October 21st Update – Analysis and predictions; The global economy and capital flows, the financial markets, and geopolitics

I have uploaded a podcast for October 21,2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-I am still short-term bullish on gold and silver. Despite massive short covering in the gold and silver markets, the large speculators have more to go. The commercials are now net short.
-A 10-year UST yield of 3.2% seems to be the equilibrium for now. The large specs have been covering some of their shorts. They need to cover more if yields are going to rise further. Of course, yields will rise in the intermediate term. Plan accordingly.
-Discussion of ZeroHedge article with analysis of Goldman’s US Fed predictions. I agree more with what Goldman is saying. If that is the case there is going to be more pain in the emerging markets. Trump will be upset.
-US GDP consensus growth of 3.3% (Goldman 3.5%) is too high with rates this low. This is the huge surprise that has the Fed hamstrung.
Atlanta Fed President Bostic said yesterday he sees that Fed policy is for continued tightening amidst strong economic growth and low unemployment.
-The tax cuts, fiscal stimulus, and the $500 billion dollar repatriation of corporate foreign dollars are hiking inflation concerns in the US. Plus, the dollar repatriation is helping to cause a scarcity of overseas dollars at the same time the Fed is tightening.
-A global dollar crunch is in the cards as the Fed continues to tighten. Neutral rate is about 75 bps higher. The Fed needs to tighten and that means at least four more rate hikes.
-US dollar well-supported here and dollar-based assets should continue to outperform.
-Despite rising mortgage yields, the US residential real estate market still provides better opportunities than in the former commonwealth, European, and Asian markets. This is based on income yields and IRRs.
-Italy won’t wander off the plantation and its sovereign yields will fall back again. The ECB and elites use the fear of higher yields to keep compromised governments from leaving the EU. The threats get so tired, but are effective.
-Oil finding support here in the trend channel. XOP looks good here. Economic growth supports price even as short-term supply builds. Oil prices fell with stocks. Downside is limited.
-India’s sovereign debt is in trouble as their yields continue to rise. The same goes for a number of other emerging economies. Investors are selling their debt and parking it in USD assets.
-Russia is the 12th or 13th largest economy; hardly a formidable long-term war foe. Putin is all-hat and no cattle as the alt-financial media gets it right in this sense; Putin has a terrible hand, but is coming off like a tactical genius. Russia is still centrally-managed, corrupt, indebted, and its economy is too reliant on oil.
-ChiCom knows the US still has the leverage. So what if China sold off its UST hoard?  It currently holds about $1.2 trillion of US government obligations.  The US Fed could easily buy them all up in the market.
-The Chinese debt bubble looks insane and the tactics the ChiCom government are employing to hold it up look like they are doomed to fail. But if we contemplate that war is coming it all makes sense. The Chinese government needs to build up their domestic economy as fast as possible. Russia will be thrown under the bus after WWIII starts.
-More disinfo; RT and ZeroHedge at it again as they are talking about Russia’s answer to the SWIFT payment system. I have been reading these articles for at least a decade.
-Analysis of an article, This Marketer Reveals 10 Psychology Truths That Brands Use to Influence Your Buying Decisions
-We all suffer from hard-wired biases, but recognizing this fact provides us the difference. Be careful of the hard-wired biases to hate the Fed, the US dollar, while supporting Putin and our manufactured adversaries. Think long and hard about supporting Trump. This is especially true with the churches.