In The News Today

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Bill Holter’s Commentary

This would be the math for you…

Endgame: Starting In 2024, All US Debt Issuance Will Be Used To Pay Only For Interest On Debt
July 31, 2019

hile it is common knowledge that the US budget deficit is soaring even though the US economy is allegedly growing at a brisk, mid-2% pace (and yet the Fed is about to cut rates), resulting in recurring bond trader nightmares about funding the growing twin US deficits (Budget and Current Account), what few people know is the increasingly ominous composition of this budget deficit.

As we first pointed out back in March, when looking at the US ‘income statement’, most concerning by far is that for the first four months of fiscal year 2019, interest payments on the U.S. national debt hit $221 billion, 9% more than in the same five-month period last year, with the rate of increase breathtaking (see chart below). As a reminder, according to the Treasury’s conservative budget estimates, interest on the U.S. public debt is on track to reach a record $591 billion this fiscal year, more than the entire budget deficit in FY 2014 ($483 BN) or FY 2015 ($439 BN), and equates to almost 3% of estimated GDP, the highest percentage since 2011. In fact, as of June 30, US interest had already surpassed $600 billion.

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J. Johnson’s Latest – Testing the Resolute(s)
August 1, 2019

Great and Wonderful Thursday Morning Folks!  

     It looks like the Silver signal worked this time with the precious metals trading lower after the Federal Reserve’s partial ¼% rate cut with Gold’s trade at $1,418.30, down $19.50 after being dropped to $1,414.50 with the high at $1,428.60. Silver is leading the decline with its trade at $16.01, down 39.5 cents and close to the low at $15.955 and the high to beat at $16.305. The US Dollar benefited from the actions from the Fed Reserve with the Dollar’s value now at 98.64 up 38.2 points and close to the high at 98.70 with the low at 98.365 (We feel this should have gone in the opposite direction, and it will, in time). All of this activity happened way before my normal time of 5 am pst, the Comex open, and the London close.  

     Another note here is the closing of Silver and Gold’s trades at the Comex. The precious metals get closed out a half an hour before the Federal Reserve announcements, but the US Dollar (and all other currencies) stay open for another hours’ time after the Fed posting. The closing prices between real money and fiat have a 1 ½ hour spread in which the “closing price game” is played. Which is why we see more volatile movements in Silver and Gold, the day after the Federal Reserve’s announcement.    

     Our precious metals markets were not treated well in the emerging currency markets as Gold’s price under the Venezuelan Bolivar lost 251.69 in value with the price at 14,165.27 Bolivar, with Silver losing 4.594 with its price at 159.900 Bolivar. In Argentina, the Peso now has Gold priced at 62,149.20 A-Pesos proving a loss of 1,205.88 with Silver losing 21.362 with the price at 701.558 A-Pesos. Over in Turkey, the Lira now has Gold priced at 7,908.98 it too showing a loss of 68.09 in T-Lira value with Silver also down 1.737 with the Lira price at 89.2941.    

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Bill Holter’s Commentary

…and this is only the start!

They Said What? Here Are The 13 Nuttiest Quotes From Wednesday’s Democratic Presidential Debate
July 31, 2019

Are these really the best and brightest that the Democratic Party has to offer? It was going to take a monumental effort to top Marianne Williamson’s level of craziness on Tuesday night, but on Wednesday there were several Democratic contenders that gave it their best shot. Kirsten Gillibrand and Jay Inslee were particularly unhinged, and Joe Biden “repeatedly stumbled over numbers and phrases” during an incoherent performance that will be remembered for a long time to come. The Democrats may have more than 20 candidates running, but none of them looks like a president at this point. Perhaps that will change, or perhaps a stronger candidate will enter the race eventually, but right now Democratic strategists cannot be feeling too good about their chances of winning the 2020 election. Of course Republicans are facing some very serious challenges of their own, but at least they don’t have to worry about a powerhouse candidate on the other side.

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Bill Holter’s Commentary

Now rate cuts are bearish for gold? Is there any condition “they” will tell you is bullish for gold? Gold IS money and thus as Ronan Manly claims, “the ultimate asset”!

Gold the Ultimate Asset as Fed Joins Race to the Bottom in Global Rates
July 31, 2019

The US Federal Reserve’s Federal Open Market Committee (FOMC) today announced a 0.25% cut in the influential US federal funds rate from a target range of 2.25% – 2.50% to a target range of 2.00% – 2.25%, a move which was closely watched and widely signaled, but which was the first such fed funds rate cut in over 10 years.

As an official interest rate which affects all other US interest rates including bank-to-bank overnight loans, the US Federal Reserve uses changes in its fed funds rate to manipulate US economic growth, but its impact is even more far-reaching, influencing as it does the relative strength of the US dollar versus other currencies, and the interest rate decisions of the world’s other major central banks.

Confirmation of the cut – officially called a policy action – came at the end of the Fed’s two-day July meeting. In the hours before the Fed announcement, Comex gold dropped a few dollars to the $1420 range and the US dollar went higher, looking very like paint taping to make the market’s reaction to the announcement more muted.

With this current rate cut, its all in the timing, and today’s cut follows a 3 year period in which Fed hiked the fed funds rate 9 times between December 2015 to December 2018 from 0.25% to 2.50%. But those hikes followed an 8 year period in which the Fed held the rate at 0.25% starting with the 2008 financial crisis right up to the end of 2015. As such, this fresh fed funds rate cut is a pivotal point in the US interest rate cycle, and has the markets in consternation over whether it will be a one off easing or the beginning of a new easing cycle.

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