Put on your macroeconomics hat and hold on for a wild, brain-stimulating ride as Lance dives into the GDP formula and explains the President’s monumental speech at the Asia Economic Summit in Vietnam last week.
This week’s show features commentary on President Trump’s monumental speech at the Asia Economic Summit in Vietnam last week.
Folks, this speech from the President was bigger than all other stories combined.
Of course Democrats want huge tax increases. Tax increases cause expanding deadweight loss and ultimately contract economic growth. Democrats clearly want to crash the economy while President Trump is in office to make sure that he’s a one-term President only.
Of course Schiff works in the gold promotion industry and so it’s not surprising to hear all the ways Schiff interprets the news as being good for gold. He’s been wrong since 2012 when gold peaked but eventually he’ll be right again, at least for a little while.
Minus the gold bug doom and gloom spinning, let’s look at what’s really going on with the push to end the debt ceiling.
President Trump said he would think about working with Democrats to end the limit on the country’s borrowing. According to The Washington Post, Trump and Schumer have agreed to work on a plan to eliminate the debt ceiling.
President Trump told reporters on Thursday that “there are a lot of good reasons” to get rid of it.
Speaker of the House Paul Ryan, R-Wis., specifically has come out against eliminating the debt ceiling.
Republicans Dishonest About The Debt Ceiling
Republicans have been dishonest about the debt ceiling for many years. The debt ceiling has nothing to do with being fiscally responsible. In fact, it is just the opposite. Using the debt ceiling to control spending is like a corporation using Accounts Payable to control costs. Dumb, right? In a corporation, Accounts Payable writes the check and mails it to a vendor. It would be detrimental to the health of a corporation for the boss to tell Accounts Payable to stop writing checks and paying vendors as a way to control costs. Vendors would stop doing work for the corporation and the entire business would implode. A boss controls costs by making decisions BEFORE an invoice gets to Accounts Payable for payment.
Another analogy is declining to pay a credit card bill or agreeing to go to dinner and then arguing about whether you’re going to pay the bill, after you’ve already eaten.
Congress is dumb to threaten to not pay its bills as a means of controlling costs. It destabilizes the country and sends the message that it’s risky working for or doing business with the US government. The time to control costs is during the budget approval process and NOT after the debt has already been incurred.
The debt ceiling is hardly more than a public manipulation tool of Congressmen to fool voters into thinking they are trying to control costs by voting against raising the debt ceiling, while at the same time voting for the government programs that caused the ceiling to be hit in the first place!
When Republicans took back the House in 1995, they brought back the debt ceiling vote as a way to pressure members on spending. Republicans would waver back and forth on using the debt ceiling vote. Sometimes they’d use the budget procedure to wave it through, and then other times they’d require the vote. It’s silly because it’s just politics and grandstanding. I mean how effective has the debt ceiling really been considering we have $20 trillion in debt?
If Republicans really wanted to control spending then they would vote for budgetary and spending decisions that would balance the budget. If Republicans really wanted to reduce government spending they would do that because that’s where the money is spent.
Richard Gephardt, D-Mo. has proposed the ‘Gephardt rule,’ which does away with the need for a second debt ceiling vote to approve borrowing once Congress has already voted once to approve spending that inherently necessitates borrowing.
Peter Schiff doesn’t know what he’s talking about when he claims that President Trump is for big spending and even bigger government and that his working with Democrats to end the second debt ceiling vote is somehow proof of that. I’m not sure Schiff himself honestly believes that. I think Schiff is playing to his alternative-news audience which are primarily gold bugs. Any bit of news that can be spun to support some lofty $5,000 an ounce for gold prediction, is what Peter Schiff does and boy does he do it well.
The North Korea nuclear test over the long labor day weekend in the U.S. is exactly why we try and close out of all long positions over the weekend news cycle. Sunday’s nuclear test by North Korea had an estimated strength of 50 kilotons which is 3x larger than the nuclear bomb that destroyed Hiroshima in 1945.
The stock market had a big run-up over the last week and so the news of North Korea’s nuclear test could be a catalyst for profit taking and a market pullback; however, this is not the first time North Korea has conducted a nuclear test. North Korea has conducted six nuclear tests, in 2006, 2009, 2013, twice in 2016, and 2017.
2006 North Korea Nuclear Test
The 2006 North Korean nuclear test was on October 9, 2006. On October 20, 2006, Kim Jong-il allegedly said that he was “sorry” over his country’s nuclear test, and wished to return to talk with the United Nations. On October 31, 2006, North Korea agreed to rejoin six-nation disarmament talks.
At a meeting with President Vladimir Putin, Russian Defense Minister Sergei Ivanov stated that the power of the tests carried out was between 5 and 15 kilotons.
2009 North Korean Nuclear Test
The 2009 North Korean nuclear test was an underground detonation of a nuclear device on Monday, May 25, 2009. The estimated yield was 2.35 kilotons.
The 2009 North Korea nuclear test came against a backdrop of uncertainty about North Korea’s leader Kim Jong-il and who might succeed him. Mr. Kim suffered a stroke in August 2008 which prompted him to step up preparations to transfer power to one of his three known sons. Analysts believe the favorite son is his youngest, Kim Jong-un, who was in his mid-20s at the time.
2013 North Korea Nuclear Test
North Korea’s 2013 nuclear test occurred on February 12, 2013. It was an underground test. The USGS detected a 5.1 nuclear tremor. The nuclear blast had an estimated yield of 14 kilotons.
2016 North Korea Nuclear Test
North Korea conducted two tests in 2016. The first test was done on January 6, 2016 and the second on September 9, 2016.
The earthquake caused by the January 2016 nuclear test was 5.1 magnitude and was estimated to have a yield of 6 to 9 kilotons. North Korea declared that the 2016 test was a “successful” demonstration of a hydrogen bomb. Many expressed skepticism because the explosion was too small. Bruce W. Bennett, senior defense analyst of the RAND Corporation told BBC News that “the bang they should have gotten would have been 10 times greater… So Kim Jong-un is either lying, saying they did a hydrogen test when they didn’t, they just used a little bit more efficient fission weapon – or the hydrogen part of the test really didn’t work very well or the fission part didn’t work very well.”
The September 9, 2016 nuclear test occurred on the 68th anniversary of the founding of North Korea. The estimated yield was between 10 and 20 kilotons.
The UN Security Council finally figured out that China was supporting North Korea’s nuclear program. US Secretary of Defense Ash Carter stated in a press conference that “China has and shares an important responsibility for this development and has an important responsibility to reverse it”. China did not confirm its support for tougher sanctions against North Korea.
2017 North Korea Nuclear Test
North Korea conducted a nuclear test on September 3, 2017. The USGS reported a 6.3 magnitude earthquare near North Korea’s Punggye-ri nuclear test site. This was the largest nuclear weapon test to date with a nuclear yield of between 50 to 100 kilotons. North Korea claimed that they detonated a hydrogen bomb that can be loaded onto an intercontinental ballistic missile (ICBM).
Trumps Failed Talk Tough Policy
President Trump’s policy of “talking tough” has clearly failed.
Right. Well it happened Mr. President. It happened.
Ok so Kim Jong Un made a wise decision to not fire missiles at Guam. If that was wise, what do you call detonating a hydrogen bomb and threatening to put it on an ICBM and fire it at the United States? Perhaps unwise? Talk about straining out a gnat yet swallowing a camel!
The only option left for President Trump is to move forward with a massive bombing and invasion of North Korea. I think this is what the Generals that are advising President Trump are saying. I think John Bolton’s appearance yesterday on Fox News is exactly what the Generals that advise the President are saying:
With all the North Korea drama as well as the fact that September is the worst month of the year for the stock market, a VIX play like UVXY is the way to go IMO. Don’t place a market order to buy UVXY automatically at the open. UVXY could do an open gap up and then fade down or do an open gap down and then fade up. Instead, we want to see what institutional traders and hedge funds with their ALGOs are going to do first. Within 15 minutes of market open, we should have a good idea if we want to go for a quick scalp trade in UVXY.
I’m not buying that the pull back in markets is over so I’m taking out some insurance by going long TWM in my personal trading account.
Looking at the chart of low volatility safe stocks versus risk-on high beta stocks really puts today’s price action into perspective IMO:
Today’s up day doesn’t even register on the TSI which continues to fall.
You would think that with markets up so much today that we would have institutional traders buying. Not so according to the TICK. The TICK chart below, while not EOD which is what counts, shows the absence of broad-based institutional traders buying this market:
Proshares UltraShort Russell 2000 Chart
The up move today in markets looks like an opportunity to short the market. The gambit is that markets will experience a dead-cat bounce. TWM looks like a good way to play this market.
The large players volume has been rising over the last couple of weeks and the Twiggs Money Flow confirms traders are shorting the market on rallies.
President Trump Sanctions China and Russia Over North Korea
President Trump made a big mistake today by putting sanctions against China and Russia over North Korea’s nuclear program. Trump’s actions don’t fix the problem, they just expand the conflict to include more countries who are pushed together in alliances against the U.S. You can read more about the new sanctions against China and Russia here.
Russia expels US diplomats in retaliation for Congress increasing sanctions against Russia last week. Let’s just get it out of the way. Congress is stupid. Congress can’t act to help Americans who are suffering under a collapsing ObamaCare. Congress can’t help out Americans who are paying too much in taxes. Congress can’t even act to help the failing infrastructure across this country.
Folks I’m on the verge of exercising my constitutional right to take up arms against my government. Alright so maybe that’s not a constitutional right but it should be one! I’m thinking of Thomas Jefferson saying, “a little rebellion now and then is a good thing.”
Sanctions never should have been put against Russia for Ukraine. John “traitor” McCain and others in Congress worked with George Soros and the Obama Administration and used NGOs to destabilize Ukraine and oust an elected leader. It is illegal for the US government to use tax payers money to overthrow an elected leader.
Those inside the US government did it to gain control of the oil pipelines in Crimea and to move NATO missiles into the country to point at Russia.
Ukraine is right on the doorstep of Russia. How would we feel if China used NGOs to overthrow the government of Canada or Mexico so that they could control the flow of oil from Canada into the US and point missiles at us from across the border?
President Trump Is a Colossal Failure On Dealing With Russia
President Trump should have ended sanctions against Russia and apologized for what the former Administration and those in Congress like John McCain had done. Instead, Trump got manipulated by the Establishment like a school boy going to the restroom without a hall pass.
I got this fake Trump email in my inbox today from the Republican party. First, read the email supposedly from President Trump and then I’ll explain why it’s fake. Note: Every CONTRIBUTE word below is actually a button in the email that links to a Republican website for processing donations.
Fake Trump Republican Email Blast Sent Out On 7/28/17
From: Donald J. Trump [firstname.lastname@example.org]
Subject: White Noise
Date: Fri, Jul 28, 2017 at 1:45 PM
Can you believe it? I’ve been in office now for six months, fighting back against the liberals and their crony agenda for YOU — the Americans who have supported me through thick and thin.
DESPITE their endless lies and the flood of Fake News, we’ve accomplished so much already — all thanks to YOUR incredible support. Together we’ve brought back thousands of jobs, fought back against radical Islamic terrorists, and scrapped the CORRUPT globalist deals that drain our wallets and weaken America.
But the Washington status quo HATES what we’re doing. They’ve made a lot of money off of business as usual. And now they’re fighting back…
That’s why I’m turning to YOU as our end-of-month deadline approaches, Lance. We must end the month STRONG.
CONTRIBUTE OTHER AMOUNT
You voted me into office to focus on the issues – unlike the FAKE NEWS media which only cares about peddling phony stories and lies that our movement is losing support.
We can’t let the opposition gain any ground. We MUST show them that their hateful bullying hasn’t weakened our resolve to work together for this beautiful country you and I love.
I’m reaching out to you personally to help us crush this goal and show the failing “journalists” at CNN and all the other liberals that they’re nothing but Fake News and white noise.
They’ll try to attack us no matter what, but when we PROVE YET AGAIN that you — my loyal supporters — are still behind our movement, we will beat the clueless Democrats and the failing liberal news networks at their own game.
Help us crush our End-of-Month goal to show the opposition that you, the American people, stand behind our America First Agenda by contributing $100, $50, $35, $15 or even $5 today.
THANK YOU FOR STANDING BY MY SIDE!
Donald J. Trump
P.S. MAKE AMERICA GREAT AGAIN!
Paid for by the Republican National Committee. Not authorized by any candidate or candidate’s committee. www.GOP.com
We believe this is an important way to reach our grassroots supporters with the most up-to-date information regarding the efforts of the Republican Party and President Trump, and we’re glad you’re on our team. It’s because of grassroots supporters like you that we will Make America Great Again, and we appreciate your support. Thank you for all that you do!
Why President Trump Didn’t Write This Email
Funny that an email being critical of fake news is itself a fake Trump email. It’s a fake fake thing.
Notice how well written the email is with proper grammar and punctuation. President Trump does not speak or write with college-level grammar and punctuation like this. President Trump has spent his life working in the business sector which strives to communicate at a 6th grade level so that commands are quick, clear, and concise. In the business world Trump comes from, anyone using the “King’s English” is told to communicate in simple, short, and direct terms at nothing higher than a 6th grade writing level. It’s impossible to suspend disbelief and actually believe that President Trump personally wrote this email.
Republican Party Sees Trump As a Marketing Ploy
The Republican party seems to be a bit weak on fundraising and marketing skills. They packaged Trump’s fake news and Twitter comments into a brand that they can raise money from. Reality check: the Republican party did everything it could to sabotage Trump’s run for office. They even made Trump sign a pledge that he wouldn’t go to the Independent party to which Trump signed the pledge and told them as long as they treat him fairly. The Republican party did not treat him fairly. The Republican Establishment used Fox News and Bill O’Reilly and Megyn Kelly to launch attack after attack against then candidate Trump, likely at the bequest of the Bush family.
The Republican party stacked the audiences at the Presidential debates in favor of Jeb Bush and Marco Rubio. That is why the TV audience always heard cheers for Jeb and Rubio, and often boos for Trump. Audience stacking was psychological manipulation of the TV audience with the intent of giving the audience at home the impression that Trump lost each debate.
When Marco Rubio said bad things against Trump, the Republican mainstream media hardly reported it but when Trump said something against Rubio, Fox News and Bill O’Reilly and Megyn Kelly went out of their way to report what Trump said and then use it to bash him. Only Sean Hannity’s program wasn’t involved in the blatant attempt to defeat Trump.
The Republican party set up PACS to defeat Trump. The Republican party did not financially help Trump until the very, very end of the campaign. The Republican party spent millions on helping other candidates. Trump had to go to the American people to ask for money and then he had to put up his own money. Basically the Republican party thinks you and I are stupid and that we have forgotten their despicable role in trying to defeat Trump.
The GOP has some nerve now trying to ask us for money.
The Republican Establishment Is to Blame For the Financial Crisis
The only reason that a socialist like Obama won the White House twice is that the public was outraged by President Bush’s stupid deregulation agenda that led to the unbridled pursuit of greed which led to the complete collapse of the global financial system. Also, Obama won because he was african-american and many hoped that the election of the first african-american president would improve race relations in this country. Obama and the people he appointed to office turned out to be a disaster for race relations in this country.
Everything that Obama did that has harmful to the private sector was the result of President Bush deregulating everything and everyone and allowing them to do whatever the heck they wanted. We had CC fraud, home mortgage fraud, investing fraud, banking fraud, education fraud, environmental fraud, and so on.
Don’t get me wrong. Democrats and Obama are to blame for what they did when they had the White House. Nevertheless, Bush and the Republican Establishment are to blame for Obama and Democrats getting into the White House in the first-place.
A Vote For Trump Was A Vote For Trump
A vote for Trump was not a vote for the Republican party. It was a vote for Trump. Sure, many people will vote for whoever a party puts forth as a candidate. But many people, myself included, refuse to be put into a prison where we have to vote for a candidate of a particular party. Many of us voted for Trump to drain the swamp and that includes ousting Republican and Democrat Establishment people.
The Republican party’s cheap trick at sending out a fake Trump email in order to raise money for the GOP, who tried to prevent Trump from getting in the White House in the first-place, must have been a hard pride-pill to swallow.
Most people voted for President Trump because they want better jobs and financial opportunities. We all know that the mainstream media (that includes Fox News) is a propaganda machine used by the rich and powerful. All this talk of fake news is silly, especially within the context of a fake Trump fund raising email.
What are your thoughts on the mass Republican spam email sent out this morning? Will you be donating? Leave your comments below.
Scaramucci is one tough dude brought in as the axe to purge Obama leftovers from positions of power who are hell-bent on leaking information to the press in an attempt to discredit and derail the Trump agenda.
I called for a purging of Obama leftovers from deep-state positions months ago. President Trump acted really gullible IMO. I’m so tired of watching these amateur newbies like Trump who get elected to office and then are in some serotonin fantasy of everyone holding hands and singing kumbaya and just all getting along. It’s a stupid fantasy that I called out Trump on months ago.
Finally, President Trump seems to have learned the lesson through the school of hard knocks that he needs to purge the White House and all government offices of Obama leftovers that are trying their best to sabotage his agenda.
These Obama leftovers are some sick people with communist and socialist agendas. They have high levels of security clearance and can record telephone conversations and release those conversations to Democrat controlled mainstream media groups. They are waging a silent coup against the President using the full power of the deep-state.
The President brought in the axe Scaramucci who may even recommend the firing of Reince Priebus and any other Republican Establishment dude that’s not fully on-board with the President.
Scaramucci is carrying the full-anger of the President with him and that was put on display when he said he wanted to “kill” the leakers who are trying to sabotage the President’s America first agenda.
Scaramucci called in to CNN and really laid out what is going on with the leaks and how emotionally attached he is to solving the problem:
Sean Hannity of Fox News did this interview with Scaramucci a.k.a “the axe” and the purge that’s coming to the White House and government:
I don’t think traders and the stock market care too much about leaks. This is more of a national security issue than it is a stock market issue. We are seeing a delay of the President’s agenda as a result of saboteurs inside the deep-state which is likely resulting in the drop of the US dollar. However the market has mostly shrugged off Trump agenda delays believing that eventually the President will get control of the situation. I think that’s what Scaramucci represents for stock traders: President Trump regaining control of the situation.
Do you have any thoughts on Scaramucci? Leave your comments below.
The gold price forecast puts gold at $1,500, a level not hit since 2013. The $1,500 forecast was made by the credible Frank Holmes of US Global Investors and not some perma-bear gold bug as reported by MarketWatch here.
Already in 2017, gold prices are up close to 8% which is what they gained for all of last year.
Gold is benefiting from the weakening U.S. dollar. In other words, President Trump’s policy agenda being derailed by ObamaCare is acting as one of the biggest catalysts for gold.
Gold Price Chart
I like to chart gold with a Renko chart using a box size of ATR 14. A Renko chart removes a lot of the noise inherent in a normal gold price chart. Remember, gold is girlie. Gold is always a drama play. The Renko chart helps remove a lot of that drama-noise on the chart so that you can better see the underlying trend. We are currently working on a 3 box reversal which is a bullish signal for gold.
Simple Gold Trading Strategy
Rather than try and pick high-quality gold mining stocks, I prefer the VanEck Vectors Junior Gold Miners exchange-traded fund (GDXJ). Just last month, Van Eck announced that it was expanding the criteria determining which stocks could be included in the popular gold mining ETF because the ETF had gotten too big as investors have piled into the fund so far in 2017.
The chart doesn’t look pretty. Large Players volume and the Twiggs Money Flow looks weak. The chart pattern I do like is a Symmetrical Triangle that appears to be forming. Remember, gold is never just a technical play. The catalyst for gold is always drama and we have plenty of that right now.
Gold Price Forecast Justified
Is the gold price forecast of $1,500 justified? I think so because gold is how you play drama.
There’s so much drama going on that even John McCain left the hospital so he could use his brain-cancer to try and push forward his own agenda. That’s drama folks. Or course John McCain didn’t really make anything better, he just stirred up more drama. Meanwhile, the debt ceiling limit is fast approaching and no one is talking about it because their too busy arguing over ObamaCare that is completely collapsing now.
The FBI and Mueller, at the bequest of the Establishment, are doing a Russia witch hunt against Trump while Trump’s own Attorney General Jeff Sessions recused himself of the Russia investigation AFTER being appointed effectively tricking the President. Drama!
Then you have President Trump using Twitter to bash his political enemies every chance he gets putting drama on top of drama.
All this drama bodes well for gold and the signs are that it is likely going to get worse so I’ve picked up some GDXJ in my personal trading account. You guys know me, I’m in and out for a quick gain if I can get it.
Are you thinking about buying gold? Leave your comments below.