By: Kent Engelke | Capitol Securities
From: 2/2/17

Will history regard Senator Reid’s 2013 ending of the Senate filibuster and the 2014 OPEC decision to flood the world with oil as two of the worst political calculations in recent history? Both have the potential to have an infinite number of unintended consequences as the intermediate future did not materialize as expected.

Commenting about the former, in 2013, the Democratic Party was convinced that it would maintain control of the Senate, win the White House in 2016 and perhaps regain control of the House. Senate Majority Leader Reid pushed through a procedural change that had previously prevented a simple majority ruling for many Presidential appointees. Under the newly passed regulation, only 51 votes were required for approval versus the historical 60.

It appears the Trump Administration will utilize this procedural change to confirm his cabinet appointees and perhaps the nomination to the Supreme Court, the proverbial nuclear option.

For the record, I am in favor of returning the filibuster.

How will the electorate view Democratic insistence of delaying Trump’s picks, a delay which at this juncture is viewed as symptomatic of everything that is wrong in Washington? Will this view change and Trump next be viewed as a proverbial bully by obtaining Senate approval by a change in the approval process that was instigated by the former majority?

As noted yesterday, Trump is a nationalist populist who ardently believes the people, not the government, make better decisions for the country. The majority of the electorate shares this view given the dominance of the Republican party in most levels of government, in some regards the greatest dominance in history.

And then there is OPEC. According to industry reports, there is 88% compliance with the production cuts. Many thought the inverse would occur. Moreover, Saudi Arabia and other cartel and non-cartel members have stated they would reduce production even more if conditions warranted.

I will argue OPEC et.al. does not have any choice other than to reduce production given the lack of infrastructure spending and large demands for monies to fund their entitlement programs. Many OPEC members require oil over $90 barrel to fund their needs.

The above has large implications for the markets. The proverbial animal spirits have been released believing Trump can reduce the power of today’s Administrative State. This releasing of spirits is a major reason for the recent market advance.

Regarding OPEC, will oil double again, the result of stronger demand and lower production as was the case in 1999? As noted many times, the similarities to that era and to today are uncanny. How will such events affect inflationary expectations?

Speaking of which, the Fed ended its two day meeting. As expected, there was no change in monetary policy, but acknowledged rising confidence among consumer and businesses following Trump’s victory.

The Committee reiterated their expectations for moderate economic growth, “some further strengthening” in the labor market and a return to 2% inflation. Policy makers gave little direction on when it might next raise borrowing costs, as officials grapple with the uncertainty created by the new administration. However there was little to alter the prevailing wisdom that there will be at least three increases in 2017.

Markets were relatively unchanged following the Fed’s announcement, thus suggesting it was essentially a non-event.

Last night the foreign markets were mixed. London was up 0.62%, Paris up 0.22% and Frankfurt unchanged. China was closed for a holiday, Japan down 1.22% and Hang Sang down 0.57%.

The Dow should open nominally lower on economic and political concerns. The 10-year is unchanged at 2.47%.



By: Kent Engelke | Capitol Securities
From: 2/10/17

Equities advanced for a myriad of reasons; earnings, potential tax cuts and an advance in crude. Treasuries declined for similar reasons for a tax cut should increase economic activity, activity that will increase the demand for crude, an increasing demand as the markets become “balanced” as according to Goldman. The combination of higher growth and oil may stoke inflationary pressures.

As inferred above, the financials and energy led the advance.

Commenting further about the selloff in the Treasury market, the 30-year auction as met with tepid demand, weak demand perhaps the result of weekly jobless claims falling to a three month low and the four week moving average in now at the lowest point since November 3, 1973.

The Labor Department stated the latest tally marks 101 straight weeks of claims below 300,000, a level considered as a “healthy labor market.” The 161 weeks that ended in April 1970 was the longest streak on record below 300,000, records that commenced in 1967.

Will wage or cost push inflation to begin to accelerate? Such would be welcomed by workers and the economy, but would be the bane of Treasury holders.

President Trump is attempting to boost wages partially by protectionist trade policies and immigration reform.

Today President Trump meets with Japanese Prime Minister Shinzo Abe. Will Trump broach the subject of currency manipulation, an accusation that he made several weeks ago? As I noted yesterday, all countries manipulate their currencies either overtly (devaluations) or covertly (monetary policy). Some believe this is a precursor of a meeting later with Chinese officials.

What will happen today?

Last night the foreign markets were up. London was up 0.30%, Paris down 0.01% and Frankfurt up 0.32%. China was up 0.42%, Japan up 2.49% and Hang Sang up 0.21%.

The Dow should open little changed with Trump’s tax comments in focus. The 10-year is off 6/32 to yield 2.42%.


The Denise Simon Experience – 02/09/17

The Denise Simon Experience

Hosted by DENISE SIMON, the Senior Research / Intelligence Analyst for Foreign and Domestic Policy for numerous flag officers and intelligence organizations.

SEGMENT 1 & 2: Trevor Louden, Author, Speaker, Movie Producer speaks about his tours around the country telling the facts about the communist/progressive activists and how to solve the problem to get America back to peace, lawfulness and productive.

SEGMENT 3 & 4: Terresa Monroe Hamilton of KeyWiki.org, RightWingNews, Editor at New Zeal and owner of NoisyRoom.net spoke with Denise on a number of domestic issues including Trump’s cabinet posts such as Education, DHS and Healthcare.

THURSDAYS: 9:00PM (eastern) on:

WJHC – Talk 107.5FM
WDDQ – Talk 92.1FM
WLBB – News Talk 1330AM

And on her Digital Flagship Station: RED NATION RISING RADIO – The NEW Dominant Force in Conservative Talk Radio

#RedNationRising #Radio