, which suspends the […]

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Do Bona Fide Financial Markets Still Exist?

Paul Craig Roberts, Dave Kranzler, Michael Hudson For many decades the Federal Reserve has rigged the bond market by its purchases. And for about a century, central banks have set interest rates (mainly to stabilize their currency’s exchange rate) with collateral effects on securities prices. It appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines driven by fundamentals, and to push prices back up in keeping with a decade of money creation. No one should […]

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Amazon.com’s Accounting Pornography

I wrote the following analysis on Amazon.com’s GAAP accounting manipulation for Seeking Alpha… Amazon.com (AMZN) released its earnings on Thursday, February 1st after the market closed. The headline net income number was $ 3.85/share. This blew away Wall Street’s estimate of $ 1.85/share, which is a bit peculiar since the traditional “beat the Street” earnings game is accomplished by guiding Wall Street analysts to an earnings consensus that is slightly below the posted result. The revenue growth rate was truly impressive. For Q4 2018 vs. 2017, revenues jumped 38.2%. For the full year, revenues grew 30.8%. However, without question AMZN’s […]

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The Stock Market – Dow And SPX – Could Easily Drop 50%

Jim Rogers stated in an interview with Bloomberg that “the next bear market will be worst in my lifetime,” adding that he didn’t know when that bear market would occur. The stock market has become insanely overvalued. Before last week, several market-top “bells” were ringing loudly. The stock market could easily drop 50% and, by historical metrics, still be overvalued. Gold, silver and the mining stocks have been pulling back since late January. In fact, I warned my Mining Stock Journal subscribers in the January 25th issue that the sector was getting ready for bank-manipulated take-down. In the latest issue […]

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How Long Can Fed Keep The Stock Market Propped Up?

Is the Stock Market Rigged? Paul Craig Roberts and Dave Kranzler On February 6 PCR asked if the Plunge Protection Team had stepped in and prevented a stock market correction by purchasing equity index futures. https://www.paulcraigroberts.org/2018/02/06/another-arrested-equity-correction-paul-craig-roberts/ Sure enough, the daily exchange volume chart shows an increase in futures activity on February 2 with sharp increases on Feb. 5th and 6th. Those are the days when the stock market averages were experiencing large point drops. So, ask yourself, would you purchase equity futures while experiencing cumultive stock market drops? One can understand shorting a dropping market, but not buying futures. Unless […]

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