The Dive With Jackson Hinkle Published originally on Rumble on December 19, 2022
Current situation in the Ukrainian Russian war.
Russia CAPTURES Marinka, Putin PLANS OFFESNIVE In Belarus w/ HISTORY LEGENDS
Tag Archives: Saxony
Aladdin v Socrates
Armstrong Economics Blog/Trading Re-Posted Dec 20, 2022 by Martin Armstrong
QUESTION: Marty, your Socrates predated Fink’s Aladdin by a decade. Blackrock’s stock dropped about 50% from 2007 into 2010 when Socrates got the whole crash right. It picked the very day of the high in 2007 and they were calling it on the floor Armstrong’s Revenge. Socrates called for a Directional Change here in 2022 and it was correct. Socrates is forecasting Aladdin. Cool!
Socrates has forecasted events years in advance. Nothing else does that. You warned at the WEC about the danger of a fund getting too big. My question is rather straightforward. Do you think that Fink’s influence can save Blackrock in the future?
ANSWER: Fink lost a ton of money before and left that firm. He is a good salesman, but I am a trader. I watched how the Hunt Brothers ended up in bankruptcy because their position in silver was too big and everyone knew it. If they tried to sell one ounce, the market assumed here it all comes and everyone and their 5th ex-wife jumped in front to sell. BlackRock is in a vulnerable position. It is TOO BIG and that may buy influence, but in a liquidity crisis, the danger becomes you are like the Hunts and everyone will front-run you.
The marketplace is so intricate and the regulators are corrupt, anything goes for there is no loyalty on the street – ask Lehman Brothers and Bear Sterns. I had the Aristotle Onasis estate precious metals positions I had to liquidate. He had the largest private holding of platinum in the world. It took me months to get approval from the CFTC just trade above exchange limits. When I got approval and called a dealer for a quote, everyone knew the position. Someone in the CFTC let their friends know.
Fink is on board with Schwab and preaches Stakeholder Capitalism. That philosophy was never Schwab’s but was born during the Great Depression before there were social programs from the government. It was a complete disaster and set the stage for the takeover boom of the 1980s.
I was advising many of the takeover players back then. I showed these charts and how the Dow bottomed in 1977 in terms of book value thanks to Stakeholder Capitalism. I showed clients we could buy companies, sell the assets, and double or triple the money. That became the genesis of the movie Wall Street with Michael Douglas.
It was Milton Friedman, back in 1970, who exposed how Stakeholder Capitalism was inefficient and stupid. It was a derivative of Marxism that took down Communism. He laid out that such a role was that of government, not corporations, whose #1 fiduciary obligation was to its shareholder. Under Schwab, I could say, “OK I will go public; everyone sends in money. I will give you shares in return and then say — OMG, there are people starving in Africa!” So, I decide to give 50% of all the profits to them and not my investors. This is Stakeholder Capitalism that Fink endorses thinking it is something Schwab has invented. Worse still, he has adopted that I believe to raise money from Schwab’s disciples. It Ain’t Capitalism – It’s Marxism!
The problem I see is that you simply cannot collect that much money to manage without becoming the elephant in the room. By the time we get to 2025, it does not look like any amount of influence will matter. Aladdin is not the same as Socrates. It cannot project out decades. Fink is specializing in high-frequency trading and ETFs. This will be very interesting in the next couple of years. He claims he is investing for the long-term so don’t judge him by the fluctuations. Those who said that in 1929, “HOLD”, lost 90%. It took 26 years for the Dow to return to the 1929 levels.
The Tax of ETFs
Armstrong Economics Blog/The Hunt for Taxes Re-Posted Dec 17, 2022 by Martin Armstrong
Interactive Brokers has published a specific list of what is taxable and what is not. If your brokerage house does not understand that ALL ETFs are not taxable, then you really have to find another broke.
January 1st, 2023 Tax on ETFs
Armstrong Economics Blog/The Hunt for Taxes Re-Posted Dec 16, 2022 by Martin Armstrong
QUESTION:
Hi Marty,
Please help as I invest in mostly ETFs from Australia.
I was getting USD exposure but now looks to be ending by Jan 1st, 2023.
I was Informed 2 days ago.
Could you do a post about this and any potential workarounds as I’d take a guess a lot of International clients would have a similar issue.
The US Internal Revenue Service (“IRS”) has issued a new provision under Section 1446(f) of the Internal Revenue Code (“IRC”) that primarily impacts non-US Persons who invest in US PTP Securities. With effect from 1 January 2023, non-US Persons will incur a 10% withholding tax on gross proceeds from sales or trading of US PTP Securities.
Regards Dean
ANSWER: This is once again the Biden Administration hunting every possible dime it can find while handing endless billion to Zelensky who may be on track to become the richest corrupt politician in the entire world. This is the notice going out to all foreigners investing in the once land of the free and home of the brave which has been downgraded to the land of the absolute fools without the hill. One bank has sent this to their clients trading in US ETFs.
Dear Customer,
Withholding Tax of 10% – Publicly Traded Partnership Interest (PTPs)
With effect from 1 January 2023, a 10% withholding will be imposed on sales and certain distributions associated with PTPs or exchange traded funds (ETFs).
PTPs trade like stocks on major U.S. and global exchanges and are often indistinguishable from equities, ETFs and other commonly traded instruments. It is critical that you understand these tax implications when you hold such PTPs and you should seek the appropriate professional advice if you are unsure of the contents of this email.
Background:
The Internal Revenue Code Section 1446(f) issued by the US Internal Revenue Service imposes rules relating to withholding of tax on transfers of Publicly Traded Partnership Interest (PTPs) and will take effect on 1 January 2023. The new rules consist of the following:
· All PTPs, including non-U.S. PTPs, are subject to the new requirements if they have gains that are effectively connected with a trade or business within the United States.
· 10% withholding will be applied to sales and certain distributions associated with PTPs. (Please note that where there is any existing withholding tax being applied today, for example to other distributions, those will continue to be applied with no change/ no reduction)
Please visit _____ official website > Notices for more details.
If you have any further questions, please email us or call our Customer Service line.
Section 1446 (see link) is part of a segment of the Code that governs withholding on nonresident aliens and foreign corporations.
Section 1446 itself deals with withholding on foreign partners who have income that is effectively connected with the US through a partnership. Section 1446(f) adds a withholding requirement that applies to the disposition of partnership interests, but it does not apply if the selling partner provides an appropriate affidavit:
“No person shall be required to deduct and withhold any amount under paragraph (1) with respect to any disposition if the transferor furnishes to the transferee an affidavit by the transferor stating, under penalty of perjury, the transferor’s United States taxpayer identification number and that the transferor is not a foreign person.”
I.R.C. § 1446(f)(2)(A).
I doubt that section 1446 applies here, as my understanding is that ETFs are taxed as registered investment companies, not as partnerships. But I am not an accountant or a tax lawyer. My reading on this text suggests that this turns on the definition of an ETF which is clearly not a partnership.
Those who are being harassed by various banks should contact their legal departments and demand their interpretation as to why suddenly an ETF is a partnership. I would love to see what explanation they have provided to apply this tax. If there is some other code they are overlapping or how they are coming up with this or are they acting out of sheer overcaution? If they will not provide an explanation, I suggest you close the account ASAP or wire out all funds until you find another firm.
Fed Announces 0.5% Interest Rate Hike as Cycle of Inflation Shows Plateau
Posted originally on the CTH on December 14, 2022 | sundance
As we have often discussed on these pages, inflation would ultimately moderate and plateau not because prices were dropping but rather because of the calendar cycle.
As the economy cycles through a year of large price increases, the current inflation rate cycles through to the period when prices first increased. This calendar cycle means continued price increases are lower as a percentage and thus the inflation rate appears to modify despite prices continuing to rise. [BLS Report]
This scenario, prices remaining high and continuing to climb – yet lower as a percentage, now provides the justification for the federal reserve to state inflation is moderating.
(Via NBC) – Amid signs that price growth in the U.S. economy is rapidly cooling, the Federal Reserve announced Wednesday it was slowing the pace of its rate-hiking program designed to tackle inflation — but that more hikes were still on the table.
The Federal Open Market Committee said it was increasing its key federal funds rate by 0.5%, after announcing four-straight 0.75% hikes at its most recent meetings. In its Wednesday statement, the Fed said it continues to target an inflation rate of 2% over the long term and would continue to increase the federal funds rate to do so.
“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the committee said.
But bringing down inflation is likely to come at the cost of higher unemployment in the short term: The Fed said it now projects the 2023 unemployment rate to average 4.6%, equating to hundreds of thousands of more jobless workers compared with the current rate of 3.7%.
The Labor Department on Tuesday reported that annual inflation clocked in at 7.1% in November — the lowest reading in more than a year. While it is still high compared to the 2% level at which the Federal Reserve typically seeks to hold down inflation, the most recent number signals that the galloping price growth earlier this year is fading. (read more)
Prices will never drop because the supply side pressure from a new energy policy remains as the driving factor.
Demand has dropped throughout 2022 as the U.S. economy, gauged in units of product sold, has contracted. Consumers are not buying non-essential goods or services as the costs of housing, fuel, heating, electricity, overall energy and food prices continue rising.
Despite the economic contraction that is lowering energy use, rapidly increasing energy costs continue to be the driving force of inflation.
This period of depressed economic activity will continue as unemployment begins to become problematic. As a nation we will remain in this economic malaise as long as Green New Deal, Build Back Better, energy policy is maintained.
On the positive side the economic shrinking is reversable with new energy policy; however, the opportunity to make that change is several years away. In the interim, the cost of living will remain the biggest challenge for the foreseeable future, and the inbound open-border migration will keep wages depressed.
Under the economic program of Joe Biden wages must be depressed in order to avoid production inflation (higher labor costs) from piling atop the energy policy inflation. Thus, the border influx will continue.
The gap between the haves and have nots is also going to explode in the next five years.
Real Estate
Armstrong Economics Blog/Real Estate Re-Posted Dec 13, 2022 by Martin Armstrong
COMMENT: Mr. Armstrong, I just want to congratulate you on creating Socrates. I am a real estate aficionado and Socrates has beaten the Case-Shiller Index which peaked in June of 2022 and even the Redfin Index which peaked in May 2022. Socrates peaked at a high in December 2021 ahead of everyone. Your model has shown a 34% drop into October where everyone is saying a 20% drop by the end of next year is likely. I just wanted to write because you and Socrates have beaten everyone in the real estate forecasting business and you do not even make that a big deal. Socrates is amazing.
I just wanted to share that because you do not even bother pounding your chest about real estate.
Thank you so much
LR
REPLY: Socrates is forecasting so many aspects of the world economy I do not have the time to pound my chest and if I did, I would probably end up in the hospital for it gets so many things right. It covers a fair sampling of real estate around the world and I do know we have many major real estate companies tuning in. Thank you for your comment. I have not had the time to look at either of those two indices as of yet.
What investment would have produced 4,414% Gain since 1932?
Armstrong Economics Blog/Traders Re-Posted Dec 13, 2022 by Martin Armstrong
Imagine if you could have bought a loaf of bread in 1932 for 7 cents. That 7 cents would be $3.09 today would be a gain of 4,414%. Of course, you could not even freeze it that long. That is also the problem with many who sell investments. Gold was $20.67 in 1932 so that has been a gain of 8990%. On the other hand, the Dow Jones Industrials bottomed in 1932 at 40.56. That has been a gain of 83,992%.
In 1955, the Dreyfus Fund was established by a New York stockbroker named Jack J. Dreyfus, Jr. (1913–2009) It was Dreyfus who acquired the open-end Nesbett Fund, which had $2.3 million in assets. This ambitious stockbroker renamed the fund bestowing his own family name upon it which would become a household word in the decades ahead. By year end, the assets grew to $5.6 million as 1955 drew to a close. The best decision Dreyfus made was to buy 400 shares of an unlisted stock. That “sleeper” stock was Polaroid which he bought for $31 7/8. Dreyfus would watch this single purchase rise to $6,372 per share – not counting splits – in the years ahead. This outstanding performance almost single-handedly led to the mutual fund boom in the 1960s.
Sometimes a new technology paves the way for something that changes the game.
Real Estate Down & Dirty
Armstrong Economics Blog/Real Estate Re-Posted Dec 9, 2022 by Martin Armstrong
QUESTION: I want to thank you for Socrates. It picked the turn in the real estate in January amazingly. Do you see the high-end and regional divergences continuing?
WH
ANSWER: Yes. The Directional Change for 2021 was spot on. Our index began declining in January 2022 anticipating the first rate hike on March 17, 2022, by a quarter point. We would expect lower prices into 2023 and this should be the typical 2-year reaction low. It appears that post-2023, we would begin to see the shift where private assets will start to trade at a premium to the public assets of the government. The spread between government and private will decline as was the case during the Great Depression as countries began to default on their debt.
Yellen Direct IRS to Audit Everyone for $600 Transactions Anyway
Armstrong Economics Blog/The Hunt for Taxes Re-Posted Dec 8, 2022 by Martin Armstrong
I really do have to wonder if my dog is smarter than most Americans who seem to have just lost their minds. My dog makes connections, anticipates what I will do, and studies my habits to predict and respond. I never knew a dog was really smart. She has learned numerous words and I have had to even spell certain words for she will respond if she hears the word. Dogs are indeed far more intelligent than I ever expected. Various studies show a dog is typically as intelligent as a two-year-old human. I can point in the sky at an airplane and she looks up. Not even a chimpanzee does that, or apparently most Americans. If you point to evidence they will not look.
The majority of Americans just listen to the propaganda, never questions anything, and assume the government is always telling them the truth because they care. Janet Yellen tried to get Congress to pass a formal act that banks and everyone had to report on Americans for every $600 transaction. Congress refused and her story was they were after the evil super-rich. The problem, the rich really are not selling stuff on eBay, using cash apps for side deals. That is the realm of the young and lower income.
So after the Biden Administration lost that battle, they simply told the IRS to do it on their own. Any transaction online over $600 is not subject to audit and you will find out the real reason they hired 87,000 armed IRS agents. You certainly do not need 87,000 IRS Agents to hunt down the 735 billionaires in the United States. They outright lie to your face, and many cheer.
People will NEVER wake up it seems. I have known politicians who actually believe that EVERYTHING belongs to the state, they decide on how much you are allowed to keep. They must have sipped history class for virtually EVERY Revolution in history was inspired by taxes. Even the famous line from Shakespeare “the first thing we do, let’s kill all the lawyers” actually refers to the king’s prosecutors for private people had not right to a lawyer. It was all about a revolution and the “lawyers” were confiscating people’s houses for their inability to pay taxes.
The American Revolution was also sparked by taxation. Remember the French Revolution and the slogan they attributed to the King’s wife – let them eat cake was also all about taxes and oppression
Futility of Price Controls
Armstrong Economics Blog/Economics Re-Posted Dec 7, 2022 by Martin Armstrong
COMMENT FROM HUNGARY: Dear Marty,
You were correct again. Price controls do not work in the long run. The Hungarian government introduced a price cap on gasoline and diesel a few months ago, but a few hours ago this evening they had to let it go(they “tried everything in their power to help but the damn bureaucrats in Brussels who voted for the sanctions”.etc etc.).
The holiday season, panic buying, no gas another nail into the trust in our government’s coffin.
Marty these people really have no clue what the hell they’re doing. We have several food products that also have price controls: Wheat, sugar, eggs, etc. And interestingly supermarkets simply stop selling them or they sell brown sugar (no price control) instead of white sugar (price controlled, the maximum amount you can purchase in one go is 3kg i believe). When will they learn (not admit) or at least stop blaming others for their own brain-dead decisions?
I honestly hope that whatever the hell comes after 2032 will be better than this nonsense.
Thanks for all you do Marty. Keep up the fight, and get some well-needed rest during the holidays. I reckon you’re getting more phone calls than usual…
All the best,
RH
ANSWER: You know the most astonishing fact is that this was not even my personal opinion. All one need do is consult history. NEVER has any attempt to freeze prices to prevent inflation EVER worked even once.
The Roman emperor Diocletian (284-305AD) tried to impose wage and price controls in an effort to prevent inflation that was soaring because of a collapse in confidence in the Roman government. The Edit on Maximum Prices was imposed during 201AD. It was an utter failure.
Even if we go back to the 4th century B.C., the Roman government bought corn (grain) and, in times of shortage, it re-sold it at a low fixed price to try to prevent inflation from shortages – as we have today. In 58BC, the Roman Senate went even further and granted every citizen free wheat. The politicians were trying to bribe the people as they are doing once again today. What happened was that the farmers began moving back to the city of Rome because they could live and eat without working – it was free. By the time Julius Caesar (100-44BC) crossed the Rubicon, one in three Romans was receiving government wheat. He was forced to create a census and found there were more people claiming welfare than there were possible people.
Those in government ALWAYS assume that since they possess a pen, they can write whatever law they desire and they will comply or be thrown in prison until they die. I was named FOREX Person of the Year in 2015 because we forecast the Euro/Swiss peg would break. I even met with the Swiss Central Bank and warned that the peg would break. I was told they would be able to hold it. I replied I think the odds are on my side since NOBODY in history has ever been able to do this. There was the British pound peh into the ERM the broking making Soros all his money. In 1997, there was the Asian Currency Crisis where all the pegs broke. then there was even Bretton Woods which was a fixed exchange rate that broke in 1971 and in 1973 I was called in for the first bank failure due to foreign exchange.
I have done my best trying to warn governments that they CANNOT fix currencies and even when they were forming the G5 with the Plaza Accord in 1985, I was called in and warned that lowering the dollar by 40% would lead to a major currency crisis and a crash by 1987. Never have they ever listened.
Perhaps, the ONLY time anyone in Europe or the United States than anyone in government ever listen was perhaps in 1997. They were starting the jawboning of the Yen for trade purposes once again. I wrote to Robert Rubin and he has Timothy Geithner respond who later became the Secretary of the Treasury. China has listened, but other than in 1997, I cannot say any central bank or government has EVER heeded my warnings that history is on my side – pegs NEVER work.
Centinel2012 