Two Wars Are About To Break Out Over Border Adjustment Tax

When it comes to the future of the US economy, capital markets, the strength of the dollar, and tax policy in general, few proposals are likely to have as much of an impact as the border adjustment tax, or BAT, which as we profiled before, could have a significant impact on the value of the dollar, pushing it as much as 15% higher, and leading to dramatic changes in global trade patterns. As a reminder, House speaker Paul Ryan is the primary advocate of the BAT, arguing this effective $1.2 trillion tax on imports is the only way Congress can pay for Trump’s proposed massive tax cuts.
Since the BAT stands to greatly benefit exporters, who would pay no taxes on exports, thereby dramatically boosting their bottom line, it is obvious why export-focused US businesses are heavily for the proposal. Among them are the “American Made Coalition,” a coalition of more than 25 American businesses. Two corporate titans playing a leading role in the push for BAT are GE, which has hosted coalition partners at its D. C. offices recently, as well as Boeing, which also has much at stake in this fight. Other industries include manufacturing, high tech, software, medical device production, agriculture, energy production, biopharmaceuticals and information services.
Furthermore, in addition to Paul Ryan and the House GOP leadership, Steve Bannon has also opined in favor of the border tax and, in recent days. Trump himself has dismissed the cornerstone of the House GOP plan as “too complicated” and has been touting a 35% levy on imports as an alternative. Yet his spokesman appeared to put the tax back in play last week by proposing a 20% tax on goods from Mexico and “other countries we have a trade deficit with” to pay for a border wall. So far, Trump’s position on BAT is “fluid.”

This post was published at Zero Hedge on Feb 2, 2017.

State Minimum Wage Hikes Already Passed Into Law Expected To Cost 2.6 Million Jobs, New Study Finds

Even though we know that Bernie and his alt-left compatriots will never tire of their endless “Fight for $15” no matter how much data we throw at them, we thought we would go ahead and highlight yet another economic study detailing the devastating job losses that will result from minimum wages hikes that have already been passed in states all around the country.
The latest study comes for the American Action Forum (AAF) and estimates that 2.6 million jobs will be lost around the country over the next several years as states phase-in minimum wage hikes that have already been passed. Here are the key takeaways:

This post was published at Zero Hedge on Feb 2, 2017.

Celebrity Deathmatch

I read somewhere that MTV was bringing this back, the Claymation series where annoying celebrities would beat each other to a pulp in a wrestling ring. They have to do one for Yellen vs. Trump.
The FOMC meeting was yesterday – and we’ll get to that in a minute – but I want to talk about the backdrop to the meeting, Trump’s relationship with Yellen and Yellen’s relationship with Trump.
Trump hasn’t had much good to say about Yellen. He said that her interest rate decisions were politically motivated. Hey, I was saying the same thing at the time. No disagreement out of me. No rate hikes for years, and now that Trump is elected, the Federal Reserve is suddenly keen on hiking with renewed vigor.
But let me tell you – as much as Trump does not like Yellen, Yellen does not like Trump. You couldn’t find two more opposite extremes. Yellen is about as cautious and risk-averse as it gets. Trump is like a drunk at the poker table, playing every hand, losing a lot of small pots, then next thing you know you’re losing a big hand to him.

This post was published at Mauldin Economics on FEBRUARY 2, 2017.

Student Loan Reforms to Watch for in 2017

So far, the Trump administration continues to deliver on some key campaign promises. These promises include the travel ban, federal hiring freeze, and authorizing the construction of the US-Mexico border wall. Higher education is another issue Trump will likely be addressing in the coming months, as it continually ranks as the biggest source of consumer debt today.
According to the student loan debt clock, the total is 1.47 trillion. The balance owed is almost as much as the total credit card and auto loans combined. Here are a few more alarming statistics:

44.2 million Americans have student loan debt 11.1% is the delinquency rate $351 is the average monthly student loan payment (borrowers aged 20 to 30 years). $203 is the median monthly student loan payment (borrowers aged 20 to 30 years). (Source: studentloanhero.com) Educational institutions are finding it convenient to charge more, given that the Federal government takes on most of the risk for defaults while schools and universities reap the financial rewards. It’s a discrepancy President Trump commented on late last year:

This post was published at Schiffgold on FEBRUARY 2, 2017.

Firestorm Coming: Draft Of Trump Executive Order May Deny Services To Gay, Transgender People

In what may be the biggest firestorm set off by a Trump executive order to date, surpassing even the widespread angry response to the Trump immigration order, a draft of an executive order circulating in the Trump administration would dramatically expand the legal protections for individuals, organizations and employers on the grounds of their religious beliefs, and as the WSJ reports, would potentially allow the denial of services to gay and transgender people, and contraception coverage for employees.
The draft is titled ‘Establishing a Government-Wide Initiative to Respect Religious Freedom.’ While it hasn’t been signed and may never make it to President Donald Trump’s desk, advocacy groups see the draft order as a broad statement of intent from a president who courted conservative Christian voters during the campaign by promising to expand the role of religion in public life. As the WSJ adds, the draft order lays out many of the proposals that conservative Christians have been requesting for years, including legal protections for organizations that claim religious objections to providing a wide range of services. It also directs federal agencies to ‘avoid potential violations of Religious Freedom’, instructing officials not to ‘coerce’ religious entities or individuals into ‘participating in activities that violate their conscience.’
If this order or a similar one were signed, it would immediately plunge Mr. Trump into a debate over religious freedom, gay rights and reproductive rights, which has churned through states and courts for years – most recently with the disputes over transgender people’s use of bathrooms. Some religious groups have argued that they should not have to violate their beliefs in business, education or as civil servants. Corporations and sports leagues have largely sided with civil-rights groups and threatened to cancel events over legislation viewed as discriminatory.

This post was published at Zero Hedge on Feb 2, 2017.

Making America Great Again – How to Judge Policy

A Simple Formula
MIAMI – How do we know if new programs will make the economy better… or worse? Here’s a simple formula:
W = rv (w-w – w-l)
That is, wealth is equal to the real value of win-win exchanges minus the loss from win-lose exchanges. Yes, dear reader, it’s as simple as that. Like a whittler working on a piece of wood, we’ve shaved so much off, there is nothing left of it… except the essential heartwood.
And now we can use it to see how Trump’s changes will affect the economy. We’re down here in the southern tip of Florida showing a group of eager colleagues from Brazil how we do business.
‘I’ve been reading your Diary,’ said one. ‘But I’ve noticed you seem to make a lot of your readers mad. Is that really a good idea? Aren’t you driving away potential customers?’
‘Uh… who knows?’ we replied, taking the high road. ‘The Diary is free. But readers pay in something more important than money: time. We try to make it worth their time by looking at what might go wrong.’
Unlimited Funding
What could go wrong? Our bubbly stew of observations over the last few weeks has cooled and congealed into an extended hypothesis:

This post was published at Acting-Man on February 2, 2017.

It’s Time We Talked About Our Owners

How vast asset managers impact ‘our increasingly cartelized economy.’
The world’s biggest asset manager, BlackRock, was splashed across the front pages of the Spanish financial news yesterday. The firm had just raised raised its stake in Spain’s telecoms giant Telefnica to 336 million shares – the equivalent of 6.7% of Telefnica’s total capital, with a market value of just under 3 billion.
In the short space of five months BlackRock has almost doubled its holdings and is now the largest owner of Telefnica stock, ahead of Spain’s second biggest bank, BBVA, which holds 6% of the shares. The asset manager has also expanded its participation in Telefnica’s international subsidiaries, raising its holdings in Telefnica Deutschland to 0.76% and Telefnica Brasil to almost 2%, making it the firm’s biggest institutional shareholder.
BlackRock is the largest institutional shareholder of Telefnica’s two main market rivals in Spain, holding 7.3% of Vodafone and 1.96% of part state-owned Orange. It’s also the second largest investor in British Telecom, after Deutsche Telekom, with a 7.84% stake. In the U. S. market BlackRock has the third largest position in Verizon, with 6.17% of the capital, and the second largest position in AT&T, with 5.84%.

This post was published at Wolf Street on Feb 2, 2017.

Gold Gains as Trump Shocks Markets by Doing What He Said He’d Do

President Donald Trump’s policies have brought gold back to life.
Gold futures rose for a second day, posting the biggest monthly gain since June, on investor concern over moves by Trump that included barring entry by citizens from seven predominantly Muslim nations and firing the acting U.S. attorney general for refusing to enforce the order. The dollar headed for a third straight decline against a basket of 10 currencies, and U.S. stocks slid.
Confusion over U.S trade and immigration policies has helped rekindle haven demand for gold, which in December capped its biggest quarterly decline in more than three years. Money is also flowing back to precious metals as speculation mounts that the Federal Reserve may be more cautious in raising U.S. interest rates amid concerns Trump’s policies could stifle economic growth. Protests from New York to Atlanta to Detroit were held Sunday.
‘There’s a lot of uncertainty and a lot of backlash over recent administration policies and that’s causing uncertainty in the market, and then all of a sudden the gold market has come back to life,’ Phil Streible, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. ‘The Fed may be slightly more cautious. It’s one thing to bring back jobs, but it’s another thing to cause protests and instability.’

This post was published at bloomberg

Alarms Are Sounding in European Bonds

Jean-Claude Trichet, the European Central Bank’s former president, used to argue that one of the euro’s greatest achievements was driving government borrowing costs down to match those of Germany, the region’s benchmark borrower. In recent weeks, however, fissures have emerged that reflect investor concern about the political and economic outlook for at least three of the common currency’s members.
Bond yields for France, Italy and Greece are all spiking higher relative to benchmarks. French 10-year borrowing costs have surpassed 1 percent for the first time in more than a year on fears that its presidential election will result in a victory for National Front leader Marine Le Pen, whose policy ideas are hardly market-friendly. Italy, deeply divided after a referendum on constitutional reform that led to a change in government, has the added problem of a banking industry that defies remedial efforts. And Greece is back in the news for all the wrong reasons as its creditors wrangle over the latest bailout review.
During Trichet’s tenure at the ECB between November 2003 and November 2011, the average value for the spread between French and German 10-year yields was about 20 basis points. The gap has been widening for several months; this week, it reached a three-year high of 61 basis points.
Italian yields spent the first half of last year below those of Spain. After crossing at the end of June, Italy’s 10-year borrowing cost has marched steadily higher compared with its peer. This week, the gap climbed to its widest level in four years at 70 basis points.
It’s Greece, though, that remains the sickest man in the euro. Greece’s two-year yield has soared by more than 2 full percentage points in the past week, climbing above 9 percent to its highest level since the middle of last year. The gap between 10-year Greek and German yields has also climbed, reaching its widest in 12 weeks.

This post was published at bloomberg

More hints that Trump’s trade policy will focus on currency valuations

Germany is using a “grossly undervalued” euro to exploit the United States and its E.U. partners, Donald Trump’s top trade adviser has said in comments that are likely to trigger alarm in Europe’s largest economy.
Peter Navarro, the head of Mr Trump’s new National Trade Council, told the Financial Times the euro was like an “implicit Deutsche mark‘ whose low valuation gave Germany an advantage over its main partners. His views suggest that the new administration is focusing on currency as part of its hard-charging approach on trade ties.
In a departure from past U.S. policy, Mr Navarro also called Germany one of the main hurdles to a U.S. trade deal with the E.U. and declared talks with the bloc over a Transatlantic Trade and Investment Partnership dead.

This post was published at Financial Times

Is Peter Navarro Wrong on Trade?

1. Economic Illiteracy
Donald Trump’s selection of Peter Navarro, an economics professor at the University of California at Irvine, to lead a newly formed White House National Trade Council has set off furious debates around the country and the world about some fairly basic questions on trade theory. In their widely-read ‘Scoring the Trump Economic Plan,’ a piece published a few weeks before the election and written by Peter Navarro and Wilbur Ross, both senior policy advisers to the Trump campaign, one passage, in particular, has drawn a great deal of comment and criticism:
When net exports are negative, that is, when a country runs a trade deficit by importing more than it exports, this subtracts from growth . . . In 2015, the US trade deficit in goods was a little under $800 billion while the US ran a surplus of about $300 billion in services. This left an overall deficit of around $500 billion. Reducing this ‘trade deficit drag’ would increase GDP growth. These trade-related structural problems of the US economy have translated into slower growth, fewer jobs, and a rising public debt.
The authors explain that growth in any country’s GDP is the sum of the growth in consumption, net government spending, investment, and net exports. This is nothing more than the standard accounting identity so familiar to anyone who has taken basic economics.
GDP = Consumption Investment Government Spending Net Exports

This post was published at FinancialSense on 02/02/2017.

David Morgan Interview ~ Bayhorse Silver TSXV BHS January 2017

The following video was published by The Morgan Report on Feb 2, 2017
David Morgan of the Morgan report interviews Graeme O’Neill , President & CEO of Bayhorse Silver. Mr O’Neill established Bayhorse Silver and has been President & CEO since its inception. He has been involved in managing junior exploration companies in the minerals sector for a number of years and is experienced in logistics, planning, and operations development. He has a strong background in the regulatory and compliance requirements of public companies.

AMERICA’S PROBLEM WITH STUDENT LOANS IS MUCH BIGGER THAN ANYBODY REALIZED

The Department of Education recently released a memo admitting that repayment rates on student loans have been grossly exaggerated. Data from 99.8% of schools across the country has been manipulated to cover up growing problems with the $1.3 trillion in outstanding student loans. New calculations show that more than half of all borrowers from 1,000 different institutions have defaulted on or not paid back a single dollar of their loans over the last seven years.
This comes in stark contrast to previous claims and should call into question any statistics provided by government agencies. The American people haven’t fully grasped the long-term implications of loaning a trillion dollars to young people who have no credit or assets.
Increases in tuition seen over the past two decades have become a point of controversy and angst for those who don’t fully understand the contributing factors. Between 1995 and 2015, the average cost of a public, four-year university skyrocketed by well over 200%. Although federal student aid programs are often championed as a necessity, they have been instrumental in making higher education unaffordable. The opportunity to pay for college by working a part-time job evaporated as soon as huge sums of money were handed out to anyone with a pulse. Since students no longer pay their tuition upfront, colleges are able to raise prices in perpetuity, knowing the government will step in and make credit easier and easier to obtain. As an added bonus, outstanding student loans account for 45% of the government’s financial assets.

This post was published at The Daily Sheeple on FEBRUARY 2, 2017.

As Brazil Unemployment Hits Record High, Rio’s Murder Rate Soars

With Brazil stuck in what may be its worst depression on record, it will surprise nobody that the homicide rate in Rio de Janeiro climbed by 20% in 2016 from the previous year, as violence soared in the Brazilian metropolis amid rising unemployment and sharp cuts in public security budgets. Worse even than Chicago, state security statistics released on Wednesday and cited by Reuters showed that 5,033 people were murdered in Rio during the year, up from 4,200 in 2015.
The figures confirm growing concerns in Rio, a city and surrounding state home to more than 16 million people, that hard-won gains in security over the past decade are quickly backsliding along with Brazil’s economy, now in its worst recession on record.
Despite a massive deployment of more than 80,000 soldiers and police officers who ensured public order when the city hosted the Olympic Games in August, Rio and its suburbs suffered from an increase in violence throughout much of the rest of the year.
The increase in violence was particularly sharp in the so-called Baixada Fluminense, a dense sprawl of blue-collar suburbs inland from central Rio and home to much of the city’s workforce.

This post was published at Zero Hedge on Feb 2, 2017.

How Will Trump Impact Gold? FOMC Meeting Recap | Golden Rule Radio #4

The following video was published by McAlvany Financial on Feb 2, 2017
This week we discuss what Impact Trump could have on Gold & the Precious Metals. We recap the FOMC Fed Meeting where Interest Rates remain unchanged. The FOMC outlook shifts forward to inflation rising in 2017. The DOW corrects below 20,000 and struggles to get back above the 20k mark, and we review the movements of Gold, Silver, Platinum, & Palladium this last week. Thanks for listening.