Part III – Prediction: Jim DeMint Will Join The Trump Administration…


♦In Part-I we explained how legislation is actually constructed in 2017. NOT how most people think it is constructed – SEE HERE

♦In Part-II we explained what that modern reality means with a Trump administration, and what will be needed to overcome the corrupted swamp – SEE HERE

The final paragraphs include accepting the reality and pondering:

[…] President Trump is not going to sit and wait for congress to evolve in their ability to turn away from existing lobbyists hanging around to defend their interests.  Sooner or later President Trump is going to do something dramatic to break the impasse within the broken legislative system.

Considering that Trump is not a politician, that “something” could get rather ugly.

We are not going to get bogged down in the weeds and loose the capacity to see the larger, more consequential, picture.  Staying elevated – However, as if guided by a prescient cue, part of the possible answer to the quagmire becomes evident today:

The controversial president of The Heritage Foundation, former Sen. Jim DeMint, may soon be out of a job, following a dispute with board members about the direction of conservative think tank, according to three people with knowledge of the situation.

Some Heritage board members believe that DeMint has brought in too many Senate allies and made the think tank too bombastic and political — to the detriment of its research and scholarly aims.

[…]  “If Heritage pushes Jim DeMint out, it was because a few board members, who are close to the Republican establishment, never wanted him to be president and have been working to push him out ever since,” said one operative who has worked with Heritage. “DeMint is one of the most respected and selfless conservative leaders in the country and pushing him out would be a big mistake.” (link)

During his keynote remarks at the NRA convention in Atlanta today, President Trump noted the high regard carried for Jim DeMint:

[…] And also from Heritage, Jim DeMint.  It’s been amazing.  I mean, those people have been fantastic.  They’ve been real friends.

Former South Carolina Senator Jim DeMint, now head of the Heritage Foundation has been pushing the organization toward more political activism because it is necessary for the exact reason we have outlined in the previous discussions:  “There are almost zero organizational entities within K-Street presenting any legislative constructs or legislative briefs intended to advance any of Trump’s policy objectives.” (link)

Virtually all of the K-Street policy and lobbying influence is targeted to grow government and present legislation that grows the scale, scope and interests of the financial political class.  DeMint’s efforts toward providing a counter-balance to the influence of the singular policy agenda is exactly what’s needed to begin to deconstruct the UniParty institutions.

The House and Senate, and all of the membership therein, are mired in the swamp by the legislative priorities of the financial influences and lobbyists upon them.  The scale of the lobbying is jaw-dropping when you consider over $3 billion spent in 2016 alone.

The Citizens United SCOTUS decision injected massive fuel into the swamp to expand the scale and scope of multinational corporate influence.   There is now virtually unlimited money pouring in to Super-PAC’S who target politicians for legislative influence.

If President Trump is going to make inroads to advance his America-First agenda, he is going to have to find a way through the financial network pressure now leveraging and choking all members of congress.  The UniParty dynamic cannot be broken without directly confronting this issue.

Senator Jim DeMint, founder of the Senate Conservative Fund (SCF), is the original Tea Party politician who generated support for grassroots conservative politicians.  It was specifically through DeMint’s pre-CU fund many of the modern leaders of conservatism gained their office.

Senator DeMint began slaying incumbent GOPe candidates and raising up challengers to GOPe preferred primary candidates.   He was remarkably successful, and the professional republican class hated him for wiping out their establishment next-in-liners.

However, empowered by the SCOTUS Citizens United decision (2010), the professional GOPe machine changed their strategy and began fighting back against DeMint’s firebrand of conservative primary politics.

The establishment GOP (McConnell, Hatch, Cornyn, Blunt, Thune etc) used the CU decision to coordinate with lobbyists like CoC President Tom Donohue and fund Super-PAC’s with tens of millions of dollars for attacks against republican primary candidates they viewed as outside the party norms.

By the 2012 election the GOPe strategy was working and most of the incumbent republicans were considered safe and secure.  The defeat of Mitt Romney didn’t matter to the UniParty republican leadership; what mattered most was their ability to remain in power.

If the UniParty republicans lose an election to a democrat nothing changes; the leadership remains in power and influence regardless of the flag color atop the spire.  However, if the UniParty republicans lose an election to a real conservative their power is threatened; this is why the professional GOPe attack their own.

For all of these reasons it just makes sense for Jim DeMint to join the Trump administration.  DeMint could be a great Chief-of-Staff replacement for Priebus, or DeMint could be the COO inside DC to guide the architecture of legislative constructs that are in line with Trump’s policy objectives.   Jim DeMint and Mike Pence are strong allies and good friends from all earlier battles on Capitol Hill.

Jim DeMint would be a natural asset to the administration because the battle has now evolved beyond party affiliation; and the UniParty, including the GOPe, must be confronted if any success is to be achieved.

To fight this:

…You Need This:

….Because ultimately the battle looks like this: 

.

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Report: Secretary T-Rex Begins Reducing State Dept. Bureaucrats…


A report from Bloomberg highlights the anxiety within the professional state department apparatus as Secretary Tillerson begins substantive cuts in the number of pontificating elitist bureaucrats.  It’s amazing how the ankle-biters never seem to recognize these consequential shifts in policy and approach toward dismantling the bureaucracy.

The State Department is the cornerstone of Deep State operations. It is a massively bloated institution filled with some of the most entrenched political globalists and ideologues.

(Via Bloomberg) The State Department plans to cut 2,300 U.S. diplomats and civil servants — about 9 percent of the Americans in its workforce worldwide — as Secretary of State Rex Tillerson presses ahead with his task of slashing the agency’s budget, according to people familiar with the matter.

The majority of the job cuts, about 1,700, will come through attrition, while the remaining 600 will be done via buyouts, according to the people, who asked not to be identified because the decision hasn’t been publicly announced. William Inglee, a former Lockheed Martin Corp. official and policy adviser in Congress, is overseeing the budget cuts and briefed senior managers on the plan Wednesday, the people said.

The personnel cuts, which may be phased in over two years, represent the most concrete step taken by Tillerson as he seeks to reverse the expansion the department saw under former President Barack Obama’s administration and meet President Donald Trump’s demand — outlined in an executive order signed last month — to cut spending across federal agencies. A draft budget outline released in March for the year that begins Oct. 1 seeks a 28.5 percent reduction in State Department spending from fiscal 2016.  (read more)

He is moving “forward” at speeds Obama could not even dream of.

You and I will be anti-Trump trolls one day and MAGA heroes the next. Get used to it. Trump speed is the new normal. Some will call it flip-flopping, but that’s not what it is. Trump is dodging and weaving through reality faster than the reality can react to disrupt his plans.

I was explaining this to my wife. This is a roller-coaster now. Trump is no longer waiting for people to keep up. He is taking his bewildering art-of-the-deal campaign schtick into geopolitics, and for a lot of people who can’t keep up or hold on, it will be a rough ride.

Trump is no longer playing only with evil and cunning players who are still predictable, easily beatable dopes, like Hillary. He is playing against killers, with his own team of killers, and all the while he has scheming creeps like Hillary, BGI, SPLC, and the neocons gunning for him. Snake Ryan ready to bite when nobody is looking. “Warhead” McCain screaming for Russian blood. Psycho Kim and Samoa Obama plotting some kind of intrigue to take him down. And THOSE are the lightweights.

This is the majors now. Trump has to outwit world-class adversaries and “frenemies” by defining the deals that they will agree to. One minute they will think Trump is their friend – the next minute, a cunning, bitter foe.

And he has to do this with evil cheerleaders like Warhead, Linderace, Dipsy Dowd, Maggie Haterman, and Fake Yapper trashing him or praising him alternately, no matter which way he goes. They can’t keep up, either.

Neither can many around him. I think that half of the problem with advisers crashing into each other is they don’t realize what Trump is doing.

And people will trash you, and they will trash me. Get used to it. I’ve already caught plenty of people mocking me. Well, just wait a week in Trump time. Look stupid and conned by Trump one minute, and you look like a sage three days later.

Trump will not find perfect solutions. He will find OPTIMAL solutions. We cannot ask for more. Trump has stood by and watched Perfect murder Good for 8 years – maybe longer. He’s not gonna do it. He’s going to deliver the best outcome possible, and he’s not waiting for us to feel relaxed about it.

Best presidency ever! Just hang on. More winning is coming, but a lot of people are going to scream that it’s all over at EVERY turn.

The best way through this is to define viewpoints, not people, because people will shift as they change position and velocity in Trump gravity. Bash the neocon, warmonger, and dopey globalist positions – not the people who are going to hold them one moment and come loose from them later.

Trump is Jupiter moving through the asteroid belt. He is going to pull people into his orbit. A few will get slung off into space, but most will come along for the ride of their lives.

I am ON the Trump Train for good, even if I scream that I want off and can’t take it.

In the end, I only want to scream “TOO MUCH WINNING!!!”  (link)

….”And we will win, and you will win, and we will keep on winning… Believe me. And we will win so much, you will get tired of winning; and you will say: please Mr. Trump, we can’t take all of this winning… And I will say to you, NO. …We will win more, and we will keep winning,.. and we will win, and we will keep on winning…. I love you”…

~ President Donald Trump

Trump’s Tax Survey – Already Predetermined


TAXES-TEXT

  1. In order to achieve the American Dream, Americans must be able to keep more money in their pockets and increase after-tax wages.
  2. We must work to simplify the tax code by reducing the number of income brackets.
  3. Income Taxes are no longer necessary when money is not tangible. See solution on YouTube
    We must discourage corporate inversions in order to grow the American economy.
  4. We must make America a globally competitive nation again.
  5. Our plan must be fiscally responsible in order to not add to our already staggering debt.
  6. We must eliminate the death tax.
  7. We must reduce or eliminate deductions and loopholes that only benefit the very rich.
  8. Simplifying the tax code and cutting every American’s taxes will boost consumer spending while encouraging savings and investment.
  9. We must cut the corporate tax rate and allow the United States to compete internationally.
  10. Corporations must no longer be able to defer taxes on income earned abroad.
  11. Our lower tax rate must also apply to small business, allowing entrepreneurs and freelancers to grow and prosper.
  12. Our lower tax rates will provide a tremendous stimulus for the economy, significant GDP growth, and a huge number of new jobs.
  13. Our tax code overhaul must return power to the states.
  14. We must eliminate the marriage penalty and the Alternative Minimum Tax.
  15. We must allow working parents to deduct childcare expenses for up to four children and elderly dependents.
  16. We must reduce or eliminate the capital gains tax.
  17. We must have import tariffs from other countries at the same rates as those countries that impose on U.S. products.
  18. We must change the border-adjustment tax so companies can no longer deduct imports as costs.
  19. We must pass tax reform legislation in order to ‘Make America Great Again!’

Vice President Pence Swearing-In Ceremony For Secretary of Labor Alex Acosta…


Earlier today Vice President Mike Pence participated in the final presidential commission ceremony for a cabinet member of the President Trump cabinet, Labor Secretary Alex Acosta.

.

The Senate finally voted 60-38 yesterday to confirm Alex Acosta to the post. Acosta accepts the presidential commission and becomes the 27th labor secretary. The son of Cuban immigrants will lead a sprawling agency that enforces more than 180 federal laws covering about 10 million employers and 125 million workers.

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The Dow Jones for the Close of April 2017


DJIND-W 4-28-2017

QUESTION:  Mr.Armstong in the past you talked of a down trun in the market in May.Since Trums TAX you have gave the impression everything is ok till 2018 is that correct?

THANK YOU

SM

ANSWER: There has not appeared to be a condition where one would warn of a crash in the stock market. The decline into May has been more of a sideways consolidation. The high remains the week of February 27th, 2017 at the 21169.11 level. In cycle analysis, what you look at is the direction. That forecast would have been wrong if the market made new highs above that of the week of 02/27/17. Moving sideways is still a cycle low rather than a high. The key point was the 20,000 level on the Dow. I have stated that a serious correction would only happen with a weekly closing beneath that level.

Today, a Weekly Bullish stands at 20970. We are currently trading at 20954. A close above that level will warn this is starting to firm up. You can see our Energy Models have been declining rather than rising. This has indicated the consolidation and it warns we are not at the precipitous from which a major crash is likely.

On the monthly level, here too we see 20975 as the important resistance and 202881 as the support for the close today. Everything is showing this 20770-20975 level as critical. The failure to exceed that level for the close today warns that the consolidation is not yet complete. Last month’s low was 20412.80. A closing below that would be technically bearish and confirm a drop into May.

We will lay out the longer term in a more detailed published report.

30Y Treasury Yield Jumps Near 3.00% Despite Dismal GDP Growth


Tyler Durden's picture

Nothing says sell bonds like the worst quarterly growth for a Fed rate hike since 1980

 

but that’s what is happening…

Here’s why – Treasuries under pressure after 1Q employment cost index rose 0.8%, largest gain since Q1 2007, a sign of inflationary wage pressures as both pay and benefits accelerated

US GDP Collapses To 0.7%, Lowest In Three Years; Worst Personal Spending Since 2009


Tyler Durden's picture

The Atlanta Fed was right once again, and slashing its forecast over the past 3 months today the BEA confirmed that in the first quarter US economic growth tumbled to just 0.7%, down from 2.1% in the last quarter and below the 1.0% expected, and the lowest print in three years going back all the way to Q1 2014.

Broken down by components, the disappoing number reflected increases in business investment, exports, housing investment, offset by a big slowdown in consumer spending. The increase in business investment reflected increases in both structures and equipment, notably a significant increase in mining exploration, shafts, and wells.

These positive contributions were offset by decreases in private inventory investment, state and local government spending, and federal government spending.

The increase in exports reflected an increase in nondurable industrial supplies and materials, notably petroleum. Also on trade, imports, which are a subtraction in the calculation of GDP, increased in the first quarter of 2017. As the chart below shows, the dramatic drawdown in trade as a result of the soybean export surge giveback is now over, and net trade contributed a modest 0.1% to Q1 GDP.

But the biggest culprit for the atrocious GDP print was the collapse in consumer spending, which rose at just 0.23% annualized, the lowest increase since 2009, and reflected an increase in services offset by a decrease in motor vehicles and parts. In short: for whatever reason, spending in the first quarter imploded.

Elsewhere, looking at PCE, prices rose 2.6% Q/Q, above the 2.3% expected, and higher than last month’s 2.0%. Core PCE rose 2.0%, in line with expectations.

Once again, the bulk of the PCE growth came from rising healthcare service prices, with the rest barely registering.

Food prices increased in the first quarter following a decrease in the fourth quarter of 2016. Energy prices increased in the first quarter of 2017 following a larger increase in the fourth quarter of 2016. Excluding food and energy, prices increased 2.3 percent in the first quarter of 2017, compared with an increase of 1.6 percent in the fourth quarter of 2016.

Part II – Why President Trump Has Not Received Legislative Action From Congress – and What Can Be Done…


In Part I we explained why President Trump has not received any legislation:

To Wit: President Donald Trump winning the election threw a monkey wrench into the entire DC system…. The modern legislative machine is frozen in place.

The “America First” policies represented by candidate Donald Trump are not within the legislative constructs coming from the authors of the legislation.   Congress has no bills to advance because all of the myriad of bills and briefs written are not in line with President Trump policy.

That’s why congress has not passed any legislation for President Trump to sign.

There’s no entity within DC writing legislation that is in-line with President Trump’s economic and foreign policy agenda.  Exactly the opposite is true.  All of the DC pipeline legislative briefs and constructs are antithetical to Trump policy.

There are almost zero organizational entities within K-Street presenting any legislative constructs or legislative briefs intended to advance any of Trump’s policy objectives.

Think about how much money is behind the legislative business when those who control the legislation are willing to spend $3.1 BILLION in a single year to achieve their needs.

♦The “Associated American Southern Border Wall and Security Builders” – special interest and lobbying group – simply doesn’t exist. Nor are there any entities creating legal briefs (bills) to facilitate the southern border wall construction.

♦There is no “Associated Illegal Immigrant and Deportation Enforcement” group lobbying for the removal of undocumented illegal aliens; or writing legislation to fast-track deportation of illegal aliens.

♦There’s also no official corporate political action committee or group office on K-Street creating legislation to repeal ObamaCare, or lobby for the removal of government interventionism into the healthcare system.  etc.

The DC legislative pipeline is devoid of any bill, brief or construct for any of the platform priorities of the Trump administration.   Quite the opposite is true.  Almost all of the K-Street institutions -which create the legislative priorities- are capable of producing a product that flows in one direction.

This reality is the epicenter of the UniParty problem.

Voters can demand change and switch the House of Representatives from Democrat to Republican control, but politicians don’t actually write legislation.  The legislative product coming through the system remains the same regardless of which party is in control of the House of Representatives.

Voters can go further and change out the Senate from Democrat to Republican control; but again, you find little difference because the legislative product hasn’t changed.  K-Street may (usually they don’t) modify the special interest ingredients a little – but the progressive sausage is still a progressive sausage; it’s not a hamburger.

Voters go one step further and change the Executive Branch away from progressive control.  However, there again, the legislative product has not changed.  The DC system is creating the same ideological product regardless of the dynamic of party affiliated politics.

The problem in 2017 is systemic because there’s no counter-balancing legislative or lobbying enterprise within the epicenter of the DC Swamp, K-Street.  There’s virtually no alternative legislative product being generated which would coincide with the change in representative political ideology.

This UniParty system is why Paul Ryan and Mitch McConnell voted to fund and approve every one of President Obama’s priorities.  Omnibus, Bailouts, Porkulous, DACA, Healthcare Exhanges, Stimulus etc. are the only game in town with support – there simply are no alternatives being pushed by interest groups.

Yes, there are a few modestly sized groups like Heritage Foundation who can generate alternate legislative products and some advertizing. But for every one of them there’s a hundred going in the other direction.

When you think about it, it simply makes sense.  It’s a self-fulfilling prophecy. Why would there be an organizational entity inside the system whose primary purpose would be to spend money in order to generate less spending or smaller government?  They would essentially be advocating against their own interests.

Remember the grand fiasco that was the 2013/2014 Comprehensive Immigration Reform bill (Gang-of-Eight)?

That Go8 bill was an outcome of the same lobbying process, same K-Street legislative construct etc.  The controversial bill was not majority supported outside the beltway.  Despite the electorate lack of support it passed the Senate and Speaker Boehner, Paul Ryan, Eric Cantor and Kevin McCarthy were only two days from a vote in the House when Cantor was primaried.

When ObamaCare was passed on December 23rd at 1:38am a full 70% of the country when polled did not support it.  But the DC lobbying and legislative system created it and found a way to get it passed.

Jump to 2017 – President Trump takes over the White House in January, and there’s really no Pro-Trump legislative product from congress because there’s no Pro-Trump legislative construct coming from the people who write legislation, K-Street.

Instead, crickets.

The only special interest group that President Trump advocating for him are the voters.

The DC swamp (writ large) is a singular organism with multiple visible components that seem disconnected; but in direction or pathway they are not dissimilar.  Under the visible surface the UniParty roots are all intertwined and connected around principles of self-sustaining common interest.  Their commonality lies in growth of government.

President Trump’s fiscal and economic policies are adverse to those UniParty interests.  President Trump’s first full-year budget proposal was a trillion dollar reduction in spending.  As a consequence the combined weight of all visible DC interests immediately aligned toward diminishment of the proposal.

Within the DC Swamp the flow of legislative interest travels in only one direction.  Albeit there are multiple organizations able to construct legislation for sale; the direction of the product they are producing is going in one progressive direction.

There are no K-Street lobbyists demanding smaller/lesser government.  There are no lobbyists walking in to House and Senate offices and asking for representatives to spend less money.  The only people doing that are voters.   How do reps generally deal with those annoyances?  They turn off the phone, disconnect the fax machine and ignore the emails.

Accepting the reality of who controls legislative constructs also helps to understand why those same entities will not allow prior legislative accomplishments to be undone.  Modern K-Street considers prior legislation ‘paid-for investments‘, they will not allow removal.

Retention priorities:

♦Retention of ObamaCare. ♦Deep Federal Spending. ♦NO border wall. ♦Open-ended immigration until congress delivers comprehensive immigration reform to include amnesty. ♦Tax Cuts (corporate revenue enhancements) are permitted.

They did however suffer defeats on legislation that had not yet passed, but were prepped for Hillary Clinton, like: Trans-Pacific-Trade (TPP) and Common Core federalization of education.

So the next obvious question is: what can be done about it?

The only viable solution, under the current system in place, is for the Trump Administration to generate their own legislative product to deliver to congress for passage.  It sounds weird, but essentially that appears to be what is taking place right now with the White House staffing up with their own groups of bill authors, constructionists and administration lobbyists.

President Trump’s team will create the legislative product, and hopefully the republican controlled house and senate will pass it.

However, even this process also runs head first into the positions of the UniParty.

Example: Commerce Secretary Wilbur Ross sends the Senate Committee on Commerce, Science and Transportation a statutorily required “letter of intent” to renegotiate NAFTA (North American Free Trade Association) mid-March, and the Republican Committee Chairman John Thune doesn’t accept it. (Today is 4/28/17).

Now what?  The GOP wing of the UniParty is beholden to lobbying interests (U.S. CoC) who are adverse to NAFTA renegotiation.   See who is on the committee HERE.

This example is not even a legislative product that needs a vote.  This example is simply a statutorily required notification that requires being accepted.  What do you think would be the outcome if Senator McConnell was given a legislative product containing similar pre-paid lobbying conflicts for his membership?

This reality also helps to explain the frustration from the White House when they do have a legislative product that moves the needle (ie. healthcare), road-mapped primarily by HHS Secretary Tom Price, and yet the House of Reps can’t even bring it to a vote.

The Freedom Caucus can wax philosophically about the Price/Ryan bill not being a full repeal; and they can argue accurately about the bill having flaws remaining from the influence of the ObamaCare lobbyists, but what is the actual alternative?  Nothing.

Nothing is not an option.

The White House paying for their own staff to hire outside people to write legislation because congress doesn’t have an ideological enterprise to create their own is what has lead to this ridiculous situation we are in right now.

This DC quagmire might improve over time as new enterprises (legislation builders) move into DC to do work with a more favorable ideological outlook in-line with the new administration.  But in the interim nothing is getting done, the simple tasks of budgets are at loggerheads, and time is wasting.

Fortunately for congress, right now foreign policy is taking up a lot of intellectual and administrative energy.  The current domestic economic policy outcomes are being driven by the executive office alone without congress having to do any work.

However, understandably, President Trump is not going to sit and wait for congress to evolve in their ability to turn away from existing lobbyists hanging around to defend their interests.  Sooner or later President Trump is going to do something dramatic to break the impasse within the broken legislative system.

Considering that Trump is not a politician, that “something” could get rather ugly.

 

The Confidence Game – The Next Crisis


Confidence-wide

QUESTION: Martin, I started following your models shortly after college in 2000 when I entered the financial advisor world. I soon realized how clueless this industry was and formed a hedge fund in Tampa in March 2007 to short retail and housing, largely based on your models & my understanding of cycles. I reached the top 1% in Morningstar through Sept of 2008 right up until the government banned shorting. I could not receive quotes from my Goldman Sachs trading platform and I lost a lot of money in a few short hours. I eventually had to shut down the fund and my investors took losses. It was this period where I learned the error in my thought process, I underestimated the length to which the Government & politicians would go to kick the can further down the road and underestimated the big banks inside influence on the “free markets”.

Your recent post regarding inflation and the end of Quantitative Easing had me thinking, wouldn’t the moment the politicians realize there is a recession on the horizon and inflation begins to cripple the housing followed by retail, etc, wouldn’t they re-institute QE and expand the balance sheet further regardless of the future implications? It seems politicians will do whatever it takes to avoid the worst and continue to kick the can down the road to save their own careers.

Thank you for your provoking thought and mindful awareness while everyone else buries their heads in the sand.

R

credit-anstalt

ANSWER: The outcome always depends upon confidence. It is what you believe that counts rather than the facts. When Credit Anstalt went belly-up in 1931, why did an obscure bank in Austria set in motion the 1931 Panic and Sovereign Debt Defaults that made a recession into a Great Depression? The answer was found in the name. One of the owners was the Rothschilds. When people heard the Rothschilds went bust, they began selling all the banks because if they went down, everyone else surely would. They were the Goldman Sachs of the day.

Hoover - Loose Cannon

I suggest reading Herbet Hoover’s Memiors from 1931. This is a confidence game. Just because QE appeared to work before does not mean it will work a second time. The middle-class lost money and their living standards were sharply reduced. Retail investment in equities has not yet returned to even 50% of 2007 levels. Most people who lost their homes were those who could never have bought one before. Yes, the middle-class who borrowed more against their house were put under stress. Home equity loans dried up so industries like selling pianos dropped by more than 50% since people borrowed using home equity to fund expensive things like a piano.

Fed v Congress

Energizer-BunnyThe difference this time is the fiscal budget. Back in 2007, the Fed only had to worry about its policy and the contracting economy. The problem they created is that government just keeps going like the Energizer Pink Bunny – it never stops spending regardless of the level of interest rates.

The Fed cannot neutralize the Fiscal spending of government. This is deeply entrenched. Just look at the table below on the annual deficits since 2007. This has increased about 364% since the 2007 crisis began.

Government has become addicted to cheap interest rates. If rates go back just to 5%, we are looking at a fiscal deficit explosion the Fed cannot overcome.

US Deficits 2007-2016

The crisis has to hit before a politician would ever act. Once the crisis begins, you cannot restore confidence. The whole thing will have to play out. Moreover, the crisis in Europe helped to send capital to the USA easing the economic pressure here. This is why the USA is holding up the entire world economy right now and a stiff wind will blow over the European banking system. I seriously doubt that anyone can stop the next crisis and whatever they do will then be seen as a failure.

glassDuring the late 1970s, the IMF held gold auctions trying to stop its advance. The first auctions in 1975-1976 caused gold to drop by 50%. However, then continued auctions had no effect and they were seen as a validation of the bull market they could not prevent. We are looking at the same type of collapse in confidence this time around. The same fundamental act can have different interpretations. It is the glass half full or half empty.

The Euro for Month-End April 2017


IBEUUS-M 4-24-2017

The Euro turning point on our Weekly Models still points to the week of May 8th. As we can see technically, the Euro is well below the Monthly Downtrend Line which stands significantly above the market at 12622. There is no real chance of a reversal in the protracted long-term decline. We really need a Monthly Close above 11060 to signal a sustainable rally ahead and a closing for month-end beneath 10822 will warn that the Euro is still bearish in the broader term. Any rally into the week of May 8th should be sold whereas a decline into the week of May 8th will be followed by a minor relief bounce.

IBEUUS-W 4-26-2017

Turning to the weekly level, we can see the the Energy within this market has peak once again and is in danger of moving back into negative territory in the weeks ahead. We need a weekly closing on Friday above 10855 to raise hop of a rally into the week of May 8th. Therefore, this is becoming very narrowly focuses 10855 and 10822.

The Weekly Bearish lies at the 10715 level. Clearly, we do see a choppy trading people starting the week of May 8th. The computer has selected this weekly target months ago which is interesting how this falls into place with the May 7th French election.