Powell the Hawk: The SUM Report 11-6 | QPOL Issue #18
"Stuff U Missed" - A Brief Summary of the Week's Top Events in Macro/Geopolitics
Ukrainazis Play Chicken
Powell Hikes Steepen
A Cluster Fu_k Election
A Russian Test
Over the Halloween weekend, Ukraine launched an attack on the ships of the Russian Black Sea Fleet in the inner roads of Sevastopol, Crimea (Russian territory). It was a mere test and another poke at the Russian bear.
This goes without saying, but these people (Ukrainian soldiers/Davos) are insufferable. Seriously. Hitting Crimea on Saturday, then moving food through Odessa’s Black Sea Port the day Russia would retaliate and then Ukraine pulling a “don’t hit the trafficking ‘food’, or else the civilian gets it/starves.”
It’s childish blackmail. That’s the only tactic the West/Europe has until they can force the US into this war and fight it for them like all the other world wars. That’s how Davos wins: by forcing the Fed to print more money to fight a war that’s not in the interest of America from the get-go.
Europe needs to neuter America of its power that is the financial system via the creation of private capital of the money transmission mechanism (commercial banks). Just as they stained the Fed’s credibility with Covid spending, they’ll use the same blackmailing tactic with this war if they can get it.
An interesting tidbit and a glimmer of hope to keep in mind is that the only custodian for Russian equities in the US is JP Morgan.
There’s a tacit coordination with the US banks and Russia to take out the EU.
The Fed is starving them of dollars.
Russia is starving them of energy, and now food because they pulled out of the grain deal with the UN.
Ergo, Powell and Putin are coordinating to bankrupt and starve Davos.
In the words of Elon Musk, “Let that sink in.”
Powell the Hawk
As expected, the Fed raised the Fed Funds Rate by another 75 basis points. Markets reacted negatively to the downside after knowing for sure the cost of capital would be higher, then rallied to finish off the week strong. Let’s cover both scenarios.
Downside:
The graph below shows the volatility index (VIX) on the top half, and the S&P 500 Futures market on the bottom half. This explains what may have happened to he downside. Booth was right as I explained in Issue #14 in her conversation on Hedgeye.
The Fed may have bought up volatility futures to smash equities. Using VIX futures to move the equity markets is the only way the Plunge Protection Team can move markets the way they do with the amount of money they actually control, which isn't that much. hey manipulated volatility to influence stocks, instead of buying the stocks directly. This may have been what happened during the FOMC announcement.
Upside:
At first glance, the recovery looks like capital flight. As Europe continues to castrate itself economically and be biblically-short dollars, money will move to where it’s treated best (American markets). Capital is shifting into US equities, gold, Bitcoin, and other fundamental “safe-havens”, or anywhere that’s not Europe.
Even though they’re still seen as “stonks” in a time of economic chaos and uncertainty, USA equities are still the “least bad” alternative for off-shore investors. They may still be hemorrhaging in US markets, but they’re better off putting their money there than their local currencies and equity markets.
Although markets might tank after the initial rate hike announcements and Powell’s hawkish tone, the trend to the upside will still occur, just on a lag. It’s all relative and is based on a matter of time. If you look at the Dow from the past few weeks, it’s still on the up and up. Europe is only gonna hemorrhage harder as time passes. Money moves to where it’s treated best.
It seems that every market surge post rate hike gives Powell even more room to raise rates and tighten harder. Mrs. Booth has been talking about this non-stop in recent interviews and this quote from CNBC she shared reveals that this idea is seeping into the financial media zeitgeist.
With that said though, which argument is it really?
A. Market does well = gives Powell room to raise rates
B. Market does poorly and inflation is high = Fed needs to raise to “combat inflation.”
Regardless, the Fed wins with either narrative. They take what they can get and run with it because they won’t stop “until the job is done” (AKA: gain credibility and destroy the offshore dollar markets). Not even public pleading and pandering from Elizabeth Warren will stop Powell from taking back America’s financial independence…
However, given the idea Powell might slow to 50 bips next month seems more plausible. This will give his buddies on Wall Street a break to scoop up more profits to close off Q4 nicely for that typical holiday run-up we’re all familiar with in the markets.
That doesn’t mean I’m still not gonna ask for 100 bips for Christmas. Again, both scenarios are plausible.
The clear takeaway from the past week is that at this rate and based on the progress so far, Powell has the markets and Davos by the horns. The LIBOR markets should continue to drain and SOFR should be sturdy enough to support the US through more rate hikes and assert its independence from the global commies out of Davos. Needless to say, demand destruction has been achieved and more is yet to come. Grab your popcorn and hold onto your wallets. It’s gonna be a bumpy ride.
Rock the Vote
A quick note on the midterm elections. I was driving through a college town (San Marcos) Friday on my way to vote where I’m still registered (San Antonio). I couldn’t help but notice gas was about 5 to 10 cents cheaper in San Marcos than any other metropolitan city in proximity. I’m not surprised, but it’s still alarming and reveals how desperate these global commies out of Davos are to get the college vote.
It may be a stretch, but the subliminal messaging of “oh look, gas is cheaper for you under this administration despite how badly evil Putler makes inflation for you” seems rampant among the young, uninformed, and indoctrinated college youth. We’ve all heard the anecdotes of friends and family who send their children off to progressive universities coming back as woke, brainless, radical monsters. They’re products of Davos infiltrating the edcation sector and the Cathedral at large to poison the American culture and society from the inside out.
This is what we are up against, and is what Powell is bankrupting. This is why your vote counts. Even if you think politics is what got us into this mess (which I concur), it’s at least a test for us to see how badly they will steal this election from us. 2020 was a wake-up call for normies. The scales fell from their eyes and many began to see through the propaganda and became red-pilled, black-pilled, white-pilled, or whatever color they prescribed themselves. The point is, neither side will be content with the election results and won’t bend the knee without putting up a fight for what they believe to be just. In some twisted way, this conviction instills and confirms that the American spirit is still alive and well.
~ Phil Gibson