Categories
Economy

Trump’s Friday Tweets Move Markets Down

In the wake of Fed Chair Jerome Powell’s speech Friday morning at Jackson Hole, WY, President Trump launched a firestorm of aggravated statements on Twitter. This included blaming Chair Powell for not aiming to lower interest rates far enough.

Donald Trump: “As usual, the Fed did NOTHING! It is incredible that they can “speak” without knowing or asking what I am doing, which will be announced shortly. We have a very strong dollar and a very weak Fed. I will work “brilliantly” with both, and the U.S. will do great…”

Then he followed it by saying, “….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”

Further, President Trump reiterated the abuse China has caused to the United States through its trade measures. Rightly so, but the way he reacted and dealt with it is reproachable and outright dangerous to our economy.

Donald Trump: “Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far….”

However, the frosting took to the cake when he said this—causing the Dow to drop 460 points, or 1.8%. The S&P 500 and NASDAQ Composite fell 1.9% and 2.2%, respectively.

Donald Trump: “….better off without them. The vast amounts of money made and stolen by China from the United States, year after year, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing..”

Donald Trump: “….your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,….”

Seriously? Even CNBC reporters reconfirmed during this hour that the president is not a king and has no constitutional authority to dictate how private U.S. companies will do business. I am not surprised at the least from the president’s rhetoric. He says stupid things whenever his temperament amounts from something negative.

UPDATE [08/24/19]: Trump Comments on Statement to “Order” U.S. Companies

The following day on Saturday, Trump reiterated his statement on Twitter after being questioned by the media. He claimed the Emergency Economic Powers Act of 1977 give him authority to do so.

Donald Trump: “For all of the Fake News Reporters that don’t have a clue as to what the law is relative to Presidential powers, China, etc., try looking at the Emergency Economic Powers Act of 1977. Case closed!”

I rejected his argument by replying that such an act, whether upheld in court, is unconstitutional.

CHRIS NAWOJCZYK: Guess what: YOU’RE NOT MY KING. We already revolted against one in 1775. Conservative values include free market capitalism via laissez faire economics, not dictatorial powers. Whatever manipulation of EEPA you claim, whether upheld or not, is #UNCONSTITUTIONAL.

Silver and Gold Soared as the Stock Market Fell, as Always

Furthermore, silver and gold stocks and ETFs shot up in the wake of the Fed Chair and president’s statements. However by 0900 there as a slight selloff.

The VIX CBOE Volatility Index actually hit a low of 16.04 before 1100, only to soar up to a high of 12.93 by 1200 noon. If President Trump just acted more “presidential” by showing more bearing and leadership in his public sentiments, the markets may not have reacted as they did. Right now in August, which is often a volatile month, the drastic rise and fall of U.S. securities is largely the result of fear and emotion rather than fact and reason.

See Also:

Powell says there’s no ‘rulebook’ for trade war, pledges to ‘act as appropriate’ to sustain economy

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Categories
Economy

The U.S. Economy is a Mess Despite Trump and CNBC Hype

We had a drastic week all around the financial world. Gold hit record highs not seen in years, to include gold ETFs like IAU (iShares Gold Trust), GLD (SPDR Gold Shares), and many others. Virtually all gold and silver exchange traded funds followed the same bullish pattern, while the U.S. dollar rose against the Chinese Yuan.

Gold shot up 1.5% on Monday in dollar terms, hitting a 6 year high. The metal increased to $1,469 before some sellers took profit, thus stalling the rally.

Moreover, it was in the value of other currencies where gold hit all time record highs. These include the British Pound, the Japanese Yen, the Indian Rubi, the Canadian dollar, the Australian dollar, and the South African Rant.

The yellow metal rose 3.5% in Yuan and 1.2% in Euros. All this came about because the Trump administration plans to levy a 10% tariff on imports from China starting September 1st, 2019. This will tariff the remaining 300 billion dollars worth of goods and products coming in to the United States.

Though president Trump accused China of being a currency manipulator, the International Monetary Fund (IMF) came out with a report today debunking that “Twitter” conspiracy by the president.

Peter Schiff, CEO of Europacific Capital, went on FOX Business recently to speak the truth of what’s really happening: investors are trending toward moving out of the U.S. dollar and into gold. SchiffGold’s Gold Wrap podcast, a weekly roundup each Friday hosted by Mike Maharrey, outlines the startling truths of what is really happening.

Maharrey sees Trump’s actions of implementing tariffs on China as a “calculated move,” of which I concur. The president wants the Federal Reserve to keep interest rates artificially low to help stimulate this struggling economy. He wants the Fed to keep cutting rates at a continuous cycle from now until his second election, despite his constant self-praise of how good the economy is under his presidency.

Can you image why? It’s simply because Trump knows that if the economy tanks under his watch the Democrats will blame him for this sickened economy, which he actually inherited. The left will ridicule capitalism (once again) and call upon all-mighty socialism as the answer to American’s woes and worries; democratic-socialists will claim to take care of people—but in exchange for letting government have more control over their lives.

The true state of the U.S. economy

The United States economy is a disaster waiting to happen. Amid all the hype by Trump, his supporters, Federal Reserve leaders, and CNBC talking heads that jobs are at record highs and production is increasing—it’s a phony economic growth that is fueled by DEBT. Consumers are using credit cards at record highs, and the federal government is using its credit card to pay for its massive programs. The central bank creates money out of thin air, which it then uses to buy U.S. Treasury bonds, in exchange for interest paid back to them by the federal government.

These facts are products of a fundamental economic problem this is being ignored by almost everyone in Washington D.C. and the mainstream media. This game of keeping interest rates artificially low is a necessity in order to keep the borrowing going as long as possible, otherwise both Trump and Fed Chair Jerome Powell will get blamed.

During the dot-com bubble of 2000 when U.S. companies crashed the following year, Federal Reserve interest rates were upwards of 6 percent—a big difference compared to today’s rates hovering around 2 percent. This chart tracks the central bank’s interest rates from 1987 to 2009.

Federal Reserve interest rates of U.S. economy from 1987 - 2009.

The Left’s desire to end free market economy as we know it

This insidious proposition is the actual intention of radical leftists. Seizing more authoritarian control over the means of production by making citizens less free is the narcissistic charge they receive. In fact, they relish the idea of having authority over the destiny of people’s lives. It sounds drastic to say, but the truth is they operate under the guise of “taking care of people” who can’t take care of themselves.

Perhaps these politicians actually believe their own claims. Maybe they feel morally justified. Nevertheless, their motives are rooted in a psychological need for greater control and self- aggrandizement. Such are the traits of narcissistic personality disorder (NPD).

Many of today’s Democrats—as well as Republicans to some degree—have tendencies to strip people of their personal sovereignty. Government regulation and taxes on business and personal income, are all measures that wee

The United States was founded on hard work and self-reliance

The United States was built on a “can-do” spirit of entrepreneurship, hard work, determination, and adherence to values and ideologies of personal liberty. This libertarian doctrine is not only rooted in the founding of our nation but is traced back to the European Enlightenment, ancient Greece, and even the Bible. However, many of the 2020 presidential frontrunners such as Bernie Sanders, Elizabeth Warren—and actually every one of them—do not want the free market to have full control. Most government leaders’s subtle tendency is to have the reigns of power, thereby diminishing the soul of those trying to get ahead and gain autonomy through self-reliance.

See Also:

A Tale of Two Bubbles: How the Fed Crashed the Tech and the Housing Markets

Categories
Behavioral Economics

CNBC Interview with Ray Dalio on Great Recession

CNBC: Ray Dalio, Bridgewater Associates founder, co-chair and co-chief investment officer, discusses his new book, “A Template for Understanding Big Debt Crises,” which looks back on the lessons learned from the financial crisis.

I hear a slight argument among the pundits in this interview. There’s talk about the bottom class and the rise of populism as a result of wealth inequality. The truth is, many of these people in mainstram news are too afraid to ‘tell it like it is’ concerning capitalism.

Free market laissez-faire economics is based on merit. It rewards the producing of value and punishes theft, trickery and laziness. There is a natural order to economic stability, and people who don’t want to work—shall not eat either. The government should not take care of them, and the natural cycle of economic highs and downturns is the result of human nature.

We are in control of our lives in a free market economy such as the United States. If you have the ability to start of a business or hold a job, then it is your responsibility to save your money, invest, and live below your means. Perhaps, when things go awry in the economy, the austere conditions are blamed upon those who squandered their wealth, while the government taxed the middle class into oblivion.

Categories
Economy

Gold Soars as Dow Drops 800 Points in Worst Fall of 2019

Gold Price Live Chart

Today the Dow Industrial Average (DOW) Dropped to a low of 2,822.12 points from a record year high of 3,027.98 in June, 2019. This occurred as a result of the currency decline of China which took place in defense of Trump’s trade tariffs.

Dow plunges almost 900 points as trade war escalation with China pummels stock market

Investors dumped U.S. stocks in late afternoon trading Monday, interpreting a sharp decline in China’s currency as an escalation in the trade war between that country and Washington.

China allowed the yuan to drop to seven per U.S. dollar, an 11-year low and a politically sensitive level. A weaker Chinese currency can help boost that country’s exports by making them cheaper while hurting foreign competition.

Jim Cramer Weighs in on Today’s Panic

Categories
Behavioral Economics

Behavioral Psychology and Economic Activity

I created Bridgeviking Capital as an informative resource to teach people to think for themselves about money, market activity, and investing. This is a place for people to learn and research the historical and current trends in the market. I focus on both U.S. and international economies because they affect each other to a lesser or greater extent. I have many visions for implementation on this site.

Among these include a blog to not only discuss recent economic events and statistical data on companies and Wall Street as a whole, but also to expose the lies and deceptions circulating among CNBC pundits, crypto-bugs, government politicians, and all those engorged in the realm of U.S. economic trust—that is, reliance on the fiat dollar. I am an advocate for a free market based on pure capitalist principles. I view gold and silver precious metals as hedges against inflation, and quite frankly—sound money. My mentor is Peter Schiff, CEO of Euro Pacific Capital. I also value the wisdom of Jim Rickards, Ron Paul, and Lew Rockwell, among others.

They have been for the past 5,000 years, and gold has a proven track record of being resistant to price fluctuations in “nothing-backed” fiat currency.

I will enjoy writing articles here on sound economic theory, relying heavily on the philosophy of Austrian economics. Nevertheless, sound economic theory is just common sense. Capitalism is the phenomenon of natural human behavior based on supply and demand. People have lives, and they make decisions based on their desires. Behavioral psychology can thus be used to determine reasons for why the market acts the way it does based on the circumstances.

*Please don’t confuse my occasional rhetoric as a mirror of a Fed chair during a press conference (pun intended).