The week ended on July 4, 2025, interesting news items to look at this week are:
1. Point of Exhaustion: In war, a wise saying goes something like this: “Amateurs Talk Strategy, Professionals Talk Logistics” (Fig. 1).
We witnessed first Trump 1.0 challenged China with aTech and Trade War in 2018, then Biden waged a NATO proxy war against Russia in 2022, Trump 2.0 followed up with a Tariff War against the whole world in 2025 and finally Natanyahu a preemptive attack on Iran. The outcome of all these war effort did not succeed as planned and the blow back has devastating to the instigators. A common reason for such failures was the surprise element of the attacks was insufficient to cover an underestimation of a well prepared adversary and a lack of a thorough assessment of the instigators’ own sustainability. This is a classic strategic mistake under Sun Tzu’s “Art of War”, Chapter 3 verse 6 said ”Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” (Fig. 2).
(i) Munition and Weapons Exhaustion: On July 2, Pentagon halted weapons shipment to Ukraine amid concerns over U.S. stockpile. (Fig. 3).
The annual production capacity of Patriot missiles was 600 missiles and even with a serge, production could only step up by another 50 missiles but not until 2027. (Fig. 4).
Annual production of THAAD missiles is only 12 in 2025 and during the 12 days war between Israel and Iran, 80 THAAD missiles were deployed at a cost of $13 million a pop. (Fig. 5).
When we factored in a ban by China on rare earth exports for military use (essential for most high end weapon systems), US are now forced to seek diplomatic solutions and compromises from her hegemonic maneuvers.
(ii) Credit Exhaustion: I reported on my April 25 , 2025 Blog that US is faced with a $9 trillion maturity of her Federal Debt in 2025 with $6.5 trillion due in June 2025. (Fig. 7)
June has come and gone but the financial market has not seen a rupture. What happened? First let me apologize for an inaccuracy of using media data. US Treasury does not publish month by month maturity data except sparingly after the event. What can be uncovered was that about $132 billion held by Social Security matured and principal and interests thereon was remedied by Treasury Emergency measures, meaning rolled over but not paid. The impaired financial position of US Treasury has not changed as the latest AI review shows. (Fig. 8).
Anyway, I have to keep on reminding myself that AI is only as good as the quality of the data on the internet, rubbish in rubbish out. What I can gather from financial market sources is that with the Middle East war, an immediate exit from the US financial market did not happen, however holders of US assets had put on insurance hedges that resulted in a further decline of US Exchange rates. In fact USD had its worst 1st half performance over 50 years since 1973. (Fig. 9).
Remember 1973 was the beginning of aftershock of the Bretton Woods default in 1971. Now back to today, we are also seeing every night US banks are frantically moving approximately $2.9 trillion of funds and Treasuries between themselves to ensure a default would not occur within the US banking system. (Fig. 10).
(SOF represents US inter-bank Secured Overnight Funding). In the context of the existing liquidity level of the US banking system, I would describe the current state of play as one of heightened activity but not of a level of cardiac arrest. If I may use the September 2019 REPO crisis as a marker when the Fed was forced to step in with immediate liquidity injection as US depository institutions liquidity freezes up due to a continuous cash drain through Federal Government borrowings. (Fig. 11)
In September 2019 Cash level of the US banking system went to a low of 1.5 trillion and SOF spiked up to 30% of M1. By comparison US banking system cash position is 4 trillion and SOF to M1 is 15%. (Fig. 12).
Using current SOF Trajectory, my forecast for the next US cash crunch should be around January 2027. (Fig. 13),
assuming no further stupid moves by the US Administration and Deep State.
2. Financial Market Performance for the first half of 2025 : (Fig. 14)
Russian Ruble (+39.53%), Silver (+27.57%), Gold (+27.05%), Copper (+25.64%), Uranium (+20.83%), Hang Seng Index (+19.22%), Bitcoin (+15.67%), Swiss Fr (+14.37%), Eur(+13.73%), GBP (+9.01%), JPY ( +8.79%), Nasdaq (+7.98%), DJI (+5.31%), Rmb (+1.88%), Oil (-9.07%) and USD Index (-10.6%).
The rise in relative value in precious metals and commodities reflect a weak economic outlook and depreciating purchasing power of major western currencies. This trend will continue as the power shifts from G7 to BRICS and Global South Nations.
Daniel 2:20 Daniel answered and said: "Blessed be the name of God forever and ever, For wisdom and might are His. 21 And He changes the times and the seasons; He removes kings and raises up kings; He gives wisdom to the wise And knowledge to those who have understanding. 22 He reveals deep and secret things; He knows what is in the darkness, And light dwells with Him.
