My top story is Switzerland and the surprise move to remove its cap against the Euro. This cap kept the two currencies roughly the same value–but not anymore. The move was such a surprise that even IMF Chief Christine Lagarde admitted the move by Swiss National bank (SNB) caught her off guard. It also caught currency traders by surprise as the Swiss franc soared by as much as 30%. Gold also spiked on the news. Why was this every-man-for-himself action taken by the SNB? It appears more money printing is coming, and this time it will come from the European National Bank (ECB.) It appears Switzerland wants protection from inflation.
My friend Gregory Mannarino from TradersChoice.net gave me his take today. Mannarino says the Swiss are getting ahead of an announcement that will probably come from the ECB next week that it, too, is going to embark on massive Federal Reserve style QE, or money printing. The Swiss did not want to print even more money to maintain the so called “cap” or peg that kept the two currencies basically the same value. That’s not all. Mannarino says the Euro will continue to plunge on the new probable money printing announcement, and that will produce a spike in the U.S dollar. As the U.S dollar moves up, the Fed will have the cover needed to bring it back down by introducing another round of money printing we affectionately call QE4.
Why would the Fed do this during a “recovery”? I’ll say it again, as I’ve said it a hundred times, there is no recovery! Look at this headline: “Consumer Spending Not in Line with Forecast.” That is putting it mildly. Here’s my headline: “Retail spending hit a wall and cratered in the fourth quarter.” Oh sure, oil prices have fallen and consumers are getting a little boost, but it will not make up for all the losses the big banks are going to have with the losses in energy and derivatives. Citi Group and JP Morgan are in deep trouble, and they are both going to need bailouts probably this year. Just Citi Group alone and its holding company have a combined $135 trillion in derivatives exposure. Citi Group’s earnings are tanking. Egon von Greyerz predicted QE4 before the end of the second quarter. My money says he’s right.
The U.S is not the only one having problems. Russia just cut off gas deliveries for six Eastern European countries. There has been a 60% cut in supply to Europe. This will cause even more financial problems in the Eurozone. It will be even more of a reason for the ECB to print money to bail out businesses and banks. We have all been waiting for the next Russian move, and no one should be surprised that January would not be the ideal month to cut supplies unless you were giving the Europeans some payback. Russia has been crippled with sanctions. Ukraine has been reportedly stealing Russian gas. What did they think Russia was going to do? My surprise is why it took so long. On top of that, Russia is dumping the dollar and leaving the petro dollar system. It is reportedly going to sell more than $88 billion in U.S. liquid dollar assets. It is going to get payment in rubles or no-dollar transactions.
Then, there is the news that Russia is adding to its “combat capabilities” in Crimea. The war in Eastern Ukraine is heating up, and it’s going to get hotter. The U.S. and NATO are also stepping up their presence in the Baltic Sea and Eastern Europe in general. Everybody in leadership knows this is getting worse, but you are not hearing much on the mainstream media. Also, things are set to ratchet up in the Middle East with the President asking for troops to fight ISIS in Iraq and Syria. America’s top General Martin Dempsey told Congress recently that it would take “80,000 competent Iraqi security forces to recapture lost territory” and take back Iraq from Isis. There are probably less than 1,000 competent Iraqi troops. You know American boots are going to be on the ground, and that will be almost all of the forces needed to defeat the Islamic State terrorists. We are being set up militarily and financially for World War III. The only question is when.
Finally, anti-Islam protests are heating up in Europe after the Charlie Hebdo attack and a separate attack on a kosher market. There is no doubt there is a problem with radical Islam. There is Boko Haram in Nigeria where 2,000 were recently murdered. There are the more than 140 murdered in Pakistan by radical Islam late last year. There have been countless stories of atrocities with the Islamic State in Iraq and Syria. It is clear there is a problem, and most of it comes from al-Qaeda related groups. If just 1% of the 1.6 billion Muslims are radical, that represents 16 million potential terrorists. Radical cleric Anjem Choudhury called the latest cartoon from Charlie Hebdo “an act of war,” but not all Muslims want violence. Case in point, did you know that a Muslim from Mali working in that kosher market in France saved the lives of six Jews, including a baby? He led the group to the freezer during the deadly attack, turned it off and told everyone to stay calm until the attack was over. He saved them. This story was reported in the Israeli press.
Join Greg Hunter as he covers these stories and more in the Weekly News Wrap-Up.