John Rubino – Market Effects From High Energy Prices, Central Bank Tightening, High Inflation, And Safe Havens
John Rubino, Founder of the Dollar Collapse website, joins us to discuss how the high energy prices, pricing inflation, corporate margin compression, and central bank hawkishness are creating volatility in the global markets. We discuss how energy is a tax on almost everything affecting both consumers and corporate cost inputs, but so far demand has remained elevated.
We’ve all seen the financial markets start breaking down last year and that trend has continued into this year, but this market weakness and slowing growth could be prolonged if inflation stays elevated and if central banks don’t tighten enough to really impact it. In addition to the Fed, the ECB is now stating that it will start hiking rates after Q2 and we discuss what this may men for sovereign bonds and the issues the PIGS (Portugal, Italy, Greece, Spain) had in the past before the ECB ran everything through German bonds. The central banks have a choice to make about whether they’ll stay focused on tightening and trying to bring down demand and inflation, or whether they’ll eventually need to reverse course again and bail out the markets with renewed liquidity.
The discussion wraps up on the topic of what are still safe haven assets, and in particular how is gold behaving, not just in dollar terms, but in relation to other key global currencies. John outlines how the precious metals markets may react to either the deflationary scenario or the persistently high inflation scenario for investors to consider.
Crude Oil May Attack All-Time High As Eurozone Inflation Hits 37.2%! Plus Can You Believe It, Car Sales And More…
June 02, 2022 – KWN
> Top Citi analyst Tom Fitzpatrick: “Crude oil is back above horizontal resistance at $116.64 (Mar 24th high). A close above $116.64 this week, if seen, would complete a double bottom formation and could suggest a target of $140.35, with intermediate resistance at $130.35 (2022 high). A close above all mentioned levels, if seen, could suggest a test of $147.27 (all-time high).”
> Peter Boockvar: “I have to highlight again what is going on in European bonds as yields continue to rise. When we look back over the last 10 yrs and search for excess, negative interest rate policy was the epitome of it as it was the ultimate hot potato, and the air continues to come out of that epic bubble in response to high inflation and ECB rates that are still negative and QE is still ongoing for another week. The markets of course don’t wait around and they continue to do the central banks work. As for that negative rate pile of debt, it totals $2.46 Trillion as of yesterday’s close after peaking at $18.38 Trillion in December 2020.”
“I’ll say for the umpteenth time, analyze US inflation and growth stats all you want in trying to predict where long term rates go but if you’re not taking into account the influence of movements in overseas bonds, you’re not looking at the full picture. We’re all in this bond move together.”
Dotcom Bust 2, New & Improved
The Wolf Street Report by Wolf Richter • Jun 5, 2022
“But we’ve had it so good for so long. And it was so easy, and it made everyone look like a genius.”
https://wolfstreet.com/2022/06/05/the-wolf-street-report-dotcom-bust-2-new-improved/
Iran proposes new currency for trade with China, Russia, India, Pakistan in Shanghai Cooperation Organization
By Benjamin Norton – MultiPolarista – June 2, 2022
“Iran proposed a new currency for trade with China, Russia, India, Pakistan, and other members of the Shanghai Cooperation Organization (SCO). This could help circumvent illegal Western sanctions and weaken US dollar hegemony.”
https://multipolarista.com/2022/06/02/iran-currency-shanghai-cooperation-organization/
Remember when just 1-2 years ago there were still people scoffing at de-dollarization, and whether sanctioned naughty nations in the East (sick of the dollar as the sole reserve currency) would ever do anything about it and create their own system? So many economic pundits and “experts” laughed at this notion and said it would never happen… Hmmm…. not such a funny idea now, is it?
Also remember when we pointed out a few months ago, that when the Ukraine/Russia war started, that the US and NATO kicking Russia off the SWIFT banking system and showing their hand to other sanctioned nations like China and Iran would only hasten them developing a new system? People brushed that off as an over-reaction…. Was it?
That system is here and consists of a mobile phone with transaction costs almost zero. Huge amounts of western banks income from interest rates, transaction costs and other gangster privileges is going to vanish.
Yes indeed. Nice drill hit from Lion One (LIO). Thanks for the heads up Wolfster. I’m actually a shareholder of Lion One but had just been swamped today and hadn’t digested all the incoming news yet. It seems like investors are pretty animated though, and LIO closed up 17.5% on the day.
(LIO) Lion One Hits Best-Ever Hole in Fiji
Brian Sylvester – Streetwise Reports (6/6/22)
“Underground drill hole TUG-141 has found a remarkable new high-grade feeder zone at Lion One Metals Ltd.’s (LIO:TSX.V; LOMLF:OTCQX) Tuvatu Gold Project on the island of Viti Levu in Fiji. It is the longest, highest-grade gold intercept to date in the alkaline system, returning 20.86 grams per tonne gold (20.86 g/t Au) over 75.9 meters.”
“Lion One has long planned to start gold production by the second half of 2023 at Tuvatu, and Crescat Capital Geologic and Technical Director — and an advisor to Lion One — Dr. Quinton Hennigh, says the new intercept should not change the company’s course.”
“Hennigh has seen this kind of intercept before when underground drilling in mid-2017 at the Fosterville gold mine in Australia hit 338 g/t Au over 33.6 meters. The find helped push shares in Kirkland Lake Gold (since bought by Agnico-Eagle) from below CA$5 per share to a peak of about CA$58 in August 2020.”
https://www.streetwisereports.com/article/2022/06/06/lion-one-hits-best-ever-hole-in-fiji.html
I’m glad John Rubino focused on The PIGS of Europe, The Giannini Banks (Italy) are going to crash first! It should have happened a long time ago. DT
It would seem like the situation in European countries is going to get pretty dicey, and the interest rates of many PIGS countries bonds are going to fly….
Senate is working on proposal to put cryptos under the CFTC. I assume that means they are going to continue not regulating them. That is like putting a derivative of a derivative under a Regulator that doesn’t do anything. Might as well let JP Morgan regulate it.
So an imaginary electronic coin will have a phony price determined in a paper price setting mechanism rather than in a monetary market containing worthless fiat.
Sounds like physical metals will become a bigger threat in the alternative universe.
Get your Crypto Futures at your local broker.(not sure if bushels or by the ton)
Brooksley Born, as head of the CFTC in 1995-96, tried to raise a flag about wild and dangerous activity in derivatives. Her boss, Larry Summers, Under Sec./Treasury, threatened her job if she didn’t shut up and managed to get rid of her by 1998-99. She was replaced by a series of mindless puppets at the head of the CFTC, kinda like the mindless puppet currently in the WH.
Brooksley Born was right and proved how bad “economists like Larry Summer or his boss, Robert Rubin or other Wall Street “wonder boys” have been. Follow the money, then follow the corruption..
Summers was Sec./Treasury the last year or two of the Clinton administration after Robert Rubin stepped down. I remember Rubin appearing as a guest on Rukeyser’s show after announcing his departure, and Lou asking him why. As I remember, Rubin did quite a tap dance.
In 2001 Larry Summers needed a new job, and got to be president of Harvard. He served there until 2006 when he stepped down after a vote of no confidence from the faculty. (Doesn’t mention it in Wikipedia, but I think the no confidence vote had something to do with the shrinking of Harvard’s endowment fund by 30,40, maybe 50%.)
Larry started at MIT as an engineering major, then switched to economics. I think it was J. K. Galbraith who stated that the “science” of astrology only exists to make economics look respectable, or vice-versa.
Michael Boutros (Gold 36:12): https://www.youtube.com/watch?v=pggTaC9m734
For anyone following the NG Energy(gasx) they are hard to come by but the may 27 warrants are a nice leveraged way to play them. I put in a bid at .15 and have been able to slowly accumulate some. Just a thought.
I just hold the common shares of NG Energy. but wish you well with the warrants amigo.
Me 2 on the shares…waiting for something to happen as they appear close to production in something.
Eloro is closing in on The Main Feeder at the Southern End Of The Santa Barbara area. Three drills turning possibly four when they hit The Main Feeder this stock will blow a FUSE! DT😁
NG energy article:
“NG Energy International: Ramping Up Natural Gas Production At An Opportune Time”
aghead – Thanks for posting a link to that article on NG Energy. Yes, this is a great time for them to bringing more Nat Gas supply to the markets for sure.
What do you think of Novo Resources NSRPF?
Look at the comments from Erik Wetterling interview June2 to get a some thoughts on NVO(NSRPF).
Good point Terry. Erik had discussed Novo in the interview from the 2nd, where his focus is still very much on the exploration upside, and not on Beaton’s Creek, and then we had some good comments down in the blog relating to Novo Resources.
Here’s a link to that interview with The Hedgeless Horseman if anyone is interested:
US Corporate Bonds Have One of Their Worst Years in a Generation
Taps Coogan – June 5th, 2022
“The punchline is that the US corporate bond market has seen its worst 12-month return since the Global Financial Crisis and, in all the various recessions and crashes since 1970, corporate bonds have only really done worse for a brief period during the absolute depths of the Global Financial Crisis.”
“If you’re looking for an entry point on corporate bonds, it’s time to start paying attention. Of course, with yields on everything down to single ‘B’ junk well below the inflation rate, buyers are taking a bath on real-returns until inflation drops quite a bit, hence the terrible performance.”
https://thesoundingline.com/us-corporate-bonds-have-one-of-their-worst-years-in-a-generation/