The War Economy

 December 9, 2022 key news items this week:

1. 2023 The War Economy: Every December Saxo Bank of Denmark came out with an outrageous prediction of possible but unlikely events to happen in the following year. The theme for 2023 will be the War Economy. (Fig. 1).

Whilst neither refuting nor endorsing Saxo’s outrageous predictions, it is worth our while to think ahead as to what would a global war economy looks like.

 (i) World Domination: It is funny how famous quotes from Epic movies stick to one’s mind, In the first James Bond series, “Dr No”, James Bond responded to Dr No’s quest to bring the entire world to submission saying,”World Domination, same old dream, many people think they are Napoleon or God”. And so throughout history from the Tower of Babel to the current Anglo American Empire, there is no lack of crazies with a God complex. In the 70s, David Rockefeller and his crony elites began to construct this dream through 10 regional power centers and Gun Boat Diplomacy. (Fig. 2).

Whilst there has always been traitors and Sold Outs of their own kin, lies and slogans would eventually succumb to the more powerful uniting force of ethnicity. A new multi-polar world has emerged in defiance to the 400 years of Anglo American Rules. (Fig. 3).

The theory of Thucydides trap dictates conflicts and competition to continue until the old establishment self destructs under its hubris blindness.

 (ii) Major Resource and Currency Realignment: The foundational area of conflicts was firstly a weaponization of USD against Iran in 2012 followed by a progressive repudiation of worldwide US Coinage Tax. No country will accept as a reserve currency, conditional IOUs with an 8% compound annual depreciation. It finally took a war of NATO against Russia to complete this decades long migration. The icing on cake for Global De-dollarization was the Joint Announcement at the Sino Saudi Summit in early December 2022. In terms of Conventional Energy War (principally oil and gas), the collective West is in a no win situation with the Gulf States on the side of East.(Fig. 4 & 5).

 

 

 

 Whilst North America may still be self sufficient in terms of conventional fossil fuel, the dominant country in New Energy Generation is China with the largest market share in generation of Solar(China -31.7%, US -16%); and Wind(China -35.2%, US - 20.6%). Throughout 2022, we reported on a monthly basis the global sell down of US Treasuries and we expect the pace of sell down to accelerate in 2023. On Oct 31, 2022 US Treasury announced an increase of borrowing needs by 37.5% (from $400 to $550 billion) for Q4 2022 (Fig.7) .

This came just three months after a forecast made on August 1. The expected 12 months run rate of Federal Deficit for 2023 will also increase from US$1.3T to US$2.6T. US has already exhausted the global capacity to buy USD and everyone knows. Expect the Federal Reserve to again run hot its printing presses, continued dollar depreciation and commodities price inflation.

 (iii) Rearmament Trade: Whilst sophisticated hi tech weaponry has its place in precision warfare, the Ukraine conflict has exposed the underbelly of Western misallocation of resources against conventional weaponries. The largest and best trained army of NATO is in Ukraine and the AFU is being pounded to disintegration by a 3:1 Russian advantage on fire power. Daily sorties by RAF missiles and shells numbered 3 to 1 against AFU (RAF 20,000 daily vs AFU 6,000) and one third of M777 howitzers given in aide to Ukraine laid idle as the guns could not take the stress of prolonged repeated overdeploment. (Fig. 8).

The entire annual US production of M777 155mm howitzer shells is only 250,000. (41 days AFU average daily consumption). For a prolonged war, US and NATO badly need an upgrade of military industrial capacity but where comes the energy to make this happen in Europe. By blowing up the Nord Stream pipelines, US and UK had sealed the fate of Europe in this conflict. We will know soon enough the outcome of this sad saga. Oh, does the US embargo of chip making technologies and equipment hurt the East military production? Probably not, because military grade chips only requires 65nm to 28 nm technologies.

 The past week’s financial markets:

 A. Stock Market: Dow dropped 953.42 points for the week (-2.77%). (Fig. 9)

Last week we lamented the Federal Reserve weekly Open Motor Mouth Policies. No sooner had Powell confirmed interest rates hikes will slow as early as December, “Fed Whisperer” appeared and whispered “higher for longer rates”. (Fig. 10)

The market reacted in response. But of course you know better.

 B. Debt Market: (Fig. 11): USGG10YR ended the week at 3.586% a gain of 9.4 basis points from the previous week. 

 Our continued monitoring of Spread between USGGYR2 and Fed Funds Rate indicates the Fed is in no position to push for further rate hikes.(Fig. 12).

UST Yield Curve continued to be seriously inverted, but during the week, it flattened somewhat with a drop in short duration with of 10 to 12 basis points and an increase of 3 points towards the long end. This is the second consecutive week of a drop in short rates. (Fig. 13)

 C. FX Market (Fig. 14): for the week ended December 9, 2022, DXY opened at 104.506 and closed at 104.932 (Up +0.4%).

Only minor movements were observed in European currencies against the USD, the Yen weakened whilst Rmb gained on further easing of Zero Covid policy. Oil took a beating with WTI dropped nearly 12% for the week as EU moved on to capping prices for Russian Oil and recession looming against the US economy. This is more derivatives in action for psychological impact. (Fig. 15).

Precious metals continued to strengthen.

 D. Precious Metals & Crypto :(Fig. 16): Gold price opened at $1797.25, and closed the week at $1797.11, 

the Fed Open Mouth Policy only affected some opportunistic traders and prices remained stable. As BIS and Bullion Banks begin to exit the paper gold market due to Basal III rules, volume were subdue and prices are subject to large swings on thin volume. The mystery buyer for 300 tons of physical gold turned out to be China. Russia and China are preparing for an alternate gold backed international settlement system. Silver was manipulated down earlier in the week but rebounded to close higher. Crypto languished in low volume.(Fig. 17)

 Gen 11:1  Now the whole earth had one language and one speech. 2  And it came to pass, as they journeyed from the east, that they found a plain in the land of Shinar, and they dwelt there. 3  Then they said to one another, "Come, let us make bricks and bake them thoroughly." They had brick for stone, and they had asphalt for mortar. 4  And they said, "Come, let us build ourselves a city, and a tower whose top is in the heavens; let us make a name for ourselves, lest we be scattered abroad over the face of the whole earth." 5  But the LORD came down to see the city and the tower which the sons of men had built. 6  And the LORD said, "Indeed the people are one and they all have one language, and this is what they begin to do; now nothing that they propose to do will be withheld from them. 7  Come, let Us go down and there confuse their language, that they may not understand one another's speech." 8  So the LORD scattered them abroad from there over the face of all the earth, and they ceased building the city. 9  Therefore its name is called Babel, because there the LORD confused the language of all the earth; and from there the LORD scattered them abroad over the face of all the earth.                        

A Tale of Two Cities

December 2, 2022 key news items this week:

1. A Tale of Two Cities: As we enter into the final month of 2022, I like to review and draw conclusions to some of the key events of recent past by looking at competing nations in their strife for world dominance or relevance. We will examine a few situations with a view to hopefully to understand their future trajectories.

(i) War on Covid 19(Washington and Beijing): After 3 years of the pandemic, on December 1, the Joint Prevention and Control Mechanism of China State’s Council held a press Conference and gave a review of the entire mechanism. (Fig. 1)

The purpose of any review is to provide a conclusion or establish a new direction. Very noticeably the Zero Covid Policy was not mentioned. China’s Joint Mechanism for Prevention and Control has a 3 prong objectives, effective prevention, economy to maintain stability and continued development in a safe environment. There were 3 take home points. The 3 data points are omicron turned very mild, no observable long term effect and when infected, young people should have no more than 3 days of fever. Future emphasis will be concentration on seniors protection by vaccination. Research data shows mortality rate is 2.32% with no injection. The rate drops to 0.36% on double jabs of Sinovac, and further drops to 0.14% on triple jabs and at that juncture mortality rate is similar to those of common flu. The fourth jab will reduce mortality to 0.11%. For those over 80, mortality rate is 14.7% with no vaccination, with 3 jabs of Sinovac, the rate drops to 1.58%, a fourth jab will see a drop to 0.87%. With 3 to 4 jabs, the mortality rate for seniors is already lower than the common flu. China targets to have 90% vaccination for 80 years old plus by January 2023 and when achieved, a lot of the social distancing measures will no longer be required.

Why is the Chinese review important? The answer is simple, China has proven to be the definitive authority by virtual of having the lowest infection and mortality per million population in the world. (Fig. 2, 3).

 

In context,The “alleged” first outbreak happened in China and only months later did US “reported” her first Covid case. US was also the first country to roll out Covid vaccines. Despite these time advantages, the end result of the war on Covid between Washington and Beijing is night and day. 30% of US population has been infected and 16% of those infected developed long Covid which impaired the victim’s livelihood and quality of living. Worst still, Senator Rand Paul accused DR Fauci of covertly funded the UN banded “Gainer Function” research, funded super viruses research in an unsecured lab that eventually leaked and 6 million people died.(Fig, 4)

(ii) Puppet War (Kiev and Taipei): After 9 months, Ukraine is on the verge of collapse as Russia had nullified most of its power generation capacity, electrical and rail infrastructure.(Fig. 5).

 A very graphic depiction is provided on the entire Ukraine “lights out” through satellite imagery. (Fig. 6)

In a candid appeal, the European Commission President confessed that 100,000 Ukrainian soldiers had been killed. (This statement was later retracted from the official release, because together with injuries, up to 50% of AFU would have been incapacitated) Fig; 7.

No wonder General Milley (Chairman US Joint Chief of Staff) advised Biden it is time to negotiate for peace, but Milley was met with stiff opposition from the Administration. It has been US’s intention to fight Russia till the last Ukrainian standing. Fig. 8

Nevertheless, the US pledged support for Ukraine’s defense, the new anti-air defense system would be available by November 28, 2025. (Fig. 9).

On the other hand, Russia struck a deal with Iran to manufacture Iranian drones in Russia with drones rolling off the assembly lines as early as 2023. (Slide 10)

I wonder what would a new satellite image of Ukraine would be like on November 28, 2025.

 As reported last week US had hijacked the most valuable asset of Taiwan, TSMC, to Arizona by 6 charter pane load of experts and engineers. In a pan Taiwan municipal election, the ruling Green Party lost big time and Taiwan President quits as Party Leader.(Fig. 11).

 Zelensky of Ukraine and Tsai of Taiwan are both products of US style of Democratic elections. Be careful of what you wish for.

 The past week’s financial markets:

A. Stock Market: Dow gain 82.85 points for the week (+0.24%). (Fig. 12).

Right after a sharp rebound on the release of FOMC minutes last week, the market fizzled out as there was a triple whammy to talk down the Fed Pivot euphoria by Fed officials. (Fig. 13)

A day later, Powell did confirm a slow down could be as soon as December and the Stock Market took off again. (Fig. 14)

Friday came and with higher than expected November payroll, the powers that be tried to use the buoyant employment snapshot to infer caution on account of inflation with covert maneuvering on key indexes.(Fig. 15 and Green Framed Window).

This had not succeed. The frequency of these empty and often contradictory diatribes   indicates the Fed is now truly quadriplegic and only the mouth can move. The Q3 financial results of the Fed showed a loss of $1.25T and owns 48% of the entire outstanding USGGYR30. The Fed is operating in deep negative gearing. Will they or can they push more rate hikes and cause bond prices to fall further.

B. Debt Market: (Fig. 16): USGG10YR ended the week at 3.492% a drop of 10.9 basis points from the previous week. 

Our continued monitoring of Spread between USGGYR2 and Fed Funds Rate indicates the Fed is in no position to push for further rate hikes.(Fig. 17) 

UST Yield Curve continued to be seriously inverted, and in fact steepest inversion for the past 40 years. Rates on all duration had declined with one month rate down by 23 basis points whilst YR30 further down by 18 points.(Fig. 18)

C. FX Market (Fig. 19): for the week ended December 2, 2022, DXY opened at 104.506 and closed at 106.062 (Down -0.3%).

All major currencies improved against USD. Two weeks ago we reported currency war will be taking a breather and two months ago we reported DXY have peaked at the end of September, the evidence is now plain in sight. USD is set to weaken further with a slam towards end of December.

 D. Precious Metals & Crypto :(Fig. 20): Gold price opened at $1754.26, and closed the week at $1797.25, a gain of $42.99 (+2.45%).

The Central Bank for all Central Banks (BIS) has given a very clear signal that a reset for Reserve Asset shall take place. Those who naked short paper gold for USD will soon face judgement day and precisely for that reason BIS has closed its Gold Window and Gold Swaps. You reap what you sow and everyone on your own. We will see a progressive acceleration of this great unwind. In this regard, the resurrection of Silver will be a religious experience. For the week, Silver gained 8.6% and Bitcoin 3.3%. (Slide 21)

Job 4:8  Even as I have seen, Those who plow iniquity And sow trouble reap the same. 9  By the blast of God they perish, And by the breath of His anger they are consumed.  

The Mind Dies First

 November 25, 2022 key news items this week:

 1. The Mind Dies First: This week I saw a horrific picture of the war in Ukraine. I apologize first to allow this ugliness to appear below but I hope none of us should have any illusion about the devastation involved in armed conflict. (Fig. 1).

A friend of mine who once served in the public security arena told me “No matter how good is the propaganda, the realities hit hard when you see young men return in body bags”. The following is an excerpt of in an article titled “The Ukraine is committing suicide by cop”. The author of the article is a Dutch blogger. The excerpt was a reply to a previous email from a “Real Ukrainian”, by this, the Dutch author distinguished the person from the Ukronazis in power in Kiev. The email began,“I am also heartbroken with the evolution of the war to liberate the Ukraine from NATO: while I have no doubts about the outcome, I am horrified at the thought of what this does to the civilian population.  My sadness is even made deeper by the realization that to a large degree the people of the Ukraine did it to themselves.  Russia tried REALLY HARD to not have a war, then she tried REALLY HARD to save the civilians and the civilian infrastructure.  But the people under Nazi occupation believed all the propaganda coming out of the regime in Kiev and the West and now there will be hell to pay.  For 6 months these naive people thought the Ukraine was winning because they could not even fathom that Russia was only using about 10% of her forces and trying really hard to save as many Ukrainians.  But no, they were celebrating the murder of Dugina, the attack on the Crimean Bridge, the attacks on the ZNPP and now they are going to pay a horrible price for these delusions and, frankly, lack of decency/morality. As Douglas MacGregor said “the Russians are about to bring a sledge-hammer” to vaporize the NATO forces in the Ukraine. We did not want that. It was imposed on us.What else can I say? The Nazis will be crushed, but the costs of doing so will be needlessly high. Millions of refugees will be added to the millions who already fled. I feel utterly disgusted, sad and angry about this outcome”.

My take is when one allows oneself to be deceived through lack of vigilance to verify the spoken words to the actual deeds, the life forces within that person is gone already. When the mind dies, everything else follows.  

From a different perspective, Putin just had a face to face meeting with mothers of Russian troops (Fig. 2)

. At the meeting Putin said,“life is more complex and diverse” than what is shown in the media and on the internet, noting that “nothing can be trusted there at all,” because of the extraordinary amount of fakes, lies, and deceit. “Information is also a weapon, and informational attacks are one the most effective types of warfare.”

Herewith links to the two articles: http://thesaker.is/the-ukraine-is-committing-suicide-by-cop/ https://www.rt.com/russia/567178-putin-mothers-russian-servicemen/

2. The Puppet Master Strikes Again: Anwar Ibrahim just sworn in as Malaysian New Prime Minister. Exactly like Zelensky’s election campaign, Anwar Ibrahim promised big to Malaysia for an end to racial strife, an end to corruption and strengthening of democracy. (Fig. 3)

There is also no coincidence that behind Zelensky and Ibrahim are the same source of funding from the National Endowment of Democracy (CIA), and the Open Society(George Soros). I suppose after hijacking TSMC to Arizona and a temporary truce with China, Tsai Ing-wen used by date has arrived. There is a need for Biden to open another disruptive front in the region. The US puppet manufacturing process is now very much standardized, vilify the sitting government, create ethnic strife, entrap corrupt sitting politicians, big campaign promises to end everything that the local citizens abhor but double up and make everything worse once the puppet is installed. This model was perfected with Obama and is now distributed world wide. I hope I am wrong for the sake of my Malaysian relatives, friends and my Singaporean buddies.

^{II Corinthians 11:14}  And no wonder! For Satan himself transforms himself into an angel of light. ¹⁵  Therefore it is no great thing if his ministers also transform themselves into ministers of righteousness, whose end will be according to their works.

 The past week’s financial markets:

 A. Stock Market: Dow gain 601 points for the week (+1.78%). (Fig. 4).

As I said last week, the hawkish statement by Boston Fed President Susan Collins was NATO(No Action Talk Only). FOMC minutes released indicated while policymakers stressed their “strong commitment” to reducing inflation, support for a higher rate peak may have been less than universal. Keep the market guessing and focused on Fed Talk on interest rates and with the hidden hand keep the money printing press cranking hot. This week we also witnessed The People's Bank of China (PBOC) said the 0.25% cut of the reserve requirement ratio (RRR) to 7.8% will take place on December 5.  

 B. Debt Market: (Fig. 5): USGG10YR ended the week at 3.601% a drop of 13.5 basis points from the previous week. 

Judging from the spread between YR2 and Fed Funds, (Fig. 6), even a 50 basis point increase in December is a luxury neither the Fed nor the US can afford.

UST Yield Curve continued to be seriously inverted, with one month rate gone up by 23 basis points whilst YR30 down by 18 points. This is a mufti-decade record of yield inversion and indicates a continued fearful tightening of credit by banks and a recession is at the door. (Fig. 7)

C. FX Market (Fig. 8): for the week ended November 25, 2022, DXY opened at 106.416 and closed at 106.062 (Down -0.3%). Eur, Gbp and Jpy all made gains against USD, Rmb eased slightly on account of lowering RRR by 0.25%.

 D. Precious Metals & Crypto :(Fig. 9): Gold price opened at $1750.4, and closed the week at $1754.26, a gain of $3.86 (+0.22%).

CTA covered all their short positions with Bullion Banks and Producers provided the liquidity. Net Bullion Bank short position as at Nov 15 stood at 276 tonnes. For the week Silver and Bitcoin gained respectively 2.4% and 1.5%. (Fig. 10).

With the spectacular collapse of Crypto Platform FTX, owning hundreds of billions and over 1 million creditors, many people wondered why Sam Bankman-Fried isn’t in handcuff yet. Well. when you are the steward for the hidden treasure vault of the US Ruling Party, there is a lot of slack given. (Fig. 11)

 ^{Ezekiel 33:2}  "Son of man, speak to the children of your people, and say to them: 'When I bring the sword upon a land, and the people of the land take a man from their territory and make him their watchman, ³  when he sees the sword coming upon the land, if he blows the trumpet and warns the people, ⁴  then whoever hears the sound of the trumpet and does not take warning, if the sword comes and takes him away, his blood shall be on his own head. ⁵  He heard the sound of the trumpet, but did not take warning; his blood shall be upon himself. But he who takes warning will save his life. ⁶  But if the watchman sees the sword coming and does not blow the trumpet, and the people are not warned, and the sword comes and takes any person from among them, he is taken away in his iniquity; but his blood I will require at the watchman's hand.'