Fed Week Jitters?

The (not-so) Federal Reserve meets tomorrow and Wednesday will have the decision on rates, but most of the smart money seems to be on a quarter-point hike, rather than going a full half.

Although, in fairness, there is a case to be made there since the 10-year Note which was trading around 1.75% a couple of months back was trading around 2.45 on Friday and that’s more than half a point higher. At its lows – as we have scraped along the bottom, I seem to recall 1.37%, but that’s going from memory and you know how dis-reliable that can be.

Point, though, is that the Fed might just shock the hell out of everyone with a bigger-than-expected hike.

One reason (besides the markets trading like it) is that the big oil discovery up north of Midland, Texas at the “Wolfcamp find” is bigger than anything ever found here.

Let me explain, if I may?

You see, prior to the Big Find, the US Federal Debt was in the vicinity of $20-trillion. I mean we all “get that,” right?

Since the find is huge (20-billion barrels is a lot of crude), even at todays lousy prices around $50 a barrel, you’re looking at a Trillion Dollars. And when (not if, but when) oil gets back to $100, then it makes the USA $2-trillion richer…and at $150 oil, well, that’s $3-trillion.

In a sense, it’s like a 15% debt reduction in a sense.  Certainly some savings for a rainy day..

No, I don’t mean literally, but down the road we certainly won’t be bringing in so much oil as before.  Less money going out.

Another factor is that when Donald Trump takes office, he may ease the restrictions on coal mining, and that, too, will reduce ours foreign energy demands.

Plus, by naming a former Exxon-Mobile CEO Rex Tillerson to State (today’s Rumor d’ Trump) we will have even more savvy on fuel-switching plugged into policy at the highest levels.

Which Gets Us To Global Warming

A couple of moving pieces here:

First is that Al Gore’s Inconvenient sequel will premier at the Sundance Film Festival, January 19th.

We’ll skip the snide remarks about hot air, please.

Then we flip up to Chicago and the Heartland where 1,800+ flights were reportedly canceled because of…well, let’s just say it wasn’t Global Warming.

And last, but not least, the Sun is back to sleep according to the sunspot progression work done by NASA:

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What it means is the debate will continue but some of the MSM may be waking up. The UK Express headlines “Global COOLING: World temperature DROPS as spikes NOT caused by man, scientists claim.”

This ought to set up even more stories about how climate change skeptics have beenb silenced by peers who have their fingers in the (grant) funding cookie jar.

Over here at Skeptical Science you can search for peer-reviewed papers skeptical of Global Warming.

FBI Tried to Frame Assange?

That’s the gist of a story over here on Russia Today’s website.

But we must advise caution when reading anything related to Russia these days, since there has been a charge from the Obama administration that the Russians were trying to hack the U.S. Election.

And “me-too” McCain says it’s a ‘Form of Warfare’ but like we said, how much is real and how much is disinfo is a matter of personal discernment.

That’s because on one side, the Obama administration’s “senior officials” have not released the actual intelligence so it is an assertion.

And since Obama’s post-presidency income prospects largely depend on democrats and issues like “warming” and what have you, we don’t know how to weigh the “dirty hands” aspect of things.

All that being said, the story didn’t seem to originate with RT and was covered early-on by the Daily Mail over here.

Troubles for the Trumpedency

The Foggy Bottom crowd is pressing their (globalist) agenda again. This time with stories circulating about how the Chinese are upset with Donald Trump for questioning the “One China Policy.

What people don’t seem to realize is that Trump is a good businessman and a good businessman doesn’t tell the whole world what cards he’s holding.

Think about it: If Trump says we are not bound to any of the old policies, as he is saying over here, then he can forge a broader, new direction for the USA.

China, for its part, is trying to grow a middle class and to do that, their strategic efforts will be focused on rolling from “production for export” to “production for internal consumption” but slowly, over time, in order to avoid economic displacements.

If Trump moves too fast, we would expect to see more Chinese saber-rattling of the sort where they flew a nuclear bomber over the South China Sea to “send a message” to Trump.

As to whether we actually get into a war with Chinese in the 2022-2024 timeframe then becomes problematic.

Our work shows that the bubble in the stock market – due for a short, sharp 3% correction and then likely to head to fresh all-time highs in the Spring – could easily be in collapse by this time next year.

That being the case, the US will have a very delicate series of decisions to make that will require close coordination of the Fed, Treasury, and State.

That’s because while it’s true that Trumperian Nationalism has a noble cause, forcing China to shift too quickly from an export orientation to internal consumption model, could land them in difficult times.

Since China has many aspects of industry that lead the US now, too much US reaction could leave them with little option except war in order to serve the dual purposes of war: Economic continuation (continuity) and (political) control (/governance) of a huge population that could get cranky if their freshly achieved quality of life (QoL) is tinkered with.

It’s early to be getting deeply into this now, but you can see some of the foundational issues in books like Red Dragon Rising and others. For now, we’re in data collection mode and trying to figure the best way through the mess for ourselves and readers alike.

Syria: It’s a Stretch

We were rather intrigued b y the BBC story over here entitled “Syrian conflict: Assad’s fragmenting military.”

The story seems focused on the gradual loss of control of Palmyra.

But the one thing I didn’t see mentioned was the comparison between Palmyra and Aleppo. The former is only 200,000 people while Aleppo is 10-times larger.

The West sees anxious to seize on any change in Assad’s focus as meaning imminent collapse, and since this war is largely the off-spring of regime-change neocons in the State Department, we hope that incoming T.Rex will have a much clearer view that the twisted relations the Obama administration has manipulated during its eight years to solve the problem.

Some Peace-Prizer, huh?

Futures are up a shade on the Dow and S&P but down more than offsetting on the NASDAQ so an overall down day seems like, but as always, this is not financial advice and we shall all see in the fullness of time.

Comments

Fed Week Jitters? — 29 Comments

  1. I find it hard to believe that the herders of the mass media wont give up on running Trump down. It looks like he is putting together one of the best teams of doers the US has ever had. He has been saying that was what he was going to do and now he is doing it. I have to say I didnt vote for him but against Hillary, now think I might have been right.

  2. I like trump as a first class business man he will take ateps to lead.iur nation in the direction of a recovery. That is if congress who I think is still being controlled by the puppet masters. It is in his best interest to strengthen our dollar.
    As far as oil I have a friend that made a delivery at the iil fields in north Dakota the subject was brought up and.he was told that the oil well had enough oil to last the usa at present consumption for over a hundred years but they were making them cap it off so we could use oil from outside the usa first.
    As far as renewables I say embrace it use both but slowly convert to green power. At present the cost of three large wind turbines you could put a ten kw solar power system on every home in our state with the potential of creating 7800 mw per hour instead of nine. For me thats a no brainer but as the head of the power company told me all in all they are in the business of selling power.

    • Exactly. Buy their oil at depressed rates. Use it and then what we have left adds value. Hopefully that others will not attack us to get at. Those pesky Canadians…

  3. George the Opera is not over until the fat lady sings, she is due to sing this week but it is not her singing! listen carefully!!!!! do you hear that???? she is miming, it is the Bonds singing and it is not a sweet song. Enter the hero Mr Trump “I do not like what you are doing and you are fired”
    David J

  4. For those that are tired of the incompatance prejudice and deceit of the MSM I recommend reading a number of different sources and coming to your own conclusion. First off Urban Survival followed in no particular order by the Daily Mail, Drudge Report, BBC, CNN, FOX News, Russia Today, Christian Science Monitor, Drudge Report,etc. etc. Well I think you get the idea , Kind of like a mutual fund of news sources.

  5. I know this is off topic but it has to be said. I have noticed each election cycle getting crazier and crazier (kind of like the mad hatters tea party). The first Obama election was crazy about the birther issue and college records. (The main stream media did not really get into the momentum there)and there were NO riots (wow) This trump election was started off with riots and crying college students (AKA crying wimps), followed by a debacle of Jill Steins recount and proposal of machine fraud and tampering (with absolutely no evidence to substantiate) then the faithless elector (a guy that cant keep his oath) and now the RUSSIANS are coming, again with no evidence that the helped Trump (although I expect the GREAT power on high will have some evidence manufactured in short order. In fact it appears that the CIA and FBI are on opposite sides of this issue. But before it is dropped completely the questions needs to be asked, how long have the Russians supposedly been tampering with U.S. elections??? 8 years, maybe more? If true was it the Russian government or non govt. Russian hackers? Do any other countries do this (allegedly)? Has the U.S. ever done this??? (I can’t hardly believe that). Not to worry the great and wise Sen. John McCain will resolve this issue and make all good. (Why is it that Repubicans constantly manage to step on their own wangs.

    • The planet needs lightning strikes for its health. This is a good thing. We need more rain and snow to fill above sea level lakes with fresh water. Would be nice to see CA get feet of rain.

  6. The thing about the oil find is interesting.

    Debt is “permanent”. You owe until it is either paid off or debt forgiven (bankruptcy or otherwise).

    Oil is “temporary”. Oil is pumped, paid for and then burned. Then it’s gone. The value the oil delivered either is in moving a civilization forward … or burned by bread/circuses (Nascar racing anyone?)

    Oil has temporary value in that it may be something used for common good or squandered doing nothing. Debt is more “real” since it requires repayment or compounding its interest.

    What should be done? Drain the swamp – I mean pump the oil and immediately pay down debts that are more real than the oil value is. But pump it after the market can be “worked up” to 80-100 per barrel. The more oil that is found, the less value it has. If too much is found, it’s intrinsic value diminishes as it can be used for more frivolous things.

    We are more likely to “not” forgive more debt than “waste” oil on frivolous things. Then factor in the time-value of money along with inflationary factors (we don’t want deflation – even if it would be good for us). I suspect both things happen – ramp up inflation so “oil is worth more” while also turning up interest rates so “banks make more” off the backs of the workers and all this means “cost of economic rents continue to go up”.

    Sure wish things could “stop” and just go sustainable. http://www.steadystate.org has a good view of that.

    • If you like reading George on Urbansurvival late at night stick with what works: oil, natural gas and coal. We have no other real alternatives. Except in fantasy. The government and engineering schools have failed because everyone is standing around windmills chanting sustainable green energy.
      If some people like Nascar racing who says the racing should stop as long as the participants can afford to race and their are fans who pay to watch.
      Talk to an older Russian nationalist: centralized idealized planning for the betterment of humanity beats everyone down to the level of starving slaves.

      • I use coal to heat and natural gas.. I embrace green tech and push solar and wind. Gasification taking trash and converting it back to oil then refinning it to the products.. In our coal renewable multifuel heater we have an after burner that eliminates the black tarry exhust.

      • I forgot to mention that even though we rely on carbon fuels to sustain our present lifestyles we shouldnt ever stop looking for a long-term reliable and sustainable fuel source.
        They are out tbere and with manufacturing improvements costs can be reduced.
        It wasnt that many years ago that my father worked very hard all summer long digging trenches everyone thought he was nuts. Inly rich people habe that and teased him on his endeavors. He was digging in a septic tank so we could have an in doir toilet…today very few have an outhouse and most.people have a shower or bathtub. In time I think it will be the se with solar power and renewables

  7. Hey George, see you finally said the words “national debt” but then nothing. Nada. Now we’re looking at $11 Trillion more, George, and you say zip. Also, I think you should start every story about the Middle East by reminding readers that it was The Right Team, your own team George, who broke it hopelessly beyond repair. Oh, and put another $8 Trillion on the national debt doing it. But they did give us Freedom Fries. Mike

  8. There are various “instruments of national power,” such as political, military and economic. Each can be wielded to influence friend and foe alike. Today, China’s economy competes with and at times challenges America’s.

    The USAF 2025 study, conducted in 1995-6, was framed by a series of plausible “alternate futures” to help focus on the most viable defense acquisitions and strategies for the future. One alternate future so envisioned an Eastern Pacific economic alliance led by China. The economic alliance ultimately led to a regional military alliance.

    This particular alternate future also saw an uncontrolled influx of illegal immigrants across the Mexican border to the U.S., which drained state and federal treasuries, resulting in unprecedented social spending, unparalleled national debt and dramatically decreased military spending by the Fed. As a result, the U.S. withdrew increasingly inward and the Eastern Pacific alliance expanded their influence and economic power outward in response. Taiwan and China peacefully merged as a result.

    The E. Pacific alliance was not so much an overt threat to the U.S. but rather a supplier, market, and valued customer. Limited domestic employment opportunities in America led to rising social and ethnic conflict over available jobs, and protesting the lack thereof. In order to militarily deter the China-led alliance, in this alternate future America depends upon an updated nuclear arsenal and maintaining technology parity and, where possible, gaining a decided technology edge. Developing an economically dominated Domestic world view, the United States faces a difficult external policy dilemma, resulting in economic unity with Japan, India, and Russia to form an informal, counterbalancing alliance to restrain the potential of a China-led alliance.

    This particular alternate future appears to be eerily similar to the path America has taken over the past 20-odd years. Trump’s election is a manifestation of an America which increasingly withdrew from the international stage and focused inwardly for a variety of reasons instead. Domestic economy, jobs, borders and national security matter most to citizens now. For national defense, a “keep swinging the big nuclear bat and choose one’s battles very carefully” strategy, while pursuing a technological edge, is in definitely play.

    Trump’s challenge is to find a way to reduce internal national friction while maintaining military presence and diplomatic influence around the world to the benefit of the American economy, which ‘should’ ultimately benefit the American people if everything goes according to plan.

  9. Well George I’m not sold on Trump yet the reason that in 60 years I simply didn’t bother to vote Clinton was never a consideration. When I look at his picks some say combined their worth may be as high as $36 billion and most of it made by corruption in the stock market wall street and the rest off the backs of the working class, while wages have been depressed for years and seeing the 1% takes care of the 1% and seeing Trump is already throwing out the baby in the wash as he retreats from the rhetoric he peddled while running make me think he’s no friend of the working class..

  10. John’s Revelation notwithstanding I was wondering if you’d ever run across the talks given by Peter Zeihan? According to his information Russia is looking at a sharp reduction in the size of it’s army due to the collapse of their birth rate in something like 5 years. With our newfound energy independence and China having to float its petroleum resources through a battle torn shipping lane would China, who also suffers from population problems, really be able to mount an offensive war short of a M.A.D. scenario? Especially if Trump manages to get on a better relationship footing with Russia?

    I ran across Zeihan’s talk after reading about his most recent one given at a Texas Cattle Feeder meeting in Ft. Worth recently. This video pretty much covers what he did there:

    https://www.youtube.com/watch?v=v_DWbBmTZ2g

    • Its a puzzle to me why so many think Russia and China are enemies,perhaps the 24/7 propaganda has addled their thinking process. for I see no reason to fear them as an enemy, except perhaps as an enemy to the empire, and that in itself is not a bad thing for all empires in history have crashed and burned and we will to,the only question that begs to be answered is just how much damage they do to the country and its people before it happens…

      • It’s called the Military/Industrial complex. Their business is blowing up things and regulating the population of the world. Granted some really inspiring things have come out of it. I still swoon at the sight of an SR-71. But one thing I keep in the back of my mind is that one has to have GOOD competitors to BE good at what one does. Some of that is behind the “Us, U.S., and Them” attitudes. I do think we’ve all grown up a little more since the U.S.S.R. went through its collapse but our idiotic policies for the Middle East and Black Sea area are like swatting a hornets nest because you’re bored.

      • You left out one key ingredient added by Johnson and the democrats when they signed up for government by conspiracy: The buying off of the poor through a scheme of transfer payments (welfare) to keep the poor from rising up.
        From each according to his ability, to each according to their ability to shake shit up.

      • They are largely democrats, disarmed, and make dandy (pocket) cannon fodder.
        If you want exceptionally low learning underscored, just look who they put in as Mayor.