This is a critical update from one of the best financial commentators I know, a good friend of ours, Mr. Lior Gantz, who runs WealthResearchGroup.com, and we’re excited to share this one with you!
Investors don’t truly comprehend how Donald Trump is playing with the Federal Reserve, with China, and with the Democrats, but it’s a grand chess match that must consume all of his thoughts and he’s winning.
Think about it: With the stock market at all-time highs (as opposed to Europe’s or China’s, which are lagging or falling), with unemployment rates the lowest they’ve ever been, using government data (as opposed to the frustrated unemployed millennials of Europe or the tens of millions of slave laborers in China), and with wages rising in North America for the first time in over 30 years for the lower-income demographics, Trump still MANAGED to pressure the central bank into cutting interest rates for the first time in 11 years.
Of course, he had a plan ready the minute Powell only lowered by 25bps, which wasn’t Trump’s favorite number (he wanted 50bps): he immediately rattled the boat with tariffs on ALL CHINESE goods, starting September 1st.
To recap, in 30 days from now, each and every Chinese product entering U.S. soil is taxed. That’s a psychological milestone, a warning shot, and it nearly forces the FED to cut again – and soon. This sort of tweet, announcing the tariffs on social media, without fair notice or early signals, is exactly what scares corporations all over the world, but Trump is sacrificing comfort in the short-term, in exchange for order in the long-term.
He is putting together the framework for Chinese-American trade relations for the 21st century; nothing could be more important. In his view, he is doing the right thing, but time will tell. He is making it hard for Americans to vote for a Democrat in the midst of this boiling pot of geopolitics. Creating ongoing political matters just in front of an election year is a strategy that boxes-in the voters. They find it difficult to change leadership that has unfinished business. It’s a strategy.
Trump is playing the FED, China and making voters love him; he is forcing the FED to lower interest rates in one of the best times for the U.S. economy (on a nationwide basis), when it is clear that it is growing and evolving; that’s unusual.
He is not giving China much of a choice, because their economy is much less diverse than America’s in its ability to absorb shocks and downturns and he is winning with the voters.
As you can see, though, a prosperous nation, as Trump claims America to be, is not the same as a prospering citizenry.
A country’s wealth can grow, but the general population won’t enjoy the spoils if the rewards stay at the ownership (shareholders) and top management levels (share buybacks).
This is the story of today’s America. Shareholders of companies (the top 10% own 84% of stocks) and individuals with assets (the top 20% of Americans) are gorging themselves, but the rest of them are flat lining, even with jobs. It is reaching a point politically where the voters want the government to intervene and act to close the gap between the top 10% and the rest. Governments have more tools at their disposal than central banks do.
I would ALWAYS much rather that both central banks be abolished and governments be constrained, so that free markets would solve any imbalances in a natural way, without favoritism, but that won’t happen in my lifetime and I’ve accepted that.
The masses are addicted to big government. They cannot imagine the United States in the spirit and manner of the beginning of the republic, a time when the citizens essentially ran the country.
In the past 50 years, the corporate tycoons – the insiders, the elites, the Wall Street gang – has de-industrialized the country and left it in an extremely vulnerable spot. Now, the role of future governments would be to ensure that America becomes more self-sufficient.
De-industrialization has made retirement impossible for the majority. The lack of hour salary growth and the shortage in the abundance of quality positions are forcing people to keep working – and not only one job.
The number of multiple-jobholders is soaring and it is obvious that 2017 was the peak of this cycle, in terms of hiring.
This 50-year era of extreme globalism and open borders is coming to an end. The middle class has evaporated so badly that they aren’t blinded by what’s going on anymore. They understand that the U.S. is a wealth machine, but that at the rate things are going, their piece of the pie will keep shrinking, if they elect crooked and mainstream politicians from the establishment.
They want to win Washington over and regain control of the trajectory of taxation, regulations, government spending, and fiscal policies. This is the reason Wealth Research Group predicts federal deficits to DOUBLE in the coming decade, contrary to the belief that Washington will try to balance its books or put blocks around entitlements.
That isn’t going to happen; the path is clear. The White House will need to devalue the dollar, one way or another.
Courtesy: U.S. Global Investors
Gold is becoming so important, in light of this.
It is so easy to forget that except for the past 49 years, there has never been a time in recorded history where gold was so MARGINALIZED.
Central banks are buying so much gold that they are, in a sense, putting the gold standard back in play.
The next resistance is at $1,458. For silver, which is NOT in a bull market yet, the next test is $16.74/ounce. If these levels hold, we could see some wild, wild moves. Silver’s bull market signal is $18.33/ounce.
In the cycle that’s brewing, inflation will be ENFORCED by government, if it can’t be naturally created by market forces.
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