Day: December 15, 2016

Here’s one surprising deal that the government actually got right

Jon

On January 17, 1917, as the Great War raged in Europe, the government of the United States signed a deal to purchase the Virgin Islands from Denmark.
The agreement transferred Denmark’s territories in the West Indies, ‘including the islands of Saint Thomas, Saint John and Saint Croix together with the adjacent islands and rocks.’
Good thing they picked up those rocks!
The US government paid ‘a sum of twenty-five million dollars in gold coin of the United States.’
$25 million was clearly a lot more money back then than it is today.
But given the change in the gold price over the years, $25 million worth of gold in 1917 is valued just under $1.5 billion today.
That’s still an amazing deal.
It means that, adjusted for inflation to 2016 dollars, the US government paid about $175 per acre for the Virgin Islands.
Today, an acre of land on one of the islands could easily set you back around $400,000.
So the USVI purchase ended up being a pretty solid return on investment.

This post was published at Sovereign Man on December 15, 2016.

The Bizarre Reason Why The World’s Worst Currency Just Soared By 60%

Jon

While we often highlight the collapse of Venezuela’s currency, the Bolivar, which just two weeks ago hit an all time low of 4,609 Bolivars to the dollar in the black market losing 60% of its value in one month, as socialism hits its terminal phase, we should also note that what goes down, must sometimes come up and in a surprising twist, over the past few days, the Bolivar has been the best (if only temporarily) performing currency in the world…

… soaring by over 60% since the start of the month.
That said, extending the time frame of the move puts it in the proper context – after a dramatic collapse which devalued the Bolivar from 1,000 to over 4,600 against the dollar, in less than a year, the currency has managed to recoup roughly half of the losses:

This post was published at Zero Hedge on Dec 15, 2016.

What a Coincidence

Jon

The fed funds target is now 0.50% – 0.75%.1 Hooray!
The Fed is finally, after eight years, normalizing interest rates.
The timing is awfully interesting, though – what a coincidence that the rate hike comes right after the election!
If they had hiked before the election, they could have affected the outcome of the election. So here we are. Just a few weeks after the election, and we got ourselves a rate hike.
But that wasn’t the big news yesterday. The big news was that the Fed had previously committed to two rate hikes in 2017 – and suddenly upgraded their assessment of the economy to justify three rate hikes next year.
What a coincidence!
I am betting that we will get more than three rate hikes next year. I am betting that we will get four – or more. It’s possible that fed funds will be close to 2% at the end of next year.
The dots!

This post was published at Mauldin Economics on DECEMBER 15, 2016.

Meet Donald Trump’s New Press Secretary (Maybe)

Jon

Meet Fox News host Kimberly Guilfoyle, who as The Hill reports, is a contender to be Donald Trump’s White House press secretary.
Guilfoyle, a host of the Fox opinion panel show, ‘The Five,’ was seen recently at Trump Tower for lunch with senior Trump transition team members, Politico said on Wednesday, citing two unidentified sources.

This post was published at Zero Hedge on Dec 15, 2016.

Foreigners are Dumping US Treasurys as Never Before

Jon

Bloodletting in one of the most conservative investments.
All kinds of things are now happening in the world of bonds that haven’t happened before. For example, authorities in China today halted trading for the first time ever in futures contracts of government bonds, after prices had swooned, with the 10-year yield hitting 3.4%. Trading didn’t resume until after the People’s Bank of China injected $22 billion into the short-term money market.
What does this turmoil have to do with US Treasurys? China has been dumping them to stave off problems in its own house….
The US Treasury Department released its Treasury International Capital datafor October, and what it said about the dynamics of Treasury securities is a doozie of historic proportions.
Net ‘acquisitions’ of Treasury bonds & notes by ‘private’ investors amounted to a negative $18.3 billion in October, according to the TIC data. In other words, ‘private’ foreign investors sold $18.3 billion more than they bought. And ‘official’ foreign investors, which include central banks, dumped a net $45.3 billion in Treasury bonds and notes. Combined, they unloaded $63.5 billion in October.

This post was published at Wolf Street on Dec 15, 2016.

Fed Wants Banks To Pay 2 Billion A Year To Prop Up The System Against A Collapse – Episode 1153a

Jon

The following video was published by X22Report on Dec 15, 2016
Gold was suppressed by using future contracts that were worth 10 billion dollars. Freddie Mac issues warning about the real estate market. US manufacturing PMI the Empire Fed and Philly Fed surveys all of sudden surge. But the hard economic data show the opposite of what is happening. The Fed wants the US Banks to pay an additional 2 billion to keep the market from crashing. Australia is on the path to becoming cashless. There are states that you don’t want to be in when everything goes south.

Currency Armageddon? A Word about the Hated Dollar

Jon

The ‘death of the dollar’ will have to be rescheduled.
Sharply higher yields on Treasury securities and the prospect of more rate hikes by the Fed – in a world where other major central banks are still stewing innocent bystanders in the juices of NIRP, negative yields, and ‘punishment interest’ – sent the hated dollar, whose death has been promised for a long time, soaring.
It soared against the euro. Or, seen from the other side, the euro plunged against the dollar, to $1.039, the lowest level since January 2003; down 35% from its peak of $1.60 during the Financial Crisis; down 10% from its 52-week high in March of $1.16; and down 2.7% from $1.068 yesterday before the Fed announcement.
Pundits are once again declaring that the euro will fall to ‘parity’ with the dollar, as the ECB has been wishing for a long time, though it cannot admit officially that it is trying to crush the euro to give member states an export advantage. That would be ‘currency manipulation,’ which is frowned upon in other countries. But a big wave of ‘money printing’ and forcing yields below zero ‘to stimulate the economy,’ whereby the currency gets crushed as a side effect, is OK.

This post was published at Wolf Street on Dec 15, 2016.

Freddie Mac Issues Warning As Mortgage Rates Soar

Jon

Blink, and you missed your chance to refi. And according to nationalized mortgage giant Freddie Mac, it’s about to get worse.
As shown last week, as a result of the recent spike in yields, the population of eligible refinance candidates has already plunged by more than half. As Black Knight pointed out, as of the end of November, though there are still 2M borrowers who could save $200 /month by refinancing and a cumulative $1B/month in potential savings, this is less than half of the $2.1B/ month available just four weeks ago.
Since then the number has shrunk substantially as rates have continued their relentless move higher.
According to the latest Wells Fargo refi rates, a 30 Year Fixed mortgage will now cost a prospective creditor some 4.625%. This was in the mid-3%s just a few months ago.

This post was published at Zero Hedge on Dec 15, 2016.

How Trump Could Shut Down Mitch McConnell if Necessary

Jon

The media have wet their Depends over Trump’s choice for Secretary of State.
We are told that Mitch McConnell — once hated by the Left, but now seen as the Left’s last hope — may mobilize Republicans in the Senate. The Senate will not consent to Trump’s choice. Rex Tillerson will be sent packing.
Oh, yeah?
Here is what I would do if I were Trump. I would tweet this:
Rex Tillerson is my personal Secretary of State. If world leaders want to deal with me, they will deal with him. He does not need Senate confirmation to represent me.
In 137 characters, Trump can tell Mitch McConnell to take a flying leap at a rolling doughnut.
He would then send Tillerson’s name back to the Senate. What could McConnell do? This: reconsider.
Trump can pay Tillerson a salary out of his own pocket. It would be Trump change. But Tillerson would do it for free, I think.
So would Trump’s designated Secretary of the Treasury.

This post was published at Gary North on December 15, 2016.

Rising Interest Rates Will Lower Stock Prices

Jon

As many expected, the Federal Reserve raised the benchmark interest rate to a range of 0.5% – 0.7%. During Janet Yellen’s announcement, she said rising employment rates among other measures have led to ‘considerable progress’ for the economy, adding she and her FOMC colleagues expected the economy to ‘continue to perform well.’ In response to the rate increase, gold prices began a steady decline beginning around 1 p.m. GMT at $1,161.84/oz. and ending the day at $1,141.77/oz.
Since the Nov 8 election, gold has been down 10%, but is currently up 6% up for the year, which began Jan 1, 2016, at $1,063.22/oz. After last year’s quarter point hike, a similar move south, finding support in mid-Dec at $1061.98/oz. and rallying to $1,230.85/oz. in Feb 2016. In a way, we’re seeing a similar reaction by the market, but there are important differences that show investors are misreading the implications of rising interest rates and Trump’s fiscal stimulus plan.

This post was published at Schiffgold on DECEMBER 15, 2016.

Ari Wald: Bull Market Looking Healthy; Keep an Eye on the Dollar

Jon

Healthy Bull Market
Oppenheimer technician Ari Wald, named 2016’s Technician of the Year, believes the bull market in US stocks is likely to continue into 2017 and cites cyclical leadership, healthy breadth, narrowing credit spreads, and an overall improvement in technical measures that help to gauge underlying market strength.
Given the above, we should view this as a ‘healthy bull market and continuation (of the upward) trend,’ Ari said recently on our podcast.
Intermarket Relationships
Ward delineates that both level and direction of interest rates are important considerations for the stock market, with ‘low and rising rates’ indicative of market growth and being ‘good for stocks.’

This post was published at FinancialSense on 12/15/2016.

DEC 15/MASSIVE RAID ON GOLD AND SILVER AS THE CROOKS SUPPLIED 10 BILLION DOLLARS WORTH OF COMEX GOLD SHORT PAPER/SILVER WHACKED TO BELOW $16.00/CHINESE BOND MARKET COLLAPSES AND THEY HALT TRADING…

Jon

Gold at (1:30 am est) $1127.80 DOWN $33.50
silver at $15.90: DOWN 125 cents
Access market prices:
Gold: $1129.00
Silver: $16.00
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
THURSDAY gold fix Shanghai
Shanghai morning fix Dec 15 (10:15 pm est last night): $ 1181.31
NY ACCESS PRICE: $1143.00 (AT THE EXACT SAME TIME)/premium $38.31
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 1182.56
NY ACCESS PRICE: 1138.60 (AT THE EXACT SAME TIME/2:15 am)
HUGE SPREAD 2ND FIX TODAY!!: $43.96
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully

This post was published at Harvey Organ Blog on December 15, 2016.

China Dumps Treasuries: Foreign Central Banks Liquidate A Record $403 Billion In US Paper

Jon

One month ago, when we last looked at the Fed’s update of Treasuries held in custody, we noted something troubling: the number had continued to drop sharply, declining by another $14 billion in one week, and pushing the total amount of custodial paper to $2.788 trillion, the lowest since 2012. One month later, we refresh this chart and find that in last week’s update, there is finally some good news: foreign central banks finally bought some US paper held in the Fed’s custody account, which following months of liquidation, rose over the past two weeks by $23 billion, the biggest two-week advance since November of 2016, pushing the total amount of custodial paper to $2.816 trillion, the highest since early October.
That was the good news, and we use the term loosely in as much as the custody account can be used as a proxy of foreign buying, which according to most rates watchers, it can.
The bad news came out with the release of latest monthly Treasury International Capital data for the month of October, which showed that the troubling trend presented one month ago, has accelerated to an unprecedented degree.
Recall that in mid-November, we reported that in the latest 12 months we observed a record $375 billion in Treasury selling by foreign central banks in the period August 2015-September 2016, something unprecedented in size.

This post was published at Zero Hedge on Dec 15, 2016.

“They Are Standing Strong By The Will Of Our Voters” – GOP Crushes Democrats’ Hopes, Confirms Electors Back Trump

Jon

While a liberal group responsible for fomenting the Electoral College rebellion claims to have at least 20 of the 37 GOP defectors needed to pull an upset and send the election to the House, The Hill reports that, among Republicans on the ground, though, there is no chatter or speculation surrounding that possibility. The liberal opposition has generated a cottage industry of online speculation that an Electoral College revolt is a real possibility. But state party leaders familiar with the thinking of their electors dismiss the speculation as fantasy.
Republican state party chairmen and local officials expect nearly every GOP elector to fulfill their pledges to vote for Donald Trump for president on Monday when delegates gather across the country to cast their Electoral College ballots.
Despite a media frenzy around the scattered groups of liberals suggesting a groundswell of Republican opposition to Trump, there is little evidence to suggest that many GOP voters will go against the popular vote in their home states.
An Associated Press poll of more than 330 electors published Thursday found similarly long odds for any Electoral College revolt, with both Democrats and Republicans convinced Trump will clinch the vote Monday.
The Hill reached state party chairmen or officials for 10 of the 30 states Trump won in November, accounting for 170 of the 270 electoral votes he needs to win.

This post was published at Zero Hedge on Dec 15, 2016.

Gold and Silver in Steep Decline as Dollar Surges to Multi-Year Highs

Jon

Gold prices sank to new 10-month Dollar lows Thursday as the US currency surged and Asian stock markets followed Wall Street lower after the Federal Reserve raised its key interest rate for the second time in 12 months.
With the gold price losing $35 per ounce to $1126 between the Fed announcement and lunchtime today in London, analysts claimed the rate rise “was priced in” but gold’s drop reflected shock at the Fed’s outlook for more rate hikes in 2017.
Commodities meantime fell over 1%, with US crude oil falling back near $50 per barrel, as government bond prices fell everywhere, pushing longer-term interest rates higher.
Giant gold-backed investment fund the SPDR Gold Trust (NYSEArca:GLD) shrank Wednesday by the equivalent of almost one day’s entire global gold-mining output, retreating as shareholders liquidated to the smallest size since mid-May at 849 tonnes.

This post was published at FinancialSense on 12/15/2016.