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3.29.2015 Financial Intelligence Report Bookmark

Bank of America Agrees With Me??

One of the themes I’ve been suggesting for almost 6 years now is the concept that a lot of the world is quite tired of the US, and is trying to break away. Now, for the average flag waving American Patriot, what I’m saying borders on treachery and treason. Hey, I get it.  But let’s face some facts.

Before we get into some “proof’ of the world moving away from the US, let’s just spend a minute contemplating our role in the world over the last couple decades. We’ve been caught spying on the Germans. Our NSA has admitted to recording everyone’s phone calls and emails. We’ve fomented wars in foreign lands. If the world doesn’t toe the US line concerning finance, we tend to overthrow them, fine them, or blockade them.

Bank of America Agrees With Me??

One of the themes I’ve been suggesting for almost 6 years now is the concept that a lot of the world is quite tired of the US, and is trying to break away. Now, for the average flag waving American Patriot, what I’m saying borders on treachery and treason. Hey, I get it.  But let’s face some facts.

Before we get into some “proof’ of the world moving away from the US, let’s just spend a minute contemplating our role in the world over the last couple decades. We’ve been caught spying on the Germans. Our NSA has admitted to recording everyone’s phone calls and emails. We’ve fomented wars in foreign lands. If the world doesn’t toe the US line concerning finance, we tend to overthrow them, fine them, or blockade them.

We  (the US) tell everyone that what we do is always for the best. Yet the fact is, we stick our noses in a lot of places that simply don’t want noses stuck. Consider the French bank BNP.  First off a bit of history…

BNP Paribas is a French bank and financial services company with global headquarters in Paris.[3] It was formed through the merger of Banque Nationale de Paris (BNP) and Paribas (see below for name origin) in 2000. BNP Paribas is one of the largest banks in the world. Based on 2012 information BNP Paribas was ranked as the third-largest bank in the world, as measured by total assets, by Bloomberg and Forbes

Well, in June of 2014 BNP was fined 9 BILLION dollars by US regulators.  The crime they were accused of was doing banking with Iran, Cuba and Sudan.  Now please understand something; they broke NO European law. They broke NO French law. But because Uncle Sam said that those nations had to be sanctioned, doing business with them violated US law. So, BNP paid up.

One might ask, well if they’re a French bank and broke no French law; and they’re in Europe and broke no European law, why did they admit to this “criminal activity” and pay the fine? Simple. They had a gun to their head. You will either pay up OR we will shut off your ability to clear US dollar denominated transactions. Well that would be the death blow to the bank, so they had no choice. While the dollar is still intact as the global reserve, you cannot risk the chance of not being able to process dollars.

Is it really our business to tell a French bank whom they can transact with? If you’re the US Government the answer is yes. The world must bow to what we say goes.  I imagine that the French are looking at the recent deal to allow Iran to pursue its nuclear ambitions as a bit odd, don’t you think? Indeed.

But let’s stay on track here… the US lays out its “rules” and the world either follows along or gets shellacked. We see this in the Ukraine all the time. Russia was sanctioned on what they could bring in and out of the country. That’s crippled companies in every major European nation that previously did tens of billions of dollars worth of commerce with Russia. Yet if they complain, or want the sanctions lifted… “bad things” happen to them.

Consider the situation with the “petro-dollar” for a moment. It’s common knowledge that when someone tries to sell oil in a currency other than dollars, bad things happen to them. Saddam Hussein wanted to sell his oil for Euro’s . We made up a story about weapons of mass destruction and invaded him. Libya’s President wanted to sell their oil for gold. He was overthrown and Libya turned from the most advanced nation on the African continent into something resembling the stone age.

Refresh your mind with this…

Total S.A.  is a French multinational integrated oil and gas company and one of the five "Supermajor" oil companies in the world. Its businesses cover the entire oil and gas chain, from crude oil and natural gas exploration and production to power generation, transportation, refining, petroleum product marketing, and international crude oil and product trading.

Well Christophe De Margerie was indeed the CEO of Total. He made his blunder by telling the world and I quote “ There is no reason to pay for oil in US dollars”.  Shortly thereafter he was “killed” in an incredibly freak accident. That was just coincidence right? Yeah, right.

The bottom line is that the US has a tremendous amount of truly good people. People I enjoy being around. But we tend to be led by psychopathic liars, and evil bankers. The Clinton’s have oodles of dead bodies surrounding their history. Hillary is probably a strong contender to be President but when asked about the horror of Benghazi and her “video” lies  she asks” what difference does it make?” Utterly amazing stuff.

Well, if you’re anyone other than the US, you’ve had to obey what we tell you or pay some form of price for it. Yet there was no other choice. That my friends is changing quickly. China and the Asian alliances want to offer up that choice and it is coming quickly.   

I’ve laid out the story of why gold was capped, and why the Chinese were amassing so much of it. What they needed to do was show the world with official data that they had indeed gotten enough gold to “support” about 5% of their currency. With that amount of “gold backing” they could make the case to the IMF that their currency was now worthy of inclusion into the IMF’s SDR basket. Right now the SDR’s are consisted of Dollars, pounds, Yen and Euro’s. The Chinese want in and I’ve been telling you that for years.

Well now we see some others finally waking up to the idea. MarketWatch published a small article about this topic on Wednesday. Take a look…

LOS ANGELES (MarketWatch) — In what would be a huge milestone in China’s emergence as a major world financial power, the International Monetary Fund looks likely to adopt the country’s currency into the basket that makes up its global forex benchmark.
Or so say strategists at Bank of America Merrill Lynch, writing in a note Wednesday that they believe the IMF will vote this October to include the yuan USDCNY, +0.09%  as one of the units that make up the Fund’s “Special Drawing Rights” (SDR), a sort of meta-currency used in IMF transactions.

As time goes on others will finally figure out the plot and come out to say they predicted this all along. (yeah right)   So, just what is the plot?  The story line is this... to create a system of trade and transactions that are not governed by the US. That in a nutshell is what 99% of all this is about. This is the reason for the BRICS’s bank, and the Chinese infrastructure alliance bank. It is direct competition to the US and it’s IMF/Worldbank cronies.

Once these alternative systems are fully in place, when there’s a complete alternative to the SWIFT system of transacting payments, and where you won’t be fined or shut down for conducting business with a country the US doesn’t like, there’s going to be a huge run away from the dollar. For all intents, the dollar’s days are numbered folks.

The US is desperate to avoid losing economic supremacy. They’re lashing out every where they can. As nation after Nation has now run to sign up with the China Infrastructure bank, the US warned over and over that they’d best not do that. But it wasn’t just one or two nations, it was “everyone”. So we had no choice but to back down  a bit and just remind everyone to be “cautious”. Meanwhile our leaders are seething over it.

What do you really think this mess with Russia is about? Did you drink the US Kool-Aid about Putin wanting to take over Europe and had to be pushed back? I hope not. I hope you’re smarter than that. The Russia “thing” has multiple prongs, but the important one is this… the US knows China won’t do anything too terrible concerning the US. The Chinese have massive investments in US infrastructure, ports, cities, companies etc. The Chinese also like to manufacture doo-dads and widgets for the Americans insatiable desire to buy “stuff”. So the US knows it can sort of work in a symbiotic relationship with China.

But with Russia it’s a different animal. We hold no real sway over their economy, their military or their people. Russia doesn’t rely on the US to buy its goods. That makes Russia very dangerous to the US, because we can’t control them and they have  no terribly good reason to obey US wishes. So seeing them become incredibly buddy-buddy with China, raises all the hairs on their necks. With Russia’s natural resources and huge food production, and military technology; and China’s manufacturing and population…that’s a tag team that shivers the US right down to its boots.  So we have attempted to halt that marriage. Bleed the Russians. Cause an overthrow to someone more willing to obey.

Recently the Dollar has surged. Some take that to mean the US must be doing pretty well, which is completely wrong. The dollar isn’t “based” upon anything than it’s relation to other currencies. So if the Euro goes down, the dollar goes “up” so to speak. Well, considering that the current system is still in place, the dollar has been the “best looking horse in the glue factory”. But here’s the kicker and this is the point of this entire letter… the SYSTEM is going to change.

I’ve predicted that the Chinese are going to get into the SDR basket for over five years. I think it happens this September/October. When that happens, I think a lot of the “capping” of gold will fade off. They won’t let it go crazy, but it won’t have to be held down as much as when China was in “accumulation” mode. The Dollar will have more competition; however it won’t be “direct” just yet. That won’t happen until the global “reset” that’s coming where ALL nations are revalued.

The dollar is doomed. Don’t  laugh, don’t chuckle, write it down. It is doomed. And as it falls from grace there’s going to be disruptions including inflation, shortages, bank outages, etc. None of this will be permanent in my view, but it can screw things up for a considerable time.

In the meantime you all have some time to fortify yourselves, to brace for what we think is coming. Do I think it will be worse than the 2008 financial mess? Yep I do. Is there anything you can do about it? Yep there is.  Are you in a position to get through it? Only you know that for sure. I’d say it is something to consider.

The Market…

Often people tend to think that since these letters are cut into a “commentary” section and a “market” section they are distinct and separate. But that’s not true. What ever the topic we discuss in the areas above, most assuredly affects the happenings in global markets.

As I said above and have said for years now, the world is shifting. We see the evidence of the US trying to maintain its influence by the things we see in the markets.  Everyone knows the central bank is influencing stocks. Everyone knows that corporations are desperately buying back stock to keep their prices up. Fewer connect the dots pertaining to the “darker” things that go on to keep the illusion that the US is strong.

They say banks passed the so called “stress test”.  Yet their assets are still marked to fantasy, not reality. If you’re new to our letters or think I’m just making up crazy talk, just google it for yourself. Banks are still allowed to mark their assets to “model” not to “market’. So their supposed assets are worth what ever they say they are. Do you think that the world doesn’t notice such games? I assure you they do, but until very recently they had no other choice but to play by the US rules.

The US market is still within a whisper of its all-time highs. To get there we’ve got “mark to model” accounting. We’ve got “Pro-forma” accounting instead of reporting GAAP results. We’ve got HUNDEREDS of BILLIONS in corporate buy backs. We’ve got fake employment numbers. Fake inflation numbers. Fake housing data. Why anyone would believe a single thing we’re told any more is beyond me.

We’re at the end of the first quarter. In that first quarter we’ve had approximately 52 out of 60 economic reports “miss” the estimates. Yet the market holds firm. The Atlanta Fed says they think first quarter GDP will be in the range of 0.3% and a whopping 30% of that came from people forced to buy Obama-care. Yet the market  is just roughly 500 points from its all time high.

This charade has gone on longer than most would have thought. Do you ever wonder why incredibly intelligent hedge fund managers are “lagging” the overall markets returns? Because they’re SMART they think stocks should be lower. They don’t buy as much as they could. And yet the market leaves them in the dust.  When brilliant people cannot fathom the idea of the market being this high, it’s a sure sign that it shouldn't be this high.

I’m in the same boat. I’ve only got 35% of our little 401K in stock funds. We take “long side trades” but we keep position size lower than we want and take profits too early. Why? Because this market SHOULD NOT be where it’s at. But yet…it is.

This week the DOW and the S&P fell for 4 straight days and then eeked out a small gain on Friday. It was a terrible week for the bulls. So we have to ask the question…has the market “topped” and we’re beginning a long slow grind lower from here?  Just to suggest that for the last 4 years has been a recipe for howling laughter. This market only seems to go “up”.

But we feel that autumn of this year there could be some interesting events taking place and it wouldn’t be unusual for the market to start fading 6 months ahead of a rough patch. If you look at the DOW high of March 3, six months later would be September 3. The very month we’re going to get some interesting scenario’s.

If you  take a look at market history, the week coming up is generally a decent one. We end the second week after the March expiration's to the positive side much more than we encounter a falling market. Considering it is a Holiday shortened week, and history shows us it is generally a good week, I have no problem thinking we might put in a bounce this week. But here’s the catch…

We set a market high on March 3 at 18,288. Then we plunged all the way down to 17,635. They rushed in to buy the dip, but we only made it to 18,127 before rolling lower again. If we don’t see the market bounce and get us over that close of 18,127…then the pattern of “lower highs” will be in place.  That is NOT a bullish sign.

So I’m okay thinking we green up this week, but pay attention to how far we get folks. If we get back to near 18,127 and it runs out of gas, we might actually have to consider the idea that the run is over and this market is destined to start working its way lower.

Have a great weekend and we’ll see you all on Wednesday evening.

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