Insufficient Bandwidth

Week ended February 3, 2023, interesting news items to look at this week were:

Insufficient Bandwidth: We all realize when there is insufficient bandwidth, data transmission tends to get slow or frozen. When nations cannot handle all the problems coming at them, political and economic decisions grind to a halt. Rather than admitting failures and re-prioritize allocations, third rate politicians in seeking self preservation often double down and make bad choices for short term optics and accelerate their decline. The past week is a fine chapter on lessons to be learn on the realities of being overwhelmed with bad actors.

(i) Victoria Nuland/Zelensky & Zaluzhny Fall Out:  Zelensky has failed to dismiss General Zaluzhny twice over the past month and finally the US Under Secretary of State for Political Affairs Victoria Nuland has to show up in Kiev reluctantly to shore up support for Zelensky. (Fig. 1).

With a total decimation of munitions, equipment, personnel and finances in the Ukraine/NATO alliance, we have already witnessed a change in the US narratives (from a total Russian defeat to negotiation for a truce). So within Ukraine, the game of musical chair kicked off as to who gets to be thrown under the bus. It looks like the axe will fall on General Zaluzhy. Despite Zaluzhy being a more popular choice, US for the time being, needs to put on a brave face to maintain the status quo on existing power structure. When the opinion of the Ukrainian public is ignored in favor of the master’s image, can any good come out of this?

(ii) The Enigma of Tower 22 in Jordan: When the US military base in Jordan got a massive hit on January 28, the news reporting thereof seemed strange indeed: (Fig. 2)

        a. CENTCOM (i.e., U.S. Central Command put out a press release about the Unmanned Aircraft System (UAS) attack on its base located on the northern border of Jordan known as Tower 22.

b. The Kingdom of Jordan wasted no time in denying that this took place inside Jordan: Jordanian Minister of Government Communications Muhannad Mubaidin said Sunday that the attack targeting U.S. forces near the Syrian border did not occur inside Jordan. Mubaidin told the state-run Al Mamlaka TV that the attack targeted the al-Tanf base in southeastern Syria.

c. The other oddity is that U.S. military sources are claiming that the that it was a “friendly” aircraft, which is supposed to explain why no air defense was activated. (Fig. 3)

d. The strike killed 3 and injured another 47 and the attack has to be from a large drone.  The only drone in the region packing that kind of punch is the MQ Predator B. Immediately the rumor mill was rife with the attack was under Israeli false flag with an agenda to drag US into a direct war with Iran.

e. Iran immediately denied responsibility.

f. Without proof, the finger was pointing at Iran with pressure applied against Joe Biden to take revenge directly against Iran. (Fig. 4)

g. Eventually on Friday Feb 2, US decided to retaliate only on targets in Iraq and Syria. (Fig. 5) but avoided Iran.

h. The take-home point of all this confusion is if Iran is truly responsible, then all the US Mid East Military bases would be at risk because the failure to identify the Iranian drone as an approaching friendly drone means Iran may have cracked the US Military communication protocol and thereby bypassed the US Air Defense System. If it was an Israeli False Flag drone, then Biden just escalated the ME war to a full scale regional conflict.

(iii) Houthis Red Sea Attack Continues: Repeated US and UK air strikes against the Houthis in Yemen have failed to slow their attacks on ships in the region, BBC Verify has found (Fig. 6).

In fact there was a 50% increase in attacks in the past three weeks as compared with the previous three weeks.  

(iv) Texas Standoff: Calling Illegal Immigrants into US as “Undocumented Residents” and allowing them to vote at US General Elections has caused a fundamental rift between the Democrats and the Republicans. This came to a head in the 2024 Presidential Election Year as 2.4 million II tried to enter US in 2023 as compared with 400,000 during the Trump years. Texas is resisting with armed National Guards against a Federal troop deployment to dismantle the Texas border fence at  Eagle Pass.  The whole shebang may well erupt into a civil war.(Fig. 7)

The week’s financial market:

A. Stock Market: DJI rose 545 points or  1.43% for the week. (Fig. 8). 

The week’s trading remained choppy as sentiment on Fed’s Pivot changes on whoever from the Federal Reserve speaks. By Friday when BLS released the January Jobs report, the market took off with just two stocks, Meta and Amazon, added $270 billion to their market cap. (Fig. 9).

BLS Jobs Report is never a survey of real-time jobs gain and loss but is just a statement based upon a synthesized ”Birth Death Model” of hypothetical new businesses created and old business vanished. The robust headline numbers reported every month are routinely revised back down in the subsequent months. Zerohedge has labeled the January Jobs Report as “the Most Ridiculous Jobs Report in Recent History”. So there it goes folks, enjoy the ride to the cleaners upon the full faith and credit of the Biden Administration. (Fig. 10).

This week also saw pervasive pessimism in the China and Hong Kong stock market as Evergrande, the largest property developer in China was ordered by the Chinese Courts to liquidation. The Hang Seng Index fell over 3% for the week.

B. Debt Market: (Fig. 11): USGG10YR ended the week at 4.024%, a rate decline of 11.5 basis points.  

Of more concern was the continued large flight of commercial bank deposits into Money Market Funds (Fig. 12).

The two critical dates to watch are March 11 when BTFP (“Bank Term Funding Program’) expires and also around Mid March 2024 when money market liquidity from the Overnight Reverse Repo Operations is totally depleted. (Fig. 13).

The disastrous US CRE (Commercial Real Estates) is flashing red lights as NYCB (New York Community Bank) and Japan Aozora Bank’s stocks were hugely marked down over their exposure to US CRE. (Fig. 14).

C. Commodities and Precious Metals: Trading results for the week: (Fig. 15) Uranium (+12.60%), Bitcoin (+2.23%), S&P 500 (+1.43%), NASDAQ (+1.24%), Gold (+1.10%), JPY( -0.16%), CNY (-0.22%), Silver (-0.30%), GBP (-0.58%), Eur (-0.64%), Rubble (-1.32%) and Oil (-6.93%).

Another meaningless manipulative week in most of the financial and commodities markets. There were wild swings in the energy markets bearing little correlations to the realities of the geo-political and the physical economies. My advise is we might as well take an early break for the coming Chinese New Year and wish everyone here Kung Hei Fat Choi.  

Deuteronomy 9:6  Therefore understand that the LORD your God is not giving you this good land to possess because of your righteousness, for you are a stiff-necked people. 7  "Remember! Do not forget how you provoked the LORD your God to wrath in the wilderness. From the day that you departed from the land of Egypt until you came to this place, you have been rebellious against the LORD.  8  Also in Horeb you provoked the LORD to wrath, so that the LORD was angry enough with you to have destroyed you.