The price of gold still stuck in the mud looking for some bit of news that can get the wheels spinning again.
Helping a little, is a weaker dollar and softer Treasury yields. As we speak, the price of gold is still locked in a trading range between $1,270 and $1,300 and needs a little help, I believe, from the equity market. With all the chaos in Washington, eventually the equity investors must realize that there is little chance anything can get done on any of the President’s proposals. So in short order, it might be time to reevaluate their holdings…
McConnell vs. President Trump
Equity markets in negative territory this morning as the market seems to be reacting to the New York Times article reporting a feud between the President and the Senate Majority leader.
It doesn’t help the relationship when the Senate Majority leader says, that he doubts if Trump can save his Presidency.
The U.S. Economy
Treasury Secretary Steven Mnuchin said Monday that the first bit of business that Congress has to address (when they return from their well-deserved vacation) will be to address the Debt ceiling. Mnunchin said he only has enough money to pay the bills of the U.S. until Sep 29th.
The Majority leader said there is “zero chance” congress will not address this issue before that date.
Mnuchin doesn’t want both houses to battle and is asking Congress to pass a clean increase in the debt limit.
But some Republicans have already said, they don’t want to increase the country’s debt limit and would ask for some spending cuts to offset the rise in the debt ceiling. Here we go again, should be fun to watch. Twenty Trillion and rising, what’s another couple trillion between friends.
The deadlines are fast approaching and this country is facing serious issues on its doorstep. No one wants to see a government shutdown or a default on sovereign debt. No one knows how the markets would react to such news.
So now with the debt ceiling issue hanging over their heads probably till the end of September, when will Congress have the time to address tax reform, health care and infrastructure. And also, let’s not forget, the ongoing investigation by Robert Mueller that everyone’s waiting for.
So for the time being, the alligators still rule the swamp.
The U.S. vs. North Korea
The United States and South Korea have started their annual war games in the Korean peninsula area.
According to U.S. Defense Secretary James Mattis, the amount of participants in the game have been reduced from last year’s number by 30 percent. Some see this as pandering to Kim Jung Un.
Still, 17,500 strong are involved in the games as North Korea claims it’s, “just an invasion rehearsal and a reckless act bereft of even elementary judgement.”
The exercises are believed to involve simulated battlefields and satellite imagery as if offensive and defensive methods would be used.
These exercises are scheduled to last 10 days and in the end, according to the Defense Secretary, the U.S. will be ready to defend South Korea in the event North Korea attacks.
Japan is planning to install a new land-based missile defense system that would increase their chances of shooting down one of Kim Jung Un’s ballistic missiles before it hits the Japanese mainland.
The new system, called Aegis Ashore, is Japan’s choice over another system called, Terminal High Altitude Area Defense (THAAD). The Aegis Ashore system comes with a broader coverage area, which means it would need fewer units to protect Japan and at the same time reduce the cost of protection.
Two former Generals on two different news channels predict that within six months to a year, we will have to act to end the North Korean nuclear ballistic program. As they both agreed “all options are on the table” and the U.S. is preparing for whatever is needed to stop Kim Jung Un.
Have a wonderful Wednesday.
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