Imagine the 2000 and 2008 Crashes Combined, but on Steroids.
The Unfolding Military Disaster in Ukraine.
The Gladstone
Economic Newsletter
Volume 18, No. 9
June 18, 2023
“Imagine the 2000 and 2008 Crashes Combined, but on Steroids.”
“The Unfolding Military Disaster in Ukraine to Impact Markets?”
DISCLAIMER: The following is not intended as investment advice, but is rather intended to promote your own analysis of markets and the economic climate. The author is not a registered investment professional. Any action taken as a result of this analysis carries a high degree of risk. This newsletter contains the personal opinion of the author.
Dear Readers-
This is not a new bull market! Please don’t get sucked into this false narrative in the markets. I am convinced we are seeing a very large scale manipulation of the US equity indexes, partially in order to disguise the NATO military disaster in Ukraine.
Basically seven stocks have been goosing the market indices. The following chart shows the S&P 100 (the 100 largest stocks) vastly outperforming the rest of the S& P 500 Index:
The above chart is not normal. The author is convinced we are on the cusp of a very large correction in the US equity markets. I could write a large book on all the things going wrong in the US economy at this point. I could do a large number of charts this week showing the economy basically retreating into itself.
Instead, let’s ignore the noise and focus on the facts that
A. We only had the opening chapter of the banking crisis occur. Nothing has been solved. The Federal Reserve put a band-aid on the problem by lending at full face value against US treasuries held by banks. The bonds had declined as much as 50% in value.
B. The US consumer has basically died. It is just that very few publications have noted this.
We could easily have a major break in the US equity markets in the next few weeks. All the ingredients are there for this to happen. The US Treasury has borrowed $576 billion since the debt limit was raised about two weeks ago. The market should not be rising in this environment.
Let’s shift gears, and look at an event that is not reported on in the mainstream media: NATO is being heavily defeated in Ukraine. Why do I focus on the Ukraine war? The answer is that the US economy is what is called a “Confidence Game.” Once the American public loses what little faith it has in the US Government, the economic ramifications will be huge. The loss of faith in government is what triggered the Weimar hyperinflation.
I very much recommend A Skeptic newsletter on Substack, for those of you who are interested in daily reports on the Ukraine war. A Skeptic published the following diagram of how they see Ukraine being partitioned at the end of hostilities. The red line may be the new border, with the western part of Ukraine being a demilitarized rump entity. The question is if western Ukraine will have a functional government at the end of the day, or if Poland and other countries essentially occupy it:
The mainstream media in the west is not reporting on the military disaster unfolding in Ukraine. The vaunted Ukrainian counteroffensive has gone on for 14 days now, with the high water mark being the capture of seven villages (some of which had only 300 inhabitants in peace time) and Ukraine perhaps “occupying” 96 square kilometers of the “gray zone” along a 1200 kilometer long front. Essentially, this is “bupkas.” Ukraine has lost very large numbers of the western supplied tanks and other armor in this 14 day counteroffensive. The human casualties have been horrific. Frankly, there is no way to accurately estimate Ukrainian losses on the front lines and in the rear supply areas that have been destroyed by Russian missile attacks. The Ukrainian regime continues to force troops into the battle, only to have the units destroyed methodically by the Russians. The Ukraine army hasn’t even reached the first line of the Russian defense works. All the slaughter has occurred in the “gray zone” minefields. The Ukrainian armor hasn’t even reached the line of antitank obstacles called dragon’s teeth.
On southfront.org, there was one 9:53 minute long video compilation of Ukrainian vehicles getting destroyed by Russian Lancet drones and other weapons. I believe the video was just from one day. US$370 million of equipment was shown being destroyed in this video. This included 15 surface to air missile launching vehicles (most of them looked to be S300 systems), 7 radar units, 5 MLRS launchers, 3 tanks, 10 howitzers and 16 other weapon vehicles. These are horrendous losses. The videos of dead Ukrainian soldiers are numerous, and too horrible for me to comment on. Ukraine (and NATO) are being heavily defeated.
The Russian Ministry of Defense released their tally of total Ukrainian losses as of yesterday:
* 444 aircraft,
* 239 helicopters,
* 4,686 unmanned aerial vehicles,
* 426 anti-aircraft missile systems,
* 10,156 tanks and other armored combat vehicles,
* 1,125 multiple launch rocket systems combat vehicles,
* 5,149 field artillery guns and mortars,
* 11,028 units of special military vehicles,
* 5 Patriot missile system (author note: estimated cost $1 billion each)
* 77 Storm Shadows
Yesterday’s Ukrainian losses in mass attacks, per Russian MOD include:
77 tanks, 74 Infantry Fighting Vehicles, 84 Armored Combat Vehicle
No army can sustain these losses. The US and NATO are going to have to admit defeat in Ukraine at some point. When that announcement (or rather realization by the general public) occurs, it could have a huge effect on the US equity markets.
I will leave you with two charts to ponder, the first by Screencap@_ClimateCraze: