Jim’s Mailbox

Posted at 9:15 AM (CST) by & filed under Jim's Mailbox.

Jim/Bill,

On Saturday, Denny asked what Turkey’s breaking with NATO would mean for the USA as the former world leader.

Dave

Post-Trump, Macron Is Enlightened And Sochi Is The New Washington
November 2, 2019

Now that it’s all over but the shouting, a few people need to be thinking about the future, as Trump’s long-delayed impeachment gets underway. In the US, this will be a difficult exercise, due to the riveting, minute by minute coverage of a process that will continue for months, leading into the 2020 presidential election. However, on a positive note, America’s soap opera is forcing Europeans to begin a process that that has been delayed since the fall of the Berlin Wall and the dissolution of the Soviet Union.

Decades after these earth-shattering events, Europe is weakened by the triple difficulties of immigration, right-wing populism and continued obedience to Washington. As French President Emanuel Macron takes over from Angela Merkel’s decades-long leadership, Europe is no longer a model for social-democracy, but a cacophony. Although France is ‘the US’s closest ally after Great Britain’, only the website of a Russian-American known as The Saker publicized Macron’s recent, stunning acknowledgement that the world is fundamentally changing. In a yearly speech to France’s Foreign Ambassadors that reflects an education system based upon the rigorous analysis of complex ideas, (incarnated in the ‘dissertation’ that even science majors must master) forty-one year-old Macron announced that the international order is being shaken to its roots “by the great upheaval taking place for the first time in history.”

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Jim/Bill,

On Saturday, we talked about gun barrel diplomacy.

Dave

China Breaks The Western Debt Stranglehold On The World
November 2, 2019

The difference between the west and east is stark. While anybody and any country that does not agree with the US dictate and doctrine, risks being regime-changed or bombed, China does not impose her new Silk Road – the BRI – to any country. China invites, respecting national sovereignty. Who wants to join is welcome to do so. That applies as much to the Global South, as it does to Europe.

China’s President Xi Jinping launched the BRI in 2013. In 2014 Mr. Xi visited Madame Merkel in Germany, offering her to be at that time the western-most link to the BRI. Ms. Merkel under the spell of Washington, declined. President Xi returned and China continued working quietly on this fabulous worldwide economic development project – BRI – THE economic venture of the 21st Century, so massive that it was incorporated in 2017 into the Chinese Constitution.

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Jim/Bill,
Ever wonder why skyscrapers aren’t built 200, 300, 500, or more stories high?
The foundation can’t support them.
No different with debt.
Collapse is imminent.
This is a chart worthy to hang on your wall for a continual reminder of our precarious position:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

And this one points to the growing fear pervasive at the FED:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Be afraid. VERY afraid.
CIGA Wolfgang Rech

The ‘Mother Of All Bubbles’ Could Blow Up The Economy If Profits Don’t Improve, Warns Blackstone Strategist
November 4, 2019

“When we try to pick out anything by itself, we find it hitched to everything else in the universe,” wrote famed naturalist John Muir more than a century ago, referring to an epiphany he had while hiking in California’s Yosemite Valley.

In our call of the day, Blackstone BX, -1.04% strategist Joseph Zidle offers a similar take, but with dollar signs instead of granite cliffs.

“At the end of any economic cycle, we often get warnings that appear to be unrelated,” he wrotein a recent not. “It’s in hindsight that we realize that they were not at all random.” Investors saw this during the runup and aftermath of the housing bubble, he added, and we’re seeing it now.

Among the recent troubles he thinks are connected are repo market woes, negative-yielding debt, global trade conflicts and collapsing manufacturing. And every cycle ends with excess.

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Bill/Jim,

When JPM begins forfeiting higher yields from corporate lending, and parks its stash in 1.5% government bonds, it should send a red flag to all.

Expect a wave a defaults.  Not that “govvies” will protect them should yields soar on oversupply, but at least they’ll have a more liquid exit door.

This is NOT the bull market and roaring economy we are led to believe.

CIGA Wolfgang Rech

As I wrote in my article for subscribers today, “don’t listen to what they say, watch for what exactly they are doing”!

Bill

JPMorgan Pours $130bn Of Excess Cash Into Bonds In Major Shift
November 3, 2019

JPMorgan Chase has pushed more than $130bn of excess cash into long-dated bonds and cut the amount of loans it holds, marking a major shift in how the largest US bank by assets manages its enormous balance sheet. The moves, which have seen the bank’s bond portfolio increase by 50 per cent, are prompted by capital rules that treat loans as riskier than bonds. As it continues to return billions of dollars to shareholders in dividends and share buybacks each year, JPMorgan has less room than some rivals to hold riskier assets.

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