THE FED CONTINUED FROM 1 JULY

In an article in the Washington Post about the Fed actions had some interesting revelations and warnings.  The article was written by Rachel Siegel on June 29^th, 2020 in italics.

“The Federal Reserve’s disclosure that it could purchase the debt of massive companies such as Apple and Microsoft, as well as U.S. subsidiaries of foreign firms, triggered a fresh debate about the central bank’s norm-shattering response to the economic crisis and whether its efforts are going to the neediest slices of the economy.”  Are these actions of a disparate Fed to keep up the optics of a happy stock market?Remember this- Apple, the highest valued company in the S&P 500, gained 43.5% in the second quarter.  Why bailout a company that had no need for the boost?  Is it for the optics of the stock market to keep Droopy Don happy?

“The Fed on Sunday disclosed its index of nearly 800 companies, including Verizon, Comcast and U.S. divisions of Toyota, Volkswagen, Daimler and BMW. The index essentially represents a snapshot used to guide the Fed’s corporate debt purchases — and widens the scope of questions the Fed could face as it tries to prevent a broader economic collapse. The central bank has said it launched the corporate debt program to support the markets and, in turn, companies in need of cash that are also vying to keep workers on the payrolls.” 

The Fed’s stated goal of supporting the markets, has given the market the biggest boost since 1998. The second quarter gains were 20% for the S&P 500, which followed the worst quarter since 2008.  The Fed is using taxpayer monies to support the markets with inherent risk.  The companies that are paying their employees during the shutdowns may get grants for their efforts and debt forgiveness that goes to the deferred national debt. 

“But as with much of the Fed’s recession response, the central bank has never bought corporate debt like this before and it’s unclear what the implications of its actions will be.”

“William Slaughter, senior portfolio manager at Northwest Passage Capital Advisors, tweeted that ‘it is exceedingly hard to fathom what public interest the Fed is serving by buying bonds of [Apple], [Microsoft] and [Oracle]’. Pointing to the foreign automakers that came in near the top of the index, Slaughter asked, ‘should the Fed really make it easier to lease your next Porsche?’ (The luxury car company is owned by Volkswagen.)”

The fact that the Fed is going where they have never gone before may have dire consequences if the vaccine is not available. The Fed is basing decisions on this administrations magical thinking. The Fed is normally risk-adverse. These actions are like gambling with taxpayer money. The question is this- will the Fed forgive large company debt if they keep employees on the payroll as a grant, adding to the national debt deferred until next year?

The stock markets were unusually happy as a result of great news from the mortgage industry as well. The Fed, using its low interest rates as incentives, has investors gobbling up marginal properties and making risky investments and borrowing from banks that are now allowed to invest in these entities circa 2008.

As a result, the Trump Administration is using a metric that loses its meaning when put in context. The mortgage market froze up in March and April and had some of the lowest numbers of mortgage contracts in history. Then the Fed lowered the prime interest rate to near 0% and relaxed the rules to allowed marginal buyers in the market. The statistic used by the Fed to boost the stock markets was its record breaking 44.3% rise in new mortgage contracts to buy homes in May.  I thought it important to point out the similarity to 2008.

2008 and 2020 are years where the administration controlling the reins of government and realized they no longer going to be in control decided to go out destroying the economy by making one bad decision after another each compounding to the inurement of the upper levels of the income ladder expanding the rich poor income divide.  All the actions of the Fed this year have led me to think its déjà vu.

The Fed data output seems to be all optics. For example, the next jobs report for June due this week is said to taut a new June record job creation number of 3 million.  This will have surpassed the 2.5 million new jobs recorded in May. The data is good, the optics are great, however, this snapshot context does not address the 20 million jobs lost in April.

As is shown above, the theme is optics of the stock market and to hell with the remainder of the economy. And by the way, if there is no vaccine by next year, too bad.  It’s all deferred debt.  There are a few things that should cool investors. 

The first is the European Union baring U.S. citizens from entering their countries as a result of Droopy Don’s response to the virus.  The second is Dr. Fauci announcing the potential for a surge of up to 100,000 cases a day if everyone does not follow guidelines.  That could come with up to with a current mortality rate of approx. 3.4% it would have 3,400 deaths/day or the equivalent of one 911 event every day (death rate calculated by adding cases + recovered cases and taking the total deaths and dividing by the sum.) That’s 2.7 million people infected, 1.2 million recovered and 131,000 deaths as of July 1, 2020. The third potential for a hiccup could be the fear of higher interest rates with the upcoming elections. The largest potential for a collapse of the market is the lack of a vaccine by the promised year-end.  Magical thinking and great optics are the only things running the stock market.

 It has been estimated that it will take 36 months to return to unemployment numbers as was recorded at the first of the year. I am skeptical whether the BLS fixed the inherent errors in recording so everyone can get a more accurate picture of rates of unemployment.  Economists think it may be between 12-15% and may be higher than last month if they correct the polling problems.  My prediction is around 13% is what will be officially recorded by the Fed. The details will delve into the actual misery created by the pandemic. I am sure of one thing, it will be a dazzling, spectacular, optically amazing piece of tainted BS until you read the details hidden on page 45.

A WAKE-UP CALL?

Osama Bin Laden was a Sunni Muslim, a Saudi citizen and his Taliban enablers all Sunni Muslims, were indoctrinated in the Madrassas, religious indoctrination schools in Afghanistan.  They were funded by the Saudi Kingdom to counter the popularity of the Ayatollah Khomeini, a Shiite Muslim that was installed as the supreme leader of Iran.  The whole of the Middle East can be summed up by the conflict between Shiite and Sunni Muslims.

The Afghanistan conflict between the Taliban Sunni forces supported by the Russians with arms and monetary support and the coalition forces made up of NATO allies was originally a result of the assault on the World Trade center on 911.  All the individuals that were involved in the 2 planes crashing into the world trade center were Sunni Muslims, and all but 2 were Saudi citizens the other two were from Yemen.

President Trump is impulsive and knows of no historical or political context to any actions he takes in the Middle East. He took action to kill Iranian General Soleimani, a Sunni, who was mistaken to be the leader of the attack on coalition forces in the green zone killing a U.S soldier. 

The reason for this information is to counter the White House Press Secretary Kaleigh McEnany. She had referred to the killing of an Iranian General as “Trump’s decisiveness and immediate action”, when confronted with intelligence about the killing of a soldier in Iraq.  And how, if the intelligence was credible, he would have taken immediate action.

The action by the President was so impulsive that it was construed as an act of war by Iran, that we killed their beloved General.  As a result, Iran was so worried that there would be additional conflict, it shot down one of its own aircraft mistaking it for an attack.

The facts came out that the General was on a peace mission in an attempt to broker a lasting resolution of the Sunni/Shiite conflicts going on in Iraq.  The truck that fired the missile into the green zone was found the next day with the launcher in the back and was owned by a Sunni Arab and may have been an ISIS fighter.

I guess he thinks an ex-KGB agent is more credible than his own intelligence agencies when it came to Russia and the 2016 election interference, even though Russian agents were indicted? And all 12 intelligence agencies concurred that Russia interfered in the 2016 election.

In Syria and Northern Iraq, the Sunni Arab ISIS forces are also supported by Russia killing U.S troops.  Russian troops attacked the U.S. in Northern Iraq and American soldiers and were slaughtered.

Is this a pattern we should look at?  Why are there no consequences for the Saudi Kingdom for their actions? Why doesn’t Droopy Don deal with the atrocities Russia has committed?  If we are the enemy of the Saudi Kingdom why do they still deal with us?  The Answer is this: the U.S. has weapons and the U.S. people are the enemy of their mortal enemy the Shiite Persian Iranians, it’s that simple.  Saudi Arabia has been, and still is, in most respects a closed society.  Does Droopy Don not want to anger the Saudis because of his arms deal to arm the Middle East to the teeth? 

The Saudi Sunni Arabs have shown no respect for American Journalists and Killing Jamal Khashoggi in a Saudi Embassy because he expressed his opinion, was justification?  Saudi and Yemeini Sunni Arabs are responsible for 911.  Why do we treat them as our friends?

It has been reported that the Taliban again Sunni Muslims in Afghanistan, where both the Saudis and the Russians operate, are being paid a bounty to kill coalition forces by Russian GRU agents. The Russians can’t be held accountable After all, Droopy Don has been compromised by Vlad.  Will there be any consequences?  There are no excuses for inaction or at least curiosity to determine facts.  If reporting is accurate, he has been derelict in his duty to the troops, and to this country…again.