Balancing on a Knife Edge

Week ended December 22, 2023, interesting news items to look at this week were:

1. Balancing on a Knife Edge: How quickly the year 2023 has come and now so close to its end. This Saturday Blog has become somewhat of a diary for me and as a means to communicate with readers, friends and relatives across mainly 4 continents. I am thankful for modern day technology that with a few strokes, people I cared for will know I am alive and well and my mind has not gone too senile. At the end of 2022, my prognosis for 2023 would be marked by 3 key observations: (a) the Big Lie, (b) the Big Bust and (c) the Big Inflation.

(i) The Big Lie: False political narratives and reports based on desired outcome rather than facts could no longer avail the Western elites sufficient control over the their populace, much less the once colonized developing world. Domestically all politicians who lied their way to their appointed positions are finding their chances of re-election very slim. Sadly inciting wars or a continuation thereof seemed to be their preferred tools for holding onto office. This tension will continued into 2024 and likely to worsen.

(ii) The Big Bust: The Chinese Property Bust did not go the way of the Sub-prime fiasco as fantasized by Western MSM although it has become a drag on the Chinese economy. Across the Pacific, White House  has doubled down and ran up more debt at an even faster pace to prop up the economy and stock market. Germany is being d-industrialized because of unsustainable  energy cost and is in recession. EU is not far behind. At the December FOMC meeting, Powell is forced to jawboning a pivot because most leading economic indicators are showing a looming recession. The real killer is the limit of how much more government debt papers US savers can absorb when the Global South is rejecting the USD. Despite a European War and a Middle East War, US is pushing the Philippians to create instability in the South China Seas with hopes that Asian capital would be scared off to find safe harbour in 5Eyes nations. Fortunately both the ASEAN countries and China showed they are much wiser than falling for this old CIA and Pentagon playbook. I am still expecting a Big Bust to occur in 2024.

(iii) The Big Inflation: The 2008 US Presidential Election maneuvers did not prevent the Sub-prime bombshell. Similarly I do not expect the 2024 US Presidential Election could prevent a busting of the Everything Bubble. Thereafter, US will go the way of Argentina with inflation of equal proportions. Compounding the inflation problem are supply chain interruptions as the Red Sea transit choke point seizes up. There is no escape for G7 nations against hyperinflation and with it very difficult times for enterprises that export to these markets. Only then will Europe finally come to terms with the relevance of the Old Silk Road or OBOR routes. (Fig. 1)

Life in 2024 for most people will be balancing on a knife edge, there will be very few winners. The economic hardship will fan the flames for civil disturbance and unruly fights for resources. Be prepared my friends.

This week’s financial markets:

A. Stock Market: (Fig. 2): Dow closed at 37,385 for the week, a rise of 81 points (+0.21%), S&P 500 +1.01% and NASDAQ +1.27%.. 

The stock market showed some volatility as confusion arose with respect to Fed’s interest rate outlook. FT reported bankruptcies on the rise. (Fig. 3)

B. Debt Market: (Fig. 4): USGG10YR ended the week at 3.901%, a drop of 1.4 basis points.

International Capital Flow Figures for October released by the US Treasury Department showed a continued capital outflow from US culminating to a total of US$ 3.02 trillion since Jan 2022. (50.53% from Europe, 29.32% from Asia and 20.15% from Rest of the World). (Fig. 5).

Correspondingly US has liquidated US$ 2.2 trillion from Foreign Investment Portfolio thus giving a net capital deficit of $805 billion. As the market anticipates US can no longer afford paying a high interest rate, capital departure will accelerate as evidenced by the recent downward US FX rate. In 2024 some $7 trillion of US Federal Debt will required to be refinanced and QE to infinity is a mathematical certainty. The great Currency Reset that has been on the grape vine since 2010 will finally happen in 2024. So much blood shed in Color Revolutions and Proxy Wars have only delayed this inevitability but could not prevent it from happening.

C. Commodities and Precious Metals: Trading results for the week: (Fig. 6) Bitcoin (+4.09%), Oil (+2.37%), Uranium (+2.35%), Gold (+1.52%), Silver (+1.37%), NASDAQ (+1.27%), Eur (+1.05%), S&P 500 (+1.01%), GBP (+0.14%), JPY( -0.17%), CNY (-0.19%) and Rubble (-2.04%).

USD continued to show weakness and the trend would accelerate in 2024.

Isaiah 9:6  For unto us a Child is born, Unto us a Son is given; And the government will be upon His shoulder. And His name will be called Wonderful, Counselor, Mighty God, Everlasting Father, Prince of Peace. 7  Of the increase of His government and peace There will be no end, Upon the throne of David and over His kingdom, To order it and establish it with judgment and justice From that time forward, even forever. The zeal of the Lord of hosts will perform this. 

May Everyone can enjoy a Peaceful and Merry Christmas.