Wednesday, April 18, 2018

Jim Rickards: Trump Prepares to Drop the Hammer on Amazon


President Trump has ratcheted up his war of words against Amazon.

Late last week, Trump tweeted that Amazon is having a negative impact on competing retailers, as well as the federal and local governments:

I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.) and are putting many thousands of retailers out of business!… This Post Office scam must stop. Amazon must pay real costs (and taxes) now!

Then there was this morning’s tweet:

Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country… not a level playing field!

Trump’s campaign against Amazon is nothing new.

He sent out a string of tweets last summer raging against Amazon’s monopolistic business practices. Here’s one from last August, for example, that sounds a lot like last week’s tweets:

Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!

But Trump’s attacks against Amazon are not just economic — they’re also personal.

Amazon CEO Jeff Bezos also owns The Washington Post, which is strongly anti-Trump. Trump sees The Washington Post as the unofficial leader of the resistance to his administration. The president has even referred to the newspaper as the “Amazon Washington Post.” And he knows it’s been out to get him.

What does all this mean?

It means there’s an excellent chance that Trump could pursue antitrust legislation against Amazon.

Trump’s logic is simple. Most of Bezos’ net worth is tied up in Amazon stock. In the world of billionaires and powerful politicians, the way to hit someone hard is in the pocketbook.

Trump will attack Amazon and clip Bezos’ wings by $10–20 billion as payback for what he considers Bezos’ attacks on him via the Post.


Antitrust law enforcement in the United States is a bit like the weather — unpredictable in the long run and highly changeable.

The Justice Department can go years or even decades without bringing a major antitrust case and then suddenly decide the time has come to send a message to big business, with emphasis on the word “big.”

When that happens, there is always one company that stands out from the crowd as a kind of sitting duck for ambitious prosecutors. Today, the sitting duck is Amazon.

When the case against Amazon begins, the stock will tumble. Amazon’s stock price is vulnerable under the best of circumstances because it ran up so far so fast. The bad news of an antitrust case will be the catalyst that causes investors to dump the stock in a desperate race to get out ahead of the crowd. Selling will feed on itself.

The selling contagion will spread to the rest of the FAANG stocks (Facebook, Apple, Netflix and Google) and to the Nasdaq as a whole.

Amazon stock was down as much as 6% today, based on Trump’s latest attacks. And the Dow is down almost 500 points at writing. The S&P and Nasdaq are also getting hammered.

But this could just be the beginning.

These companies are already vulnerable because China has threatened sanctions against U.S. technology companies. Technology stocks, led by Apple, dragged the broader market lower last week when the news broke. These threats of course come in retaliation against Trump’s latest promise to crack down on Chinese theft of U.S. intellectual property.

Any antitrust action Trump pursues against Amazon will trigger another correction or worse in U.S. stocks.

But investors who can read the antitrust tea leaves correctly stand to make huge profits when the Justice Department strikes.

- Source, Jim Rickards

Sunday, April 15, 2018

James Rickards: Trump Will Use the “Nuclear Option” on Trade


What we have seen so far are just the opening shots of the coming trade war. Think of it as the Battles of Lexington and Concord that opened the Revolutionary War. Much larger tariffs and penalties are waiting in the wings.

Trump will soon receive a report under Section 301 of the Trade Act of 1974. That report has been almost a year in preparation and will reveal that China has stolen over $1 trillion in U.S. intellectual property.

Section 301 of the Trade Act of 1974 is the “nuclear option” when it comes to trade wars.

I don’t want to get too deeply in the weeds here, but Section 301 gives the president broad authority to impose sanctions and penalties. The president will have a completely free hand to impose billions of dollars of damages if not more on China.

Trump could receive this report within days or weeks. Regardless, it is coming soon.

Once the president receives it, the law gives him 90 days to react. But he will likely act within days or weeks upon receiving it.

Importantly, Trump does not require Congressional approval to act. Again, the law gives the president enormous flexibility. So he doesn’t need Congressional backing as he did for, say, the tax cuts.

Initial reports indicated that these penalties will be about $60 billion. In fact, Trump used that figure in today’s press conference on tariffs. But that’s just for starters.

Trump will wait to see if China is willing to make concessions in other areas. If not, he can easily double or triple that $60 billion figure.

The penalties Trump seeks to impose are not limited to specific sectors but may apply across a wide range of goods and services from China that benefitted in any way from the theft of intellectual property (IP).

IP is a very tricky subject with a lot of gray area.

Trade restrictions on steel, for example, are much easier to implement. Steel is tangible. You can weigh it, track it, etc.

Intellectual property, on the other hand, is much more vague, much more amorphous. It exists inside human brains, or on the internet or a computer thumb drive. It can be everywhere at once in a sense.

So it’s much more difficult to identify, quantify, and throw tariffs on than traded products like steel, autos, solar panels or washing machines. Yet intellectual property is more important than ever.

We live in a world of technology, a world of the internet, of smart devices, and even cryptocurrencies for that matter. These are all forms of intellectual property.

Now, China has been stealing U.S. intellectual property for decades in various ways. Sometimes it happens when a Chinese scientist comes to the United States and takes what he learns back to China.

But a lot of the theft has been done through malicious hacking of U.S. technology companies. These could be big defense contractors like Lockheed Martin or Northrop Grumman. But they could also be small firms with one great innovation or idea. These smaller firms may actually be more vulnerable because they don’t have the defenses against hacking or cyber warfare that the big guys do.

With this stolen intellectual property, China has been able to build up companies like Huawei, a large technology and telecommunications firm. And its defense industry has made enormous strides because of stolen intellectual property.

Because intellectual property is so amorphous, the president could look at a wide variety of Chinese industries and say:

“You know those electronic products you’re assembling, like smart phones? They wouldn’t be so smart if you hadn’t stolen some of our intellectual properties. So we’re going to throw a tariff on them.”

These penalties will have a much broader and deeper impact than the steel and aluminum tariffs, or those on washing machines or solar panels.

- Source, Jim Rickards via the Daily Reckoning

Thursday, April 12, 2018

Jim Rickards: The Fed Is Going “Cold Turkey”



This is the most aggressive tempo of rate hikes of any major central bank and puts U.S. policy rates significantly higher than those in the U.K., Japan or eurozone.

The issue for investors is whether the Fed is raising rates too aggressively considering the strength of the U.S. economy. Higher rates imply a stronger dollar, imported deflation and head winds to growth.

If the U.S. economy is on a firm footing, then the rate hikes may be appropriate, even necessary to head off inflation.

But if the U.S. economy is vulnerable, then the Fed’s actions could trigger a recession and stock market sell-off unless the Fed reverses course quickly. My view is that the latter is more likely. The Fed is tightening into weakness and will reverse course by pausing rate hikes later this year.

When that happens, important trends in stocks, bonds, currencies and gold will be thrown into reverse. Investors who position now for a coming course correction by the Fed can reap huge gains when that Fed flip-flop occurs.

Outwardly, the Fed is sanguine about the prospects for monetary normalization. Both Janet Yellen and new Fed chair Jay Powell have said that interest rate hikes will be steady and gradual. In practice, this means four rate hikes per year, 0.25% each, every March, June, September and December, with occasional pauses prompted by strong signs of disinflation, disorderly markets or diminution in job creation.

Balance sheet normalization is even more on autopilot than rate hikes. The Fed will not dump its securities holdings. Instead, it refrains from rolling over maturing securities. When the Treasury pays the Fed upon the maturity of a Treasury note, the money simply disappears.

This is the opposite of money printing — it’s money destruction. Instead of QE, we now have QT, or quantitative tightening.

The Fed has been transparent about the rate at which they will run off their balance sheet this way, although transparency should not lead investors to complacency. The balance sheet reduction tempo as of late 2018 is $600 billion per year, equal in impact to four 0.25% rate hikes per year.

The annual combined impact of the Fed’s rate policy and QT is a 2% increase in interest rates. For an economy addicted to cheap money, this is like going cold turkey.

The Fed would have investors believe that the rate hikes are already priced into capital markets, and QT is a nonevent, running on “background” in the Fed’s words, like an Excel spreadsheet on your laptop while you watch a film from Netflix.

Neither assumption is correct.

The view that balance sheet normalization can run on background without disruptive effects is unwarranted. The Fed printed almost $4 trillion of new money over six years from 2008–2014 to inflate the value of risky assets.

Yet somehow, the Fed would have investors believe that destroying $2 trillion in even less time will have no negative impact on the value of those same risky assets.

It’s not true...

- Source, James Rickards via the Daily Reckoning

Monday, April 9, 2018

Big Money Questions: Jim Rickards Predicts a Financial Crisis


The next financial crisis will hit us in the next six to eight months and will be triggered by war between the US and North Korea, best-selling author Jim Rickards predicts on the Big Money Questions show.

- Source, This is Money

Sunday, April 1, 2018

Jim Rickards: The Next Financial Panic Will Be the Biggest of All Time


Jim Rickards examines what the next financial crisis will look like and how it will be different from previous panics, gives us his outlook for gold and the key drivers for the yellow metal in part one of a tremendous two-part interview. Don’t miss my conversation with Jim Rickards, coming up after this week’s market update.


Thursday, March 29, 2018

The Gold Chronicles with Jim Rickards and Alex Stanczyk


How BLS jobs data largely being mis-read by financial media 

*Why all current narratives in the financial media are missing the true causes of early Feb US stock markets correction *Why Atlanta Fed analysis is more of a nowcast than a forecast 

*Why exploding sovereign debt and debt to GDP ratio are critical to market stability in the next few years 

How student loans are a $1.5T problem with a significant default rate *What the two critical confidence boundaries are, and how they might be crossed

*3 Yr playbook - not a forecast but a potential scenario 

*Why the idea that Central Banks dont need capital would be challenged in a collapse of confidence



Monday, March 26, 2018

Jim Rickards: Where is Gold Going in 2018? The Ultimate Gold Panel


Hosted by Kitco News at the 2018 VRIC. Rick Rule, Peter Hug, and Jim Rickards join a panel where they discuss the direction that gold is heading throughout 2018 and beyond.

In addition to this, they break down a number of key issues that are affecting the markets and some that have not yet come to pass...

What is the end game?

- Source, Cambridge House

Monday, March 19, 2018

It's Not Just Jim Rickards, I Prescribe To $10,000 Gold


The imminent collapse of modern currencies will push gold up to $10,000 an ounce, assuming central banks resort back to a gold-backed monetary system, said Byron King, editor of Jim Rickards’ Gold Speculator. 

“If you take the global money supply, back it with 40% gold, you need $10,000 gold to make the math work, and that’s just using a 40% backing,” King told Kitco News on the sidelines of the PDAC 2018. “And it has to do with the eventual demise of modern currencies.”

Byron noted that gold stocks at current valuations are much more attractive now than they were two years ago, and said that today’s miners are backed by “better numbers” and “smarter geologists.” “We are in a new gold bull cycle, we’re in a blip of six or eight month downturn, but it will turn around. 

These are fundamentally good companies with great value behind them,” he said.

- Source, Kitco News

Thursday, March 15, 2018

Jim Rickards explains the day after plan... Forget gold, Silver is going out of sight.


How should you be preparing for the big one? An economic collapse looms on the horizon, but many are simply unprepared. Don't be caught off guard, heed Jim Rickards latest advice and take action before you are completely and utterly wiped out.

- Video Source

Monday, March 12, 2018

Gold: The Once and Future Money with James Rickards


James Rickards joins Cambridge House International, where he discusses how gold has dominated the financial scene throughout history and how it will once again rise from the ashes and take back its rightful throne. Gold is coming.

- Video Source

Friday, March 9, 2018

Rickards: First Came Currency War, Now Trade War, Then Shooting War


A popular thesis since the 1930s is that a natural progression exists from currency wars to trade wars to shooting wars. Both history and analysis support this thesis.

Currency wars do not exist all the time; they arise under certain conditions and persist until there is either systemic reform or systemic collapse. The conditions that give rise to currency wars are too much debt and too little growth.

In those circumstances, countries try to steal growth from trading partners by cheapening their currencies to promote exports and create export-related jobs.

The problem with currency wars is that they are zero-sum or negative-sum games. It is true that countries can obtain short-term relief by cheapening their currencies, but sooner than later, their trading partners also cheapen their currencies to regain the export advantage.

This process of tit-for-tat devaluations feeds on itself with the pendulum of short-term trade advantage swinging back and forth and no one getting any further ahead.

After a few years, the futility of currency wars becomes apparent, and countries resort to trade wars. This consists of punitive tariffs, export subsidies and nontariff barriers to trade.

The dynamic is the same as in a currency war. The first country to impose tariffs gets a short-term advantage, but retaliation is not long in coming and the initial advantage is eliminated as trading partners impose tariffs in response.

Despite the illusion of short-term advantage, in the long-run everyone is worse off. The original condition of too much debt and too little growth never goes away.

Finally, tensions rise, rival blocs are formed and a shooting war begins. The shooting wars often have a not-so-hidden economic grievance or rationale behind them.

The sequence in the early 20th century began with a currency war that started in Weimar Germany with a hyperinflation (1921–23) and then extended through a French devaluation (1925), a U.K. devaluation (1931), a U.S. devaluation (1933) and another French/U.K. devaluation (1936).

Meanwhile, a global trade war emerged after the Smoot-Hawley tariffs (1930) and comparable tariffs of trading partners of the U.S.

Finally, a shooting war progressed with the Japanese invasion of Manchuria (1931), the Japanese invasion of Beijing and China (1937), the German invasion of Poland (1939) and the Japanese attack on Pearl Harbor (1941).

Eventually, the world was engulfed in the flames of World War II, and the international monetary system came to a complete collapse until the Bretton Woods Conference in 1944.

Is this pattern repressing itself today?

Sadly, the answer appears to be yes. The new currency war began in January 2010 with efforts of the Obama administration to promote U.S. growth with a weak dollar. By August 2011, the U.S. dollar reached an all-time low on the Fed’s broad real index.

Other nations retaliated, and the period of the “cheap dollar” was followed by the “cheap euro” and “cheap yuan” after 2012.

Once again, currency wars proved to be a dead end.

Now the trade wars have begun. On Thursday, July 27, the U.S. Congress passed one of the toughest economic sanctions bills ever against Russia.

This law provided that U.S. companies may not participate in Russian efforts to explore for oil and gas in the Arctic. But it went further and said that even foreign companies that do business with Russia in Arctic exploration will be banned from U.S. markets and U.S. contracts.

These new sanctions pose an existential threat to Russia because depends heavily on oil and gas revenue to propel its economy.

Russia has vowed to retaliate...

- Source, James Rickards

Monday, March 5, 2018

Jim Rickards: Fed Policy Implications for 2018


Jim Rickards discusses the recent action witnessed by the FED and how reckless they have truly become. How will this all play out? Will it result in another 2008 disaster?

- Video Source