Not So Fast
Post US election and Vaccine announcement euphoria seems to have morphed into range bound tranquillity for financial markets this week, as we all await the source of the next “stimulus”.
The “peaceful” nature of financial markets right now is an amazing feat, given what’s actually happening and happened to the world economy this year, so far.
Before we get too carried away with this newfound financial peace let’s have a quick update on the state of the, not over, US election!
Starting with a summary of how a US election normally works.
- Elections held early November.
- Votes are tallied in the presence of officials from both parties.
- Provided officials are present during votes tallies and there no credible accusations of fraud or software glitches, the vote tallies are ratified.
- If the vote margin between winner and loser is 0.5% or smaller, recount is required.
- If the margin between candidates is larger than 0.5% and someone wants to dispute the result, they can pay for a recount at a cost of around $3m per state.
- Once a recount is complete, or a recount is not necessary, the individual states formally declare the winner on December 14th, when they officially cast their electoral college votes.
- Then, in early January of the next year, congress meets to count the vote and declare the actual winner.
- The new President is sworn into office on January 20th.
Did you notice any mention of the media in the process above?
Nope, as it turns out, despite best efforts, the media cannot decide the winner, despite well organised commitment.
Even here in Strayafornia, one expects the left leaning ABC lynch mob to promote whatever virtuous narrative they see fit, but everyone else as well? News, 7, 9, AFR (9), et al….or perhaps we missed something, again. It’s just been poorly constructed populist journalism wherever you look, or worse.
It is quite understandable that Trump is a (un)popular target. Sheer buffoonery and a failure to adhere to any 2016 election commitments may have contributed!
But as it was in 2016, there are/were only 2 poor choices for a superpower in secular decline. It does matter that, as it was in 2016, “the polls” are/were COMPLETELY WRONG, again.
As it stands, Biden is not President elect, and, at the time of this writing no swing state has declared Joe Biden as the winner of its electoral college votes!!
This is just a fact; the media cannot do anything about it.
The fact needs to be stated that this is no ordinary election, and it has quite a way to play so we suggest that for reasons of close margins and fraud accusations, one might try for oneself to ignore the hysteria (no matter what you wish for) and just watch this one play out.
We could go into more detail but don’t want to be cancelled by a woke “twitter mob”, and this blog is for economic commentary anyway!
One thing is for sure, whoever is in power in the US, will not change this budgetary structure below.
Presenting, JUST ONE MONTH!
And estimated for 2020. Quite the sight.
Moving on, did anyone else see any irony in the timing of all the recent vaccine announcements?
Financial markets didn’t, it was like someone screamed, “alright, everyone move to the other side of the boat”!! Energy stocks supercharged, Airlines, Travel Co’s and, especially Healthcare, all on their way to the moon. Gold down (2%), Bonds sold heavily (means rates rose), all on the Pfizer Vaccine news, before a more measured Moderna Vaccine announcement this week.
Interestingly, the Pfizer announcement was good enough for the Company’s CEO, Albert Bourla, to sell 65% of his stock, ON THE SAME DAY AS the announcement. Hmmm!!
At the very least, poor optics!! As Dr Bourla’s sale portends, this 90% vaccine has a long way to roll out.
In the meantime, in the US and Europe (Australia?), lockdowns are back, despite the economic consequences. As we’ve already discovered, the economic and social consequences of hard lockdowns are irrelevant. Or are they? This divergence below has been an effective leading indicator, one of them is going to be right.
As if the economic consequences of this Corona period aren’t enough to bear, co-ordinated Global Climate Change agendas seem to have cranked to 11 over the last few weeks. The noise seems to be coming from everywhere.
To be sure you know what we’re potentially dealing with, let’s let the Virtuous European Climate Champs explain.
The European Green Deal.
The Green Deal formulated by the European Commission is based on three main goals:
- eliminating net greenhouse gas emissions by 2050;
- decoupling economic growth from resource use; and
- leaving no person and no place behind.
How they pay for this or anything else “green” in this economic climate is no mystery, out of thin air, newly created digital.
The sheer amount of Fiat money creation needed to appease Climate Change agendas as well as a Covid Economy without a Vaccine until, at the earliest, April next year is truly mind boggling.
To think this can be done without consequence is pure fantasy and luck will favour the prepared investor.
A well-diversified, prepared investor.
Which brings us to the amazingly under owned precious metals market.
On this front, it’s been a horrible couple of weeks for the miners, despite a fairly stable USD gold price, which should not surprise anyone that knows this is generally what happens when the global economy goes though periods of “fixed”.
Holders of Gold mining shares are some serious nervous nellies, traumatised by 2012 to 2018, a finger constantly on the sell button!! Pushing through buying opportunities, again?
The reality is that the economic, geopolitical and monetary risks that confront the world today are as great as any seen in living memory.
We expect many more financial analysts to join the Goldman Sachs recent upgrade to its gold price forecast on the back on increased inflationary and systemic risks.
“QE to infinity” as we and others have dubbed it does not appear reckless as financial “media” completely fails to analyse the real monetary risks and continues to cheer-lead our central banks as “saviours”!!
Most recently The Bank of England has again boosted its quantitative easing (QE) “stimulus” package by another £150 billion, as central bankers use the coronavirus and attendant lockdowns to justify even greater currency creation in order to buy vulnerable government bonds and other assets, as well as funding budget surpluses.
Same as it ever was!!
Save the planet!
