The World Is Changing Before Our Eyes

There is so much going on these days it is difficult to sit down and pound out a blog because just when you think you’ve seen every major headline another one pops out that makes you sit back and shake your head.

As a person who works in the industry it is difficult enough to sort through the most newsworthy events and discard the hyperbole, or should I say, discern the difference between hyperbole and what is important, so individual investors are excused if they are confused by all the noise.

So let me start with the headlines and then try and keep this concise and conclusive.

Headlines

1. China doing military exercises over Taiwan

2. Talk of Recession has bloomed again

3. International Monetary Fund Warns of Heavy Downside Risks Due to Global Banking Crisis

4. Numerous countries abandon the use of the US$ and trade in their own currencies or the gold backed Chinese Yuan.

5. Interest Rates-Inflation

6. Derivatives are the ugly monsters no one knows much about (will talk about in a future blog)

Why is China and Taiwan important? China has said for years that it will be taking Taiwan and the past year they have ramped up the rhetoric. This past week they reportedly had 70 fighter jets flying over Taiwan as well as 11 ships encircling the island country. Not only is China flexing its muscle and suggesting that it is ready any day they are also stating they are not afraid of the US. Fact be known that most of the world is not afraid of the US after they ran from Afghanistan. Their weakness and wokeness impress know one. When China takes Taiwan, the world will be at their mercy for semiconductors that run all our computers which is a much bigger problem than one thinks. But it also could throw the world into a World War if the misguided leadership of the West decide to intervene like they did in the Ukraine. Doesn’t it feel like the West wants war? Whatever happened to negotiated peace talks and UN intervention?

And then we have the R word again, Recession is popping up and this time led by the mainstream such as the International Monetary Fund warning of a massive hard landing (“hard landing” means massive stock market crash) due to the banking crisis. But, but, but didn’t the leaders of the financial world and US government assure everyone last month that the banking crisis was contained to just those two banks located in heavily populated Democrat counties?

Not so fast.

There is at least $7 trillion in uninsured bank deposits in the USA and the chart below shows the largest banks with their exposure. And yes, that is the Canadian banks, CIBC in 7th spot and TD in 12th. Remember that the US government has stated that they will not automatically bail out future banks, in fact the western world all adopted the “bail in protocol” many years ago which I have spoken of before. This is where the banks take depositors money and give them shares in their bankrupt company in return.

US Bank deposits are dropping as lending dries up. The final two weeks of March saw the largest decline in approved loans on record.

In a recent article I read, Wealthion founder Adam Taggart and Matterhorn Asset Management principal, Matthew Piepenburg, addressed the current and vast range of headline market topics, signals and risks. They mention Inflation, deflation, risk assets, bond stress, cryptos, war, bank failures, CBDC’s rise, trapped policy makers and, of course, the topic of precious metals.

They see many bubbles ready to burst including bonds, stocks and eventually the currencies.

Piepenburg’s views on current and future financial conditions are presented as a “no way out” scenario for global economies distorted by cornered central bankers. The bottom line is as simple as it is incontrovertible: The global economy is stuck in a doom loop of debt.

Either central banks raise rates to allegedly “kill inflation” by killing the economy and markets, or they resort to printing more money and making the currency even more worthless than it is now.

Historically, all debt-cornered nations lead to collapsing stock and bond markets followed by collapsing currencies. The much talked about Central Bank Digital Currency is said in some circles as their way out. Destroy one currency then introduce another in which they have total control over anyone that owns it.

In the end, the last bubble to burst is always the currency, and the USD, like every other currency, will be no exception.

Remember this will be much greater than 2008 as this time the crisis is global. This crisis also comes with inflation it also comes with wars, and threats of more wars. It also comes with much higher real estate prices than 2008 and much more debt.

But whether it is a war breaking out or more banks going broke that causes the next news story the biggest threat to the global economy is the take over by the East. The BRICS nations along with Saudi Arabia and numerous other countries are mounting an all out offensive against the US$ and the western world as well.

Recently Saudi Arabia shocked everyone by announcing production cuts pushing up the price of oil at a time when the world economy is slowing. They did so to add more pain to the US. But the biggest pain will come when they announce their new currency which is reportedly to be backed by Gold and other commodities, likely oil being one of them. With numerous countries already ditching the US dollar and trading in their own currency or the Chinese Yuan the introduction of this new currency will be announced as a new world reserve currency. As mentioned, dozens of other countries have already announced they will be going with a currency the BRICS including all of Africa, much of Asia and Eastern Europe and numerous Latin American countries including Mexico. France, the country the US liberated in WW2 already made a natural gas deal with Said Arabia using the Chinese currency

Bank of America analyst Michael Hartnett suggests selling stocks and owning treasury bills and gold. Bank of America identifies the next bubble and says investors should sell stocks rather than buy them after the last rate hike - MarketWatch

As Hartnett sums it up:

1. Own Treasury bills as cash outperforms until interest rates drop

2. Own gold as the US currency gets debased.

3. He goes as far as saying to short Bonds, technology stocks, defense stocks and private equity.

4. And lastly prepare a shopping list to buy when stocks are at distressed levels, namely commodities, real estate and the banks that survive.

We are at a turning point in history which is inevitable and there will be no turning back. We still have time to prepare, it is almost like they are showing us and giving us time but regardless of that, the reality is we must operate with the knowledge we have right in front of our face and prepare now so we are not left scrambling. Because when it happens it likely will strike quick. The opportunity is now.

Yours in Faith, Family and Finance,

Daryl Cooper