Armed for Peace

Week ended September 1, 2023, interesting news items to look at this week were:

1. Armed for Peace : In response to a continued taunting by the Anglo Americans for a show down, both Russia and China had showcased their latest arsenal for the world to see. Russia put nuclear-capable Sarmat Missile on combat duty (Fig. 1).

The Samart Missile can travel over 18,000 Km, bent through the South Pole at very high altitude to hit targets at directions the enemy would not expect. Each Samart Missile can carry 10 avangard nuclear armed hyper-sonic glide vehicles with speed of 27 Mach. China, separately put on display stealth unmanned surface vessels (“UV”) with displacement tonnage of only 20 tons. Each UV is equipped with 10 guided missiles and 2 torpedoes, all precision guided with phased-arrayed radars(“PAR”). (Fig. 2).

For the US military, a PAR system is only deployed on Zesus Class Destroyers as each PAR costs about US$200 million. At a cost of only CNY one million each for the Chinese PAR, the Chinese UV can be deployed in undetectable swam 500 nautical miles off the China coast armed with anti-ship, anti-air and anti-submarines capabilities all at a use and discard costs. The arithmetic is simple enough, all 7 US aircraft carrier battle group at a cost of US$300 billion+ can be countered by the Chinese at a minuscule fraction of the cost by UV swam, assuming if anything remains after a concentrated DF17 missile defensive strike. I prayed for sane Anglo American military analysts to take note about the absurdity of a US-Russian and US-China war. For readers interested in the Chinese UV technology, the link is listed below: https://zhuanlan.zhihu.com/p/642759879 

2. Out-of-Ammo, Out-of-Allies and Out-of-Colonies: The Anglo American Allies are in disarray. Standing with Ukraine “as long as it takes” turned out to last only 18 months and change. First US complained Kiev is wasting ammo (Fig. 3).

Then Germany complained Kiev sent 71 years old man for NATO training. (Fig. 4).

Hungarian Prime Minister Viktor Orban warned that both Budapest and Belgrade would consider any attacks on Russian gas-supply routes to the region as a pretext for war.(Yes, Orban understood fully that the sabotage of Nord Stream II was an inside job by members of NATO). (Fig. 5).

First Niger, then Gabon, were the series of coups in Africa a groundswell of “Anti-imperialist People’s Movements” or were they supported by Pentagon under Washingston’s unspoken objective: “Remove France from Africa” since the coup leaders were mostly trained by Pentagon. (Fig. 6).

3. Out Smarts: Three years of draconian technology embargo by US could not stop Huawei from challenging US in 5G communications. Huawei announced her totally Chinese sourced 5.5G smart phone on the occasion of US Commerce Secretary Raimondo’s visit to China. (Fig. 7).

Another round of spitting in the wind after the CHIPS 4 Alliance and the Chips and Science Act.

This week’s financial markets:

A. Stock Market: (Fig. 8): Dow closed at 34,837 for the week, a gain of 490 points or +1.42%. S&P 500 +3.03% and NASDAQ 4.62%..

On Wednesday, Labor Statistics released which showed job openings cratered and prior data “unexpectedly” revised lower. (Fig. 9).

The market reacted that the Federal Reserve may pivot sooner towards accommodation. As previously reported, monthly US Labor Statistics are just politically driven guesswork based upon “Birth/Death Model of business starting and closing”. The real US economy is much slower than the propaganda pep talk. The US economy is going nowhere but down with government spending crowding out private capital formation. Since the Ukraine War, global de-dollarization has drained $1 trillion from the US economy and high Treasury rates had herd $720 billion from domestic commercial bank deposits into US Govt debt papers.(Fig. 10).

Last week I reported in less than 15 months time, the Federal Reserve would squander its entire Balance Sheet assets. Within the same period, I project US commercial banks would also experience a cataclysmic contraction (Fig. 11).

In reaction thereto, Wall Street big guns like Morgan Stanley, JP Morgan, Wells Fargo, Goldman Sachs, Citigroup, Bank America have all tapped the bond market in the billions at about 170 basis points premium over Treasuries. (Fig. 12)

Do they know ahead of Main Street of what’s coming? YOU BET THEY DO.

B. Debt Market: (Fig. 13): USGG10YR ended the week at 4.181%, a drop of 12 basis points.

On the release of Wednesday Labor Stats, USGG10YR dropped to a low of 4.071% before Friday close rebound to save the weak USD and strong run in precious metals. UST Yield Curve saw an easing of rates across all duration of between 1 to 15 basis points. (Fig. 14).   

C. FX, Commodities and Precious Metals: Trading results for the week: (Fig. 15)

Oil (+7.59%), NASDAQ (+4.62%), S&P 500 (+3.03%), Gold (+1.59%), Rmb (+0.39%), Silver (+0.19%), GBP (+0.05%), JPY (+0.03%), Euro (-0.18%), Bitcoin (-0.69%), Rubble (-1.38%). Again Friday NY Close machination has somewhat masked the true extent of the week’s natural momentum.

^Luke 12:54  Then He also said to the multitudes, "Whenever you see a cloud rising out of the west, immediately you say, 'A shower is coming'; and so it is. ⁵⁵  And when you see the south wind blow, you say, 'There will be hot weather'; and there is. ⁵⁶  Hypocrites! You can discern the face of the sky and of the earth, but how is it you do not discern this time?