TWO CONCLUSIONS. BIDEN OUR "BASE" FIDDLE PRESIDENT. LAST DOWN PHASE? ROSS RANTS. SATCHMO.

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I DRAW TWO CONCLUSIONS FROM BIDEN'S SPEECH THIS PAST THURSDAY EVENING.

IT REVEALED HIS TRUE SELF  HE HAS ALWAYS BEEN A MEAN SPIRITED, DIVISIVE POLITICIAN. 

SECOND,  HE CONTINUES AS THE CONDUIT THROUGH WHICH OBAMA  FUNCTIONS.

BIDEN IS A DIVIDER AND HE KNOWINGLY CHOSE TO PIT AMERICAN AGAINST AMERICAN. ALSO, HAVING MARINES ON STAGE BEHIND HIM WAS AN EFFORT TO SEND A MESSAGE OF  INTIMDATION AND A WASTE OF AMERICA'S BEST. DISGUSTING.

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MEANWHILE, OUR ADVERSARIES PLAY BIDEN LIKE THE FOOL HE REALY IS:

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Taliban Playing Biden Like a FIDDLE

Frustration all around...

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I BELIEVE WE ARE IN THE LAST DOWNTURN. SEPTEMBER IS GENERALLY A NEGATIVE MONTH AND, AS WE ENTER OCTOBER AND NOVEMBER,  YEAR END TAX SELLING ALWAYS HAS AN EFFECT ON THE MARKET.  

INFLATION WILL DETERMINE WHAT STEPS THE FED WILL TAKE VIS A VIS INTEREST RATES.  THEY SEEM TO HAVE COMMITTED THEMSELVES TO A RISE OF 75 BASIS POINTS AND THAT SHOULD COOL CONSUMER PURCHASING AND MIGHT EVEN BRING ABOUT A RECESSION. WE MUST WAIT AND SEE.

MEANWHILE, WE CONTINUE TO HAVE SOME POTENTIAL BLACK SWANS PADDLING AROUND LIKE THE UKRAINE WAR,  CONTINUED EVENTS BIDEN WANTS TO IGNORE SUCH AS ILLEGAL IMMIGRATION, DEADLY NARCOTIC INVASIONS AND THE IMPACT OF INCREASING ENERGY PRICES AND POTENTIAL SHORTAGES IN EUROPE.

OBVIOUSLY THE MID-TERM ELECTION RESULTS CANNOT BE DISMISSED.

AN ISRAEL-IRANIAN WAR IS ALSO A GROWING LIKELIHOOD SOME TIME NEXT YEAR, IF NOT BEFORE, AND CERTAINLY A FED INDUCED RECESSION IS A FACTOR THAT CANNOT BE DISMISSED. (Fifty members of Congress, 34 Democrats and 16 Republicans, signed a bipartisan letter to President Biden this week expressing deep concerns about the reported Iran deal.)

THAT SAID, INVESTORS ALSO MUST RECOGNIZE THE ABOVE IS ALEADY PARTIALLY DISCOUNTED.

I AM A WILLING NIBBLER AS THE END OF THE YEAR NEARS. PLENTY OF QUALITY STOCKS ARE AVAILABLE AT COMPELLING PRICES AND SOME PAY EXTRAORDINARY DIVIDENDS LIKE EPD'S 7%.

FINALLY, THE IMPACT OF BIDEN'S CONTINUED INCOMPETENCE  AND DIVISIVENESS CANNOT BE IGNORED. 

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ROSS RANTS

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It is clear Powell is his own man now, and he no longer has to bow to the White House pressure. My sense is, he knows he was made the fall guy for inflation and the Fed being behind the curve due to the White House holding his nomination as blackmail. So now he wants to clear his reputation. The problem he has is, he has no control over Congress spending, and no control over oil or food inflation no matter what the Fed does. Oil and food are going to go back up in price due to a myriad old reasons that has nothing at all to do with interest rates. So the Fed can raise all it wants, but a sizable push on inflation is going to happen regardless. All the Fed can do is raise rates and balance sheet reduction- (QT)- to cause recession and loss of jobs in the rest of the economy, and thereby cause some inflation reduction in the parts of the economy not impacted by worldwide commodities. I think we will see several more large rate rises over the next few months. Fed funds will end the year at 3.75%-4.25% which means bonds need to adjust in value. To some degree, therefore, he is shoveling against the tide. Hopefully when he retires he will write a book telling us what really went on with his nomination.

Here are some summary conclusions from conversations with some of my very smart friends in the two groups of which I am part. Wheat is going to go up, corn may also, so buy grains, gold will decline maybe to 1550 as rates rise. The key Chinese conclave has been moved up to October so that Xi can attend the G-20 in November where Putin and Biden will attend. Until Xi is in place, and has his people in place, there are no new projects underway in China, so the economy is stalled. Quarantines continue in various parts of the country making it worse. The real reason China agreed to let US auditors review the work of the Chinese auditors is they need western capital into some of their companies so and they believe having audited statements reviewed by US auditors will help. Stay away from Chinese stocks. You cannot believe any of their numbers no matter what an auditor says. In sum, everyone in both groups believe the world is potentially headed to a very bad place, and we have a grossly incompetent president who will make very bad politically driven mistakes like Afghanistan and Iran. The market is likely headed to 3600 or near that level. Maybe to my 3750 level. Up from here is not happening anytime soon, and maybe not for many months or longer. This is not a time to speculate or invest in companies with no cash flow. 

The ADP report of jobs was well below estimate, and 65% of the jobs were in leisure hospitality and more were in construction. That is going to reverse. The hotel business will not be hiring a lot more pretty soon as the recession and inflation reduces demand, and as wage increases kill cash flow. Occupancy is still below 2019. Construction will also drop a lot as projects get completed and there is a major decline in new projects, and new homebuilding. Jobs over the next couple of months will drop lower despite the 11 million job openings. We don't have a strong job market, we have a massive shortage of supply of labor willing to work. 

China will not invade Taiwan. There are various reasons, but one major one is the Taiwanese can potentially take out the 3 Gorges dam with a missile attack, and that would result in massive floods and millions of dead. There is far too much trade, and especially chips and other tech that Taiwan has. There is a lot of unseen interchange and business between China and Taiwan. China will bide its time to take over. China has a major water shortage with the Yangtze at the lowest in 4000 years. This is causing power shortages. Their demographics are headed to crisis with a declining population and an imbalance of too many old people and no way to support all of them. The real estate collapse is not getting any better, and is causing consumers to pull back. There is a question of the quality of all those navy ships and weapons. There are other reasons an invasion would not be easy, and could result in serious problems for China. Too much info for here. However, the Chinese possess a missile that can potentially take out a US carrier. If Pelosi never went, things would have remained calm. Her trip was a real problem. Stupid on her part, but her son went along, and he is another Hunter Biden with business interests in China and possibly Taiwan, for which he gets paid and received equity. The corruption is rampant in DC now.

One report states that 40% of US small business is now unable to pay full rent, and 25% still have not gotten back to 2019 revenue. This excludes all of the businesses that disappeared. It is going to get worse as the fall goes on, and holiday sales do not come to expectations as inflation and job losses mount. We are in for a tough few months. With the EU going into recession and hyper- inflation, and as the dollar increases in value (now par with the Euro) demand and tourism from there will be weak. China is also in economic decline, so exports to there will not be strong. Inflation in the US is far from over, and might go back up a little if oil goes back up, and as food commodities go up due to the drought. The drop in oil prices due to a deal with Iran is temporary. The Saudis will cut production to offset that increase. In summary, I do not see how the stock market goes up from here, and it is possible it could drop below the 3626 low it hit this summer. That is why I sold almost all my non-energy stocks last Wednesday before Powell killed the market. I am now 80% cash and energy. Had I done that in December when I considered it, I would be up substantially for the year. My mistake. 

CA just passed a law setting up a council that will set wages for fast food outlets. This is European socialism. The unions, backed by Biden and Newsome, hope this will spread across the country, and we will then have the German system where a union sets wages for an entire industry. If that happened they would try to then do the same in other industries. The goal would be European style socialism and union control. This is really dangerous policy if allowed to become law. This is one more reason why the Republicans have to win control in November. CA has become completely socialist now.

We are witnessing a complete change in the world order similar to when the Soviet Union disintegrated. Now we are witnessing the final end of the British Empire as it is now just another nation with major economic and political problems. Germany has had its day. Russia will be very weak once the war goes against them and the sanctions do more damage to their economy. China has passed its day of glory, and is now faced with a declining population over-burdened with old people, and substantial unemployment. The property sector has crashed, and that has had huge negative ramifications for the economy. Many companies are in the process of moving their manufacturing out. The EU is in decline never to be back to being a powerful force it once was. That leaves Iran which will be sustained for a while by Biden lifting sanctions. And then there is the US. We are somewhat protected from the collapse of these other empires due to our ability to self- sustain energy and food, and many raw materials, and manufacturing, and we are protected from invasion by oceans. We are in a very unique position. The dollar is the currency of the world. We still have the strongest military. Lastly we still have major industry and innovation. We are in much better shape economically than most of the rest of the world. If we had a competent government the US would own and control the world today. We are not going to have a civil war. This is like the sixties, and this too will pass.

Here is how Germany came to dominate Europe and thrive, and now be in serious trouble. The Germans are exceptional at high quality machinery and precision instruments. They made a decision decades ago to let the US taxpayer spend the money to protect them from the Soviets, and they far underspent on defense to the point of not really having a functional army today. So the US taxpayer subsidized their economic growth. At the same time, China wanted large quantities of top quality machinery, and Germany was the supplier. Merkel set a policy of appeasement with Putin to get cheap energy supplies via Nordstream I. She also set a policy of letting in over 1 million Muslims from Syria et al to have cheap labor for the factories. Lastly she had negative interest rates for the past couple of years. Cheap capital. She made sure the rest of Europe did not get the financial support they really needed through Germans controlling EU central banking. That made Germany the power in the EU. That is all over now, and Germany is now in real trouble. First there is no more cheap energy, and her policy to go green and close nuke and coal power plants is now a crisis. One more example of how green energy emphasis leads to crisis every time. China is no longer buying as much machinery as their economy slows materially. Lastly, some of the manufacturing in Germany has begun to move out to Italy and France where energy is cheaper and where there are newer plants due to more willingness to make capital investments. Germany has had a policy of reducing debt for years, and so the capital markets were not as conducive to new plant expansion as it was in other countries. Bottom line- Germany is screwed now thanks to all the policies of Merkel. The drought is just making things worse. As Germany goes so goes the EU. Oh yeah, they also have a major war going on next door. This has put the US in a much stronger position now, if only Biden and Blinken understood geopolitics 

A recent WSJ article pointed out that the president of the American Historical Assoc had written a piece stating that history now was too focused on current social justice issues, and that 1619 was not an accurate portrayal of actual history. You guessed right. He was pounced on by the mob as being racist etc, and unfortunately groveled and apologized for speaking truth. Without teaching true history, instead of the racist false history promoted by the NY Times called 1619, we are lost as a culture. If you don't know where we and the world have been, and how we got here, you have no understanding of American culture, law or academic reality, and no understanding of geopolitics.. Instead kids at all grade levels are being taught fake history that makes it appear we have been a racist society from the day the pilgrims landed, and we are therefore a culture of bad people. That is what the NYT is promoting. So kids graduate from college never having taken a real history class, and believing Jefferson, Washington and the other founding fathers were all terrible people whose names need to be stricken from everywhere. The kids have zero knowledge of the constitution, nor of how it came about, nor the roles of these men who created a nation that allows these misinformed brats to blather on about things they know nothing about. They don't even understand what the first amendment really means, and why it is the bedrock of America. People like James Sweet, who heads AHC, need to grow a pair and stand up for truth, and for history. This is one more glaring example of why the Amy Wax case is so important to pursue. It is all about ending this censorship and indoctrination in academia. One of the disastrous outcomes of this failure to study history, and to have free speech, in universities is the foreign policy establishment in the US is now imbued with this idea of globalization and negotiation and appeasement, as opposed to peace through strength. They have no idea how nations developed, and how history plays a crucial role in today's international relations. They have no clue as to how oil plays a key role in Mideast and geopolitics and world peace. Biden going begging to the Prince for more oil was a horrendous show of utter weakness and stupidity. The days of Kissinger, Schultz and Baker are gone from the state department. Nobody in this administration has any history knowledge, and so no clue how to play power politics internationally, nor how to manipulate others, and to see the big picture. Biden has no clue at all. Blinken can't shine Kissinger's shoes. 

Here is my guess on what Putin does as the war goes worse for him. There will be some sort of rad leak or incident, like happened at Three Mile Island, at the big nuke plant that Putin arranges to happen, and it will scare the hell out of everyone. Biden will not know what to do and Putin will have his propaganda guy stir the fear pot in the EU. This may lead to the far left protesting against any new nuke plants which them means the EU goes back to buying Russian oil and gas, and Europe has a real recession due to energy shortages. Meantime Putin says it was not me, the Ukrainians are operating the plant. He is not giving up that plant no matter what the world says.

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• Michigan’s Secretary of State Fights to Keep Dead on Voter Rolls -
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  Ameri-Can or Can’t? China’s Looming Demographic and Economic Collapse
  Featuring John H. Cochrane, Niall Ferguson, H. R. McMaster, and Bill Whalen via GoodFellows

  Is this the “Chinese century”? Not necessarily, given that nation’s long-term demographic challenges (an aging population overtaking a contracting workforce). Hoover senior fellows Niall Ferguson, H. R. McMaster, and John Cochrane discuss the geopolitical consequences of a China in demographic decline—if it accelerates a move against Taiwan, should America be engaging in détente or a military buildup?

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• SATCHMO SPOKE YIDDISH:
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  A Jewish family Karnofsky, who immigrated from Lithuania to the United States, took pity on the 7-year-old boy and brought him to their home.

  There he stayed and spent the night in this Jewish family home, where for the first time in his life he was treated with kindness and tenderness.

  When he went to bed, Mrs Karnovski sang him Russian lullabies, which he sang with her.

  Later he learned to sing and play several Russian and Jewish songs.

  Over time, this boy became the adopted son of this family.

  Mr. Karnofsky gave him money to buy his first musical instrument, as was the custom in Jewish families.

  Later, when he became a professional musician and composer, he used these Jewish melodies in compositions such as St. James's Hospital and Go Down Moses.

  The little boy grew up and wrote a book about this Jewish family, who adopted him in 1907. And proudly spoke Yiddish fluently.

  In memory of this family and until the end of his life, he wore the Star of David and said that in this family he learned "to live a real life and determination."

  This little boy's name was Louis Armstrong.This little boy was called Louis “Satchmo” Armstrong. Louis Armstrong proudly spoke fluent Yiddish and “Satchmo” is Yiddish for “big cheeks, a nickname some say was given to him by Mrs. Karnofsky!

  
  
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