QUESTION: Mr. Armstrong, I am new to your services and I attended the Tampa Conference. You have opened my eyes to see the world as a whole. A famous analyst just said and it is becoming a glaring issue that they are only domestically focused as you said blind to everything outside the United States. ________ said:
“We want long-term interest rates to go lower, but that’s only gonna happen if we can get inflation under control by reopening the Strait of Hormuz, and that’s a tall order,” _______ said. “The Treasury Department’s attempts to get this under control I think have only made investors more nervous.”
My question ia with Trump’s tariff war and his war against Iranand we have Bessent imposing sanctions on Iran while trying to support the bond market, your track record record and computer puts everyone to shame. I am not an international hedge fund manager as you were. But I can see that they are trying to defend a view on tariffs, sanctions, and bonds that are a losing ticket. Why doesn’t Bessent call you in?
EK
ANSWER: Besides the Neocons who try to keep me away from Trump and I believe are now intercepting my letters to him, then there is the old rumor that those who lost big on the Russia collapsed and the failed regime change blackmailing Yeltsin and expecting the IMF would never allow Russia to collapse, are the ones who blamed me and told the CFTC we had to be shut down. I wrote to Bessent, but got no response. They say beware a woman scorned for she knows no limit to fury, that appears to apply to sore losers in high-stake finance. They never believe in my forecasting. They always claimed I had too much influence which was greater than all the influence that they could bribe for their guaranteed trades. When the forecast that Russia would collapse made the front page of the London Financial Times, that was the icing on the cake. It wasn’t that my computer was correct, it was I had too much influence and had to be taken down so they could manipulate markets without interference.
In August 1998, during Russia’s financial crisis (ruble devaluation and debt default), George Soros’s Quantum Fund / Soros Fund Management group lost approximately $2 billion in Russian markets. Contemporary reports (including The New York Times) attribute this to the fund under chief investment strategist Stanley Druckenmiller. The positions were described as mostly equities, with some exposure to Russian GKOs (short-term ruble Treasury bills) and dollar bonds. Druckenmiller publicly acknowledged the losses at the time.
Bessent’s role at Soros
Bessent joined Soros Fund Management in 1991 and worked there through roughly 2000 (first stint), including as head of the London office. He is well-documented as a key member of the team on the famous 1992 Black Wednesday trade that shorted the British pound and generated roughly $1 billion in profits for Soros. I was advising the British government them and warned them what the club war doing. So I believed in free markets, they believed in manipulating markets. Bessent later returned as Chief Investment Officer (2011–2015) and is credited with profitable trades such as shorting the Japanese yen.
The danger here is that after stepping in and doubling the purchases, the risk is that new lows will shatter the confidence in Bessent and the ability of the government to manipulate the bank market. As I hace said before, in February 1987, there was the Louvre Accord where they said that the dollar had fallen enough. When it continued to make new lows, that was it. Confidence in the central banks collapsed and that led to the 1987 Crash. That is the risk we now have. Rate will rise thanks to geopolitical chaos and there will be no way to prevent long-term rates from rising.
His latest sanctions on Iran and going after any bank that has contact with Iran will fail. It just makes hom look authoritative. Sanctions have NEVER worked even once the same as Marxist Communism/Socialism, which tries to eliminat the business cycle and create utopia void of any recession or depression. The US put sanctions on Cuba in 1960, they are still there. The sanctions on Russia did not even the Ukraine War against Russia.
Our computer has been projecting rising long-term rates since 2020. With the rising trend in geopolitical insanity with this need for war, there is no possible way that rates would decline long-term. This is far more that the Strait of Hormuz. The Madman Zelensky has attacked Russian energy to the point that they now must import refined products. Zelensky and Netanyahu belong in prison. Neither cares about the world and they only look at their own personal hatreds and to hell with the world.
“When we correlate the US 30-year bonds we see volatility rising in 2022 and building into 2030. Here the strongest turning point is 2023 and a Directional Change came here in 2021. Clearly, this does not look good for the future of the debt markets.” id/page 27
The opening line in 2020 WEC Bond Bubble Report had forecast that 2020 would be the low and from there on into 2032 we will be looking at a bond crisis – not a stock crisis.I find it humorous how people are claiming the stock market will crash the biggest in 150 years but remain clueless of the real crisis – debt. The report began:
“he markets have always one major objective in mind – prove that the majority is wrong be it at the top or bottom of major turning points. Now that we are drawing near the conclusion of this Economic Confidence Model 8.6-year Wave #938, we are facing the mother of all debt crises from a 5,000-year low that will probably go down in the financial history books as to why governments should be prohibited from borrowing at any time in the future”
ID/page 8
Tariffs are a Marxist philosophy to protect jobs. This flies in the face of David Ricardo’s Comparative Advantage. You can grow lettuce in the desert probably at a cost of $10 when you can buy it from someone else for 50 cents. Tariffs are a tax, plain and simple. They result in making the consumer subsidize higher labor costs. This is why union are just socialist organization. They began about working conditions. After that, they became extortion operatings for excessive pay.
The shift of shipping from New York City to New Jersey and other ports wasn’t a single event, but a decades-long process driven by new technology and labor unions that thought they could make any demand. While the change began in the late 1950s and accelerated in the 1960s, the labor unions simply became abusive.
Major strikes, like the 1951 dock strike, prompted shippers to consider other ports like Boston and Philadelphia to avoid disruptions.
The introduction of container shipping favored large, open, modern facilities. The Port Authority invested heavily in Port Newark and the new Elizabeth, N.J., terminal, which opened in 1962.
Shippers like United States Lines moved operations to New Jersey for practical reasons, leading to tension with the ILA union over job losses in Manhattan.
A pivotal event was in 1968 when United States Lines decided to berth its new flagship container ship, the American Lancer, in Elizabeth, NJ, rather than at its Manhattan piers. This was due to the modern facilities required. The move sparked a union strike in protest.
The unions chased ships out of NYC, labor costs and issues became a major factor turning into a war between employees vs management. Frequent wildcat strikes and complex work rules demand by unions in the 1950s made NYC a less reliable and more expensive port for shippers.
Tariffs operate the same way. Making America Great does not mean bringing back overpriced labor. Also ignored in this equation are TAXES! The City of Detroit may have been the place where auto manufacturing began, but the stupidity of the Democrats and this presumption that they can always just rob the rich and business, resulted in chasing out every auto-manufacturer and the city then went into bankruptcy by 1937.
Putting tariffs on products does NOT make America great, it reduces the standard if living for Americans. It is not just the labor costs. I have worked on restructuring multinational companies in my career. I know why they move. Most is regulation and taxes. They do not move simply to pay someone $2 less and hour. The cost of moving is far greater than such a savings. This is not just about labor costs, it is also about taxes and regulation at the city, state, and national level.
