Smoke Screens and Mirrors

The week ended on July 27, 2024. Interesting news items to look at this week are:

Smoke Screens and Mirrors: Nearly a year ago I posted a piece on September 9, 2023 ton this Blog titled “The Ukraine War will end on 8^th August 2024”. The estimate was not so much on the military outcome but the days required for the loser to psychologically accept a defeat. This week we saw Zelensky softened to express ending the Ukraine war through diplomatic means. (Fig. 1).

Contemporaneously, Ukraine’s FM went to Beijing to seek help in opening up a dialogue with Russia. (Fig. 2).

Amongst the chaotic politics in the West since the Biden/Trump televised debate, there is no shortage in speculation as to changes that are taking place in the global world order. Piercing into the Palace Politics of the Deep State, the events that happened over the past month may not be what it seems. In my opinion, the Anglo American Empire would not simply admit defeat although prima facie the Ukrainian military has been decimated since the failure of the Summer 2023 Counter Offense. It has also become increasingly clear that on a conventional war basis NATO could never defeat Russia. What then would constitute a not so shameful retreat like Afghanistan must be a subject of much anxiety with the Western elites.  Would a plot like the Minsk Agreement of 2014 be resurrected. Could the West possibly entered into an armistice to bide time in order to restock and regroup for a later war. What Smoke Screens and Mirrors would be necessary to disguise such heinous schemes. My thesis for the foregoing are summarized in the data points below: 

(i) A premature televised debate between Biden & Trump: Never before in US politics has there been a two candidate debate televised live between the Democrats and the Republicans so early as even before their respective confirmation as Presidential Nominees at their own National Party Convention. Nonpartisan intelligence analyst Larry Johnson reported that he first heard of a plan to replace Biden with Michelle Obama over a year ago. That Biden’s mental degeneration was well known. That CNN sets new guidelines to provide candidates with a pen, notepad, and a bottle of water on stage; however, no props or written notes will be allowed. Campaign staff were be prohibited from interacting with their respective candidates during intermissions, denying them the opportunity for strategic consultations or to touch up the candidates’ appearance.White House travel pool reporters were also denied presence to give prompts and context to the debaters presentation. All these would expose the weaknesses of Biden. (Fig. 3).

Yet as Biden failed the test, he stubbonly refused to stand down despite all the pressures from donors and Democrat big guns like Obama and Pelosi. It was not until Trump’s miraculous escape from assignation that Biden finally recognized all is lost and withdraw his renomination. Now it would be interesting to see who would be allowed to take credit in ending the Ukraine war, Trump or Kamala.

(ii) Major shift in the Financial Market: Alongside with a possible armistice for Ukraine, the powers that be in the West also changed their narrative of accepting a US recession is inevitable. The Yen Carry Trade was unwound and Tech stocks dumped. The US Exchange Stabilization Fund (‘ESF”) was visible to rapid fire brought down precious metal prices as a precautionary move for the October BRICS Summit in Kazan when Russia is expected to present plans for a Global South Dedollarization. But of course ESF would not allow US Stocks to break the bank and at the NY Close saw the Dow rebound sharply on a pretext of a softening of inflation. Performance of different asset class as follows: (Fig. 4)

JPY (+2.44%), Russian Rubble (+1.46%), Dow (+0.76%), Bitcoin (+0.71%), CNY (+0.30%), USD Index (-0.04%), EUR (-0.24%), GBP (-0.37%), Uranium (-0.48%), Gold (-0.57%), S&P 500 (-083%), AUD (-2.08%), Nasdaq (-2.56%), Oil (-2.61%), Copper (-3.02%) and Silver (-4.50%).

We have on the June 1 Blog explained the US Private Sector’s capacity to further absorb new Federal Issuance will be exhausted in July 2024 and indeed this month we are seeing the unwinding of the Yen Carry Trade and correction of the Stock market. The Fed will start printing soon enough but do not expect interest rates can be lowered by too much. The Fed is trapped, with dedollarization in full swing, cutting interest rate would trigger a collapse of USD exchange value but maintaining interest rates higher for longer would mean a collapse of the Bond and Credit market.

Matthew 26:52  But Jesus said to him, "Put your sword in its place, for all who take the sword will perish by the sword. 

Summer 2024: A Woman in Travail

The week ended on July 20, 2024. Interesting news items to look at this week are:

Summer 2024: A Woman in Travail: As we stepped into mid summer 2024, cracks of the Western World Order have ruptured one by one beyond their thinly plastered veneer. So many things are happening so fast that poor old ordinary citizens like yours truly are finding it hard to catch up, much less distilling all the news into actionable steps to maintain a steady hand on the rudder of my family ark. I thank God that my Christian World View has drawn attention years ago to a prophetic understanding of the times we are in right now and that is, (i) Everything that can be shaken will be shaken until what cannot be shaken remains” (Hebrews 12:27) . yet within the volatile times, (ii) there will be periods intersperse with pain and joy like the birth pangs of a pregnant woman. (John 16:21-23). Imagine yourself as a pregnant woman in her third trimester placed right in the middle of an earthquake zone and you’ll get the drift. (Fig. 1).

With the stage set behind us, let’s take at look at the actors and their performance this week.

(a) Attempted Assignation of Trump and Biden ponders a withdrawal: Consensus is  the Democrats will loose the Presidential election whether Joe Biden withdraws or otherwise. A changing of the presidential contestant with the Democrats will only serve to salvage seats due at the Congress and Senate in October. Trump has already declared his platform to focus primarily on domestic social and economic issues like border security and mass eviction of illegal immigrants. Foreign policy agenda are scant but will focus on a wind down of the Ukraine and Gaza wars. The Ukrainian War will be left to the Europeans to fend for themselves with expensive American weaponry so long as the Europeans pay. The Gaza war will likely be a long drawn out unsatisfactory North Korean style armistice with Trump to coerce all American cronies to foot the bill for reconstruction. There will not be a kinetic war with China over Taiwan but the economic, financial and tech wars will escalate.

(b) Putin and Zelensky: Putin has dug in for a long war of aggressive attrition and have articulated his uncompromising political objectives of long term security for the ethnic Russians in the former Ukrainian Oblasts, a neutral but toothless Ukraine, demilitarized and denazified. Zelensky suddenly found himself as a lost sheep without a shepherd looking down a double barrel shotgun with Stepan Bandera Neonazis that would kill him if he surrenders and capitulation by Putin if he continues.

(c) Ursula von der Leyen and Viktor Orban: The puppet Leyen celebrated her second term as European Commission President one week too early as her puppet master Biden’s future hung in balance. Hard working Viktor Orban who holds the current Presidency of the Council of Europe just might have his last laugh as the political winds for peace for Europe ascends rapidly.

(d) Modi/Lula and Xi/Putin: Modi and Lula may well proved to be the biggest stumbling bloc for Xi/Putin’s grand design for BRICS and the Global South Multi-polar Dedollarization Plan. Modi was driving hard in Moscow for a wedge between China and Russia and Lula has been too pre-occupied with factional infighting within Brazil to be of much help. It is always the little foxes that spoil the vine.

(e) Chinese Communists Party Third Plenum: No, Xi did not have a stroke but appeared steady and confirmed a continued path of China for self determination on technological power and fortifying its national security. It may be said that China is both facing a rapid cooling down of its real estate sector and shadow banking but a all firing up of the three new technological industries of EV, lithium-ion batteries and photovoltic products. The semiconductor sector was 11% of GDP in 2018 will assume 19% of GDP by 2026 according to Bloomberg Research. The New Energy sector will likewise occupy  23% of GDP in the same period. This compensated for the decline of the Real Estate sector from 24% to 16%. By comparison once the real estate bubble burst in the West, whether US or Japan, there were no turn around except by flooding the market with liquidity and dire consequences in later years.

Financial market performance for the week ended July 20, 2024: (Fig. 2)

Bitcoin (+16.28%), Dow (+0.27%), USD Index (+0.27%), Russian Rubble (+0.20%), JPY (+0.19%), EUR (-0.23%), CNY (-0.27%), Gold (-0.51%), GBP (-0.58%), AUD (-1.49%), S&P 500 (-2.52%), Oil (-3.42%), Nasdaq (-4.62%), Silver (-5.09%), Copper (-7.56%) and Uranium (-10.3%). The reaction to Trump miraculous escape from assignation and gathering momentum to take the White House presented a major shift in focus of investment capital flows. Bitcoin was bid up by 16% because Trump said he would accept political contribution in cryptocurrency. The New Energy Commodities of copper, silver and Uranium were dumped. Currency market remained stable but Trump is a proponent of a weaker USD. It is early days to react to short term emotional swings.

Romans 13:1  Let every soul be subject to the governing authorities. For there is no authority except from God, and the authorities that exist are appointed by God. 2  Therefore whoever resists the authority resists the ordinance of God, and those who resist will bring judgment on themselves. 3  For rulers are not a terror to good works, but to evil. Do you want to be unafraid of the authority? Do what is good, and you will have praise from the same. 4  For he is God's minister to you for good. But if you do evil, be afraid; for he does not bear the sword in vain; for he is God's minister, an avenger to execute wrath on him who practices evil. 5  Therefore you must be subject, not only because of wrath but also for conscience' sake. 6  For because of this you also pay taxes, for they are God's ministers attending continually to this very thing. 7  Render therefore to all their due: taxes to whom taxes are due, customs to whom customs, fear to whom fear, honor to whom honor. 

Darkness Beyond Comprehension

The week ended on July 13, 2024. Interesting news items to look at this week are:

Darkness Beyond Comprehension: I started this Blog initially as an exercise to allow myself to sit quietly over a Saturday morning to ponder what happened in major world events that may impact decisions regarding asset allocations for my family’s portfolio. As my peers are all in their retirement I thought sharing my understanding of economics and financial markets won’t be such a bad idea because amongst them are some very learned people who may point out my blind spots and biases. What I failed to appreciate are the records I kept were witnesses to an indictment of the depravity of a fallen world and the darkness at heart of some globalist leaders that are totally beyond comprehension of us common folks.

(i) The Hannibal Directive: On July 7, the Israeli newspaper Haaretz came out with competent evidential documentation that on October 7 2023, the Israeli Defense Force (“IDF”) ordered the Hannibal Directive and by that Israeli helicopter gunship had in fact killed many many Israeli citizens. (Fig. 1).

The Hannibal Directive is the name of a controversial procedure used by IDF to prevent the capture of Israeli soldiers by enemy forces. According to one version, it says that "the kidnapping must be stopped by all means, even at the price of striking and harming our own forces.

(ii) The apolitical medical science journey Lancet estimated that up to 186 000 or even more deaths could be attributable to the current conflict in Gaza. Using the 2022 Gaza Strip population estimate of 2,375,259, this would translate to 7·9% of the total population in the Gaza Strip. Even at that  Natanyahu would not pause for a ceasefire to maintain his grip on power. (Fig. 2)

(iii) NATO Summit: In a rare moment of sanity, Zelensky admitted that it is more important not to loose people than territories. (Fig. 3).

Sadly the bunch of has been  leaders at the NATO Summit would continue with their rhetoric of war expansion not only with Russia but intrusion into Asia with accusations of China sabre rattling. (Fig 4).

The North Atlantic security bloc this week declared China was a “decisive enabler” of Russia’s war against Ukraine and demanded Beijing halt shipments of “weapons components” and other technology critical to rebuilding Russia’s military. The ironic part of these senseless diatribe is that US DOD sourced 40% of its military chip requirement from China whereas China does not directly supply the Russian Armed Forces. (Fig. 5).

Either the NATO leaders do not know what they are talking about or were purposely deceiving their own countryman.

Financial market performance for the first two weeks in July:

A. Stock Market: As a veteran of the financial markets, I have witnessed too many times stocks with unique US technologies were priced to the stratosphere than crashed back into the commons. I postulated previously, US must find a substitute to replace petroleum no longer denominated solely in USD  to maintain her Dollar Hegemony. US Chips and Tech stocks seemed to be an appropriate surrogate. First the Fanng  stocks (Facebook, Amazon, Apple, Netflix, and Alphabet (GOOG), then the Magnificent 7 (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla).When Tesla met its match with BYD, the fad was narrowed to the AI 4 sisters. It now appears the steam has also run out of the AI pump as well (Fig 6).

Goldman Sachs has just came out with a piece titled “Gen AI: Too Much Spend, too little benefit;” (Fig. 7)

as NVIDIAtumbles again as AI mania cools. (Fig. 8).

B. Debt Market: USGG10YR has drifted down to 4.186% as the US economy cooled despite still Hawkish rhetoric from Fed Chairman Powell. (Fig. 9).

Saudi Arabia threatened to sell off European debt if G-7 seized Russian assets: Report  (Fig. 10).

Riyadh has been concerned about western efforts to seize the Kremlin's assets for months. In April, Politico reported that Saudi Arabia, along with China and Indonesia, was privately lobbying the EU against confiscation. But Saudi Arabia’s threat to unload the debt of European Union members would represent a serious show of force and willingness by the kingdom to leverage its economic heft to sway western policymakers. (Fig. 10).

The market also speculated that JCB lobbied against the Federal Reserve to narrow its spread against Japanese Government Bonds in a bid to rescue the falling Yen and the dumping of US Treasuries. Investors is expecting a Fed rate cut in September.

C. Currencies, Commodities and Precious Metals:  (Fig. 11)

For the first two weeks in July, Uranium (+8.51%), Silver (+5.83%), Copper (+4.65%), Nasdaq (+3.85%), Gold (+3.78%), S&P 500 (+3.37%), Dow (+2.65%), GBP (+2.63%), JPY (+1.96%). EUR (+1.48%), CNY (+0.23%), Oil (-0.73%), USD Index (-1.50%), Russian Rubble (-2.60%) and Bitcoin (-8.09%). An interesting twist of events happened this week in the precious metals market when the Western bullion banks naked shorts was squeezed badly by a Chinese Gold Fund (Fig. 12).  

The Sina news medium reported that the customary tactic of gold price suppression by US Bullion Banks naked shorts to prop up the value of USD met its match when a Chinese Gold Fund bought long in the future markets against the Bullion Bank shorts then demand physical delivery. This totally caught the Bullion Banks flat footed by virtual of its size and deep pocket. It was reported that the Chinese Gold Fund Zhongcai may have profited as much as CNY 10 billion.  It fits an old Chinese saying “上得山多終遇虎” (If you venture into the mountains too many times, you will eventually encounter a tiger). As at 9^th July 2024, the 15 or so Bullion Banks are net short 647 tons of Gold on Comex (notional value of $55 billion) and 6,155 tons of Silver ($6.6 billion). It is a near impossibility for the Bullion Banks to cover their short position as available supply of gold are all bought by Central Banks of the Global South in preparation for the BRICS currency called “The Unit” and the mBridge settlement mechanism.

Revelation 3:17  Because you say, 'I am rich, have become wealthy, and have need of nothing'—and do not know that you are wretched, miserable, poor, blind, and naked— 18  I counsel you to buy from Me gold refined in the fire, that you may be rich; and white garments, that you may be clothed, that the shame of your nakedness may not be revealed; and anoint your eyes with eye salve, that you may see. 19  As many as I love, I rebuke and chasten. Therefore be zealous and repent. 20  Behold, I stand at the door and knock. If anyone hears My voice and opens the door, I will come in to him and dine with him, and he with Me.