1. Global Warming May Be a Hoax, but It Could Still Melt Your Net Worth

    It’s almost impossible to have a rational discussion about climate change. That’s not because there is no good science and nothing to debate. It’s because the “climate change” brigades ignore science and rely on ideology, intimidation and propaganda to advance their cause.

    Here are a few simple facts to bear in mind (all backed by solid science): Of course the climate changes. Long Island Sound used to be a glacier. But it changes slowly and in ways that are difficult to predict and impossible to change.

    CO2 does not cause warming; it’s the other way around. There is some evidence that warming causes CO2 to be released. Saying CO2 causes warming is like saying umbrellas cause rain.

    Regardless, the warming trend that was observed halted in the late 1990s. Blaring headlines about “record” warm years leave out the fact that the so-called records are measured in hundredths of a percent of one degree and are within the margin of error.

    Sea levels are rising about 1.5mm per year. That’s the height of a penny viewed sideways, or about seven inches in 100 years assuming the trend doesn’t reverse (which it well may), hardly enough to inundate the New York subways or Pacific Islands (which are expanding, by the way). Sea levels rose 400 feet after the last ice age. If humans survived 400 feet, they can easily adapt to 7 inches, if that.

    Polar bear populations are expanding exponentially and the polar bears are getting fatter — hardly the forlorn portrayal in Al Gore’s phony movie An Inconvenient Truth.

    Every past prediction of climate-related doom has proved false. The new ones are no different.

    I could go on, but you get the point: The climate alarmists are perpetrating a hoax.

    If that’s true (it is), then why does this article suggest that major corporations are jumping on board the idea of a carbon tax? The reason is that they fear something much worse (such as the Green New Deal) and want to get out ahead of the problem by paying a carbon tax and otherwise laying the issue to rest.

    A carbon tax can be passed on to consumers (just like beer and cigarette taxes) without shutting down the energy industry. These companies realize that the climate change alarmists are really socialists in disguise who want to radically change capitalist economies into poverty-stricken communes.

    The carbon tax is a small price to pay to avoid the wrath of the radicals and ideologues. The only problem is that you and I will be the ones paying it.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  2. Trump’s Enemies Will Stop at Nothing. Investors May Be the Biggest Losers

    The battle between Trump and the Democrats in the House of Representatives shows no signs of abating and is in fact getting worse.

    The House Ways and Means Committee issued a demand followed by a subpoena for Trump’s tax returns. The White House, Treasury and IRS all refused to provide the returns on the basis that the House had no legitimate legislative purpose and was only requesting the information to harass the president. That matter is currently in litigation.

    But Trump’s enemies were not prepared to wait out the litigation. As reported in this article, the Democrat-controlled legislature in New York state and Democratic Gov. Andrew Cuomo worked together to pass a new law that permits the New York tax authorities to hand over state tax returns upon the request of committees of the U.S. House.

    Since state and federal tax returns contain many similar entries, this is a backdoor way to deliver Trump’s personal tax returns to his enemies by using state returns instead of federal returns. Where there’s a will, there’s a way!

    This New York state law provision may be unconstitutional under the U.S. Constitution as an illegal “bill of attainder.” That’s a law aimed at a single individual (Trump) rather than the population as a whole. No doubt, that argument will form the basis of even more litigation.

    Even if the law is upheld, it’s a signal to investors that your tax information is not safe in New York and if you are singled out as a political enemy, you can expect the same treatment. That’s a good reason to avoid New York entirely when it comes to business expansion and new investment.

    More to the point, it shows the war between Trump and his political enemies is now at a point where the federal government has become dysfunctional. That’s a good reason to avoid stocks and risky assets while increasing allocations to cash, hard assets and private equity.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  3. The Fed’s on Hold. The Reason Is They Have No Idea What They’re Doing

    The Fed was on a tear in 2018, raising rates four times at four quarterly FOMC meetings (out of eight total) by 0.25% each time. These rate hikes came on top of “quantitative tightening,” or QT, where the Fed burned money to reduce the M0 money supply by about $500 billion, equivalent to another 1.00% in rate hikes.

    This was all done in the name of “normalization” of rates and the Fed’s balance sheet in an effort to undo the QE and ZIRP science experiments of Ben Bernanke and Janet Yellen.

    There was only one problem. By trying to normalize, the Fed almost threw the U.S. economy into a recession.

    This was one cause of the precipitous stock market decline from Oct. 1–Dec. 24, 2018. Fortunately, Jay Powell woke up out of his trance just in time (maybe) and slammed the brakes on tightening. He announced the Fed would “pause” its rate hikes and be “patient” about future rate hikes. He also announced the Fed would taper its QT and bring the tempo of balance sheet reduction to zero by September 2019.

    The pause and patience talk is Fed-speak for “We’re not raising rates for the indefinite future and we’ll let you know in advance when we change our minds.” (The Fed will do this by dropping the word “patient” from their FOMC press releases when the time comes. That’s the signal that rate hikes are back on the table. Watch for it).

    Unfortunately, the balance sheet reductions will continue for four more months, so the U.S. economy is not out of the woods yet. This article covers this ground about no planned rate hikes and continued patience. But it reveals something else.

    The Fed officials’ debate shows they really have no idea where the economy is going and, as a result, have no idea what the future path of interest rates really is. They’re wandering in the dark. That’s what happens when you manipulate markets for 10 years. There’s no way to escape the room.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  4. Rare Earths Are Not Rare but They Are Strategic. Will China Cut Them Off?

    You’ve heard about “rare earths.” These are 17 chemical elements with names including cerium, erbium, europium and other little-known metals.

    Certain rare earth minerals are formed from combinations of these rare earth elements. Despite the designation as rare earths, they are not actually that rare. In fact, some are quite plentiful in the Earth’s crust.

    Some are far more plentiful than copper. The “rare” designation comes from the fact that while they may be plentiful in quantity, they are found in extremely low concentrations. This means a huge amount of ore and expensive mining processes are needed to extract even a small amount of these substances.

    While they have had various uses over the decades, rare earths today are critical in the manufacture of fuel cells, nickel-metal hydride batteries, plasma screens, fiber optics, lasers and other high-tech applications. Electronic vehicles, mobile phones and telecommunications systems would be impossible to build without them.

    China is responsible for 90% of global production, which makes them a potent weapon in the U.S.-China trade wars. The U.S. dominates the trade wars because we import far more from China than they import from us, which means China cannot match the U.S. when it comes to tariffs.

    China cannot dump their Treasury note holdings on the markets without devaluing their own position and risking an account freeze by President Trump. As a result, China must use more unconventional weapons.

    According to this article, China is now threatening to cut off rare earth exports to major users such as Japan and South Korea, both allies of the U.S. Over time, Western powers can replace rare earths purchased from China, but there could be major manufacturing disruption in the meantime.

    This is one more example of the unintended consequences of a trade war and how the consequences cannot be limited to just adding up tariffs on one side or the other.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

     

  5. Events Are Getting Hot in the Middle-East. Is War on the Horizon?

    The list of international strategic hot spots keeps getting longer. There is significant potential for confrontation in North Korea, the South China Sea, the Taiwan Straits, the Gaza Strip, Venezuela, Ukraine and a long list of other unstable locales.

    As reported in this article, the newest addition to the list (and one that has been there before) is Iran. The U.S. was in a financial war with Iran in 2012–13, which caused hyperinflation, bank runs and a currency collapse in Iran. Obama eased up on financial sanctions in late 2013 in exchange for Iran’s participation in seven-party talks that resulted in a deal in 2015 to limit Iran’s uranium enrichment and weapons development programs.

    Trump tore up the deal in 2017 and reimposed financial and other sanctions. Those sanctions have been increased to the point where they constitute “maximum pressure.” Iran is now in worse shape than in 2013 because they wasted the $10 billion in cash and gold that Obama gave them in 2015 on sponsoring terrorism in Gaza, Lebanon, Syria, Yemen and elsewhere.

    The Iranian people know this money was wasted and they now have less patience with their government as the effects of the new Trump sanctions grow worse. Since Iran cannot win a financial war with the U.S., they are resorting to kinetic war by attacking Saudi Arabian vessels and pipelines with drone bombs. The latest reports are that Iran has also mounted cruise missiles on small boats, which constitutes a threat to U.S. Navy aircraft carriers and cruisers in the Persian Gulf.

    It’s not clear what happens next, but escalation is likely. Investors should add Iran to their list of places that could erupt into a full-scale shooting war with extensive financial fallout.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

     

  6. Is The Economy Actually Growing or Are We Just Piling on More Debt?

    The airwaves and political channels are filled with self-congratulations on 3.2% annualized growth in the first quarter of 2019. This is touted by Trump administration officials as “proof” that the 2018 tax cuts worked and we have now returned to the days of 3%-plus self-sustaining growth. Don’t believe it.

    Growth in Trump’s first year (2017) was identical to the eight years of the Obama administration, about 2.3%. Growth was slightly better in 2018, but this appears to be a one-time Trump bump due to the tax cuts. That’s fine, but it’s not self-sustaining.

    The first-quarter 2019 figures were propped up by a number of temporary factors including inventory accumulation, government spending on highways and improvement in trade. The inventory accumulation and trade improvement were both related to the trade wars and were an effort to beat the tariffs that are now being imposed. With that behind us, what’s the outlook for the rest of 2019?

    As of today, the best forecast for growth in the second quarter of 2019 from the Atlanta Fed is only 1.2%. If that figure holds, first-half growth annualized would be 2.15%, about where it has been for the past 10 years. In other words, there is no growth miracle, just more of the same.

    Given adverse demographics, persistent disinflation and flat productivity, why do we have any growth at all? This article gives a simple answer to that question: debt. Jeffrey Gundlach, the new “Bond King,” says, “Nominal GDP growth over the past five years would have been negative if U.S. public debt had not increased.”

    If growth is unsustainable without debt, how sustainable is the increase in debt? The answer is that any debt that grows faster than income will eventually result in default through inflation, restructuring or nonpayment. The timing is uncertain, but the outcome is not. Investors can prepare for the inevitable for now by increasing allocations to cash and gold.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  7. Is Bitcoin Back? or Is This Just Part 2 of Tulipomania?

    By now you’ve seen the headlines about the return of bitcoin. Bitcoin mania is back!

    Bitcoin rose from about $2,000 in May 2017 to $20,000 by December 2017 in one of the greatest asset price bubbles in history. Then it crashed from $20,000 to $3,300 by December 2018, an 83.5% collapse in one year and the greatest recorded asset price collapse in history.

    The crash of bitcoin was even more dramatic than the infamous collapse of tulip prices in the tulipomania in Netherlands in the early 17th century. Suddenly bitcoin is back in the news as a new asset bubble is developing.

    Bitcoin rose from $3,900 on March 26, 2019, to $8,100 on May 15, 2019, a gain of 52% in less than seven weeks. This recent bitcoin price action is described in this technical analysis article. Is this the start of a new rally back to the heights of $20,000? That seems highly unlikely.

    Bitcoin still has no use case except for gambling by speculators or the conduct of transactions by terrorists, tax evaders, scam artists and other denizens of the dark web. Bitcoin is still unsustainable due to extreme demands for electricity in the computer “mining” process. It is still nonscalable due to the slow and clunky validation process for new blocks of transactions on the bitcoin blockchain.

    Bitcoin has no future as “money” because the supply of bitcoin cannot grow beyond a preset amount. That feature makes bitcoin inherently deflationary and therefore not suitable for credit creation, which is the real source of any system of money.

    Bitcoin has been subject to continual price manipulation by miners through wash sales, front-running, ramping and other tried-and-true techniques for price manipulation. The bitcoin infrastructure has been plagued with hacking, fraud, bankruptcy and coin theft measured in the billions of dollars.

    Bitcoin may go higher, but it will soon come crashing down again. This is a phony rally and one best avoided.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  8. Even Cashless Sweden Thinks That Some Cash and Coin Are a Good Idea

    We’ve written a lot about the powerful movement toward a so-called “cashless society.” In its pure form, cash would cease to exist in the same way that gold coins ceased to exist in 1933 and silver coins ceased to exist in 1965.

    Your “money in the bank” would be in digital form only, with no ability to take it in cash form. All payments would be by credit card, debit card, PayPal, Venmo, crypto or some other digital payment channel. All point-of-purchase transactions would be with the help of a swipe, chip reader, bar code, etc.

    Academics and central banks favor this digital world because it puts all private funds under government control in banks. It allows the imposition of confiscation through negative interest rates since individuals cannot escape the digital system. Merchants like it because it lowers transaction costs (it actually costs money to store and move cash).

    This all-digital world of money is closer than you think. One of the movement leaders has been Sweden, which has the lowest cash usage of any developed economy.

    Guess what? According to this article, Sweden is now having second thoughts. Swedish government officials are concerned that in the event of a power outage or cyberattack Swedish citizens would be left without any means of payment. They recommend stockpiling some cash in case of emergencies.

    I can suggest many more reasons to maintain physical cash (including bank freezes and infrastructure collapses), but at least Sweden is on board with the need to maintain cash.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  9. Will China Use Its “Nuclear Option” in the U.S. Trade War?

    The trade war was never going to be easy for China. There are several reasons for this.

    The easiest one boils down to third-grade math. In round numbers, the U.S. imports about $500 billion per year from China. In turn, China imports about $150 billion per year from the U.S. The difference is a $350 billion-per-year trade deficit with China that Trump wants to eliminate (or at least greatly reduce).

    When Trump put tariffs on $200 billion of Chinese goods, the Chinese initially retaliated with dollar-for-dollar tariffs on U.S. goods. The problem is they ran out of headroom.

    China is now proposing tariffs on almost 100% of its imports from the U.S., but Trump still has $300 billion to go. When Trump puts tariffs on those goods (which he is planning to do over the coming months), China has no way to retaliate directly because they simply don’t buy enough from the U.S.

    If China wants to retaliate, they’ll have to use nontariff measures. These can include bans on acquisitions of Chinese companies by U.S. companies and limits on U.S. direct investment in China. But these restrictions are already tough, so it’s not clear how much more China can do.

    The theft of intellectual property has been going on for decades and is continuing. That’s a big problem, but it’s not new and does not represent an escalation, because it’s already there. What can China do?

    One so-called “nuclear option” is for China to dump its massive holdings of U.S. Treasury notes, about $1.4 trillion in value, as described in this article. The idea is that if China dumps these Treasuries, prices will drop, interest rates will go up, stocks will drop and the U.S. housing market will hit a wall. It’s a kind of economic warfare.

    Everything about this scenario is wrong. China won’t dump Treasuries because they would be the biggest loser (because they own so many themselves and you can’t sell them all at once). The president can freeze China’s accounts with one phone call if any economic damage begins. Besides, there are plenty of other buyers of U.S. Treasuries including U.S. banks and, if needed, the Federal Reserve.

    The bottom line is that China is stuck with a losing hand. And Trump knows it.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.

  10. Crypto Is Here to Stay. Bitcoin Isn’t

    Bitcoin is back! So say the true believers, even with Friday’s flash crash. But there less there than meets the eye.

    Bitcoin has staged a notable comeback from its 2018 crash. From a level of about $4,000 through the month of March, 2019, bitcoin had a two-day 23% spike from $4,135 on April 1, 2019 to $5,102 on April 3, 2019.

    Bitcoin then moved sideways in the $5,000 to $6,000 range until May 8, 2019 when it staged another three-day spike from $5,932 on May 8 to $7,255 on May 11, a 22% surge.

    Combining the April 1 and May 8 spikes, the bitcoin price moved from $4,135 to $7,255 for a spectacular 75% price rally in six weeks.

    By last Thursday morning, it soared even higher, to over $8,300.

    Click here to read the rest of this article.

    Institutional investors can schedule a proof of concept with the world’s first predictive data analytics firm combining human and artificial intelligence with complexity science. Check out Jim Rickard’s company at Meraglim Holdings to learn more.