August 5, 2019 Update – My observations; Recent events seem to be part of the larger agenda

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Manufactured Trade tensions:
-The Chinese yuan falls below 7 on the USD. This market action is just another reason why the yuan will never become an important reserve currency in its present form. The Chi Comm system is centrally-planned from stem to stern and any firm of importance is Party controlled.
-Trump was not alone when he formulated his August 1st tariff tweet storm. According to a Zero Hedge article, which named its sources, Treasury Secretary, Steve Mnuchin (Skull & Bones); NEC Director, Larry Kudlow; and Trump’s COS were present when Trump formulated his tweets.
-This indicates that Trump has less latitude than previously thought. He is serving an important function and is there to create international tension. He is the figurehead that takes the blame. If the world will eventually go to war, it is vital that Trump get reelected. Career politicians would be less inclined to perform this role.
-When the markets fall to the bottom of the monthly trading channel, the TPTB have breakthrough trading talks. When stocks hit the top of the range, the trade talks fall apart.

Bond yields continue to fall:
-Markets still functioning. Sovereign yields continue to fall. Australian 10-year about to take out 1.00% and is currently at all time lows.

Peculiar Timing of the Problems with Fed Management and PPT:
-Problems in the Fed seem to be rising. Jerome Powell is in over his head and is vulnerable to personal attacks from Trump. The other former Fed chiefs are all members of the tribe and would never be on the receiving end of Trump’s ire.
-The management shakeup at the NY Fed couldn’t have come at a worse time.
-Traditional Fed shill, Bloomberg, publishes peculiarly-timed articles regarding the low morale and poor management in the New York Fed Branch. The NY Fed carries out the market operations and is the most important branch in the Fed system.

Large oil plays consolidate their domestic power:
Exxon, Chevron move to dominate Permian as smaller players pull back. Only the big players will rule domestic shale oil with low costs of capital.

August 2nd Market Update – Our macro investment thesis remains intact; What I see coming

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-Recall my dour assessment of commodities two-three months ago. Despite many calls to the contrary at the time, commodities have faded as the dollar firmed and the global economy softened.

One-year percentage price changes in some of the major food commodity futures. Clearly there is no commodity bull market with a strong dollar. Remember the terrible weather and swine fever in April? All in the rear view mirror. I recommended staying away from all commodities except gold.

-Lower interest rates and a strong dollar are a one-two knockout punch to commodities.
-The only commodity I have recommended all year has been gold. Gold is rising despite a strong dollar as this is a reflection of investor doubt over central bank policy and the lack of confidence many have in Jerome Powell.

Since U.S. oil production is so important to the global petroleum market, the XOP seems to telegraph moves in the oil futures before they happen

-The XOP fell hard at market open, while stocks initially rose. This told us that oil’s next move would be down. Oil tanked later in the day.
-Investors who believe in bursting bond bubbles, out-of-control central bank policy, and a falling dollar will continue to lose money.
-Investors who believe that the central banks are suppressing bond yields, because they are trying to stimulate the economy and increase aggregate demand will make the wrong investment decisions. These investors will continue to be confused.
-If we understand why the central banks are engaging in these monetary policies then investing is much easier and more profitable. It has less to do with growing the economy and raising inflation growth, and more to do with keeping the existing global hierarchy in control. The prime directive is to keep the governments in business under the current system. It has plenty of room continue.
-Fed Chair Powell is in over his head and was chosen by President Trump, because Trump sees weaknesses in Powell that he can leverage. Powell’s decisions have been influenced by Trump’s behavior, but Trump would never be able to get away with what he does if Bernanke, Greenspan, or Yellen were Fed heads.
-Trump started this tariff stuff again, so he can get the Fed to drop rates again.