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6.22.2019 - Free Newsletter, this time Iran Bookmark

War
 
In 1970, while the US was still mucking it out in Vietnam, Edwin Starr released a single called “War”. It was a catchy, raspy, tune, perfectly in line with the times, as thousands of our men and women slugged it out in Southeast Asia.
 
A few of the lines stand out to me:

War, huh, yeah
What is it good for
Absolutely nothing
 
Oh, war, I despise
'Cause it means destruction of innocent lives
War means tears to thousands of mothers eyes
When their sons go to fight
And lose their lives
 
I said, war, huh good god, why'all
What is it good for
Absolutely nothing say it again
 
it ain't nothing but a heart-breaker
(War) friend only to the undertaker
Oh, war it's an enemy to all mankind
The point of war blows my mind
War has caused unrest
Within the younger generation
Induction then destruction

Who wants to die, ah, war-huh, good god why'all
What is it good for
Absolutely nothing
Oh, war, has shattered many a young mans dreams
Made him disabled, bitter and mean
Life is much to short and precious
To spend fighting wars these days
War can't give life
It can only take it away
 
Not only is war the true horror that it is, where young people are shredded like sausages, both physically and mentally...war is, a racket.
 
In 1935, the most decorated soldier of all time. Major General Smedley Butler wrote a book entitled “War is a racket.”

WAR is a racket. It always has been.
 
It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives.
 
A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small "inside" group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.
 
In the World War [I] a mere handful garnered the profits of the conflict. At least 21,000 new millionaires and billionaires were made in the United States during the World War. That many admitted their huge blood gains in their income tax returns. How many other war millionaires falsified their tax returns no one knows.
 
Who Makes The Profits?
 
The World War, rather our brief participation in it, has cost the United States some $52,000,000,000. Figure it out. That means $400 to every American man, woman, and child. And we haven't paid the debt yet. We are paying it, our children will pay it, and our children's children probably still will be paying the cost of that war.
 
The normal profits of a business concern in the United States are six, eight, ten, and sometimes twelve percent. But war-time profits -- ah! that is another matter -- twenty, sixty, one hundred, three hundred, and even eighteen hundred per cent -- the sky is the limit. All that traffic will bear. Uncle Sam has the money. Let's get it.
 
Of course, it isn't put that crudely in war time. It is dressed into speeches about patriotism, love of country, and "we must all put our shoulders to the wheel," but the profits jump and leap and skyrocket -- and are safely pocketed. Let's just take a few examples:
 
Take our friends the du Ponts, the powder people -- didn't one of them testify before a Senate committee recently that their powder won the war? Or saved the world for democracy? Or something? How did they do in the war? They were a patriotic corporation. Well, the average earnings of the du Ponts for the period 1910 to 1914 were $6,000,000 a year. It wasn't much, but the du Ponts managed to get along on it. Now let's look at their average yearly profit during the war years, 1914 to 1918. Fifty-eight million dollars a year profit we find! Nearly ten times that of normal times, and the profits of normal times were pretty good. An increase in profits of more than 950 per cent.
 
Take one of our little steel companies that patriotically shunted aside the making of rails and girders and bridges to manufacture war materials. Well, their 1910-1914 yearly earnings averaged $6,000,000. Then came the war. And, like loyal citizens, Bethlehem Steel promptly turned to munitions making. Did their profits jump -- or did they let Uncle Sam in for a bargain? Well, their 1914-1918 average was $49,000,000 a year!
 
Or, let's take United States Steel. The normal earnings during the five-year period prior to the war were $105,000,000 a year. Not bad. Then along came the war and up went the profits. The average yearly profit for the period 1914-1918 was $240,000,000. Not bad.
 
There you have some of the steel and powder earnings. Let's look at something else. A little copper, perhaps. That always does well in war times.
 
Anaconda, for instance. Average yearly earnings during the pre-war years 1910-1914 of $10,000,000. During the war years 1914-1918 profits leaped to $34,000,000 per year.
 
Or Utah Copper. Average of $5,000,000 per year during the 1910-1914 period. Jumped to an average of $21,000,000 yearly profits for the war period.
 
Let's group these five, with three smaller companies. The total yearly average profits of the pre-war period 1910-1914 were $137,480,000. Then along came the war. The average yearly profits for this group skyrocketed to $408,300,000.
 
A little increase in profits of approximately 200 per cent.
 
On and on it goes. The book is printed free on scores of web sites and you truly do need to read it. This is a man that knows, who’s seen the blood, who’s been on the lines. He called it for what it is, a racket. A big boy game, played at the very top, but fed the animal protein of your children.
 
So, what brings this up on a Fine afternoon? As you all may or may not know, Iran downed a US spy drone Thursday. It was just last weekend that I wrote my article concerning Iran’s ability to convert yellowcake into the gas needed to create uranium 235. That’s the stuff that gets sent to the centrifuges to be made pure.

Well there’s good intelligence that suggests an entire covert operation, involving even people from our own intelligence agencies, have been backdoor dealing with Iran’s uranium for years, and it’s being sold to some pretty sinister people. My guess at the time, was and still is that the US is going to send missiles into those fabrication plants.
 
But, the Iran drone shoot down, does indeed change the narrative a bit. I think it speeds up the process. There is NO question in my mind that we are going to send missiles to Iran. It just might happen sooner than later.
 
A showdown is coming. Iran has said they’re going to nix the last part of the original nuclear agreement This from Politico:
 
Iran will breach the uranium stockpile limits set by a 2015 multinational nuclear deal within the next 10 days, according to an Iranian official - further escalating weeks of tension between Tehran, Washington and the pact's other signatories.
 
Now think this out. We KNOW and yes I said know, that Iran’s been converting yellowcake to Uranium 235. We know they’ve been selling it on the black market in a “uranium for oil” sort of deal. However, they’re not buying oil, they’re selling it - for a huge discount to the nations buying the Uranium.
 
Israel doesn’t like this at all, since there’s no shortage of people that wouldn’t like to wipe Israel off the map. So, since for the most part the US takes its marching orders from Israel, we’re definitely going in. So we’ve got them doing illegal oil sales via uranium. That alone is enough for the US to get the call from Israel to blow up those centrifuges and Uranium gas plants.
 
Now add in the idea that they just shot down a US spy drone. That’s got the war hawks feeling orgasmic, since it ups the chances of us making a move. But there’s one other twist that “could” speed this up even more.
 
Trump has a meeting with China’s Xi on the 28th of June. Trump wants to make a deal, and frankly China desperately needs a deal. They just had to bail out a large portion of their banking system again, a system blown up over bad loans. Could it be that Trump would like to show Xi that he means business about things, by launching a strike into Iran? I think it’s entirely possible.
 
The question of the day of course, is, how will Iran respond. They have an awful lot of very esoteric missiles of their own. They could easily shut the Straight down for a couple weeks. They have also “hinted” that they have sleeper cells in the US, and there’s loose reports concerning the idea that there’s been suitcase sized nukes smuggled into the US.
 
I know this reads like a spy novel, but that’s the world we live in folks. Clandestine operations galore, spy vs spy stuff. Could it be that if we launch, Iran pulls off a small nuke in an American city? We’d hate to think so, but I believe the possibility exists.
 
I hope I’m wrong about all this. I hope I’m just promulgating nightmares, with no substance. But the stars are all aligned for some form of military engagement with Iran, and I think it’s coming. Butler told us, all wars are a racket. There’s gigantic money to be made creating the communications, missiles, launchers, jets, etc, in a conflict. Unfortunately, there’s not enough sane people to keep it from happening.
 
How very sad.
 
The Market:
 
The Market certainly had to shrug off a lot of negatives this week. And those puppet masters behind it all, did a masterful job of doing just that. With headlines like these popping up all week, it’s a marvel that we didn’t crash:
 
Mfg PMI Employment index falls to 50.2 vs 51.9 in May; Lowest reading since April 2016
Services PMI Business expectations fall to 57.8; lowest reading on record
Existing Home Sales Tumble YoY For 15th Month - Worst Run Since Housing Crisis
 
So, they ignored such things and we hit another all-time high. It was all looking quite tremendous, until late Friday. After being up strongly, the late afternoon saw the markets roll over and when we got into the close, the S&P was NOT up 18, it was red by 3. The DOW, likewise was NOT up 150, it was down 34.
 
While not an epic plunge by any stretch, it seemed that they weren’t willing to hold too much over the weekend and that makes a lot of sense. With all the tensions in the middle East, there’s no question that something ugly could take place, and we walk into a sea of red Monday.
 
I had some DIA ( the ETF trading proxy for the DOW) and in the morning, it looked like it was going to be okay to hold over the weekend. By the time I sent the 11 am update, it was up about 80 cents a share for me. But by noon things had already started to fade, and I stepped off before going negative.
 
It was my guess that the market had two ways to play out. Either they were going to punch through the old highs, get a ton more volume and just soar higher, leaving everyone behind, OR, it was going to bang its head at the highs several times, struggling to get up and over.
 
Right now it looks like the head banging situation could be in play. Sure, maybe nothing happens this weekend, and Monday we see them pushing things higher. But that was a pretty broad sell down into the close. Maybe we’ve got some downside work to do before their next attempt at higher.

NOTE>> If you’re an Insider Club member and didn’t get an afternoon update, it wasn’t you. It wasn’t your ISP. No, that was my fault, 100%. I wrote the update, I loaded the update to the proper send page, and hit send. Mission accomplished right? Sure, and I went off to do some things that needed doing. Wrong. What I didn’t see was the system telling me “hey stupid, you hit send, but didn’t specify the Email list to send to”. The Email never went. Sorry folks, my bad.
 
Okay, so we’ve got tensions in the Mid East. We’ve got a trade war, and we’re hearing mixed signals concerning what might come of Trump and Xi’s meeting next weekend. I’ve heard there was promising hints, and I’ve heard that the Chinese are not interested in anything less than total removal of all tariffs. While both sides truly need a deal, they both want to save face. Tough job.

We’re also about to enter earnings season again, and it is NOT going to be pretty. Earnings are going to come out light for hundreds of companies, and weak earnings with an all-time high market, is dangerous stuff.
 
So the fight is on. In one corner we have the Feds willing to cut rates, and jumpstart QE, along with their tagteam partner-stock buybacks. In the other corner we have economic reality crashing, global weakness, insurmountable debt. Who wins?
 
Right now gold does. Gold is looking pretty perky lately. But as far as the equity markets, it’s a crap shoot folks. My best guess if nothing blows up in Iran, is that we ultimately see one move push for higher, that takes us to the S&P 3000 area, and then we begin a long lengthy stair step down. But there’s nothing written in stone, hell, we could fail here at the old highs and simply roll over.
 
One last thing to consider. The global economy is so weak, that even a true shootdown of a US spy drone only moved oil up a little. That’s a bit different to say the least.
 
Remain cautious!

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