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3.27.2019 - Free Investment Newsletter Bookmark

As the Stomach Turns


So, it’s Tuesday afternoon and I’m waiting for the air conditioner man to stop by. We have a contract on this new unit where we get 2 free service calls per year, for a couple years.  As I’m waiting on him, I’m doing what I usually do, I scour the net for interesting topics.



Well I found two of them Tuesday and both of them just about made me sick. First off just before noon, I saw headlines racing across the wires that Jussie Smollett was going to have all charges against him dropped. I’m sure you all remember this turd?  He paid a few of his buddies to buy some MAGA hats, and some rope, and then told cops that he was assaulted by “Trump supporters”.


The whole thing looked fishy as hell and it only took about half a day to realize this pox of a human had set up the whole thing.  In fact, so Iron clad was the case, that two suspects in the case, Nigerian-American brothers Ola and Abel Osundario - one of whom has been an extra on Empire, told police that Smollett paid them a combined $3,500 to stage the "attack," and that the three of them had practiced it beforehand!  They also said that Smollett was involved in creating a racist letter containing a white substance that was sent to the actor on the Chicago set of Empire.


It was so cut and dry, the grand jury found 16 charges against him. And yet, in a very “strange” twist, the power players from the Obama era got involved in the background and “boom” ALL CHARGES DROPPED.  And why did they drop the charges? According to the corrupt State’s attorney -Kim Foxx, told Chicago police she was dropping the case because Jussie would have only gotten community service if convicted and she said he has already performed community service so there is no point in prosecuting him. I could not find any record of Smollett doing community service.


Wait it gets better. He had posted 10 grand for bail, and he’s decided to “forfeit” that. Guess what he got in return  for that? The case is SEALED. All the evidence, all the testimony, everything. No one gets to see officially how this puke lied, and made all this up.


So, let’s chew on that for a moment. Is there a rule of law in the US? No. It’s gone, dead. There’s NO rule of law in the US. We are no more than the worst of Banana Republics.  Why isn’t Hillary in Jail? Why aren’t the scum that made up false FISA papers, dossier’s, and crooked FBI agents in jail? Why aren’t any of the banking CEO’s in jail for the crooked mortgage scams that brought down the economy in 2008?  No, only the peons go to jail.


While I’m whining about it, how about some jail time for the slimy news anchors that told us for 300 + morning, noon and night’s, that Trump colluded with the Russians. How many people did they KNOWINGLY incite to hate this guy for Treason?? Many. Don’t forget the bulk of the left-center is easily swayed by shiny objects.  They all need to get investigated and several put in a cell for a few months.


I’m not the only person that see’s these injustices and wonders just how far it can go. Many of my contemporaries are astounded at what a joke the US has/is becoming. And I think what’s so surprising is that it is clearly IN YOUR FACE, and no one seems to be able to stop it.  Maybe I’ll whine more about this topic on the weekend. I have a ton of ammo concerning this travesty.


So that was enough to get me reaching for my Tums, and then I got hit with the second punch.


Not long ago, while opining about what the “Reset” is going to look like, I laid out my theory of what “they” are going to do. All the normal policy mechanisms have already been used up, to keep the economy limping along. In the future, they’re going to either have to resort to “unconventional” mechanisms, or simply let the whole damn global economy blow up.  As I’ve mentioned about “too many times” if they go the “let the world blow up” route, they have to do it in a way that they can’t be blamed. So they could start a nuke war, or what have you. But, until they’re ready for the ultimate take down, they have to try and keep the wheels on this cart, and it’s getting harder all the time.


So I had said that I see them coming out with a two tier situation, where we will still have cash, but all big transactions will be done via electronic money. In my version, they will recall the “Federal Reserve notes” and replace them with “Treasury bucks”.  We’ll get screwed in the trade, because I don’t believe it will be a one for one swap. I think we’ll get hit with something like we get 1 new Treasury bucks for every 1.25 or 1.5 or even 2 Federal Reserve notes. We will use those for everyday little things like gas, or a bottle of tea, or paying your neighbor to cut your hedges, etc.


The really big stuff, will be all digital. This has a lot of advantages for them. See, like I just said above, they have used up most of the conventional mechanisms to keep an economy grinding forward. Let me give you an example:


We’re ten years into this “recovery” ( which is really not a recovery at all). In more “normal” times, after slashing rates, the economy would have recovered, and they’d have been hiking rates for a few years. That way when the next down turn hit, they’d simply cut the rates again. Wash/rinse/repeat. But there’s a huge problem this time. They never got our rates over 3%. How could they cut rates by 3 or 4% if they’re not even at 3??  They can’t, so they have to come up with some really twisted crap. Yes, negative interest.


So, I get a notice that there’s a new blog post at the IMF “suggesting” how they’re going to use “negative” interest rates.  When I read it, I almost fell out of my chair. It’s so close to what I predicted they’ll do  with the “two currencies” I was shocked.


I’ll post the link so you can read all about it, but here’s a few highlights:


In a cashless world, there would be no lower bound on interest rates. A central bank could reduce the policy rate from, say, 2 percent to minus 4 percent to counter a severe recession. The interest rate cut would transmit to bank deposits, loans, and bonds. Without cash, depositors would have to pay the negative interest rate to keep their money with the bank, making consumption and investment more attractive. This would jolt lending, boost demand, and stimulate the economy.

Then they go on to say that however, because there is cash, when interest rates go negative, everyone pulls their money out of the bank and sits in cash. So read on to see how they’ll combat that…


One option to break through the zero lower bound would be to phase out cash. But that is not straightforward. Cash continues to play a significant role in payments in many countries. To get around this problem, in a recent IMF staff study and previous research, we examine a proposal for central banks to make cash as costly as bank deposits with negative interest rates, thereby making deeply negative interest rates feasible while preserving the role of cash.


The proposal is for a central bank to divide the monetary base into two separate local currencies—cash and electronic money (e-money). E-money would be issued only electronically and would pay the policy rate of interest, and cash would have an exchange rate—the conversion rate—against e-money.


Well now.  Cash and digital money. Just like I supposed that they’d float as an idea. Anyway, here’s the link where you can see for yourself what they’re planning.





Basically they believe negative interest rates are going to be the next big thing folks. If they do it the way I think they will, they are indeed going to ROB your money. They’re going to charge 3% a year during “recessionary” times, so that you figure it’s better to spend your money than to save it.


Between Smollett getting off scott free, and the IMF telling us flat out that they’re going to engineer negative rates on us… that was about all the news flow I needed to see for one day.  Wow.


The Market:


Desperation reeks. And we smelled a lot of it over the last two days. They are terribly desperate to keep the S&P over that 2800 level, because they know that below that, enough shorts could fire off that they couldn’t stop it.  So, check it out:


Friday we had that gigantic plunge day. Opening at 2846, we fell all the way to…2800 even. Then Monday came and while they couldn’t save 2800 we only lost it by 2 points. We closed at 2798.


Tuesday they went for the bounce, and it was pretty nice. Although we closed the session well off the highs of the day, they managed to close up at 2818, which is 18 points over 2800, and even 3 over 2815, the biggest sticking point level.


So surely today they’d ramp things up and get us moving upwards right? Nope. It was a long tiring day of ups and downs.  We were as low at 2787 and as high as 2825. And we closed at 2805.


They need this 2800 level to hold and you can see by the action, that every time we dip meaningfully below it, they “rush in” and save it. Now, some will say that the longer this sort of chop lasts, the more chances for a downside fall.  Others will say this is building a base, to move up from.  I say it’s too damn dangerous to tell. We could roll out of bed or they could conjure up some “good news” and send us back to the recent highs at the 2850 area.


I’m long a few positions, but not terribly anxious to add to them unless we can get past 2854 which was set just 4 sessions ago. ( last Thursday) We are bouncing around in a range here and  yes the range will break. Will we break out, or down? That’s the question. We’ll know soon enough.

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