An emotional frenzy of doom and gloom stoked up among the financial media.

4 August 2018

Dear Fellow Investor,

In the last 2 weeks, some of you  have sent me messages and shared research from leading brokerages including JP Morgan.  The news flow has been alarming and negative. I can understand your concerns. Some famous gurus are forecasting economic collapse. There has been an emotional  frenzy of doom and gloom stoked up among the financial media.

Some of the negative news includes the hysterical trade war rhetoric,  Middle East conflict, crude oil disruption, Facebook, Twitter share price collapse, rising interest rates world wide , Brexit no deal fears, rise of rabid socialist  candidates for the upcoming mid term elections in the US,  etc.   

Lets look at the facts: In the US unemployment is at 40 year lows. GDP as last reported is increasing and last reported at 4.1 %, higher than  previous US administrations including Obama.

Trump’s tax cuts have fuelled business growth world wide while quality stocks are performing well. Interest rates throughout the world are at historical lows though gradually rising.  

This is not the background of a recession- not yet.

The catalyst for the negative news flow has been the escalating trade war.

Why there will not be a trade war:

Below is commentary by Bill Bonner, a brilliant  anti establishment economist and owner of Money Week, a UK financial magazine.   

Fake Wars

The Deep State welcomes war. But, especially in the case of a trade war with China, it must be a phony war.

And here is a good test. We’ll see how well, or badly, we have connected the dots.

According to the picture we see, the Deep State – the more or less permanent, but fluid and schismatic, group of insiders that controls U.S. public policies – uses war to gain public support for policies that actually serve only one purpose… to shift power, wealth, and status from the public to itself.

That’s why the trade war has to be fake.

Real wars threaten the Deep State’s survival. The wars in the Middle East (now also in Africa), for example, help justify trillions of dollars of wealth transfers to the military/industrial/surveillance complex.

But the U.S. has nothing really at stake in these fights; no matter what happens, it will not be invaded, bombed, or humiliated.

Likewise, the wars at home – against poor people and drug users – go on for decades. And no one is better off – except the Deep State industries engaged in the wars themselves (welfare agencies, prisons, police, drug pushers, etc.).

The Donald’s new trade war is a delight, too; already, the sidewalks are slick with greasy swamp water; lobbyists line up around the block to ask for special favors and dispensations. The insiders gain power and money by controlling crony trade deals.

But neither the president nor his crackpot advisors may realize the danger. And here is where it gets interesting: They mustn’t allow this war to get out of hand.

A real trade war with China would be disastrous – for the Deep State itself. That’s why we predict it won’t happen. The 25% tariffs will more than likely never be fully implemented.

Mr. Trump will follow a pattern that is already familiar. He will talk tough. He will stir things up. He will announce victory. And he will quietly back down.

Or else he will not survive as president to the end of his term.

If this scenario plays out expect a recovery in Asian markets.

We must continue with our conservative value based equity strategy to weather the storm.

Invest well and grow your wealth
Bill

Critters of the week are the elephant and the donkey symbols of the 2 political parties in America, the republicans, party of free markets and low taxes and the democrats, party of high taxes, massive regulations, big government and open borders.