Vilify, Marginalize and Nullify

I am still on the road, so the contents of this blog will be brief. This passage is a continuation of the previous blog’s theme of defensive measures in times of turbulence and chaos. We talked about the paramount importance of a body armor of truth. Alexander Solzhenitsyn has elegantly explained that falsehood and violence always goes hand in hand. (Fig. 1).

When we are being viciously attacked by lies and accusations, sooner or later violence will arrive at our gates. It seems an adversary’s attack always come in 3 stages: vilify, marginalize and nullify.

(i) Vilify - speak or write about in an abusively disparaging manner. If the adversary’s attack is based on falsehood then you know the next stage will be even more damaging.

(ii) Marginalize - treated as insignificant or peripheral, be unfriended. Economic sanctions, isolation and encirclement tends to weaken one’s ability to defend.

(iii) Nullify - make of no use or value; cancel out, subdue or exterminate. The final step of destruction whether by colour revolution to foment a failed state or by armed invasion.

At the 14th China People’s Congress, Xi expressed no illusions about the foregoing first two steps taken by the Anglo American Empire against China. Step 3 would also be within sight, hence China will be migrating into a war economy footing. But before an actual kinetic war to begin, there are still defensive posture one can take to mitigate the effects of vilification and marginalization. In very broad terms, the defensive measure is “Righteousness” for “righteousness” is to become “blameless”. (Fig. 2)

 Righteousness must be acted out in “truth” meaning words and actions need to be in sync. In big contrast, the Nazi approach is “große Lüge” (Big Lie). (Fig. 3)

Yes, Adolf Hitler has a certain level of success in the beginning but without a “Mandate from Heaven’, the final outcome is certain doom. For us to be able to stand firm in times of turbulence and chaos, we must have discernment as to who is on the side of truth and who is “righteous”. However, it is much easier said than done because people’s standard not only varies but in fact in actual decline. If we stand back and take a harsh look at the Western societal values, my previous statement is not in exaggeration. Therefore if our standard of truth and righteousness is constrained by a few rules within consensus, consistency, coherence and pragmatism then I am sorry to say, your data universe will be too narrow to be fool proof.

Edmund Burke said “The only thing necessary for the triumph of evil is for good men to do nothing.” (Fig. 4).

The golden standard in the bible takes one step further. James 4:17 “Therefore, to him who knows to do good and does not do it, to him it is sin.” Some countries talk a good talk, others are doing good deeds without fanfare. Guess who has the “Mandate from Heaven”.

 This week, all eyes in the financial market were focused on Fed Chairman Powell’s congressional hearing. No sooner was the hawkish interest rate policy statement delivered, the Silicon Valley Bank (“SVB”) collapsed. The failure of SVB laid squarely at the inept of the Federal Reserve because SVB did not fail because of bad loan losses but losses on having invested in Federal and Agency long dated papers and got wiped out by the interest rate hike tsunami. There are numerous mid tier US banks in similar situations. For a Central Bank that could not detect the sub-prime fiasco, that kept on printing money and mistaken inflation as transitory and lately could not decipher fake January employment and retail sales as representative of a strong US economy, we all should take their decrees as contrarian indicators.

Fig. 5 shows US had been in Yield Curve inversion for 248 days, that the US banking system is now in trouble is a no-brainer.

Having a prolonged ultra low interest environment, the pension and insurance system is similarly in trouble. (Fig. 6, the mean YR10 yield is 6.05% and since July 2000, US has consistently underpaid a fair interest for its indebtedness through rate suppression and destabilization of other economies. In all probability as US Inc. weakens, a reversion to mean will happen.)

Compounding the fixed income market catastrophe is unrealistic stock market valuation, and unsustainable Federal and Municipal debt, a perfect financial storm has arrived. What separates chaos and a functioning society is as thin as the reassuring babble of clueless politicians and bureaucrats. What causes breakdowns are continuous broken promises. I apologize for the punch line, NATO countries will fail one by one because NATO is an acronym for “No Action Talk Only”. Next week if the Federal Reserve would not move fast to stabilize the financial markets, a contagion would likely develop with a severity much more intense than the Lehman event. As I write this passage, short sellers are lining up to attack the US banking sector. We expect hyperinflation through Central Bank currency debauchery will officially enter the fray at the opening bells on Monday. For student of biblical prophecy, this look like a clear sign for the third seal.

Revelation 6:5  When He opened the third seal, I heard the third living creature say, "Come and see." So I looked, and behold, a black horse, and he who sat on it had a pair of scales in his hand. 6  And I heard a voice in the midst of the four living creatures saying, "A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not harm the oil and the wine." 

 

 

Harakiri

 I have been away from my home base for three weeks and am now trying to gather some thoughts on the important geopolitical and geo-economic events that transpired. Few readers of this blog would doubt WWIII is happening before our eyes and according to experts who study war cycles, 2025 to 2027 would probably be the time when we witness full scale global armed conflicts. Before that time, we all are experiencing an unhealthy dose of toxic misinformation and disinformation that are targeted to distract us from making the right choices. As a Christian, we have been taught certain defensive measures that would be useful in hatever warfare before us. I like to share these golden nuggets here for the benefit of all, irrespective of your philosophical or religious inclination.   

1. Truth: A wise saying “The first casualty of war is truth”. In times of turbulence and chaos it is so much more necessary that we are to make “informed” choices. Armour ourselves with truth is a first step for war preparation. Truth, however, is not some web site called Fact Check. Truth is also not an algo driven search engine ranking narratives in prominence only when in compliance with the edicts of the powers. Truth is not an AI called Chatgpt because, when a significant portion of data that Chatgpt screened were previously filtered through political censorship, AI becomes just a parrot (Fig.1).

The chart shows Chatgpt are bound by the algo rules of Correspondence, Coherence and Pragmatism meaning whoever can jam the data universe with the largest number of statements, biased as they may be, “truth” is a numbers game. Let me illustrate this point by using the try and tested method of “Follow the Money” on popular myths of the past 3 weeks.

(i) Renewed Attack by the Anglo American Empire against China: A barrage of provocations against China has recently been launched: a strayed civilian weather dirigible been accused as a spy craft; unsupported accusation of lethal arms supply to Russia by China and a rehash of the origins of Covid-19 as lab leaks from Wuhan. The latter despite a definitive investigation to the contrary by WHO. All these whilst US Administration Officials from the State, Treasury, Defense and Commerce departments desperately tried to establish a dialogue with Beijing. Why?

(ii) US Interest Rates spiked up again: (Fig. 2) shows a spike up of YR2 yields since February 2023 after a period of softening inflation.

The reversal of sentiment came after a shocking BLS release of January 2023 employment growth of 517,000 as against market expectation of 187,000. (Fig. 3)

Biden, then MSM immediately went all gung-ho on how robust the US economy is galloping. For people who are remotely interested in the shenanigans of the Anglo American finances are very likely be swayed by this concerted onslaught of propaganda. For people who paid attention to US trickeries, what a joke! On a monthly basis BLS does not carry out a real headcount of job creation, the employment numbers are derived from a “birth death model”. The birth-death ratio is an estimate of the net number of jobs in a given period that have been created by new businesses, or births, and lost to business closings, or deaths. Historically, approximately 3 million jobs are shed in January after the peak temporary employment month of December because of the Christmas gifting and holiday seasons. For January 2023, by revising 3 key indices in the birth death model, half a million jobs is seasonally adjusted to be not made redundant. All these robust job creation happens at a time when mass layoff news hit every 45 minutes (Fig.4). 

To reinforce the robust economy narrative, CTA (Commodity Trading Advisory), an algo driven highly leveraged derivative centered hedge funds were mobilized to move the markets, shorting bonds, stocks, commodities, FX in support of the USD. Of course BLS January 2023 employment numbers alone would not be persuasive enough , so out came another surprise, the January retail sales came out 3% higher than December. (Fig.5).

Remember Christmas sales averaged 19% of annual sales, the January retail sales numbers was indeed another shocker! With further CTA action, hawkish Fed Open Mouth Policy added to short squeeze, the majority of momentum traders once again follows the mantra of “Don’t Fight the Fed” and voila, a complete reversal of sentiment happened. “May be indeed the US economy is strong after all.” The real picture of course is another matter (Fig. 6).

US Real retail sales was flat as a pancake, the advanced estimate for January nominal retail sales (like the BLS employment stats, is highly “seasonally adjusted ”) were just inflation price froth rather than real unit sales growth. In another statistics, US Redbook sales began to rollover once the free cash stimulus stopped and as inflation and interest rate hit hard, real unit sales volume were actually on a rapid decline. (Fig. 7).

What then is the purpose for such concerted propaganda that the US economy remained strong and further interest rate hike is necessary to contain inflation?

(iii) Harakiri - In my December 17 2022 Blog, titled “Zombiefied”, I mentioned the Federal Reserve were running deficits of $14.3 billion per week. The losses have now swelled to $38.2 billion per week. ($2 trillion losses annualized) (Fig. 8).

Further interest rate rises means bigger losses. For a nation with $31 trillion debt and rising, a 6% interest rate means a $1.8 trillion interest payment. $1.8 trillion is equivalent to the GDP of Italy. Both the Federal Reserve and the US Treasury is committing an act of Harakiri and those in the know clearly understands the road to perdition is right before us all. For those who study closely on US finances, a deep recession is likely to break in June 2023. This is evidenced by the steepest of yield curve inversion since Oct 1979, some 43 yeas ago. (Fig. 9).

1979 was when the USD was in crisis with a default of Bretton Woods Agreement and is exactly a forerunner of the Global De-dollarization which is happening today. In the previous incident, there was a reversal of policy which began a month and a half later as the US economy and banking system could not take such pressures and the whole system was at the edge of collapsing. We expect the hawkish Powell would look quite differently two months on from today. In this game of chicken, those who blinked will likely end up as lunch for their opponents. Allow me to refresh your memories on who bought and who dumped US Treasuries in the year 2022 (Fig. 10).

The Global South is unlikely to reverse course on the path of de-dollarization, no matter how high the Federal Reserve may bait interest rates, because USD has become a matter of “National Security”.  In the meantime, the Fed printing press continued to run hot 24/7 (Fig. 11)  

2. Other Defensive Measures - Due to time away from my home base, the rest of the Defensive Measures will need to be covered at a later more opportune time. My apologies.

 ^{Ephesians 6:10}  Finally, my brethren, be strong in the Lord and in the power of His might.¹¹  Put on the whole armor of God, that you may be able to stand against the wiles of the devil.¹²  For we do not wrestle against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this age, against spiritual hosts of wickedness in the heavenly places. ¹³  Therefore take up the whole armor of God, that you may be able to withstand in the evil day, and having done all, to stand. ¹⁴  Stand therefore, having girded your waist with truth, having put on the breastplate of righteousness,¹⁵  and having shod your feet with the preparation of the gospel of peace;¹⁶  above all, taking the shield of faith with which you will be able to quench all the fiery darts of the wicked one.¹⁷  And take the helmet of salvation, and the sword of the Spirit, which is the word of God;¹⁸  praying always with all prayer and supplication in the Spirit, being watchful to this end with all perseverance and supplication for all the saints—  

Which is Worse, Uninformed or Misinformed

Week ended Feb 4, 2023, interesting news items to look at this week were:

 Which is Worse, Uninformed or Misinformed: The theme for this week’s report was inspired by Larry Johnson’s piece titled “Which is More Dangerous; Armoured Tanks or Think Tanks”. (Fig. 1).

Interestingly, this week I came across four essays more or less on the same concept. The first was billionaire resource investor Rick Rule’s lamentation on shortages in key natural resources that will define the next decade. The underlying problem of shortages lies in people’s preference to use votes with governments in favor of votes in the market place. Votes in the government results in coercion to conform to one side of an argument, bend natural order and nullify the self regulatory aspects of a market economy. By this, those in power need not listen, negotiate nor compromise for win win solutions. Of course, this problem did not manifest in just Green Energy vs Fossil Fuel but across many sectors of the economy, e.g. Facebook vs Tik Tok where a failure to compete became a national security issue, mandatory unproven vaccines that do more harm than good.

 Next there were two essays that caught my attention from US-based Russian military author Andrei Martyanov. One of his essay titled “Fake Science and War”. How people without scientific, engineering and specialists discipline ended up making decisions on the global economy,commerce and industry. Even proven wrong yet they stubbornly continued to inflict damage. Martyanov was referring to a particular group of people who studied Political Science, ended up in “Think Tanks” than Government. He even quoted Putin once challenged classifying political science as science. (Fig. 2).

Then finally the piece from Larry Johnson referred to in (Fig. 1), how Biden’s transition team comprised eight out of 23 team members from the pro-military think tank CSIS. Eventually CSIS’s SVP Kathleen Hicks, now serves as Deputy Secretary of Defense. Hicks has zero military training whatsoever. Some of the colossal errors made were:

 (i) Against the better judgement of Janet Yellen, the Federal Reserve and Wall Street, the National Security Team weaponized USD and SWIFT against Russia. The Russian economy did not collapse within months as expected (Fig. 3) but global de-dollarization went main stream from a trickle.

(ii) Not admitting previous mistakes and market skepticism, the National Security Team doubled up with Oil Price Cap aainst Russia and failed miserably again. (Fig. 4)

(iii) Another Political Pseudo Science expert is Victoria Nuland, Under Secretary of State for Political Affairs. Nuland was the architect for the 2014 Maiden Color Revolution. Though successful in overthrowing a Pro Russia government through funding the Ukrainonazis, NATO was defeated as Ukraine suffered the loss of Crimea, Donbass and Luhansk. By stealth, NATO and Ukraine faked the Minsk Accord to prepare for 8 years for an all out assault against the Russians. In the intervening years before Feb 24, 2022, Russia in anticipation, stepped up her military industries so much so that Russia now produces 800 tanks per annum. Quite the opposite,  UK closed her main tank factory in Leeds and can now provide only limited service to refurbish old tanks. The same goes for the US. No wonder UK Defence Secretary Ben Wallace admitted recently that the UK armed forces had been hollowed out and underfunded. (Fig. 5). Retired General Richard Barrons, who formerly headed the UK’s Joint Forces Command, said “The UK could deplete its ammunition stocks in mere hours should it be drawn into large-scale fighting”. 

Just who in their right mind would plan and provoke a militarily strong country to war without preparing the resources for war? Answer: Political Science students. This problem is not restricted to tanks because in terms of missiles, Russia produces missiles of every class in excess of all the NATO country combined, including the US.

In conclusion, according to Bloomberg “The Russian troops have exhausted the potential of the Armed Forces of Ukraine during the recent months of the special operation. In particular, the battles at Bakhmut had distracted Kyiv's chances to conduct counter-offensive operations in other directions. In plain English, Ukraine is damaged beyond repairs even with NATO's help and talk of counter-attack is pure spin. (Fig. 6).

In Zelensky’s own words It will be “too late” if Abrams arrives in August. (Fig. 7).

 Your adversary need not do you damage when you yourself allow a bunch of uninformed pseudo scientists to gain votes to high office through public misinformation and propaganda spin. All that is necessary is for your adversary to sit back and watch you self destruct.

This week financial markets results as follows:

 A. Stock Market: For the week ended Feb 4 2023 Dow dropped 52.07 points (-0.15%). (Fig. 8) .

FOMC came in mid week with a 25 basis points rate increase as market expected. The stock market staged a mild rally and USD drifted lower. A day later both BOE and ECB increased interest rate by 50 basis points and in a coordinated effort the powers that be used BLS employment numbers to push a rally of USD and hammered bonds, stocks, precious metals, oil and commodities down in a classic short squeeze of bearish Hedge Funds. There was margin calls galore across the board. (Fig. 9)

The funny thing is BLS reported that instead of the 188K expected number, in January the US created a laughably goalseeked 517K jobs (at a time when mass layoff news hit every 45 minutes), up twice from last month's upward revised 260K and the highest since July 2022!(the Covid rebound). 

It did not matter whether the labor stats were truthful, With Govt sponsored market actions, bearish Hedge Funds became the sacrificial lamb and were slaughtered. (Fig. 9).

This blood bath was meant for bears in the US Treasury Market, USD bears and speculative Bulls in precious metals. The Anglo American Empire must have been quite threatened by the global de-dollarization and finally resort to a false narrative of robust employment when there were massive laid-offs. The Fed financially cannot further raise interest rates but must continue with a narrative that they can combat inflation through rate hikes. Let’s see if the uninformed officials can spin this one through misinformation.  

 B. Debt Market: (Fig. 10): USGG10YR ended the week at 3.512% a gain of 1.2 basis points from the previous week.

Right after FOMC raised 25 basis points on Wednesday, USGG10YR actually dropped 16.9 basis points to a low of 3.338%. This is a slap on the face of the Fed and they need to react. Hence, Friday BLR crap stats and market orchestrations. As I reported in the previous week, the market gave a king sized middle finger in the face regarding Fed’s Open Mouth Policy of hawkish talk against a backdrop of recession. I explained to some friends before the FOMC meeting, the Fed can make decisions on the Fed Funds Rate but overall interest rates are dictated by the market and not the Fed. The3X 75 bass points increase, though steep in historical terms was not hawkish. The YR2 Notes rate have gone way ahead much earlier. (Fig. 11).

In this context, the Fed was just darn slow and ill-informed about the true nature of inflation. But honestly, how can the Fed admit gilt when inflation was caused by their unscrupulousness printing of currencies. Increase in Fed Funds rate in a recession environment would further widen the negative spread between the Fed 2YR Treasury Note Rate and the Fed Funds Rate. This is exactly what had happened. (Fig. 12).

The low point of 2YR Treasury Note Rate dropped to 4.059%. (20 basis points down from the previous week despite the Fed’s 25 basis point increase.). The Spread Chart on (Fig. 13) and specifically the data point on Feb 2 is a tell tale sign that whatever credibility the Fed may have is disappearing fast.

In the mean time, Fed weekly losses increased from $25.8 billion to $26.9 billion as at Feb 2023. (Fig. 14)

C. FX Market (Fig. 15): for the week ended Feb 4, 2023, DXY opened at 101.922 and closed at 102.992 (Up +1.07%). 

The rebound in DXY was principally through crony accounts in the British pound and the Yen Carry Trade. Rmb remained strong against USD. Whilst the rebound of DXY was just a front, the hidden agenda in the financial market raid was to bring down precious metals and oil through naked derivative paper shorts. At the NY close, being the final session of the current week’s trading, oil was knocked by 11%, Silver 6% and Gold 3.5%. (Fig. 16)

This is financial warfare against Russia and China. Fear not though, the Anglo American Empire does not control the physical market and when they sell whatever at depressed prices without an ability to deliver, eventually they will all comeback and haunt the short seller.

 D. Precious Metals & Crypto :(Fig. 17): Gold price opened at $1927.29, and closed the week at $1864.9 (-$62.39, -3.23%). 

From the trading pattern and Commex open interests, there were some weak longs in gold taken out in the down draft but as regards silver, the price drop was mainly a doubling down of short positions. It will be interesting to watch what will happen next week. World Gold Council reported this week Central Bank buying soars to 55 years high. (Fig. 18). 

Silver dropped by 5.3% for the week but Bitcoin actually gained by 1.3% as it was not a target of the attack.(Fig. 19)

 ^{1Corinthians 8:2}  And if anyone thinks that he knows anything, he knows nothing yet as he ought to know.